As filed with the Securities and Exchange Commission on July 16, 1996.
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
NEW YORK HEALTH CARE, INC.
(Name of small business issuer in its charter)
New York 7373 11-2636089
(State or jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
1667 Flatbush Avenue, Brooklyn, NY 11210 (718) 421-0500
(Address and telephone number of principal executive offices)
1667 Flatbush Avenue, Brooklyn, NY 11210 (718) 421-0500
(Address of principal place of business or intended place of business)
JERRY BRAUN, PRESIDENT
New York Health Care, Inc.
1667 Flatbush Avenue
Brooklyn, NY 11210
Telephone: (718) 421-0500
Facsimile: (718) 421-4365
(Name, address and telephone number of agent for service)
Copies to:
WILLIAM J. DAVIS, ESQ. FRAN M. STOLLER, ESQ.
Scheichet & Davis, P.C. Bachner, Tally, Polevoy &
505 Park Avenue, 20th Floor Misher LLP
New York, NY 10022 380 Madison Avenue
(212) 688-3200 New York, NY 10017
(212) 687-7000
Approximate date of proposed sale to the public: As soon as practicable after
the effective date of this Registration Statement.
<PAGE>
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. |X|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
The registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933, or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Title of each class of securities to Proposed maximum Amount of registration fee
be registered aggregate offering price (1)
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Common Stock, $.01 par value $6,037,500 $2,082
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Redeemable Warrants, exercisable $ 120,750 -0-(2)
for one share of Common Stock
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Common Stock issuable upon $7,245,000 $2,498
exercise of Redeemable Warrants
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Common Stock issuable upon $ 630,000 $ 217
exercise of the Representative's
Warrants
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Redeemable Warrants issuable upon $ 12,600 -0-(2)
exercise of the Representative's
Warrants
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Common Stock issuable upon $ 756,000 $ 261
exercise of the Redeemable
Warrants issuable upon exercise of
the Representative's Warrants
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TOTAL $5,508
======
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</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(a) under the Securities Act of 1933, as amended (the
"Securities Act").
(2) No fee pursuant to Rule 457(g) under the Securities Act.
Pursuant to rule 416(a) under the Securities Act, there are also being
registered such additional securities as may be issued pursuant to the
antidilution provisions of the Redeemable Warrants and the Representative's
Warrants.
iii
<PAGE>
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Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus supplement shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws of any
such State.
- --------------------------------------------------------------------------------
SUBJECT TO COMPLETION, DATED JULY 16, 1996
PROSPECTUS
NEW YORK HEALTH CARE, INC.
1,050,000 Shares of Common Stock and
1,050,000 Redeemable Warrants
New York Health Care, Inc., (the "Company") hereby offers 1,050,000 shares
(the "Shares") of Common Stock, $.01 par value (the "Common Stock") and
1,050,000 redeemable warrants (the "Warrants"). The Shares and the Warrants
(collectively, the "Securities") may only be purchased together on the basis of
one Share and one Warrant until completion of the initial distribution of the
Securities and will be separately tradeable immediately thereafter. It is
currently anticipated that the initial public offering prices of the Securities
will be $5.00 per Share and $.10 per Warrant. Each Warrant entitles the
registered holder thereof to purchase one (1) share of Common Stock at an
exercise price of $6.00 per share, subject to adjustment, commencing on the
first anniversary of the date of this Prospectus through the fifth anniversary
of the date of this Prospectus. The Warrants are redeemable by the Company at
any time commencing _____________, 1998, at a redemption price of $.05 per
Warrant, provided that the average closing bid price of the Common Stock shall
equal or exceed $7.50 per share for 20 consecutive trading days ending on the
tenth day prior to the date of the notice of redemption. See "Description of
Securities - Redeemable Warrants."
(cover continued on next page)
----------
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK
AND IMMEDIATE SUBSTANTIAL DILUTION. SEE "RISK FACTORS"
COMMENCING ON PAGE 9 AND "DILUTION."
----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMIS-
SION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRE-
SENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
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Price to Public Underwriting Discounts Proceeds to Company (2)
and Commissions (1)
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<S> <C> <C> <C>
Per Share ........................ $ $ $
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Per Redeemable Warrant ........... $ $ $
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Total (3) ....................... $ $ $
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</TABLE>
(footnotes on following page)
The Securities are being offered by the Underwriters subject to prior sale
when, as and if delivered to and accepted by the Underwriters and subject to
approval of certain legal matters by their counsel and to certain other
conditions. The Underwriters reserve the right to withdraw, cancel or modify
this offering and to reject any order in whole or in part. It is expected that
delivery of the certificates representing the Shares and Warrants will be made
against payment at the offices of the Representative, RAS Securities Corp., 2
Broadway, New York, New York 10004-2801, on or about _______________, 1996.
RAS SECURITIES CORP.
The date of this Prospectus is __________________ , 1996
<PAGE>
(cover continued from previous page)
(1) Does not include additional compensation to RAS Securities Corp., acting as
representative (the "Representative") of the several underwriters (the
"Underwriters") in the form of a (i) non-accountable expense allowance
equal to 3% of the gross proceeds of this offering; and (ii) warrants (the
"Representative's Warrants") to purchase up to 105,000 shares of Common
Stock and/or 105,000 Warrants. In addition, the Company has agreed to
indemnify the Underwriters against certain liabilities under the Securities
Act of 1933, as amended. See "Underwriting."
(2) Before deducting estimated expenses of approximately $__________ payable by
the Company, including the non-accountable expense allowance payable to the
Representative.
(3) The Company has granted to the Underwriters an option exercisable within 30
days after the date of this Prospectus to purchase up to an additional
157,500 shares of Common Stock and/or up to an additional 157,500 Warrants
upon the same terms and conditions as set forth above, solely to cover
over-allotments, if any. If such option is exercised in full, the total
Price to Public, Underwriting Discounts and Commissions and Proceeds to
Company will be $ __________ , $ __________ and $ __________ ,
respectively. See "Underwriting."
Prior to this offering, there has been no public market for the Securities
and there can be no assurance that such a market will develop after the
completion of this offering or, if a market develops, that it will be sustained.
The initial public offering prices of the Securities and the exercise price and
other terms of the Warrants have been arbitrarily determined by negotiations
between the Company and the Representative and do not necessarily bear any
relationship to the Company's asset value, book value, net worth or any other
recognized criterion of value. See "Risk Factors -- Arbitrary Determination of
Offering Prices; Possible Volatility of Common Stock and Warrant Prices" and
"Underwriting." Application has been made for quotation of the Common Stock and
the Warrants on the Nasdaq SmallCap Market ("Nasdaq") and the Boston Stock
Exchange under the symbols NYHC and NYHW, and NYH and NYW, respectively.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK
AND/OR WARRANTS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
The Company intends to furnish the holders of the Common Stock and the
Warrants, annual reports containing audited consolidated financial statements
with a report thereon by independent certified public accountants and quarterly
reports containing unaudited consolidated financial information for the first
three quarters of each fiscal year.
2
<PAGE>
PROSPECTUS SUMMARY
The following summary information is qualified in its entirety by, and
should be read in conjunction with, the more detailed information and financial
statements, including the notes thereto, appearing elsewhere in this Prospectus.
Unless the context otherwise requires, all share and per share information in
this Prospectus gives effect to a 56,625-for-1 stock split effected on March 26,
1996, but does not give effect to the exercise of (i) the Underwriters'
over-allotment option to purchase up to 157,500 shares of Common Stock and/or
157,500 Warrants; (ii) the Representative's Warrant to purchase up to 105,000
shares of Common Stock and/or 105,000 Redeemable Warrants; (iii) options to
purchase up to 210,000 shares of Common Stock reserved for issuance pursuant to
the Company's Stock Option Plan; or (iv) an option to purchase 75,000 shares
outstanding on the date hereof. See "Management - Savings and Stock Option
Plans" and "Underwriting."
The Company
New York Health Care, Inc. (the "Company") is a licensed home health care
agency engaged primarily in supplying the services of paraprofessionals who
provide a broad range of health care support services to patients' in their
homes. The Company operates in all five boroughs of New York City and the
counties of Nassau, Westchester, Rockland, Orange, Duchess, Ulster, Putnam and
Sullivan, in the State of New York. The Company's services are supplied
principally pursuant to contracts with health care institutions and agencies
such as the Mt. Sinai Medical Center in Manhattan, New York Methodist Hospital
in Brooklyn, Beth Abraham Health Services in the Bronx and Westchester County
and the New York State Department of Social Services.
The Company operates 24 hours a day, seven days a week to receive referrals
and coordinate services with physicians, case managers, patients and their
families. It offers a broad range of support services, including assistance with
personal hygiene, dressing and feeding; meal preparation, light housekeeping and
shopping; and, to a limited extent, standard skilled nursing services such as
the changing of dressings, injections, catheterizations and administration of
medications and physical therapy. The Company's personnel also train patients in
their own care, monitor patient compliance with treatment plans, make reports to
the physicians and process reimbursement claims to third-party payors. Among the
paraprofessionals and nurses supplied by the Company are those fluent in
Spanish, Yiddish and Russian as well as personnel knowledgeable in the
requirements and practices of Kosher homes.
In August 1993, the Company established a maternal/child care division,
called "Special Deliveries," which presently accounts for approximately 5% of
the Company's business and which supplies comprehensive nursing services for
women during pregnancy, and for them and their newborn children after
childbirth. The Company provides its skilled nursing staff with special
additional training in this division, which offers a wide range of quality
health services to patients at home through the provision of Registered Nurses,
including those with at least two years of experience in maternal child care,
Neonatal Intensive Care Unit ("NICU") Nurses, Maternal/Newborn Registered
Nurses, Certified Childbirth Educators and Certified Lactation Consultants.
Referral services are also available for support programs providing social
workers, bereavement counselors and
3
<PAGE>
nutritionists. Each patient's individual treatment plan and insurance coverage
is reviewed prior to commencement of services being rendered, except for
childbirth education, which is privately contracted.
High quality service is emphasized throughout the various divisions of the
Company, both in hiring, Company training and testing of its personnel and in
the manner in which services are delivered. The Company is approved by the New
York Department of Health and the New York Department of Social Services to
train its paraprofessional Home Health Aides and Personal Care Aides,
respectively. Training and quality assurance programs are regularly reviewed and
directed by management and corporate support staff consisting of experienced
health care professionals. The Company received "Accreditation with
Commendation" from the Joint Commission on Accreditation of Health Care
Organizations ("JCAHO") after its initial and only review, in 1994, and, in
February 1996, was selected by the University of Colorado Health Sciences Center
as one of only 22 home health care agencies participating in a two to three year
study known as the Outcome-Based Quality Improvement in Home Care New York State
Demonstration Project being funded by the New York State Department of Health,
by reason of the Company's commitment to both quality assurance and improvement.
The Company believes that its reputation for quality patient care has been and
will continue to be a significant factor in its success.
The Company believes that cost containment pressures in the health care
industry, together with the development of new technology, have increasingly
shifted the provision of many health care services from institutions, such as
hospitals and nursing homes, to home care. As a result of the continuing
pressure to restrain costs, the structure of health care payments has been
shifting from the traditional fee-for-service reimbursement model to the
contract care reimbursement model, and this has resulted in patients being
released from hospitals earlier and, often, sicker. The earlier detection of
cancer and the incidence of AIDS, together with the general aging of the
American population, have increased the opportunities for home treatment, as
opposed to institutionalization, resulting in growth in the home health care
industry.
The Company's primary objective is to enhance its position in the home
health care market by increasing the promotion of its full service and specialty
health care capabilities to existing and new referral sources; expand its
markets and enter new markets by establishing additional branch offices and
acquiring other related health care businesses; expand its provision of skilled
nursing services, principally infusion therapy and the care of women during
pregnancy and their newborn children; and develope complimentary home health
care products and services, as well as maintaining its regular training and
testing programs, and recruitment activities.
The Company has been treated as an "S Corporation" under Subchapter S of
the Internal Revenue Code since its inception. As a result, the Company was
exempt from federal and certain state income taxes attributable to its earnings
and such income taxes were instead the obligation of the Company's stockholders.
The Company is terminating its S Corporation status prior to the completion of
this offering. As a result of the termination, the Company will be subject to
federal income taxes at rates of up to 35 percent and may, in certain
circumstances, become subject to the federal alternative minimum tax imposed on
corporations. The Company is also subject to state and local income taxes.
4
<PAGE>
The Company was incorporated under the laws of the State of New York in
February 1983 and maintains its principal offices at 1667 Flatbush Avenue,
Brooklyn, NY 11210, telephone (718) 421-0500.
5
<PAGE>
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The Offering
Securities Offered by the Company ... 1,050,000 shares of Common Stock and
1,050,000 Warrants.
Terms of the Redeemable Warrants .... Each Warrant entitles the holder thereof
to purchase one share of Common Stock at
a price of $6.00 per share, subject to
adjustment, at any time commencing ____,
1997 through ____, 2001. See
"Description of Securities."
Common Stock Outstanding
Before the Offering (1) .......... 2,340,000 shares
Common Stock Outstanding
After the Offering(1) (2) ........ 3,390,000 shares
Use of Proceeds ..................... Acquisitions, establishment of
additional offices, expansion and
upgrading of computer systems, expansion
of pediatric services division, sales
and marketing and working capital. See
"Use of Proceeds."
Risk Factors ........................ The Securities offered hereby involve a
high degree of risk and immediate
substantial dilution. See "Risk Factors"
and "Dilution."
Proposed Nasdaq and Boston Stock
Exchange Symbols:
Nasdaq
Common Stock ............... NYHC
Warrants ................... NYHW
Boston Stock Exchange
Common Stock ............... NYH
Warrants ................... NYW
- ----------
(1) Includes 75,000 shares of Common Stock issuable upon exercise of an
outstanding option, exercisable at $3.75 per share, held by the Company's
President. See "Capitalization," "Management - Savings and Stock Option
Plans, "Principal Stockholders" and "Certain Transactions."
(2) Excludes 1,050,000 shares issuable upon the exercise of the Warrants.
6
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<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Summary Financial Information
Years Ended December 31, Three Months Ended March 31,
---------------------------- -----------------------------
1994 1995 1995 1996
-------- -------- -------- --------
(In thousands, except per share data)
<S> <C> <C> <C> <C>
Statement of Income Data:
Net patient service revenue $ 8,981 $ 11,810 $ 2,621 $ 2,987
-------- -------- -------- --------
Professional care of patients 6,301 8,128 1,782 2,062
General and administrative
expenses 1,793 2,391 580 691
-------- -------- -------- --------
Income from operations 887 1,291 259 234
Interest expense, net (85) (82) (27) (28)
Other income 6 -- -- 4
Provision for income taxes(1) (37) (81) (9) 38
-------- -------- -------- --------
Net income $ 771 $ 1,128 $ 223 $ 248
======== ======== ======== ========
Pro Forma Data:(2)(3)
Income before provision
for income taxes $ 808 $ 1,209 $ 232 $ 210
Pro forma provision for
income taxes 353 520 101 91
-------- -------- -------- --------
Pro forma net income $ 455 $ 689 $ 131 $ 119
======== ======== ======== ========
Pro forma net income per common
share and common share
equivalents outstanding(1)(3) $ .25 $ .04
======== --------
Pro forma weighted average number of
common shares and common
share equivalents outstanding (2) 2,743 2,743
======== ========
</TABLE>
<TABLE>
<CAPTION>
At December 31, 1995 At March 31, 1996 Pro forma at March 31, 1996(3)
-------------------- ----------------- ------------------------------
(In thousands)
<S> <C> <C> <C>
Balance Sheet Data:
Working capital (deficit) $2,775 $2,186 $ (14)
Total assets 4,840 4,001 4,001
Total liabilities 1,799 1,500 3,700
Retained earnings 3,011 2,471 271
Stockholders' equity 3,041 2,501 301
- ---------------------
7
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</TABLE>
<PAGE>
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(1) The Company has been an S Corporation under Subchapter S of the Internal
Revenue Code of 1986, as amended (the "Internal Revenue code") for U.S.
federal and New York State income tax purposes since its inception. As an S
Corporation, the Company was not subject to federal income tax, but
remained subject to a reduced New York State income tax. The Company will
terminate its S Corporation status prior to the completion of this
offering. See "The Company." Pro forma amounts give effect to additional
income taxes that would have been reported assuming that the Company was a
C Corporation for years ended December 31, 1994 and 1995 and the three
months ended March 31, 1995 and 1996. See "Former S Corporation Tax
Treatment" and "Management's Discussion and Analysis of Financial Condition
and Results of Operations."
(2) Pro forma weighted average number of common share equivalents outstanding
includes 459,725 shares whose proceeds would be necessary to pay the S
Corporation distribution and 18,750 shares relating to the stock option
grant. See "Former S Corporation Tax Treatment," "Capitalization,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources," "Principal Stockholders,"
"Certain Transactions" and Financial Statements.
(3) Pro forma summary financial information includes $2,200,000 of bank debt to
be incurred by the Company after March 31, 1996 to fund the payment of
undistributed S Corporation earnings to current shareholders prior to this
offering. See "Former S Corporation Tax Treatment," "Capitalization,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations - Liquidity," "Principal Stockholders" and "Certain
Transactions."
8
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<PAGE>
RISK FACTORS
An investment in the securities offered hereby involves a high degree of
risk and prospective investors, prior to making an investment in the Securities,
should carefully consider the following risk factors relating to the Company and
this offering.
Indirect Dependence Upon Reimbursement by Third-Party Payors; Potential for
Health Care Reform. More than 90% of the revenues of the Company are paid by
Certified Home Health Agencies ("CHHA's") and Long-Term Home Health Care
Programs ("LTHHCP's"), as well as other clients who receive their payments from
"third-party payors," such as private insurance companies, self-insured
employers, HMOs and governmental payors under the Medicare and Medicaid
programs. The levels of revenues and profitability of the Company, like those of
other health care companies, are affected by the continuing efforts of
third-party payors to contain or reduce the costs of health care by lowering
reimbursement or payment rates, increasing case management review of services
and negotiating reduced contract pricing. Because home care is generally less
costly to third-party payors than hospital-based care, home nursing and home
care providers have benefited from cost containment initiatives aimed at
reducing the costs of medical care. However, as expenditures in the home health
care market continue to grow, cost containment initiatives aimed at reducing the
costs of delivering services at non-hospital sites are likely to increase. A
significant reduction in coverage or payment rates of public or private
third-party payors would have a material adverse effect on the Company's
revenues and profit margins. While the Company is not aware of any substantive
changes in the Medicare or Medicaid reimbursement systems for home health care
which are about to be implemented, a number of proposals have been made
including, but not limited to, revised budget plans of New York State Governor
George Pataki and in President Bill Clinton's federal budget proposal for fiscal
year 1996-1997, which could result in significant limitations or reductions in
the reimbursement of home care costs and in the imposition of limitations on the
provision of services which will be reimbursed. As a result, there can be no
assurance that government regulations concerning Medicare or Medicaid will not
change in the future in a manner detrimental to the Company. Under certain
circumstances, third party payors, particularly private insurance companies, may
negotiate fee discounts and reimbursement caps for services which the Company
provided. At this time, the Company can neither estimate the frequency or rates
of the negotiated discounts or the maximum reimbursement amounts nor predict
whether the Company's revenues will be thereby materially adversely affected.
Recently, attention has also been focused on reform of the health care system in
the United States. However, until specific legislation is proposed to the
Congress, the Company cannot accurately predict what additional legislation, if
any, may be adopted relating to the Company's business or the health care
industry. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations," "Business - Third-Party Reimbursement" and "Business -
Government Regulation."
Delays in Reimbursement; Bad Debts. The Company generally collects payments
from its contractors within one to six months after services are rendered, but
pays its accounts payable and employees currently. This timing delay may cause
working capital shortages from time to time. In the past, the Company has been
able to obtain financing to cover these shortages through bank
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borrowings guaranteed by the current stockholders. There can be no assurance
that bank borrowings or other methods of financing will be available when needed
or, if available, will be on terms acceptable to the Company. The Company has
established a bad debt reserve for uncollectible accounts. Any significant
increase in bad debts may adversely affect the Company. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations,"
"Business - Third-Party Reimbursement," "Certain Transactions" and Financial
Statements.
Adequacy and Availability of Professional Liability Insurance. The
administration of home care and therapy and the provision of nursing services
entails certain liability risks. The Company maintains professional liability
insurance coverage with limits of $1,000,000 per claim and $3,000,000 annual
aggregate, with an umbrella policy providing an additional $5,000,000 of
coverage. Although the Company believes the insurance it maintains is sufficient
for its present operations, professional liability insurance is expensive and
becoming increasingly difficult to obtain. There can be no assurance that the
Company's present coverage will continue to be adequate or that the Company will
be able to maintain the current levels of such insurance in the future or secure
additional insurance on terms satisfactory to the Company or at all. A
successful claim against the Company in excess of, or not covered by, the
Company's insurance coverage could have a material adverse effect on the
Company's business and financial condition. Claims against the Company,
regardless of their merit or eventual outcome, also could have a material
adverse effect on the Company's reputation and business. See "Business -
Insurance."
State and Federal Regulation. The Company's operations are subject to
substantial regulation at the state level and also under the federal Medicare
and Medicaid laws. In particular, the Company is subject to state laws governing
home care, nursing services, health planning and professional ethics, as well as
state and federal laws regarding fraud and abuse in government funded health
programs. Changes in the law or new interpretations for existing laws can have a
material adverse effect on permissible activities, the relative costs of doing
business and the amount of reimbursement by government and private third-party
payors. The establishment of additional branch offices by the Company and any
future acquisitions will be subject to compliance with all applicable laws,
rules and regulations. If any person should become the owner or holder, or
acquire control of or the right to vote ten (10%) percent or more of the issued
and outstanding Common Stock of the Company, such person could not exercise
control of the Company until an application for approval of such ownership,
control or holding has been submitted to the New York State Public Health
Council and approved. In the event such an application is not approved, such
owner or holder may be required to reduce their ownership or holding to less
than 10% of the Company's issued and outstanding Common Stock. Although the
Company has not experienced any difficulties to date complying with any of such
laws, rules or regulations, the failure of the Company to obtain, renew or
maintain any required regulatory approvals or licenses could adversely affect
the Company and could prevent it from offering its existing services to patients
or from further expansion.
Competition. The home health care industry is highly competitive. The
Company competes with hospitals, nursing homes and other businesses that provide
home health care services, most of which are larger and more established
companies with significantly greater resources and access to
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<PAGE>
capital and greater name recognition than the Company. Among the national
companies with which the Company competes are Olsten Kimberly Quality Care,
Inc., Staff Builders Inc., Coram Health Care Corp., Interim Personnel, Inc.,
Transworld Home Health Care, Inc. and Health Force, Inc. Additionally, as a
regional rather than a national provider of home health care services,
competition in the Company's markets as well as general economic conditions may
be more acutely felt than if the Company's operations were spread over a larger
market area. Among the Company's competitors in the New York metropolitan area
are U.S. Home Care, Inc., Star Multicare, Inc., VIP Home Health Care, Inc.,
Patient Care, Inc., Plaza Nurses Agency, Inc. and Personal Touch Home Care
Services, Inc. Moreover, other companies, hospitals and health care
organizations may elect to enter the home care and home nursing markets, and
existing and future competitors can be expected to expand the varieties of
therapies and nursing services that they offer. See "Business - Competition."
Relationship with Referral Sources and Dependence on Major Customers. The
development and growth of the Company's home care and nursing businesses depends
to a significant extent on its ability to establish close working relationships
with hospitals, clinics, nursing homes, physician groups, HMO's, governmental
health care agencies and other health care providers. There can be no assurance
that existing relationships can be successfully maintained or that additional
relationships can be successfully developed and maintained in existing and any
future markets. The Company's ten largest customers accounted for approximately
76% and 74% of revenues during the years ended December 31, 1994 and 1995,
respectively. One referral source, the New York State Department of Social
Services, was responsible for approximately 36% and 27% of the Company's gross
revenues for the years ended December 31, 1994 and 1995, respectively. Another
referral source, Beth Abraham Medical Center, was responsible for approximately
18% and 13% of gross revenues for the years ended December 31, 1994 and 1995,
respectively. The loss of or a significant reduction in referrals by either of
such sources, as well as certain other key sources, could have a material
adverse effect on the Company's results of operations. Many of the Company's
contractual arrangements with its customers are renewable annually. See
"Business."
Control by Officers and Directors. Upon completion of this offering, the
officers and directors of the Company will control the vote of approximately 68%
of the outstanding shares of Common Stock. The Company's stock option plan
provides 210,000 shares of Common Stock regarding which options may be granted
to key employees of the Company. Moreover, the Company's Board of Directors has
approved a resolution which proposes to provide for an increase in the number of
shares of Common Stock available for options under the Company's Stock Option
Plan equal to an additional 210,000 shares for each of two additional years,
subject to approval by the Company's shareholders at the first annual meeting of
shareholders which is held after the completion of this offering. As a result,
the officers and directors of the Company, alone or together with a limited
number of other shareholders, will control the election of the Company's
Directors and will have the ability to control the affairs of the Company.
Furthermore, such persons will, by virtue of such vote, have significant
influence over, among other things, the ability to amend the Company's Restated
Certificate of Incorporation and By-Laws or effect or preclude fundamental
corporate transactions involving the Company, including the acceptance or
rejection of any proposals relating
11
<PAGE>
to a merger of the Company or an acquisition of the Company by another entity.
See "Management" and "Principal Stockholders."
Dependence on Key Personnel. The Company's success will, to a large extent,
depend upon the continued services of Jerry Braun, the Company's President and
Chief Executive Officer, and Jacob Rosenberg, the Company's Vice President and
Chief Operating Officer. Although the Company has employment agreements with
Messrs. Braun and Rosenberg expiring in 1999 and is the sole beneficiary of a
$2,000,000 life insurance policy covering Mr. Braun and a $1,000,000 life
insurance policy covering Mr. Rosenberg, the loss of the services of either
executive officer could have a materially adverse effect upon the Company. The
success of the Company will also depend, in part, upon its ability in the future
to attract and retain additional qualified licensed health care, operating,
marketing and financial personnel. Competition in the home health care industry
for such qualified personnel is often intense and there can be no assurance that
the Company will be able to retain or hire the necessary personnel. See
"Business - Government Regulation" and "Management."
Acquisition and Expansion Strategy. The Company has allocated $2,600,000 of
the net proceeds of this offering for expansion through the acquisition of
health care related businesses and opening of additional branch offices. The
Company's ability to expand its operations depends on a number of factors,
including the availability of desirable locations for additional facilities, the
availability of acquisition candidates and the ability of the Company to finance
such expansion. To date, the Company has not determined the specific location of
any additional branch offices. Although the Company continually explores
acquisition possibilities, it is not currently negotiating any acquisitions and
has no agreements, arrangements or understandings regarding acquisitions. There
can be no assurance that the Company will open any additional branch offices,
or, if opened, that the Company can profitably manage such offices or that the
Company will make any acquisitions or, if made, that such acquisitions will be
successful. The establishment of additional branch offices and any future
acquisitions by the Company may involve the use of cash, debt or equity
securities, or a combination thereof. A Company decision to utilize a
substantial portion of the net proceeds of this offering for acquisitions
reduces the resources available to complete its other expansion and growth
objectives. In such event, the Company may be required to obtain additional
financing to achieve such objectives. There can be no assurance that such
financing will be available, or, if available, will be on terms acceptable to
the Company. In addition, the Company may explore the potential for expanding
its operations into health care businesses not related to the Company's current
operations on an opportunistic basis, and if the Company's management deems it
appropriate, a portion of the net proceeds of this offering may be used for such
purposes. The Company is not experienced in operating any health care business
unrelated to its current businesses and, accordingly, no assurance can be given
that the Company could successfully operate any such unrelated health care
business. Thus, purchasers of the securities will be entrusting their funds to
the Company's management, upon whose judgment the investors must depend, with
only limited information concerning management's specific intentions. See "Use
of Proceeds" and "Business -- Expansion Strategy."
12
<PAGE>
Charge to Earnings Resulting from Sale of Accounts Receivable. By reason of
an agreement entered into by the Company on July 8, 1996 with 1667 Flatbush
Avenue LLC, a limited liability company organized under New York Law which is
owned by the Company's current shareholders, pursuant to which the Company sold
$3,500,000 of its accounts receivable for a purchase price of $3,150,000, the
Company expects to record a net charge to its earnings for the third quarter
ended September 30, 1996 in the amount of $170,000. The recognition of such a
charge will substantially reduce net income during such period and may have a
depressive effect on the market price of the Company's securities. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations - Liquidity and Capital Resources," "Principal Stockholders" and
"Certain Transactions."
Dilution. Purchasers of the Shares offered hereby will incur immediate
dilution of approximately $3.62 (or 72%) in the net tangible book value per
share of Common Stock. See "Dilution."
Arbitrary Determination of Public Offering Prices; Possible Volatility of
Common Stock and Warrant Prices. The initial public offering prices of the
Shares and Warrants and the exercise price and other terms of the Warrants were
arbitrarily determined by negotiations between the Company and the
Representative and do not necessarily bear any relationship to the Company's
asset value, book value, net worth or any other recognized criteria of value.
The trading price of the Common Stock or Warrants could also be subject to
significant fluctuations in response to variations in quarterly results of
operations, announcements of new contracts or services by the Company or its
competitors, governmental regulatory action, general trends in the industry and
other factors, including extreme price and volume fluctuations which have been
experienced by the securities markets from time to time in recent years. See
"Underwriting."
No Assurance of Public Trading Market or Continued Nasdaq Inclusion; Risk
of Low- Priced Securities. Prior to the offering, there has been no public
market for the Securities and there can be no assurance that an active public
market will develop or, if developed, be sustained. The Company anticipates that
the Securities will be eligible for listing on Nasdaq. In order to qualify for
continued listing on Nasdaq, however, a company, among other things, must have
$2,000,000 in total assets, $ 1,000,000 in capital and surplus, $200,000 in
market value of the public float, a minimum bid price of $1.00 per share and a
minimum of 300 shareholders. If the Company is unable to satisfy the maintenance
requirements for quotation on Nasdaq, of which there can be no assurance, it is
anticipated that the Securities would be quoted in the over-the-counter market
National Quotation Bureau ("NQB") "pink sheets" or on the NASD OTC Electronic
Bulletin Board. As a result, the liquidity of the Securities could be impaired,
not only in the number of securities which could be bought and sold, but also
through delays in the timing of transactions, reduction in security analyst's
and news media's coverage of the Company and lower prices for the Company's
securities than might otherwise be attained. In addition, if the Securities are
delisted from Nasdaq they might be subject to the low-priced security or
so-called "penny stock" rules that impose additional sales practice requirements
on broker-dealers who sell such securities. For any transaction involving a
penny stock the rules require, among other things, the delivery, prior to the
transaction, of a disclosure schedule required by the Securities and Exchange
Commission (the "Commission") relating to the penny stock market. The
broker-dealer also must disclose the commissions payable to both the
broker-dealer and the registered representative
13
<PAGE>
and current quotations for the securities. Finally, monthly statements must be
sent disclosing recent price information for the penny stocks held in the
customer's account.
In the event the Securities subsequently become characterized as a penny
stock, the market liquidity for the Securities could be severely affected. In
such an event, the regulations relating to penny stocks could limit the ability
of broker-dealers to sell the Securities and, thus, the ability of purchasers in
this offering to sell their Securities in the secondary market.
Current Prospectus and State Registration Required To Exercise Warrants.
The Warrants are not exercisable unless, at the time of exercise, the Company
has a current prospectus covering the shares of Common Stock issuable upon
exercise of the Warrants and such shares have been registered, qualified or
deemed to be exempt under the securities or "blue sky" laws of the state of
residence of the exercising holder of the Warrants. Although the Company has
undertaken to use its best efforts to have all of the shares of Common Stock
issuable upon exercise of the Warrants registered or qualified on or before the
exercise date and to maintain a current prospectus relating thereto until the
expiration of the Warrants, there is no assurance that it will be able to do so.
The value of the Warrants may be greatly reduced if a current prospectus
covering the Common Stock issuable upon the exercise of the Warrants is not kept
effective or if such Common Stock is not qualified or exempt from qualification
in the states in which the holders of the Warrants then reside. The Warrants
will be separately tradeable immediately upon issuance and may be purchased
separately from the Common Stock. Although the Securities will not knowingly be
sold to purchasers in jurisdictions in which the Securities are not registered
or otherwise qualified for sale, investors may purchase the Warrants in the
secondary market or may move to jurisdictions in which the shares underlying the
Warrants are not registered or qualified during the period that the Warrants are
exercisable. In such event, the Company will be unable to issue shares to those
persons desiring to exercise their Warrants unless and until the shares are
qualified for sale in jurisdictions in which such purchasers reside, or an
exemption from such qualification exists in such jurisdictions, and holders of
the Warrants would have no choice but to attempt to sell the Warrants in a
jurisdiction where such sale is permissible or allow them to expire unexercised.
See "Description of Securities -- Redeemable Warrants."
Adverse Effect of Possible Redemption of Warrants. The Warrants are subject
to redemption by the Company at a price of $0.05 per Warrant, commencing 24
months following the date of this Prospectus, on 30 days prior written notice,
if the average closing bid price for the Common Stock equals or exceeds $7.50
per share for 20 consecutive trading days ending on the tenth trading day prior
to the date of the notice of redemption. Redemption of the Warrants could force
the holders thereof to exercise the Warrants and pay the exercise price at a
time when it may be disadvantageous for such holders to do so, to sell the
Warrants at the current market price when they might otherwise wish to hold the
Warrants or to accept the redemption price, which is likely to be substantially
less than the market value of the Warrants at the time of redemption. The
holders of the Warrants will automatically forfeit their rights to purchase
shares of Common Stock issuable upon exercise of the Warrants unless the
Warrants are exercised before they are redeemed. See "Description of Securities
- -- Redeemable Warrants."
14
<PAGE>
Shares Eligible for Future Sale. The sale of substantial amounts of Common
Stock in the public market following this offering could adversely affect the
market price of the Securities. Upon the completion of this offering, all
2,265,000 of the shares of Common Stock outstanding prior to this offering will
be "restricted securities" as that term is defined in Rule 144 under the
Securities Act of 1933, as amended (the "Securities Act") and, under certain
circumstances, will be eligible for sale without registration pursuant to the
provisions of such rule. An additional 75,000 shares underlying an option will
be eligible for sale under Rule 701 of the Act. Holders of all such shares and
the option, however, have agreed that they will not sell any shares of Common
Stock for a period of 24 months from the date of this Prospectus without the
prior written consent of the Representative. See "Shares Eligible for Future
Sale" and "Underwriting."
Possible Restrictions on Market-Making Activities in the Company's
Securities. The Representative has advised the Company that it may make a market
in the Company's securities. Rule 10b-6 under the Exchange Act may prohibit the
Representative from engaging in any market-making activities with regard to the
Company's securities for the period from nine business days (or such other
applicable period as Rule 10b-6 may provide) prior to any solicitation by the
Representative of the exercise of Warrants until the later of the termination of
such solicitation activity or the termination (by waiver or otherwise) of any
right that the Representative may have to receive a fee for the exercise of
Warrants following such solicitation. As a result, the Representative may be
unable to provide a market for the Company's securities during certain periods
while the Warrants are exercisable. Any temporary cessation of such
market-making activities could have an adverse effect on the market price of the
Securities. See "Underwriting."
Possible Adverse Effects of Authorization of Preferred Stock; Anti-Takeover
Effects. The Company's Certificate of Incorporation authorizes the issuance of a
maximum of 2,000,000 shares of preferred stock, $.01 par value ("Preferred
Stock"), on terms which may be fixed by the Company's Board of Directors without
further stockholder action. The terms of any series of Preferred Stock, which
may include priority claims to assets and dividends, and special voting rights,
could adversely affect the rights of holders of the Common Stock. The issuance
of Preferred Stock could make the possible takeover of the Company or the
removal of management of the Company more difficult, discourage hostile bids for
control of the Company in which stockholders may receive premiums for their
shares of Common Stock, or otherwise dilute the rights of holders of Common
Stock and the market price of the Common Stock. See "Description of Securities -
Preferred Stock."
Representative's Warrants and Registration Rights. The Company has agreed
to sell to the Representative for an aggregate purchase price of $210.00,
Representative's Warrants to purchase an aggregate of 105,000 shares of Common
Stock and/or 105,000 Warrants at an exercise price equal to 120% of the initial
public offering price. The shares of Common Stock and the Warrants issuable upon
exercise of the Representative's Warrants are identical to those offered hereby.
The Representative's Warrants are exercisable for a period of four years
commencing one year from the date hereof. The exercise of the Representative's
Warrants will dilute the value of the shares of Common Stock and may adversely
affect the Company's ability to obtain equity capital. Moreover, if the Common
Stock issuable upon the exercise of the Representative's Warrants is sold in the
public
15
<PAGE>
market, it may adversely affect the market price of the Common Stock. The
holders of the Representative's Warrants have been granted certain "piggyback"
registration rights for a period of seven years from the date of this Prospectus
and demand registration rights for a period of five years from the date of this
Prospectus, with respect to the registration under the Securities Act of the
securities issuable upon exercise of the Representative's Warrants. The exercise
of such rights could result in substantial expense to the Company. See
"Underwriting."
Absence of Dividends. The Company does not anticipate paying any cash
dividends on the Common Stock in the foreseeable future. See "Dividend Policy."
USE OF PROCEEDS
The net proceeds from the sale of the Securities offered hereby are
estimated to be approximately $_________ ($_________ if the over-allotment
option is exercised in full) after deducting the Underwriters' discount and
non-accountable expense allowance and other estimated expenses of the offering.
The Company intends to use the net proceeds as follows:
<TABLE>
<CAPTION>
Approximate Approximate
Amount of Percentage of
Net Proceeds Net Proceeds
------------ ------------
<S> <C> <C> <C>
Acquisition of businesses(1) $2,100,000 48.1%
Establishment of new branch offices 500,000 11.5%
Funding of Infusion Therapy
and Pediatric Divisions 500,000 11.5%
Sales and marketing 300,000 6.9%
Establishment of new principal
office, upgrade of facilities and computer systems 300,000 6.9%
Working capital %
---------- ----
TOTAL $ 100%
========== ====
</TABLE>
- ----------
(1) The Company may, when and if the opportunity arises, acquire other
businesses which are related to the Company's business with a portion of
the net proceeds. The Company has no specific arrangements with respect to
any such acquisition at the present time and is not presently involved in
any negotiations with respect to any such acquisition. There can be no
assurance that any such acquisition will be made.
The Company anticipates that the net proceeds of this offering, together
with the funds anticipated to be generated from its operations, will be
sufficient to fund the Company's contemplated cash requirements for at least 12
months following the consummation of the offering. While the initial allocation
of the net proceeds of this offering, as set forth above, represents the
Company's best estimates of their use, the amounts actually expended for each
purpose may vary significantly from
16
<PAGE>
the specific allocation of the net proceeds set forth above, depending on
numerous factors, including changes in the economic, regulatory and competitive
climates for the Company's business operations. The Company, therefore, reserves
the right to reallocate the net proceeds of this offering among the various
categories set forth above as it, in its sole discretion, deems necessary or
advisable. Depending upon the timing of the proposed expenditures for the
purposes described in the table set forth above, the Company may use a
substantial portion of the proceeds to reduce or repay in full its current bank
credit lines. In such event, borrowings under the bank credit lines would then
be used to finance the expenditures described in the table set forth above.
Pending use of the proceeds for the purposes described above, the Company
intends to invest the net proceeds in short-term, investment grade,
interest-bearing obligations. Any proceeds received upon exercise of the
Underwriters' over-allotment option, the Warrants or the Representative's
Warrants, as well as income from investments, will be added to working capital.
DILUTION
The Company had a pro forma net tangible book value of $224,132, or
approximately $.10 per share of Common Stock as of March 31, 1996. Net tangible
book value per share is equal to the net tangible assets of the Company (total
assets less total liabilities and intangible assets), divided by the number of
shares outstanding. After giving effect to the issuance of the 1,050,000 shares
of Common Stock and the 1,050,000 Warrants offered hereby (after deduction of
estimated offering expenses and the underwriting discounts and commissions
estimated at $996,150), the pro forma net tangible book value of the Company at
March 31, 1996 would have been $4,582,982 or approximately $1.30 per share of
Common Stock representing an immediate dilution to new investors of $3.62 per
share as illustrated by the following table:
<TABLE>
<S> <C>
Assumed initial public offering price per share of Common Stock ...................... $5.00
Pro forma net tangible book value per share of
Common Stock before offering ......................................................... $ .10
Increase per share of Common Stock
attributable to public investors ..................................................... $1.28
Pro forma net tangible book value per share of Common Stock after offering ........... $1.38
Dilution per share of Common Stock to new investors .................................. $3.62
</TABLE>
If the Underwriters' over-allotment option is exercised in full, the pro
forma net tangible book value per share of Common Stock after this offering
would be $5,281,809 which would result in dilution to new investors in this
offering of $3.48 per share.
17
<PAGE>
The following table sets forth the number of shares of Common Stock owned
by the current stockholders of the Company, the number of shares to be purchased
from the Company by the purchasers of the shares of Common Stock offered hereby
and the respective aggregate cash consideration paid or to be paid to the
Company and the average price per share:
<TABLE>
<CAPTION>
Shares Purchased Total Consideration
---------------- -------------------
Average Price
Number Percent Amount Percent Per Share
------ ------- ------ ------- ---------
<S> <C> <C> <C> <C> <C>
Present
Stockholders(1) 2,265,000 68% $ 30,000 % $ .013
New Investors 1,050,000 32% $ % $5.00
--------- ---- ------------ -------
TOTAL 3,315,000 100.0% $ 100.0%
</TABLE>
- ----------
(1) Excludes 75,000 shares of Common Stock issuable upon exercise of an
outstanding option, exercisable at $3.75 per share, held by the Company's
President. See "Capitalization," "Management - Savings and Stock Option
Plans, "Principal Stockholders" and "Certain Transactions."
18
<PAGE>
DIVIDEND POLICY
The Company has operated as an S Corporation prior to this offering and has
paid out a substantial portion of its earnings to its current shareholders. See
"Former S Corporation Tax Treatment." The Board of Directors currently intends
to retain and reinvest any future earnings into the development and expansion of
the business and therefore does not intend to pay cash dividends. Any future
payment of dividends will be subject to the discretion of the Board of Directors
and will depend upon, among other things, future earnings, if any, the operating
and financial condition of the Company, its capital requirements and general
business conditions.
FORMER S CORPORATION TAX TREATMENT
The Company has been treated for federal income tax purposes as an S
Corporation under Subchapter S of the Internal Revenue Code of 1986, as amended,
and under Section 660 of the New York State Tax Law. As a result, earnings of
the Company were declared, for federal and New York State income tax purposes,
by the current shareholders of the Company. In past years, the Company
distributed a substantial portion of its earnings to its current shareholders.
These distributions aggregated $100,230 and $840,032 for the years ended
December 31, 1994 and 1995, respectively. Prior to the consummation of this
offering, additional distributions of previously earned and undistributed S
Corporation earnings in the aggregate amount of $2,200,000 will be made to the
current shareholders. The Company is funding the distribution to current
shareholders utilizing $2,200,000 out of its $3,500,000 aggregate lines of
credit, which bear interest at a rate equal to the prime rate published in the
Wall Street Journal, plus .75%, payable monthly, and which are for a one-year
term renewable in April, 1997. The Company will no longer be treated as an S
Corporation prior to the completion of this offering and, accordingly, the
Company will be subject to federal and New York State income taxes. See
"Capitalization," "Certain Transactions" and Notes 1, 2 and 4 to the Financial
Statements.
CAPITALIZATION
The following table sets forth the capitalization of the Company (i) at
March 31, 1996 and (ii) as adjusted to give effect to the sale by the Company of
the Securities offered hereby at an assumed initial public offering price of
$5.00 per share of Common Stock and $.10 per Warrant, respectively, and the
initial application of the net proceeds therefrom. The information below should
be read in conjunction with the Financial Statements and the notes thereto
included elsewhere in this Prospectus, which should be read in their entirety.
19
<PAGE>
<TABLE>
<CAPTION>
March 31, 1996
---------------------------
Actual Pro forma (2) Pro forma As Adjusted
---------- ------------- ---------------------
<S> <C> <C> <C>
Short-term debt
Note Payable --
Bank ........................................ $ 900,000(1) $3,100,000 $3,100,000
Long-term debt - current portion ............ 6,355 6,355 6,355
---------- ---------- ----------
Total short-term debt ..................... 906,355 3,106,355 3,106,355
========== ========== ==========
Long-term debt
Collateralized capital leases ................. 5,137 5,137 5,137
Stockholders' equity (deficit):
Preferred Stock, $.01 par value,
authorized 2,000,000 shares,
no shares issued and outstanding ............ -- -- --
Common stock, $.01 par value,
authorized 10,000,000 shares;
2,265,000 shares issued and outstanding,
actual; 3,315,000 shares issued and
outstanding as adjusted(3) .................. 22,650 22,650 35,650
Additional paid-in capital .................... 7,350 7,350 4,355,700
Retained earnings ............................. 2,471,406 271,406 271,406
---------- ---------- ----------
Total stockholders' equity .................. 2,501,406 301,406 4,660,256
---------- ---------- ----------
Total capitalization ........................ $3,412,898 $3,412,898 $7,771,748
========== ========== ==========
</TABLE>
- ----------
(1) Excludes $2,200,000 in bank debt incurred subsequent to March 31, 1996 to
fund payment of S Corporation dividends to current stockholders. See
"Dividend Policy," "Former S Corporation Tax Treatment," "Management's
Discussion and Analysis of Financial Condition and Results of Operations -
Liquidity and Capital Resources," "Principal Stockholders," "Certain
Transactions" and Financial Statements.
(2) Pro forma weighted average number of common share equivalents outstanding
includes 459,725 shares whose proceeds would be necessary to pay the S
Corporation distribution and 18,750 shares relating to the stock option
grant. See "Former S Corporation Tax Treatment," "Capitalization,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources," "Principal Stockholders,"
"Certain Transactions" and Financial Statements.
(3) Does not include (i) 1,050,000 shares reserved for issuance upon exercise
of the Warrants; (ii) an aggregate of 210,000 shares reserved for issuance
upon exercise of the Representative's Warrants and the Warrants included
therein; and (iii) 75,000 shares reserved for issuance upon exercise of an
option granted prior to the date of this Prospectus and shares reserved for
issuance upon exercise of options available for future grant under the
Company's Stock Option Plan. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Liquidity and Capital
Resources," "Management - Stock Option Plan," "Principal Stockholders,"
"Description of Securities," "Certain Transactions" and "Underwriting."
20
<PAGE>
SELECTED FINANCIAL DATA
The following table presents selected financial data of the Company for
each of the two years ended December 31, 1994 and 1995 and for the three months
ended March 31, 1995 and 1996. Except for pro forma data, the data as of
December 31, 1994 and 1995 and for each of the two years in the period ended
December 31, 1995 have been derived from the financial statements of the Company
appearing elsewhere in this Prospectus which have been audited by M.R. Weiser &
Co. LLP The data for the three month periods ended March 31, 1995 and 1996 was
derived from unaudited financial statements included herein, which in the
opinion of management of the Company contain all adjustments (consisting only of
normal recurring adjustments) necessary for a fair presentation thereof. The
results of operations for the three months ended March 31, 1996 are not
necessarily indicative of results to be expected for the entire year. The
selected financial data set forth below should be read in conjunction with the
Financial Statements of the Company and related notes thereto and "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
appearing elsewhere in this Prospectus.
<TABLE>
<CAPTION>
Years Ended December 31, Three Months Ended March 31,
---------------------------- -----------------------------
1994 1995 1995 1996
-------- -------- -------- --------
(In thousands, except per share data)
<S> <C> <C> <C> <C>
Statement of Income Data:
Net patient service revenue $ 8,981 $ 11,810 $ 2,621 $ 2,987
-------- -------- -------- --------
Professional care of patients 6,301 8,128 1,782 2,062
General and administrative
expenses 1,793 2,391 580 691
-------- -------- -------- --------
Income from operations 887 1,291 259 234
Interest expense, net (85) (82) (27) (28)
Other income 6 4
Provision for income taxes(1) (37) (81) (9) 38
-------- -------- -------- --------
Net income $ 771 $ 1,128 $ 223 $ 248
======== ======== ======== ========
Pro Forma Data:(2)(3)
Income before provision
for income taxes $ 808 $ 1,209 $ 232 $ 210
Pro forma provision for
income taxes 353 520 101 91
-------- -------- -------- --------
Pro forma net income $ 455 $ 689 $ 131 $ 119
======== ======== ======== ========
Pro forma net income per common
share and common share
equivalents outstanding(1)(3) $ .25 $ .04
======== --------
Pro forma weighted average number of
common shares and common
share equivalents outstanding(2) 2,743 2,743
======== ========
</TABLE>
<TABLE>
<CAPTION>
At December 31, 1995 At March 31, 1996 Pro forma at March 31, 1996
-------------------- ----------------- ---------------------------
(In thousands)
<S> <C> <C> <C>
Balance Sheet Data:
Working capital (deficit) $2,775 $2,186 $ (14)
Total assets 4,840 4,001 4,001
Total liabilities 1,799 1,500 3,700
Retained earnings 3,011 2,471 271
Stockholders' equity 3,041 2,501 301
</TABLE>
- ----------
(1) The Company has been an S Corporation under Subchapter S of the Internal
Revenue Code of 1986, as amended (the "Internal Revenue code") for U.S.
federal and New York State income tax purposes since its inception. As an S
Corporation, the Company was not subject to federal income tax, but
remained subject to a reduced New York State income tax. The Company will
terminate its S Corporation status prior to the completion of this
offering. See "The Company." Pro forma amounts give effect to additional
income taxes that would have been reported assuming that the Company was a
C Corporation for years ended December 31, 1994 and 1995 and the three
months ended March 31, 1995 and 1996. See "Former S Corporation Tax
Treatment" and "Management's Discussion and Analysis of Financial Condition
and Results of Operations."
(2) Pro forma weighted average number of common share equivalents outstanding
includes 459,725 shares whose proceeds would be necessary to pay the S
Corporation distribution and 18,750 shares relating to the stock option
grant. See "Former S Corporation Tax Treatment," "Capitalization,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources," "Principal Shareholders,"
"Certain Transactions" and Financial Statements.
(3) Pro forma summary information includes $2,200,000 of bank debt incurred by
the Company after December 31, 1995 to fund the payment of undistributed S
Corporation earnings to current shareholders prior to this offering. See
"Former S Corporation Tax Treatment," "Capitalization," "Management's
Discussion and Analysis of Financial Condition and Results of Operations -
Liquidity," "Principal Shareholders" and "Certain Transactions."
21
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Three Months Ended March 31, 1996 Compared with the Three Months Ended
March 31, 1995
Revenues for the quarter ended March 31, 1996 (the "first quarter of 1996")
increased 14% to approximately $2,987,000 from approximately $2,621,000 for the
quarter ended March 31, 1995 (the "first quarter of 1995"). The increase
resulted primarily from new business.
Cost of professional care of patients for the first quarter of 1996
increased 15.7% to approximately $2,062,000 from approximately $1,782,000 for
the first quarter of 1995. The increase resulted primarily from the hiring of
additional home health care personnel to service the increased new business.
Selling, general and administrative expenses for the first quarter of 1996
increased 19.1% to approximately $691,000 from approximately $580,000 for the
first quarter of 1995. The increase resulted primarily from an increase in the
reserve for doubtful accounts and from the hiring of additional office staff to
support the growth in the Company's business.
Interest expense for the first quarter of 1996 increased 14.8% to
approximately $31,000 as compared to approximately $27,000 for the first quarter
of 1995, primarily as a result of an increase in borrowings to finance an
increase in accounts receivable that occurred during the month of December 1995.
The provision for New York State and New York City income taxes for the
first quarter of 1996 decreased to a credit of $(38,000) from $9,000 for the
first quarter of 1995, because a $50,000 credit for deferred New York State and
New York City taxes was recorded in the first quarter of 1996 as a result of
timing differences due to the cash basis of accounting for income tax purposes.
In view of the foregoing, net income for the first quarter of 1996
increased 11.2% to approximately $248,000, as compared to approximately $223,000
for the first quarter of 1995.
Year Ended December 31, 1995 compared with the Year Ended December 31,
1994.
Revenues for the year ended December 31, 1995 ("1995") increased 31.5% to
approximately $11,810,000 from approximately $8,981,000 for the year ended
December 31, 1994 ("1994"). The
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increase resulted primarily from an increase in services provided to existing
clients and increased new business.
Cost of professional care of patients for 1995 increased 29% to
approximately $8,127,000 from approximately $6,301,000 for 1994. The increase
resulted primarily from the hiring of additional home health care personnel to
service the increased new business and increase in services rendered to existing
clients.
Selling, general and administrative expenses for 1995 increased 33.4% to
approximately $2,391,000 from approximately $1,793,000 for 1994. The increase
resulted primarily from the hiring of additional office support staff to support
the growth in the Company's business.
Interest expense for 1995 decreased 3.7% to approximately $82,000, as
compared to approximately $85,000 for 1994, primarily as a result of a reduction
in borrowings resulting from the Company's increased cash flow.
In view of the foregoing, net income for 1995 increased 46.3% to
approximately $1,128,000, as compared to approximately $771,000 for 1994.
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Liquidity and Capital Resources
The Company has required cash to fund the growth of its operations,
particularly to finance expansion of accounts receivable and the opening of new
branch offices. Historically, the Company's internally generated funds have been
insufficient to meet all of its cash needs. To satisfy these requirements, the
Company has supplemented its internally generated funds with borrowings under
bank lines of credit. The Company presently has a credit facility with UMB Bank
and Trust Company in the amount of $3,500,000, which is secured by substantially
all of the Company's assets. Repayment of outstanding amounts under such
facility is guaranteed by all of the Company's directors and current
stockholders. This credit facility provides for interest at the prime rate
published in the Wall Street Journal, plus .75%, payable monthly, and is
renewable in July 1997. At March 31, 1996, the Company had outstanding
borrowings of $900,000. Subsequent to March 31, 1996, a total of $2,200,000 of
the $3,500,000 credit facility will be used by the Company to fund a
distribution to its current stockholders of previously undistributed S
Corporation earnings. See "Former S Corporation Tax Treatment" and "Certain
Transactions."
For the first quarter of 1996, net cash provided by operations was
approximately $1,265,000, as compared to approximately $627,000 for the first
quarter of 1995. This increase in net cash from operations was primarily a
result of a decrease in accounts receivable and unbilled receivables of
approximately $841,000 and a decrease in loans to stockholders of $145,000
during the first quarter of 1996. Net cash used in financing activities for the
first quarter of 1996 totalled approximately $1,115,000, primarily as a result
of the payment of S Corporation distributions to the Company's stockholders
which aggregated approximately $788,000 and repayments under its line of credit
totalling $325,000 during the period. See "Former S Corporation Tax Treatment"
and "Certain Transactions."
As of March 31, 1996, approximately $3,270,000 (approximately 81.7%) of the
Company's total assets consisted of accounts receivable derived from payments
made to contractors by third-party payors. Such payors generally require
substantial documentation in order to process claims.
On July 8, 1996, the Company entered into an agreement with 1667 Flatbush
L.L.C. ("1667 Flatbush"), a limited liability company organized under the laws
of the State of New York which is owned by the Company's officers and directors,
pursuant to which 1667 Flatbush purchased $3,500,000 of the Company's accounts
receivable for a purchase price of $3,150,000, payable at the rate of $1,100,000
on August 1, 1996, $1,100,000 on September 1, 1996 and $950,000 on the earlier
of October 1, 1996 or the date of this Prospectus. Each payment is to be made
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together with accrued interest, in arrears. The payments due to the Company are
reflected in a promissory note bearing interest at the rate of 12% per annum,
are secured by a lien on the accounts receivable purchased from the Company by
1667 Flatbush and are personally guaranteed by each of the members of 1667
Flatbush. The promissory note permits prepayments of principal without penalty,
such prepayment to be credited against the next due payment obligation. As a
result of the Company's sale of accounts receivable for less than their face
value, the Company expects to recognize a net charge to its earnings during the
third quarter ended September 30, 1996 in the amount of $170,000. See "Principal
Stockholders" and "Certain Transactions."
Days Sales Outstanding ("DSO") is a measure of the average number of days
taken by the Company to collect its accounts receivable, calculated from the
date services are performed. For the years ended December 31, 1994 and December
31, 1995, the Company's DSO's were 152 days and 130 days, respectively, a
reduction of approximately 14.5%, primarily as a result of additional
concentration on collection of accounts receivable. For the first quarter of
1995 and 1996, the Company's DSO's were 119 days and 101 days, respectively, a
reduction of approximately 15.1%.
The Company has allocated a portion of the net proceeds of this offering to
upgrade its computer systems, one of the results of which is expected to be the
expediting of its internal billing procedures which can be expected to have the
effect of generally decreasing the Company's DSO's. See "Use of Proceeds."
However, there can be no assurance that any expected decrease in DSO's due to
computer upgrades will not be offset by an increase in DSO's resulting from the
efforts of third-party payors to increase their audit and review facilities and
reduce costs.
The Company's liquidity and long-term capital requirements depend upon a
number of factors, including the rate at which new offices and facilities are
established and acquisitions, if any, are made. The Company believes that the
development and start-up costs for a new branch office aggregate approximately
$100,000, including leasehold improvements, lease deposits, office equipment,
marketing, recruiting, labor and operating costs during the pre-opening and
start-up phase, and also the provision of working capital to fund accounts
receivable. Such costs will vary depending upon the size and location of each
facility and, accordingly, may vary substantially from these estimates.
Although the Company does not have any pending material commitments
regarding capital expenditures, it anticipates making additional capital
expenditures in connection with the acquisition of home health care companies,
development of a new principal office and improved branch facilities, and the
improvement of its management systems. See "Use of Proceeds." Further expansion
of the Company's business (particularly through acquisitions) may require the
Company to incur additional debt or offer additional equity if internally
generated funds, cash on hand and amounts available under its bank credit
facilities are inadequate to meet such needs. There can be no assurance that
such additional debt or equity will be available to the Company or, if
available, will be on terms acceptable to the Company.
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Inflation
Inflation has not had a significant impact on the Company's operations to
date.
Recent Pronouncements of the Financial Accounting Standards Board
Recent pronouncements of the Financial Accounting Standards Board ("FASB"),
which include Statement of Financial Accounting Standards ("SFAS") No. 121,
"Accounting for Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed Of" and SFAS No. 123, "Accounting for Stock-Based Compensation," are
effective for fiscal years beginning after December 15, 1995. The adoption of
SFAS 121 and SFAS 123 does not have a material impact on the Company's financial
statements.
BUSINESS
General
The Company is a licensed home health care agency engaged primarily in
supplying the services of paraprofessionals who provide a broad range of health
care services to patients' in their homes. The Company operates in all five
boroughs of New York City and the counties of Nassau, Westchester, Rockland,
Orange, Duchess, Ulster, Putnam and Sullivan, in the State of New York. The
Company's services are supplied principally pursuant to contracts with health
care institutions and agencies such as the Mt. Sinai Medical Center in
Manhattan, New York Methodist Hospital in Brooklyn, Beth Abraham Health Services
in the Bronx and Westchester County and the New York State Department of Social
Services.
When the Company was initially organized, in February 1983, it engaged
principally in the business of providing nursing staff in nursing homes.
In 1988, the Company purchased the equipment, fixtures, client lists and
paraprofessional aide lists of National Medical Home Care, Inc. located in
Brooklyn, Queens Village, Rockville Centre and Mount Vernon, New York.
Thereafter, the Company maintained offices in Brooklyn, Hempstead and Mount
Vernon, New York and shifted the focus of its business to the provision of home
health care support services.
In 1992, the Company opened a fourth office, in Spring Valley, New York
and, in 1993, opened its fifth office, in Newburgh, New York. Each of the
Company's five offices are responsible for the sales and health care operations
within their respective territories and maintain their own recruitment,
scheduling, training and quality assurance programs. The Brooklyn office also
serves as the Company's central administrative and financial operations
location.
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<PAGE>
In 1993, the Company opened its maternal/child services division, "Special
Deliveries", providing both pre- and post-delivery care for pregnant women and
their newborn children, which operates out of the Hempstead office.
The Company currently offers a broad range of support services, including
assistance with personal hygiene, dressing and feeding; meal preparation, light
housekeeping and shopping; and, to a limited extent, standard skilled nursing
services such as the changing of dressings, injections, catheterizations and
administration of medications; and physical therapy. The Company's personnel
also train patients in their own care, monitor patient compliance with treatment
plans, make reports to the physicians and process reimbursement claims to
third-party payors. Among the paraprofessionals and nurses supplied by the
Company are those fluent in Spanish, Yiddish and Russian as well as personnel
knowledgeable in the requirements and practices of Kosher homes.
Industry Background
The home health care industry has grown substantially over the past decade
according to published industry information. The New York State Association of
Home Care Providers estimates (from annual reports submitted by agencies) that
Medicaid and Medicare spending on home health care has grown from approximately
$2.9 billion in 1985 to in excess of approximately $19.4 billion in 1994. The
Company believes that the primary reasons for the growth in the home health care
market include the aging of the U.S. population; the realization of substantial
cost savings through treatment at home as an alternative to hospitalization;
advances in medical technology which have enabled a growing number of treatments
to be provided in the home rather than requiring hospitalization; the general
preference of patients to receive treatment in a familiar environment;
reductions in the length of hospital stays as a result of increasing cost
containment efforts in the health care industry; growing acceptance within the
medical profession of home health care and the rapid increase in the incidence
of AIDS-related diseases and cancer.
Aging Population. The number of individuals over age 65 in the United
States is estimated to have grown from 25.7 million in 1980, or 11.3% of the
population, to approximately 34.1 million in 1996, or 12.9% of the population,
and is projected to increase to more than 35 million, or 12.8% of the
population, by the year 2000. The elderly have traditionally accounted for two
to three times the average per capita share of health care expenditures. As the
number of Americans over age 65 increases, the need for home health care
services is also expected to increase.
Cost Effectiveness of Home Health Care Services. National health care
expenditures increased from approximately $697 billion in 1990 (12.6% of the
United States gross national product) to approximately $1,008 billion in 1995
(14.2% of the United States gross national product), and is projected to
increase to more than $1,481 billion (15.9% of the United States gross national
product) by the year 2000. In response to rapidly rising costs, governmental and
private payors have adopted cost containment measures that encourage reduced
hospital admissions, reduced lengths of stay in hospitals and delayed nursing
home admissions. Changes in hospital reimbursement methods under Medicare from a
cost-based method to a fixed reimbursement method based on the patient's
diagnosis
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have created an incentive for earlier discharge of patients from hospitals.
These measures have in turn fostered an increase in home health care which, when
appropriate, provides medically necessary care at significantly less expense
than similar care provided in an institutional setting.
Advances in Technology. Advances in technology in the past decade now
enable patients who previously required hospitalization to be treated at home.
For example, the development of a compact and portable phototherapy blanket
performing the same functions as bilirubin lighting systems in hospitals for the
treatment of newborn children with jaundice, a common condition, permits these
infants to be treated at home. Prior to the development of this device, these
infants were kept in the neonatal unit of a hospital even after the mother was
discharged. This practice delayed mother-infant bonding, made breast-feeding
difficult and otherwise caused substantial inconvenience and concern to families
at a time when the mother was in a weakened state. Similar advances have been
made in home infusion therapy (which is presently provided by the Company only
on a limited basis) and rehabilitation equipment permitting treatments at home
which used to require hospital settings.
Patient Preference and Physician Acceptance. The Company believes that, if
possible in any given case, a patient will prefer to be treated at home rather
than in an institutional setting. Further, in the last decade, the medical
profession has shown greater acceptance of home health care in the clinical
management of patients. As evidence of this greater acceptance, the American
Medical Association Councils on Scientific Affairs and Medical Education has
recommended that training in the principles and practice of home health care be
incorporated into the undergraduate, graduate and continuing education of
physicians.
Incidences of AIDS and Cancer. Increases in the incidence of AIDS/HIV
infections and cancer have also been responsible for a significant portion of
the growth in the home care market. As of December 1995, more than 513,486 cases
of AIDS had been reported to the Center for Disease Control (not including those
with less advanced HIV who could still benefit from treatment). During their
treatment, AIDS/HIV patients may receive several courses of infusion and other
therapies typically administered by infusion therapy companies, including AZT,
aerosolized Pentamidine(TM), antibiotics and nutritional support. The Company
presently provides a limited amount of infusion therapy with pharmaceuticals
provided by licensed suppliers. The Company plans to expand its infusion therapy
operations during the next year. See "- Home Health Care Services."
The American Cancer Society estimates that 83 million (or 33%) of Americans
now living will eventually be diagnosed with cancer. Approximately one million
new cases are reported annually. At the same time, improvements in cancer
diagnosis and treatment have caused mortality rates to increase more slowly than
the increase in incidence rates. Cancer treatment is one of the fastest growing
segments of outpatient infusion therapy due to increasing numbers of patients
and new technologies that allow for the therapy's safe and effective
administration in the home and at alternate site locations. Over the course of
their treatment, cancer patients may require a range of infusion therapies,
including chemotherapy, pain management and nutritional support.
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Home Health Care Services
The Company's home health care services are provided principally by its
paraprofessional staff, who provide personal care to patients and, to a lesser
extent, by its skilled nursing staff, who provide various therapies employing
medical supplies and equipment and, to a lesser extent, infusion therapy.
Personal care and nursing services for a particular patient can extend from a
few visits to years of service and can involve intermittent or continuous care.
Approximately 95% of the Company's total net revenues in 1995 were attributable
to services by its paraprofessional staff.
Certified Paraprofessionals
The Company's certified paraprofessional staff provide a combination of
unskilled nursing and personal care services to patients, as well as assistance
with daily living tasks such as hygiene and feeding. Consistent with applicable
regulations, all of the Company's aides are certified and work under the
supervision of a licensed professional nurse. Certain aides have been specially
trained by the Company to work with patients with particular needs, such as new
mothers and their newborn infants, patients with particular diseases such as
cancer, AIDS or Alzheimer's Disease, and particular classes of patients such as
the developmentally disabled and terminal.
The Company is approved by the New York State Department of Health to train
"Home Health Aides" and by the New York Department of Social Services to train
"Personal Care Aides." Medicaid provides reimbursement for services performed by
both Home Health Aides and Personal Care Aides, while Medicare provides
reimbursement only for the services provided by Home Health Aides. In order to
provide a qualified and reliable staff, the Company continuously recruits,
trains, provides continuing education for, and offers benefits and other
programs to encourage retention of its staff. Recruiting is conducted primarily
through advertising, direct contact with community groups and employment
programs, and the use of benefits programs designed to encourage new employee
referrals by existing employees.
All paraprofessional personnel must pass a written exam and a skills
competency test prior to employment, with all certificates having been validated
by the issuing agency. The Director of Nursing or Director of Maternal/Child
Health in each of the Company's branch offices validates the professional
competency of all new hires. Newly hired employees are re-evaluated as to
competency within six months of their employment and all employees are
re-evaluated on an on-going basis at least semi-annually. In addition, they
undergo an orientation program which includes material regarding HIV patients,
Hepatitis B, essential precautions which must be taken with all patients,
patient's rights issues, and the Company's policies and procedures. An
orientation manual is also provided to each employee.
High quality service is emphasized throughout the various divisions of the
Company, both in hiring, Company training and testing of its personnel, and in
the manner in which services are delivered. Training and quality assurance
programs are regularly reviewed and directed by
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management and corporate support staff consisting of experienced health care
professionals. The Company received "Accreditation with Commendation" from the
Joint Commission on Accreditation of Health Care Organizations ("JCAHO") after
its initial and only review, in 1994, and, in February 1996, was selected by the
University of Colorado Health Sciences Center as one of only 22 home health care
agencies participating in a two to three year study known as the Outcome-Based
Quality Improvement in Home Care New York State Demonstration Project funded by
the New York State Department of Health, by reason of the Company's commitment
to both quality assurance and improvement. The Company believes that its
reputation for quality patient care has been and will continue to be a
significant factor in its success.
Competition for qualified staff has been intense in recent years. The
Company competes to attract and retain personnel on the basis of compensation
and working conditions. Among the benefits which the Company provides to its
staff are competitive salaries, a 401(k) Plan and unlimited Company-paid visits
to a walk-in clinic. The Company has generally not experienced difficulties in
the past in attracting and retaining personnel. It believes it will be able to
compete effectively in this area and satisfy its overall staffing requirements.
However, there can be no assurance that shortages of health care professionals
in the future will not occur and such shortages could materially effect the
Company's ability to maintain or increase its current obligations.
Licensed Professional Nurses
The Company employs licensed professional nurses (both registered nurses
and licensed practical nurses) who provide special and general professional
nursing services (these nurses are employed on a per diem basis). The Company
also employs registered nurses who are responsible for training and supervising
the Company's paraprofessional staff, as well as providing backup in the field
for the nursing staff which is providing care (these nurses are employed on a
salaried basis). General nursing care is provided by registered and licensed
practical nurses and includes periodic assessments of the appropriateness of
home care, the performance of therapy procedures, and patient and family
instruction. Patients receiving such care include stabilized post-operative
patients recovering at home, patients who, although acutely ill, do not need to
be cared for in an acute care facility and patients who are chronically or
terminally ill.
Specialty nurses are registered nurses with experience or certification in
particular specialties, such as emergency service, intensive care, oncology,
intravenous therapy or infant and pediatric nursing. The Company employs
specialty nurses to provide a variety of therapies and special care regimes to
patients in their homes. These specialty nurses also instruct patients and their
families in the self administration of certain therapies and in infection
control, emergency procedures and the proper handling and usage of medications,
medical supplies and equipment.
In August 1993, the Company established a maternal/child care division,
called "Special Deliveries," which provides comprehensive nursing services for
women during pregnancy, and for them and their newborn children after
childbirth. The Company provides its skilled nursing staff with special
additional training in this division, which offers a wide range of quality
health services to
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patients at home through the provision of Registered Nurses, including those
with at least two years of experience in maternal child care, Neonatal Intensive
Care Unit ("NICU") Nurses, Maternal/Newborn Registered Nurses, Certified
Childbirth Educators and Certified Lactation Consultants. Referral services are
also available for support programs providing social workers, bereavement
counselors and nutritionists. Each patient's individual treatment plan and
insurance coverage is reviewed prior to commencement of services being rendered,
except for childbirth education, which is privately contracted.
The Company's licensed professional nurses also provide a very limited
amount of in-home administration to patients of nutrients, antibiotics and other
medications intravenously (into a vein), subcutaneously (under the skin) or
through feeding tubes, utilizing supplies provided by licensed suppliers. Such
intravenous therapy is used for antibiotic treatment, parenteral nutrition (the
administration of nutrients), enteral nutrition (the administration of nutrients
directly into the digestive tract), growth hormone therapy, pain management, and
chemotherapy. The duration, progression and complexity of infusion therapy is
governed by the patient's disease and condition and can range anywhere from a
few weeks to many years.
All nurses hired by the Company must have at least one year of current,
verifiable experience, including references and license verification.
Maternal/Child care nurses must have at least two years of experience.
While the provision of licensed professional nursing services accounted for
less than 5% of the Company's net revenues in 1995, the Company intends to
expand its maternal/child care and infusion therapy operations in its existing
markets as well as new geographic locations. See "Use of Proceeds" and " -
Company Strategy."
Company Strategy
The Company's objective is to become a comprehensive provider of efficient
and high quality home health care to an increased share of expanding markets.
The primary elements of the Company's strategy to achieve this objective are
geographic expansion of its branch office network by investment in additional
branch offices and by the acquisition of other home health care companies, and
by expansion of the services provided by its licensed professional nurses,
principally in the areas of infusion therapy, pediatrics and maternal/child
care. The Company intends to initially concentrate its expansion efforts in its
current market areas and the counties surrounding those market areas. In
addition to expansion into geographic areas in proximity to the Company's
current branch offices, the Company will generally seek to enter and expand into
new metropolitan areas in the Northeast and Southeast regions of the United
States which have large patient populations and, in particular, patients
traveling between these regions.
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Acquisitions
A major element of the Company's strategy is to acquire home health care
companies in order to diversify into additional geographic markets and to
increase market share in the Company's current markets, in order to add patients
and referral sources to existing branch offices without adding substantial
overhead cost. The Company will also seek to expand into other metropolitan
areas through acquisition, if it can identify appropriate opportunities which
make an acquisition more cost-effective than a direct investment for facilities
and personnel in areas outside of its current branch office network. However,
the Company has not yet identified any particular potential acquisition and
there can be no assurance that any such acquisition which may be consistent with
the Company's strategy will be available or, if available, that it will be at a
price which the Company deems to be favorable.
Branch Offices
The home health care industry is, fundamentally, a local one in which both
the patients and the referral sources (such as hospitals, home health agencies,
social service agencies and physicians) are located in the local geographic area
in which the services are provided. The Company seeks to serve local market
needs through its branch office network, run by branch managers who are
responsible for all aspects of local office decision-making, including
recruiting, training, staffing and marketing. The Company intends to open
additional branch offices with a portion of the net proceeds of this offering in
the Counties of Suffolk, Putnam, Ulster and Duchess, in New York State, subject
to entering required agreements with the local New York Department of Social
Services Agencies. In addition, the Company hopes to expand into New Jersey,
Pennsylvania and Connecticut in order to offer a wider geographic coverage to
the health maintenance organizations ("HMO's") and health care insurance
organizations with which it deals, and to add additional organizations. This
further expansion is subject to the completion of market surveys in the various
locations to ascertain the extent to which existing home care medical needs are
not being met as well as competition and recruitment issues.
Expansion of Infusion Therapy
The Company presently provides a limited amount of infusion therapy service
to patients, utilizing pharmaceuticals provided by licensed suppliers.
Management believes that the total market for home infusion therapy is
continuing its growth and that increasing the provision of infusion therapy will
build on the Company's strength in providing nursing services, because such
therapies generally require administration by specialty nurses. The Company will
also seek to supply infusion therapy patients with the other home health care
services and therapies which they often require and which are offered by the
Company. While the Company has no current commitments to establish infusion
therapy facilities, it intends to pursue the establishment of such facilities
during the next 18 months in order to increase its very small market share. See
"Use of Proceeds." However, there can be no assurance that the Company will
succeed in expanding an infusion therapy business or, if expanded, that it will
conduct such a business on a profitable basis.
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Professional Care Resources
The Company intends to expand its maternal/child care division, Special
Deliveries, as well as its pediatric care programs in order to meet the needs
which management believes are being created by early discharge programs. The
existing referral base utilized by the Company from the various agencies, social
workers, case managers and positions will be used to meet what management
perceives to be a need not being met by the current pool of home health care
agencies. The Company expects that the expansion of this program will require
the hiring of an additional services director with an extensive background in
pediatrics to assist the Directors of Nursing in each of the Company's branch
offices. Additional support staff will also be required, as well as new training
materials, assistant directors, coordinators and marketing staff. The Company
also expects that expansion of the Special Deliveries division will result in
the acquisition of additional office facilities.
Organization and Operations
The Company operates 24 hours a day, seven days a week, to receive
referrals and coordinate services with physicians, case managers, patients and
their families. The Company provides services through its five principal and
branch offices and one recruitment and training office. The Company seeks to
achieve economies of scale by having each branch office serve a large patient
population. Each office conducts its own marketing efforts, negotiates contracts
with referral sources, recruits and trains professionals and paraprofessionals
and coordinates patient care and care givers. Each office is typically staffed
with a branch manager, director of nursing, home care coordinators, clerical
staff and nursing services staff.
The Company's principal office retains all functions necessary to ensure
quality of patient care and to maximize financial efficiency. Services performed
at the principal office include billing and collection, quality assurance,
financial and accounting functions, policy and procedure development, system
design and development, corporate development and marketing. The Company uses
financial reporting systems through which it monitors data for each branch
office, including patient mix, volume, collections, revenues and staffing. The
Company's systems also provide monthly budget analysis, financial comparisons to
prior periods and comparisons among the Company's branch offices. The Company
has committed a portion of the proceeds to this offering to acquire new computer
hardware and upgrade its software and other systems with the intention of
increasing its processing capacity, enhancing its database capabilities and
clinical management capacities and improving collections and financial
management. See "Use of Proceeds."
Work Flow
A case is initiated by one of the Company's referral sources contacting a
branch office and advising it of the patient's general location, diagnosis,
types of services required, hours of service required and the time of day when
the services are to be rendered. The branch office then contacts the
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referral source as promptly as possible with the identification of the staff
person who will be rendering the service, after which the referral source
transmits to the branch office a detailed copy of the plan for the patient's
home care, which includes the type of care to be rendered, the method by which
it should be rendered, the precise location and hours.
The supervisory staff at the branch office then reviews the care plan with
the staff member(s) who will be providing the care and then dispatches the staff
member(s) to begin rendering the care, usually the next day.
The clerical staff at the branch office enters all of the information
regarding the case into the local area computer network of the branch office,
which then generates the work schedule for the staff member(s), which provides a
detailed description of the services to be rendered, the hours and number of
days during which the care is to be provided. All of this information is
spontaneously received by the Company's principal office by way of the wide area
computer network linking the principal office to each of the branch offices.
This information is then processed by the principal office computer system on a
weekly basis to generate the documentation of the services being provided. Such
documentation is then used to generate the billing for the service as well as
process the payroll for the staff member(s) providing the service.
Referral Sources
The Company obtains patients primarily through referrals from hospitals,
community-based health care institutions and social service agencies. Referrals
from these sources accounted for substantially all of the Company's net revenues
in 1995. The Company generally conducts business with most of its institutional
referral sources, including those referred to below, under one-year contracts
which fix the rates and terms of all future referrals but do not require that
any referrals be made. Under these contracts, the referral sources refer
patients to the Company and the Company bills the referral sources for services
provided to patients. These contracts also generally designate the kinds of
services to be provided by the Company's employees, liability insurance
requirements, billing and recordkeeping responsibilities, complaint procedures,
compliance with applicable laws, and rates for employee hours or days depending
on the services to be provided. A total of 45 such contracts were in effect as
of March 31, 1996.
One or more referring institutions have accounted for more than 5% of the
Company's net revenues during the Company's last two fiscal years, as set forth
in the following table:
Percentage of Net Revenues
- --------------------------------------------------------------------------------
Referring Institution 1994 1995
- --------------------------------------------------------------------------------
New York State Department 27.5% 26.8%
of Social Services
- --------------------------------------------------------------------------------
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- --------------------------------------------------------------------------------
Beth Abraham Health 15.38% 12.5%
Services
- --------------------------------------------------------------------------------
Kingsbridge Medical Center 6.9% 6.1%
- --------------------------------------------------------------------------------
Mt. Sinai Medical Center1 0 6%
- --------------------------------------------------------------------------------
Methodist Medical Center 5.1% 3.1%
- --------------------------------------------------------------------------------
Center for Nursing 4.6% 5.6%
- --------------------------------------------------------------------------------
Franklin Medical Center 3.1% 6.4%
- --------------------------------------------------------------------------------
- ----------
1/ The Mount Sinai Medical Center contract was established in March 1995.
Overall, the Company's ten largest referring institutions accounted for
approximately 73% of net revenues for 1995 and 76% of net revenues for 1994.
Billing and Collection
The Company screens each new case to determine whether adequate
reimbursement will be available and has developed substantial expertise in
processing claims. The Company makes a concerted effort to provide complete and
accurate claims data to the relevant payor sources in order to accelerate the
collectibility of its accounts receivable. For the years ended December 31, 1994
and 1995, the Company's days' sales outstanding, which are measured from the
date services are performed, were 153 days and 130 days, respectively. For the
three months ended March 31, 1995 and March 31, 1996, the Company's DSO's were
119 days and 101 days, respectively. Certain accounts receivable are outstanding
for more than 90 days, particularly where the agreement provides for payment
terms of 90 days or more, the services relate to new patients, or existing
patients receive additional services requiring medical review. The Company does
not expect a material change in its DSO during the current year. However, there
can be no assurance that the Company's DSO will not increase in subsequent
fiscal periods.
The Company licenses the Dataline Home Care System, a computerized payroll
system designed to produce invoices for services rendered as a by-product of
employee compensation. Automated schedules and staffing requirements are
maintained in the Company's offices, with the ability to enter all relevant
patient and employee demographic information. The payroll is processed weekly at
the Company's principal office in Brooklyn. This office is responsible for the
processing of data, ensuring the availability of all required billing
documentation and its accuracy, and the printing and distributing of payments.
35
<PAGE>
Once payroll processing is completed, the Company's computer system
generates the resulting invoices automatically. The necessary documentation is
attached to all invoices that are mailed to clients.
Management reviews reports for all phases of the billing process and
prepares reconciliations for the purpose of ensuring accuracy and maintenance of
controls. When errors are found, new processes are developed, as appropriate, to
ensure and improve the quality and accuracy of the billing process and
responsiveness to clients' needs and requirements.
Accounts receivable reports are produced weekly and are analyzed and
reviewed by staff and management to locate negative trends or emerging problems
which would require immediate attention. All unpaid invoices are reviewed and
telephone contacts established for invoices over 90 days old. The Company's
experience with collection of accounts receivable has been quite favorable, with
uncollectible accounts remaining negligible.
Private patients are required to pay the one week fee for their service in
advance, as a deposit for services to be provided. For patients with insurance
covering home health services, the Company accepts assignment of the insurance
and submits claims if the carrier first verifies coverage and eligibility.
Payments from private patients are required to be made weekly, as invoices are
submitted and, if unpaid over three weeks, result in follow-up telephone calls
to ensure prompt payment. Requests for terms from private patients are generally
honored and payment arrangements structured based on the patient's financial
resources and ability to pay. Unresponsive accounts are referred to outside
collection agencies.
Reimbursement
The Company is reimbursed for its services, primarily by referring
institutions, such as health care institutions and social service agencies,
which in turn receive their reimbursement from Medicaid, Medicare and, to a much
lesser extent, through direct payments by insurance companies and private
payors. New York State Medicaid programs constitute the Company's largest
reimbursement source, when including both direct Medicaid reimbursement and
indirect Medicaid payments through many of the Company's referring institutions.
For 1994 and 1995, payments from referring institutions which receive direct
payments from Medicare and New York State Medicaid, together with direct
reimbursement to the Company from New York State Medicaid, accounted for
approximately 89% and 92%, respectively, of net revenues. For the same periods,
a significant number of referring institutions (which are primarily private
not-for-profit organizations) with home health care programs that the Company
believes are reimbursed to varying extents by New York State Medicaid accounted
for approximately 74% and 76%, respectively, of net revenues. Direct
reimbursements from private insurers, prepaid health plans, patients and other
private sources accounted for approximately 11% and 8%, respectively, of net
revenues for the calendar years 1994 and 1995.
The New York State Department of Health, in conjunction with local
Departments of Social Services, promulgates annual reimbursement rates for
patients covered by Medicaid. These rates are
36
<PAGE>
generally established on a county-by-county basis, using a complex reimbursement
formula applied to cost reports filed by providers. The Company has filed all
required annual cost reports for each of its offices which provide services to
Medicaid recipients. Generally, the first report filed (called a "budgeted"
report) uses projections to develop the current year's reimbursement rate,
subject to retroactive recapture of any monies paid by local Departments of
Social Services for budgeted expenses which are greater than the actual expenses
incurred. The Company's expenses have always equaled or exceeded the budgeted
amounts.
Third party payors, including Medicaid, Medicare and private insurers, have
taken extensive steps to contain or reduce the costs of health care. These steps
include reduced reimbursement rates, increased utilization review of services,
negotiated prospective or discounted pricing and adoption of a competitive bid
approach to service contracts. Home health care, which is generally less costly
to third party payors than hospital-based care, has benefited from many of these
cost containment measures.
The New York State Department of Health issues Certificates of Need for
Certified Home Health Agencies ("CHHA'S"), which provide post-acute home care
services for people who have just been discharged from a hospital but are not
yet fully recovered, and Long-Term Home Health Care Programs ("LTHHCP'S"), also
known as the "Nursing Home Without Walls," which is intended to provide elderly
people with an alternative for long-term care other than by entering a nursing
home at less than the cost of nursing home care. The Company negotiates its
contracts with CHHA's and LTHHCP's on the basis of services to be provided, in
connection with contracts either currently in effect with the Company or with
other agencies. Prevailing market conditions are such that, despite escalating
operating expenses, reduced contract rates are regularly "demanded" as a result
of internal budget restraints and reductions mandated by managed care contracts
between the Company's clients and HMO's and other third party administrators.
While management anticipates that this trend is likely to continue for the
foreseeable future, it does not expect the impact on the Company to be
significant, since its rates are competitive and, therefore, are expected to be
subject to only minor reductions. However, as expenditures in the home health
care market continue to grow, initiatives aimed at reducing the costs of health
care delivery at non-hospital sites are increasing. A significant change in
coverage or a reduction in payment rates by third party payors, particularly New
York State Medicaid, would have a material adverse effect upon the Company's
business.
Quality Assurance
The Company has established a quality assurance program to ensure that its
service standards are implemented and that the objectives of those standards are
met. The Company believes that it has developed and implemented service
standards that comply with or exceed the service standards required by JCAHO.
The Company received "Accreditation with Commendation" from JCAHO after its
initial, and only, review in 1994. In February 1996, the Company was selected by
the University of Colorado Health Sciences Center as one of only 22 home health
care agencies participating in a two to three year study known as the New York
State Outcome-Based Quality Improvement in Home Care Demonstration
37
<PAGE>
project being funded by the New York State Department of Health, by reason of
the Company's commitment to both quality assurance and improvement. The Company
believes that its reputation for quality patient care has been and will continue
to be a significant factor in its success. An adverse determination by JCAHO
regarding the Company on any branch office could adversely affect the Company's
reputation and competitive position.
The Company's quality assurance program includes the following:
Quality Advisory Boards. The Company maintains two Quality Advisory Boards,
one for its northern group of branch offices and the other for the southern
offices. Each Quality Advisory Board consists of a physician, nursing
professionals and representatives of branch management. The Quality Advisory
Boards identify problems and suggest ways to improve patient care based on
internal quality compliance audits and clinical and personnel record reviews.
Internal Quality Compliance Review Process. Periodic internal reviews are
conducted by the Company's management to ensure compliance with the
documentation and operating procedures required by state law, JCAHO standards
and internal standards. Written reports are forwarded to branch managers. The
Company believes that the internal review process is an effective management
tool for branch managers.
Case Conferences. Staff professionals regularly hold case conferences to
review problem and high risk cases, the physician's plan of treatment and
Company services provided for such cases in order to ensure appropriate, safe
patient care and to evaluate patient progress and plans for future care.
Clinical Record Review. Clinical record review is the periodic evaluation
of the documentation in patient clinical records. In this review process, the
Company evaluates the performance of the nursing services staff to ensure that
professional and patient care policies are followed in providing appropriate
care and that the needs of patients are being met. Clinical record review
findings are documented and reviewed by the applicable Quality Advisory Board
for recommendations.
Sales and Marketing
The Company's executive officers, Jerry Braun and Jacob Rosenberg, are
principally responsible for the marketing of the Company's services. Each branch
office director is also responsible for sales activities in the branch office's
local market area. The Company attempts to cultivate strong, long-term
relationships with referral sources through high quality service and education
of local health care personnel about the appropriate role of home health care in
the clinical management of patients.
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<PAGE>
Government Regulation
The federal government and the State of New York, where the Company
currently operates, regulate various aspects of the Company's business. Changes
in the law or new interpretations of existing laws can have a material effect on
permissible activities of the Company, the relative costs associated with doing
business and the amount of reimbursement by government and other third-party
payors.
The Company is licensed by New York State as a home care services agency.
The State requires approval by the New York State Public Health Council
("Council") of any change in "the controlling person" of an operator of a
licensed home care services agency ( a "LHCSA"). Control of an entity is
presumed to exist if any person owns, controls or holds the power to vote 10% or
more of the voting securities of the LHCSA. A person seeking approval as a
controlling person of a LHCSA, or of an entity that is the operator of a LHCSA,
must file an application for Council approval within 30 days of becoming a
controlling person and, pending a decision by the Council, such person may not
exercise control of the LHCSA. If any person should become the owner or holder,
or acquire control of or the right to vote 10% or more of the issued and
outstanding Common Stock of the Company, such person could not exercise control
of the Company's LHCSA until an application for approval of such ownership,
control or holding has been submitted to the Council and approved. In the event
such an application is not approved, such owner or holder may be required to
reduce their ownership or holding to less than 10% of the Company's issued and
outstanding Common Stock.
The Company is also subject to federal and state laws prohibiting payments
for patient referrals and regulating reimbursement procedures and practices
under Medicare, Medicaid and state programs. The federal Medicare and Medicaid
legislation contains anti-kickback provisions which prohibit any remuneration in
return for the referral of Medicare and Medicaid patients. Courts have, to date,
interpreted these anti-kickbacks laws to apply to a broad range of financial
relationships. Violations of these provisions may result in civil and criminal
penalties, including fines of up to $15,000 for each separate service billed to
Medicare in violation of the anti-kickback provisions, exclusion from
participation in the Medicare and state health programs such as Medicaid and
imprisonment for up to five years.
The Company's healthcare operations potentially subject it to the Medicare
and Medicaid anti-kickback provisions of the Social Security Act. These
provisions are broadly worded and often vague, and the future interpretation of
these provisions and their applicability to the Company's operations cannot be
fully predicted with certainty. There can be no assurance that the Company will
be able to arrange its acquisitions or business relationships so as to comply
with these laws or that the Company's present or future operations will not be
accused of violating, or be determined to have violated, such provisions. Any
such result could have a material adverse effect on the Company.
Various Federal and state laws regulate the relationship among providers of
healthcare services, including employment or service contracts, and investment
relationships. These laws include
39
<PAGE>
the broadly worded fraud and abuse provisions of the Social Security Act that
are applicable to the Medicare and Medicaid programs, which prohibit various
transactions involving Medicare or Medicaid covered patients or services. Among
other things, these provisions restrict referrals for certain designated health
services by physicians to entities with which the physician or the physician's
immediate family member has a "financial relationship" and the receipt of
remuneration by anyone in return for, or to induce, the referral of a patient
for treatment or purchasing or leasing equipment or services that are paid for,
in whole or in part, by Medicare or Medicaid. Violations of these provisions may
result in civil or criminal penalties for individuals or entities and/or
exclusion from participation in the Medicare and Medicaid programs. The future
interpretation of these provisions and their applicability to the Company's
operations cannot be fully predicted with certainty.
In May 1991, the United States Department of Health and Human Services
adopted regulations creating certain "safe harbors" from federal criminal and
civil penalties by identifying certain types of joint venture and management
arrangements that would not be treated as violating the federal anti-kickback
laws relating to referrals of patients for services paid by the Medicare and
Medicaid programs. It is not possible to accurately predict the ultimate impact
of these regulations on the Company's business.
New York and other states also have statutes and regulations prohibiting
payments for patient referrals and other types of financial arrangements with
health care providers which, while similar in many respects to the federal
legislation, vary from state to state, are often vague and have infrequently
been interpreted by courts or regulatory agencies. Sanctions for violation of
these state restrictions may include loss of licensure and civil and criminal
penalties. In addition, the professional conduct of physicians is regulated
under state law. Under New York law, it is unprofessional conduct for a
physician to receive, directly or indirectly, any fee or other consideration for
the referral of a patient. Finally, under New York law, a physician with a
financial interest in a health care provider must disclose such information to
the patients and advise them of alternative providers.
The Company believes that the foregoing arrangements in particular and its
operations in general comply in all material respects with applicable federal
and state laws relating to anti-kickbacks, and that it will be able to arrange
its future business relationships so as to comply with the fraud and abuse
provisions.
Management believes that the trend of federal and state legislation is to
subject the home health care and nursing services industry to greater
regulation, particularly in connection with third-party reimbursement and
arrangements designed to induce or encourage the referral of patients to a
particular provider of medical services. The Company is attempting to be
responsive to such regulatory climate. However, the Company is unable to
accurately predict the effect, if any, of such regulations or increased
enforcement activities on the Company's future results of operations.
In addition, the Company is subject to laws and regulations which relate to
business corporations in general, including antitrust laws, occupational health
and safety laws and environmental laws (which relate, among other things, to the
disposal, transportation and handling of
40
<PAGE>
hazardous and infectious wastes). None of these laws and regulations have had a
material adverse effect on the Company's business or competitive position or
required material expenditures on the part of the Company, although no assurance
can be given that such will continue to be the case in the future.
The Company is unable to accurately predict what additional legislation, if
any, may be enacted in the future relating to the Company's business or the
health care industry, including third-party reimbursement, or what effect any
such legislation may have on the Company.
The Company has never been denied any license it has sought to obtain. The
Company believes that its operations are in material compliance with all state
and federal regulations and licensing requirements.
Competition
The home health care market is highly fragmented, and significant
competitors are often localized in particular geographical markets. The
Company's largest competitors include U.S. Home Care, Inc., Star Multicare,
Inc., TransWorld Home Health Care, Inc., Patient Care, Inc., Plaza Nurses
Agency, Inc. and Personal Touch Home Care Services, Inc. The home health care
business is marked by low entry costs. The Company believes that, given the
increasing level of demand for nursing services, significant additional
competition can be expected to develop in the future. Some of the companies with
which the Company presently competes in home health care have substantially
greater financial and human resources than the Company. The Company also
competes with many other small temporary medical staffing agencies.
The home infusion therapy market is highly competitive, and the Company
expects that the competition will intensify. As the Company seeks to expand its
provision of infusion therapy services, it will compete with a large number of
companies and programs in the areas in which its facilities are located. Many of
these are local operations servicing a single area; however, there are a number
of large national and regional companies, including Olsten Kimberly QualityCare,
Inc., Coram Health Care Corp., Staff Builders, Inc. and Interim Personnel, Inc.
In addition, certain hospitals, clinics and physicians, who traditionally may
have been referral sources for the Company, have entered or may enter the market
with local programs.
The Company believes that the principal competitive factors in its industry
are quality of care, including responsiveness of services and quality of
professional personnel; breadth of therapies and nursing services offered;
successful referrals from referring government agencies, hospitals and health
maintenance organizations; general reputation with physicians, other referral
sources and potential patients; and price. The Company believes that its
competitive strengths have been the quality, responsiveness, flexibility and
breadth of services and staff it offers, and to some extent price competition,
as well as its reputation with physicians, referral sources and patients.
41
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The United States health care industry generally faces a shortage of
qualified personnel. Accordingly, the Company experiences intense competition
from other companies in recruiting qualified health care personnel for its home
health care operations. The Company's success to date has depended, to a
significant degree, on its ability to recruit and retain qualified health care
personnel. Most of the registered and licensed nurses and health care
paraprofessionals who are employed by the Company are also registered with, and
may accept placements from time to time through, competitors of the Company. The
Company believes it is able to compete successfully for nursing and
paraprofessional personnel by aggressive recruitment through newspaper
advertisements, flexible work schedules and competitive compensation
arrangements. There can be no assurance, however, that the Company will be able
to continue to attract and retain qualified personnel. The inability to either
attract or retain such qualified personnel would have a material adverse effect
on the Company's business.
Insurance Coverage
The Company maintains a policy of insurance covering the acts and omissions
of its health care personnel. This policy, which is renewable by the carrier at
the beginning of each policy year, provides coverage of $3 million in the
aggregate or $1 million per occurrence for each policy year. The Company also
maintains umbrella insurance which provides an addition $5 million in coverage.
The Company believes that the insurance coverage which it maintains is customary
in the home health care and infusion therapy industry. However, there can be no
assurance that such insurance will be adequate to cover the Company's
liabilities or that the Company will be able to continue its present insurance
coverage on satisfactory terms, if at all. A successful claim against the
Company in excess of, or not covered by, the Company's insurance coverage could
have a material adverse effect on the Company's business and financial
condition. Claims against the Company, regardless of their merit or eventual
outcome could also have a material adverse effect on the Company's reputation
and business.
Employees
At June 30, 1996, the Company had 650 employees, of whom 42 are salaried,
including three executive officers, one director of operations, five branch
managers, five directors of nursing, one director of maternal/child health, six
accounting/clerical staff, and 21 field staff supervisors. The remaining 608
employees are paid on an hourly basis and consist of professional and
paraprofessional employees. None of the Company's employees are compensated on
an independent contractor basis. The Company believes that its employee
relations are good. None of the Company's employees is represented by a labor
union.
Litigation
To the knowledge of the Company, there are no material legal proceedings
pending or threatened against the Company, other than legal proceedings pending
in the ordinary course of business which are fully covered by insurance.
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Properties
The Company's principal place of business is located at 1667 Flatbush
Avenue, Brooklyn, New York 11210 and consists of approximately 2,000 square feet
on two of the three floors of a commercial building, which is owned by 1667
Flatbush Ave., L.L.C., a New York limited liability company owned by the
Company's current stockholders. See "Certain Transactions." The lease is for a
period ending October 31, 2000 and is subject to a renewal option for five years
in favor of the Company. The rent is $3,000 a month and is subject to annual
increases, beginning November 1, 1996, equal to 5% of the total prior year's
monthly rent for the original term and all renewal terms of the lease. The
Company intends to use a portion of the proceeds of this offering to move to a
new and larger principal office facility, as well as to upgrade its existing
branch office facilities and its computer management systems. See "Use of
Proceeds."
The table below sets forth certain information with respect to each of the
Company's existing branch office locations, all of which are leased from
non-affiliated lessors:
<TABLE>
<CAPTION>
Lease Terms
Approx. Square -------------------------------------
Opening Footage of Expiration Annual
Location Date Sales Area Date Rental(1)
<S> <C> <C> <C> <C>
Nassau County
Branch Office
175 Fulton Avenue
Hempstead, NY 11550 9/93 1,600 10/31/98 $20,187
Westchester County
Branch Office
105 Stevens Avenue
Mt. Vernon, NY 10550 1/93 1,600 12/31/96 $20,400
Rockland County
Branch Office
49 South Main Street
Spring Valley, NY 10977 10/94 1,500 9/30/98 $15,600(2)
Orange County
Branch Office
45 Grand Street
Newburgh, NY 11250 9/92 1,500 8/31/97 $10,800(3)
Queens Recruitment and
Training Office
91-31 Queens Blvd.
Elmhurst, NY 11373 10/95 750 9/30/97 $17,400
</TABLE>
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(1) The leases provide for additional rentals based upon increases in real
estate taxes and other cost escalations.
(2) Until 10/1/96; thereafter, the rent is at the rate of $16,200 per year.
(3) Until 8/31/96; thereafter, the rent is $12,000 per year.
43
<PAGE>
MANAGEMENT
Executive Officers and Directors
The executive officers and directors of the Company are as follows:
Name Age Position
---- --- --------
Jerry Braun 39 President, Chief Executive Officer and Director
Jacob Rosenberg 38 Vice President, Chief Operating Officer,
Secretary and Director
Gilbert Barnett 51 Chief Financial Officer and Chief Accounting
Officer
Samson Soroka 40 Director
Hirsch Chitrik 68 Director
Sid Borenstein 42 Director
Jerry Braun has been the President, Chief Executive Officer and Chief
Operating Officer of the Company since its inception in 1983.
Jacob Rosenberg has been Secretary and a Director since the Company's
inception in 1983, and Vice President and Chief Operating Officer since February
1995.
Gilbert Barnett has been the Chief Accounting Officer and Chief Financial
Officer of the Company since April 1995. From 1989 to 1995, he was Director of
Finance for the Mt. Sinai Medical Center in New York, where he was responsible
for the Patient Accounting Department. From 1981 to 1988, Mr. Barnett was the
President of Grand Graham Medical Center, a shared health facility located in
Brooklyn, New York. In 1981, he was the treasurer of Accredited Care, Inc., a
licensed home care company in White Plains, New York. Mr. Barnett is a Certified
Public Accountant, a Fellow of the Health Care Financial Management Association
and a Certified Manager of Patient Accounts.
Samson Soroka has been a Director of the Company since its inception in
1983. From 1988 to February 1995, Mr. Soroka was employed by the Company as its
Chief Financial Officer. Since then, Mr. Soroka has been employed as an
independent consultant. Mr. Soroka is a graduate of Brooklyn College of the City
University of New York (BS, Accounting and Computer Science, 1979).
Hirsch Chitrik has been a Director of the Company since May 1995. For more
than the last five years, Mr. Chitrik has been the President of Citra Trading
Corporation, a privately-held company in New York engaged in the jewelry
business.
44
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Sid Borenstein has been a Director of the Company since May, 1995. For more
than the last five years, Mr. Borenstein, a Certified Public Accountant has been
a General Partner in Sid Borenstein & Co., CPAs, in Brooklyn, New York.
There are no committees of the Board of Directors. Directors hold their
offices until the next annual meeting of the stockholders and thereafter until
their successors have been duly elected and qualified. Executive officers are
elected by the Board of Directors on an annual basis and serve at the direction
of the Board. All of the executive officers devote approximately 90% of their
time to the business affairs of the Company. See "Certain Transactions." The
Company intends to appoint a Compensation Committee after the completion of this
offering.
Employment Agreements
On March 26, 1996, the Company entered into employment agreements with
Jerry Braun and Jacob Rosenberg, each of which is for a term ending December 31,
1999. The Company expects to enter into an employment agreement with Gilbert
Barnett, its Chief Financial and Accounting Officer, prior to the date of this
Prospectus.
Mr. Braun's agreement provides that he will serve as President and Chief
Executive Officer in consideration of (i) initial annual compensation of
$175,000; (ii) reimbursement of authorized business expenses incurred in
connection with the conduct of the Company's business; (iii) participation in
the Company's 401(k) Plan and stock option plan; (iv) an automobile
reimbursement allowance of $500 per month toward automobile leasing cost and
reimbursement of automobile insurance cost; (v) an allowance of $3,500 per year
towards the cost of $500,000 of term life insurance, and disability insurance;
(vi) four weeks paid vacation; and (vii) annual increase in salary of 10% for
each year. He is required to devote a majority of his business time to the
Company's affairs and is permitted to devote a limited amount of his business
time to the affairs of Heart to Heart, provided those activities do not compete
with the Company's business. See "Certain Transactions."
Mr. Rosenberg's agreement has the same general terms and conditions as Mr.
Braun's, except that he will serve as Chief Operating Officer, and the annual
compensation is $140,000.
Mr. Braun and Mr. Rosenberg also participate, together with all employees
of the Company, in a bonus plan pursuant to which 10% of the Company's annual
pre-tax net income is contributed to the bonus pool which is distributed to such
persons and in such amounts as decided upon by the Company's Compensation
Committee.
45
<PAGE>
Executive Compensation
Summary Compensation Table
The following table sets forth, for the year ended December 31, 1995, the
cash compensation paid by the Company, as well as certain other compensation
paid with respect to those years, to its President, Chief Executive Officer,
Chief Operating Officer and Chief Financial Officer (the "Named Executives") in
all capacities in which they served.
Annual Compensation
-------------------
Other Annual
Name and Principal Position Year Salary Compensation
- --------------------------- ---- ------ ------------
Jerry Braun
President and Chief Executive
Officer 1995 $116,177 $18,294(1)
Jacob Rosenberg
Chief Operating Officer 1995 $100,096 $19,480(2)
Gilbert Barnett(3)
Chief Financial Officer 1995 $ 57,692 $ 851
- ----------
(1) Includes $10,412 of medical insurance premiums paid on behalf of such
individual and $7,882 for automobile and automobile-related costs, including
insurance, incurred on behalf of such individual.
(2) Includes $10,412 of medical insurance premiums paid on behalf of such
individual and $9,068 for automobile and automobile-related costs, including
insurance, incurred on behalf of such individual.
(3) Mr. Barnett joined the Company in April 1995.
Directors Compensation
The Company currently reimburses each non-employee director for their
expenses in connection with attending meetings.
Savings and Stock Option Plans
401(k) Plan
The Company maintains an Internal Revenue Code Section 401(k) salary
deferral savings plan (the "Plan") for all of its eligible employees who have
been employed for at least one year and are at
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<PAGE>
least 21 years old (effective July 1, 1996, field staff employees at the
Company's Orange County branch office, in Newburgh, New York, ceased being
eligible to participate in the Plan). Subject to certain limitations, the Plan
allows participants to voluntarily contribute up to 15% of their pay on a
pre-tax basis. Under the Plan, the Company may make matching contributions on
behalf of the pre-tax contributions made by participants. For 1995 and for the
first half of 1996, the Company contributed 50% of each dollar contributed to
the Plan by participants up to a maximum of 6% of the participant's salary. All
participants are fully vested in their accounts in the Plan with respect to
their salary deferral contributions and are vested in Company matching
contributions at the rate of 20% per year for two years through four years of
service, with 100% vesting after five years of service. However, participants
who are first hired after December 31, 1994 will not be vested in the Company
matching contributions until the completion of five years service, when they
become 100% vested. The Company has agreeed with the Representative that no
discretionary contributions to the Plan may be made for officers or stockholders
of the Company.
Stock Option Plan
In March 1996, the Company's Board of Directors and stockholders approved
and adopted the New York Health Care, Inc. Performance Incentive Plan (the
"Option Plan"). Under the terms of the Option Plan, options to purchase up to
210,000 shares of Common Stock may be granted to key employees of the Company.
Moreover, the Company's Board of Directors has approved a resolution which
proposes to provide for an increase in the number of shares of Common Stock
available for options under the Option Plan equal to an additional 210,000
shares for each of two additional years, subject to approval by the Company's
shareholders at the first annual meeting of shareholders which is held after the
completion of this offering. The Option Plan is to be administered by a
Compensation Committee to be appointed by the Board of Directors (the
"Committee"), which is authorized to grant incentive stock options and
non-qualified stock options to selected employees of the Company and to
determine the participants, the number of options to be granted and other terms
and provisions of each option.
The exercise price of any incentive stock option or nonqualified option
granted under the Option Plan may not be less than 100% of the fair market value
of the shares of Common Stock of the Company at the time of the grant. In the
case of incentive stock options granted to holders of more than 10% of the
voting power of the Company, the exercise price may not be less than 110% of the
fair market value.
Under the terms of the Option Plan, the aggregate fair market value
(determined at the time of grant) of shares issuable to any one recipient upon
exercise of incentive stock options exercisable for the first time during any
one calendar year may not exceed $100,000. Options granted under the Option Plan
become exercisable in whole or in part from time to time as determined by the
Committee, but in no event may a stock option granted in conjunction therewith
be exercisable prior to the expiration of six months from the date of grant,
unless the grantee dies or becomes disabled prior thereto. Stock options granted
under the Option Plan have a maximum term of 10 years from the date of grant,
except that with respect to incentive stock options granted to an employee who,
at the time of the grant, is a holder of more than 10% of the voting power of
the Company, the stock option shall expire not more than five years from the
date of the grant. The option price must be paid
47
<PAGE>
in full on the date of exercise and is payable in cash or in shares of Common
Stock having a fair market value on the date the option is exercised equal to
the option price.
If a grantee's employment by, or provision of services to, the Company
shall be terminated, the Committee may, in its discretion, permit the exercise
of stock options for a period not to exceed one year following such termination
of employment with respect to incentive stock options and for a period not to
extend beyond the expiration date with respect to non-qualified options, except
that no incentive stock option may be exercised after three months following the
grantee's termination of employment, unless it is due to death or permanent
disability, in which case they may be exercised for a period of up to one year
following such termination.
The Underwriting Agreement between the Company and the Representative
provides that for a period of three years from the effective date of this
Prospectus, the Company will not adopt, propose to adopt or otherwise permit to
exist any employee, officer, director or compensation plan or arrangement
permitting the grant, issue or sale of any shares of Common Stock or other
securities of the Company in an amount greater than 210,000 shares, other than
the proposed increase in the Option Plan described above. The Underwriting
Agreement also provides that, (i) for the 12 month period commencing on the
effective date of this Prospectus, the exercise price for any option granted
pursuant to the Option Plan or otherwise during such period cannot be less than
the fair market value per share of the Common Stock on the date of grant and
(ii) if the Company's shareholders approve an increase of an additional 210,000
shares for each of two additional years, then any option granted in the first 12
months following such an increase will have an exercise price no lower than the
fair market value per share of the Common Stock upon the date of the option
grant.
Other than a stock option which has been issued outside of the Option Plan
to Jerry Braun for 75,000 shares of the Company's Common Stock at an exercise
price of $3.75 per share, the Company has not issued any options under the
Option Plan, or otherwise, as of the date of this Prospectus. The Company does
not have any other existing stock option or other deferred compensation plans,
but may adopt such plans in the future. However, the Company has agreed with the
Representative not to adopt any other stock option or deferred compensation
plans during the three-year period commencing on the effective date of this
Prospectus without the written consent of the Representative.
48
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding shares of the
Common Stock beneficially owned as of the date of this Prospectus by (i) each
person, known to the Company, who beneficially owns more than 5% of the Common
Stock, (ii) each of the Company's directors, (iii) each of the Named Executives
and (iv) all officers and directors as a group:
<TABLE>
<CAPTION>
Percentage(1)
-------------
Name and Address of Shares Prior to After
Beneficial Owner Beneficially Owned(1) Offering Offering
- ---------------- --------------------- -------- --------
<S> <C> <C> <C>
Jerry Braun(2) 924,374 39.5% 27.27%
929 East 28th Street
Brooklyn, NY 11210
Jacob Rosenberg 424,688 18.75% 12.81%
932 East 29th Street
Brooklyn, NY 11210
Samson Soroka 424,688 18.75% 12.81%
1228 East 22nd Street
Brooklyn, NY 11210
Hirsch Chitrik 453,000 20% 13.67%
1401 President Street
Brooklyn, NY 11213
Sid Borenstein(3) 113,250 5% 3.42%
1246 East 10th Street
Brooklyn, NY 11230
All officers and directors 2,340,000 100% 68%
as a group (5 persons)(1)(2)
</TABLE>
- ----------
(1) The shares of Common Stock owned by each person or by the group, and the
shares included in the total number of shares of Common Stock outstanding,
have been adjusted in accordance with Rule 13d-3 under the Securities
Exchange Act of 1934, as amended, to reflect the ownership of shares
issuable upon exercise of outstanding options, warrants or other common
stock equivalents which are exercisable within 60 days. As provided in such
Rule, such shares issuable to any holder are deemed outstanding for the
purpose of calculating such holder's beneficial ownership but not any other
holder's beneficial ownership.
(2) Includes 75,000 shares of Common Stock issuable upon the exercise of a
stock option granted to Mr. Braun at an exercise price of $3.75 per share.
See "Management" and "Certain Transactions."
(3) Mr. Borenstein is a subordinated lender to, and participates in the profits
of, RAS Securities Corp., the Representative. See "Underwriting."
49
<PAGE>
CERTAIN TRANSACTIONS
The Company operated as an S Corporation prior to this offering and has
paid out a substantial portion of its earnings to the current stockholders.
These distributions aggregated $100,230 and $840,302 for the years ended
December 31, 1994 and 1995, respectively, and $787,638 for the three months
ended March 31, 1996. Prior to the consummation of this offering, additional
distributions of previously earned undistributed S Corporation earnings in the
aggregate amount of $2,200,000 will be made to the current stockholders. The
Company is funding the distribution utilizing $2,200,000 out of its $3,500,000
aggregate lines of credit. See "Former S Corporation Tax Treatment",
"Capitalization" and Notes 1, 2 and 4 to the Financial Statements.
The Company's directors are the sole stockholders of a New Jersey
corporation named Heart to Heart Health Care Services, Inc. ("Heart to Heart"),
with offices located at 7 Glenwood Avenue, East Orange, New Jersey 07017. Heart
to Heart, which began its operations in 1995, engages in the home health care
business in northern New Jersey, but not in the State of New York, and had net
revenues of $288,948 in the year ended December 31, 1995. Since its inception,
Heart to Heart has utilized Company personnel for its administrative functions
regarding payroll, benefits management and data processing. The Company and
Heart to Heart have entered into a Service Agreement, pursuant to which the
Company will provide administrative services relating to payroll, benefits
management and data processing for a term of 18 months ending June 30, 1997 for
which the Company will be reimbursed for all expenses attributable to such
operations, presently totalling approximately $15,000 per year. The Company is
not a guarantor of any obligations of Heart to Heart, nor is it engaged in any
business or financing transactions with Heart to Heart, other than as described
herein.
On February 13, 1995, Samson Soroka resigned as Chief Financial Officer of
the Company. Mr. Soroka entered into a Settlement Agreement and General Release
with the Company on September 28, 1995 (the "Settlement Agreement"), pursuant to
which the Company agreed to pay his base salary of $85,000 per year through
August 13, 1995 and continue his medical insurance coverage through February 13,
1996. In addition, the Company agreed to advance to Mr. Soroka, without
interest, the sum of $25,000 against the cash distributions payable to the
Company's current stockholders and loaned to Mr. Soroka the sum of $125,000.
Such loan bears interest at the same rate charged to the Company under its
credit lines and is repayable to the Company within 30 days after Mr. Soroka
receives notice of the filing of the registration statement of which this
Prospectus forms a part, but in no event later than September 28, 1997. Mr.
Soroka agreed to keep confidential all commercial, financial or technical
information concerning the Company which he learned during his employment. The
Company and Mr. Soroka also entered into mutual releases of all claims which
they might have had against each other.
On May 8, 1995, Jerry Braun, Jacob Rosenberg and Samson Soroka contributed
back to the Company an aggregate of 566,250 shares of Common Stock and the
Company issued 453,000 shares of its Common Stock to Hirsch Chitrik and 113,250
shares of Common Stock to Sid Borenstein
50
<PAGE>
in consideration for their having obtained a bank line of credit for the Company
of not less than $800,000 at an interest rate no greater than 2% over the prime
rate of Citibank N.A. The credit line was obtained in 1988 pursuant to a March
31, 1988 agreement between Jerry Braun, Jacob Rosenberg, Samson Soroka, Hirsch
Chitrik, Sid Borenstein and the Company, in which they subscribed to purchase
shares of Common Stock, subject to New York State Department of Health and
Public Health Council approval (which was granted on March 24, 1995), and which
provided to Messrs. Chitrik and Borenstein non-voting equity distributions of
20% and 5%, respectively.
On November 1, 1995, the Company transferred the land and building located
at 1667 Flatbush Avenue, Brooklyn, New York, which houses its principal offices,
to 1667 Flatbush. This transfer, which relieved the Company of a first mortgage
obligation aggregating $146,250, was a non-cash distribution to the current
stockholders of S Corporation earnings in the aggregate sum of $144,927. The
Company now leases its principal offices from 1667 Flatbush for a term of five
years ending October 31, 2000, which term is subject to a five-year renewal
option in favor of the Company. The rent is $3,000 per month and is subject to
annual increases equal to 5% of the prior year's monthly rent beginning November
1, 1996 for each year of the original and any renewal term. Management believes
that the terms of the lease were and are no less favorable to the Company than
could be obtained from unaffiliated third parties. See "S Corporation Tax
Treatment" and "Business -- Properties."
On March 26, 1996, the Company issued a stock option to its President and
Chief Executive Officer, Jerry Braun, for the purchase of 75,000 shares of the
Company's Common Stock at an exercise price of $3.75 per share during the period
ending March 31, 2001. See "Management -- Savings and Stock Option Plans."
On March 26, 1996, the Company entered into employment agreements with
Jerry Braun and Jacob Rosenberg. See "Management -- Employment Agreements."
On July 8, 1996, the Company entered into an agreement with 1667 Flatbush
pursuant to which 1667 Flatbush purchased $3,500,000 of the Company's accounts
receivable for a purchase price of $3,150,000, payable at the rate of $1,100,000
on August 1, 1996, $1,100,000 on September 1, 1996 and $950,000 at the earlier
of October 1, 1996 or the date of this Prospectus, whichever comes first. Each
payment is to be made together with accrued interest, in arrears. The payments
due to the Company are reflected in a negotiable promissory note of 1667
Flatbush bearing interest at the rate of 12% per annum, are secured by a lien on
the accounts receivable purchased from the Company by 1667 Flatbush and are
personally guaranteed by each of the members of 1667 Flatbush. The promissory
note permits prepayments of principal without penalty. Each such prepayment will
be credited against the next due payment obligation of 1667 Flatbush. As a
result of the Company's sale of accounts receivable for less than their face
value, the Company expects to recognize a net charge to its earnings during the
third quarter ended September 30, 1996 in the amount of $170,000. See
"Management's Discussion and Analysis of Financial Conditions and Results of
Operations - Liquidity and Capital Resources."
51
<PAGE>
The transactions described above involve actual or potential conflicts of
interest between the Company and its officers or directors. In order to reduce
the potential for conflicts of interest between the Company and its officers and
directors, prior to entering into any transaction in which a potential material
conflict of interest might exist, the Company's policy has been and will
continue to be that the Company does not enter into transactions with officers,
directors or other affiliates unless the terms of the transaction are at least
as favorable to the Company as those which would have been obtainable from an
unaffiliated source.
DESCRIPTION OF SECURITIES
The Company's authorized capital stock consists of 10,000,000 shares of
Common Stock, par value $.01 per share and 2,000,000 shares of Preferred Stock,
par value $.01 per share. Prior to this offering, there were 2,265,000 shares of
Common Stock issued and outstanding held by five holders of record.
Common Stock
The holders of Common Stock are entitled to one vote for each share held of
record on all matters to be voted on by stockholders. There is no cumulative
voting with respect to the election of directors with the result that the
holders of more than 50% of the shares of Common Stock can elect all of the
directors. The holders of Common Stock are entitled to receive dividends when,
as and if declared by the Board of Directors out of funds legally available
therefor. In the event of the liquidation, dissolution or winding up of the
Company, the holders of Common Stock are entitled to share ratably in all assets
remaining available for distribution to them after payment of liabilities and
after provision has been made for each class of stock, if any, having preference
over the Common Stock, as such, having no conversion, preemptive or other
subscription rights, and there are no redemption provisions applicable to the
Common Stock.
Preferred Stock
The Board of Directors of the Company is authorized to issue up to
2,000,000 shares of preferred stock in one or more series and to fix the rights,
preferences, privileges and restrictions thereof, including the dividend rights,
dividend rate, conversion rights, voting rights, terms of redemption (including
sinking fund provisions), redemption price or prices, liquidations preferences
and the number of shares constituting any series or the designations of such
series, without any further vote or action by the stockholders. It would be
possible for the Board of Directors to issue shares of such preferred stock in a
manner which would make acquisition of control of the Company, other than as
approved by the Board, exceedingly difficult.
The Company currently has no plans to issue any shares of Preferred Stock.
52
<PAGE>
Redeemable Warrants
Each Warrant entitles the holder thereof, upon exercise, to purchase one
share of Common Stock at a price of $6.00 per share, subject to adjustment,
exercisable for a period of four years, commencing one year from the date of
this Prospectus.
The exercise price of the Warrants and the number and kind of shares of
Common Stock issuable upon the exercise of Warrants are subject to adjustment in
certain circumstances, including a stock split of, or stock dividend on, the
Common Stock, all as set forth in the Warrant Agreement relating to the issuance
of the Warrants. There will be no adjustment for the payment of cash dividends,
if any, by the Company on its Common Stock. Holders of the Warrants have no
voting power and are not entitled to any dividends. In the event of any
dissolution or winding up of the Company, the holders of the Warrants will not
be entitled to participate in a distribution of the Company's assets.
In the event that the Company adopts a resolution to merge, consolidate, or
sell all or substantially all of its assets prior to the expiration of the
Warrants, each Warrant holder, upon the exercise of his Warrant, would be
entitled to receive the same treatment as other holders of any other shares of
Common Stock. In the event the Company adopts a resolution for the liquidation,
dissolution or winding-up of the Company's business, the Company will give
written notice of the adoption of such resolution to the registered holders of
the Warrants. Thereupon, all liquidation and dissolution rights under the
Warrants will terminate at the end of 30 days from the date of the notice to the
extent not exercised within those 30 days.
The Warrants are subject to redemption by the Company, at any time,
commencing 24 months following the date of this Prospectus, on 30 days prior
written notice, at a price of $.05 per Warrant if the average closing bid price
for the Common Stock equals or exceeds $7.50 per share for 20 consecutive
trading days ending on the tenth trading day prior to the date of the notice of
redemption.
The Warrant may be exercised upon surrender of the Warrant certificate on
or prior to the expiration date (or earlier redemption date, if applicable) of
such Warrants at the offices of the warrant agent, with the form of "Election to
Purchase" on the reverse side of the Warrant certificate completed and executed
as indicated, accompanied by payment of the full exercise price (in cash or by
certified check payable to the order of the warrant agent, as agent for the
Company) for the number of Warrants being exercised.
No Warrant will be exercisable or redeemable unless, at the time of
exercise or redemption, the Company has filed a current Prospectus with the
Commission covering the shares of Common Stock to be issued or redeemed upon
exercise or redemption of such Warrant and such shares have been registered or
qualified or deemed to be exempt under the securities laws of the state of
residence of the holder of such Warrant. The Company will use its best efforts
to have all such shares so registered or qualified on or before the exercise or
redemption date of the Warrants and to maintain a current Prospectus relating
thereto until the expiration of the Warrants, subject to the terms of the
Warrant Agreement. While it is the Company's intention to do so, there is no
assurance that it will be able to do so.
53
<PAGE>
Transfer Agent and Warrant Agent
Continental Stock Transfer & Trust Company, New York, New York, is the
transfer agent and registrar for the shares of Common Stock and the warrant
agent for the Warrants.
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of this offering, there will be 2,265,000 shares of Common
Stock outstanding that are "restricted securities" as that term is defined in
Rule 144 promulgated under the Act. In general, under Rule 144, and providing
the Company is current in all reports which are required to be filed by the
Securities Exchange Act of 1934, a person (or persons whose shares are
aggregated) who has satisfied a two-year holding period may, under certain
circumstances, sell within any three-month period that number of shares which
does not exceed the greater of one percent of the then outstanding shares or the
average weekly trading volume during the four calendar weeks prior to such sale.
Rule 144 also permits, under certain circumstances, the sale of shares without
any quantity limitation by a person who has satisfied a three-year holding
period and who is not, and has not been for the preceding three months, an
affiliate of the Company. Under the provisions of Rule 144, 1,698,750 shares of
such restricted securities may be sold immediately and 566,250 shares may be
sold beginning in May, 1997. The Warrants being offered by the Company entitle
the holders of such Warrants to purchase up to an aggregate of 1,050,000 shares
of Common Stock at any time during the period beginning one year from the date
of this Prospectus and expiring five years from the date of this Prospectus.
Sales of either the Warrants or underlying shares of Common Stock, or even the
existence of the Warrants, may depress the price of the Common Stock or the
Warrants in any market which may develop for such securities. Holders of 100% of
the Common Stock (including shares issuable in connection with pre-offering
transactions and upon exercise of outstanding options) have agreed not to
directly or indirectly sell any shares of Common Stock or any other securities
of the Company owned by them for a period of two years from the date of this
Prospectus without the prior written consent of the Representative.
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting
Agreement, which is filed as an exhibit to the Registration Statement, the
Underwriters have agreed to purchase, and the Company has agreed to sell,
1,050,000 shares of Common Stock and 1,050,000 Warrants as follows:
Name Shares Warrants
RAS Securities Corp.........................
**** ******** *** ..........................
Total....................................... 1,050,000 1,050,000
The Underwriting Agreement provides that the Underwriters will be obligated
to purchase all the Securities offered hereby on a "firm commitment" basis, if
any are purchased. The Company has been advised by the Underwriters that they
propose to offer the Shares and the Warrants to the public initially at the
offering prices set forth on the cover page of this Prospectus; that the
Underwriters may
54
<PAGE>
allow to selected dealers a concession of $.** per Share and $.** per Warrant;
and that such dealers may reallow a concession of $.** per Share and $.** per
Warrant to certain other dealers.
The Company has granted to the Representative an over-allotment option to
purchase up to 157,500 shares of Common Stock and/or 157,500 Warrants during the
30 day period commencing with the date of this Prospectus, solely to cover
over-allotments in the sale of the Shares and the Warrants. The Company has also
agreed to sell to the Representative for nominal consideration the
Representative's Warrants to purchase an aggregate of 105,000 shares of Common
Stock and 105,000 Warrants. The Representative's Warrants are exercisable at a
price equal to 120% of the initial offering price, for a period of four years
commencing one year from the date of this Prospectus. The Representative's
Warrants grant to the holder thereof certain "piggyback" registration rights for
a period of seven years from the date of this Prospectus and demand registration
rights for a period of five years from the date of this Prospectus with respect
to the registration under the Securities Act of the securities issuable upon
exercise of the Representative's Warrants.
During the term of the Representative's Warrants, the holders are given the
opportunity to profit from a rise in the market price of the Common Stock with a
resulting dilution in the interest of other stockholders. Moreover, the holders
may exercise the Representative's Warrants at a time when the Company would in
all likelihood be able to obtain equity capital on terms more favorable than
those provided in the Representative's Warrants.
In accordance with the Underwriting Agreement, the Representative has been
granted the option of designating an individual to serve on the Company's Board
of Directors for a period of three years after completion of this offering. The
Representative has not advised the Company whether it will exercise such option
or, if so, who it will designate.
The Underwriting Agreement provides that the Company will pay a
nonaccountable expense allowance of 3% of the gross proceeds of this offering to
the Underwriters, $50,000 of which has been paid as of the date of this
Prospectus. The Company also has agreed to pay all expenses in connection with
qualifying the Shares and the Warrants offered hereby for sale under the laws of
such states as the Underwriters may designate, including fees and expenses of
counsel retained for such purposes, certain costs of investigatory searches of
the Company's executive officers and other expenses in connection with the
Offering.
The Underwriters have informed the Company that the Underwriters do not
intend to confirm sales to any accounts over which they exercise discretionary
authority.
All of the Company's other stockholders, officers and directors have agreed
not to sell their shares without the consent of the Representative for a period
of 24 months. The Underwriting Agreement provides that, other than the issuance
of options pursuant to the Option Plan, the Company will not offer any shares of
Common Stock, options to purchase Common Stock, Warrants or any other equity or
debt security within three years after the date of this Prospectus without the
consent of the Representative.
55
<PAGE>
The Underwriting Agreement provides that the Company will neither solicit
the exercise of the Warrants nor authorize any other dealer to engage in such
solicitation without the consent of the Representative. Upon the exercise of the
Warrants, the Company has agreed to pay to the Representative a commission equal
to 5% of the aggregate exercise price. The commission will be payable only if
(i) the Warrant is exercised at least 12 months after the date of this
Prospectus; (ii) the market price of the Common Stock on the date that the
Warrant is exercised is greater than the exercise price of the Warrants; (iii)
the exercise of the Warrant was solicited by a member of the National
Association of Securities Dealers, Inc.; (iv) the Warrant is not held in a
discretionary account; (v) disclosure of the compensation arrangements is made
at the time of the exercise of the Warrant; (vi) the holder of the Warrant has
stated in writing that the exercise was solicited and designated in writing the
soliciting broker-dealer; and (vii) solicitation of exercise of the Warrant was
not in violation of Rule l0b-6 promulgated under the Exchange Act. However, no
fees will be payable to the Representative in connection with Warrants
voluntarily exercised without solicitation by the Representative.
The Underwriting Agreement provides that, on the effective date of this
Prospectus, the Company shall enter into a non-exclusive financial consulting
agreeement with the Representative providing for the payment to the
Representative of certain success fees upon the completion of future services
after the completion of the offering, such as mergers and acquisitions
originated by the Representative.
Prior to this offering, there has been no public market for any of the
Company's securities. Accordingly, the initial public offering prices of the
Securities was determined by negotiation between the Company and the
Representative. Factors considered in determining such prices and terms, in
addition to prevailing market conditions, included the history of and the
prospects of the industry in which the Company intends to compete, an assessment
of the Company's management, the prospects of the Company, its capital structure
and such other factors as were deemed relevant.
The Underwriting Agreement provides for reciprocal indemnification between
the Company and the Underwriters against certain liabilities in connection with
the Registration Statement, including liabilities under the Securities Act. To
the extent that the Underwriting Agreement may purport to provide exculpation
from possible liabilities arising under the federal securities laws, it is the
opinion of the Commission that such indemnification is contrary to public policy
and unenforceable.
In December 1994, Sid Borenstein, a director of the Company, made a
subordinated loan to the Representative in the principal amount of $490,000, due
in December 1996. In connection with such loan, Mr. Borenstein received the
right to participate in certain profits of the Representative.
LEGAL MATTERS
The validity of the issuance of the Securities will be passed upon for the
Company by Scheichet & Davis, P.C., New York, New York. Bachner, Tally, Polevoy
& Misher LLP, New York, New York has acted as counsel for the Underwriters in
connection with this offering. The statements
56
<PAGE>
under the captions "Risk Factors - State and Federal Regulation", "Business -
Reimbursement" and "Business - Government Regulation" and other references in
this Prospectus to health care regulations and third party reimbursement have
been reviewed for the Company by Halpern & Pasternack, P.C., Garden City, New
York.
EXPERTS
The historical financial statements of the Company as of December 31, 1994
and December 31, 1995 included in this Prospectus have been audited by M.R.
Weiser & Co., LLP, independent certified public accountants. Their report
appears elsewhere in this Prospectus and is included in reliance upon the
authority of that firm as experts in auditing and accounting.
ADDITIONAL INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission"), in Washington, D.C., a Registration Statement on Form SB-2 under
the Securities Act with respect to the Securities. This Prospectus omits certain
information contained in said Registration Statement as permitted by the rules
and regulations of the Commission. For further information with respect to the
Company and the Securities, reference is made to the Registration Statement,
including the exhibits thereto. Statements contained herein concerning the
contents of any contract or any other document are not necessarily complete, and
in each instance, reference is made to such contract or other document filed
with the Commission as an exhibit to the Registration Statement, or otherwise,
each such statement being qualified in all respects by such reference. The
Registration Statement, including exhibits and schedules thereto, may be
inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549, at the Chicago Regional Office, Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661-2511 and at the Northeast Regional
Office, Seven World Trade Center, 13th Floor, New York, New York 10048. Copies
of such materials can be obtained from the Public Reference Section of the
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates.
57
<PAGE>
NEW YORK HEALTH CARE, INC.
INDEX TO FINANCIAL STATEMENTS
NEW YORK HEALTH CARE, INC.:
<TABLE>
<S> <C>
Independent Auditors' Report F-1
Balance Sheets at December 31, 1995 and March 31, 1996 F-2
Statements of Income for the Years Ended December 31, 1994 and 1995
and for the Three Months Ended March 31, 1995 and 1996 F-3
Statements of Shareholders' Equity for the Years Ended December 31, 1994
and 1995, and for the Three Months Ended March 31, 1995 and 1996 F-4
Statements of Cash Flows for the Years Ended December 31, 1994 and 1995,
and for the Three Months Ended March 31, 1995 and 1996 F-5
Notes to Financial Statements F-6 - F16
</TABLE>
58
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
New York Health Care, Inc.
We have audited the accompanying balance sheet of New York Health Care, Inc.
(the "Corporation") as of December 31, 1995, and the related statements of
income, shareholders' equity and cash flows for the years ended December 31,
1994 and 1995. These financial statements are the responsibility of the
Corporation's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of New York Health Care, Inc. as
of December 31, 1995, and the results of its operations and its cash flows for
the years ended December 31, 1994 and 1995 in conformity with generally accepted
accounting principles.
----------------------------------
M.R. WEISER & CO. LLP
Certified Public Accountants
New York, NY
January 26, 1996
F-1
<PAGE>
NEW YORK HEALTH CARE, INC.
BALANCE SHEETS
A S S E T S
<TABLE>
<CAPTION>
Pro Forma
March 31,
December 31, March 31, 1996
1995 1996 Note 2
---------- ---------- ----------
(Unaudited) (Unaudited)
<S> <C> <C> <C>
Current assets:
Cash (Notes 2 and 8) $ 177,688 $ 318,541 $ 318,541
Accounts receivable, net of allowance for uncollectible
amounts of $44,000 and $74,000 in 1995 and 1996,
respectively (Notes 4, 8 and 14) 4,089,198 3,269,520 3,269,520
Unbilled services (Note 2) 109,314 57,478 57,478
Advances to shareholders 145,000
Prepaid expenses 46,867 34,619 34,619
---------- ---------- ----------
Total current assets 4,568,067 3,680,158 3,680,158
Property and equipment, net (Notes 2 and 3) 96,431 98,729 98,729
Note receivable - shareholder (Note 9) 125,000 125,000 125,000
Acquisition costs, net (Note 2) 30,757 27,274 27,274
Deferred registration costs, net (Note 2) 50,000 50,000
Deposits 19,819 19,819 19,819
---------- ---------- ----------
Total assets $4,840,074 $4,000,980 $4,000,980
========== ========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Note payable - bank (Note 4) $1,225,000 $ 900,000 $3,100,000
Accrued payroll 288,023 290,495 290,495
Deferred income taxes (Note 2) 184,000 134,000 134,000
Accounts payable and accrued expenses 59,138 163,587 163,587
Income taxes payable (Note 2) 29,737
Current maturities of long term debt (Note 6) 6,980 6,355 6,355
---------- ---------- ----------
Total current liabilities 1,792,878 1,494,437 3,694,437
Long-term debt, less current maturities (Note 6) 6,502 5,137 5,137
Commitments and contingencies (Note 8)
Shareholders' equity (Notes 7 and 10):
Preferred stock $.01 par value, 2,000,000 shares
authorized; no shares issued or outstanding
Common stock, $.01 par value, 10,000,000 shares
authorized; 2,265,000 shares issued and outstanding 22,650 22,650 22,650
Additional paid-in capital 7,350 7,350 7,350
Retained earnings 3,010,694 2,471,406 271,406
---------- ---------- ----------
Total shareholders' equity 3,040,694 2,501,406 301,406
---------- ---------- ----------
Total liabilities and shareholders' equity $4,840,074 $4,000,980 $4,000,980
========== ========== ==========
See accompanying notes to financial statements
</TABLE>
F-2
<PAGE>
NEW YORK HEALTH CARE, INC.
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
For The
For the Years Ended Three Months Ended
December 31, March 31,
------------------------------- -------------------------------
1994 1995 1995 1996
------------ ------------ ------------ ------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Net patient service revenue (Note 2) $ 8,981,301 $ 11,809,728 $ 2,621,331 $ 2,987,065
------------ ------------ ------------ ------------
Expenses:
Professional care of patients 6,301,138 8,127,447 1,781,837 2,062,483
General and administrative 1,719,220 2,358,487 571,588 653,429
Bad debts expense 50,000 30,359
Depreciation 23,940 32,455 8,100 6,886
------------ ------------ ------------ ------------
Total operating expenses 8,094,298 10,518,389 2,361,525 2,753,157
------------ ------------ ------------ ------------
Income from operations 887,003 1,291,339 259,806 233,908
------------ ------------ ------------ ------------
Nonoperating income (expenses):
Interest income 3,073
Other income 5,940 4,766
Interest expense (84,931) (82,328) (27,368) (31,397)
------------ ------------ ------------ ------------
Nonoperating expenses, net (78,991) (82,328) (27,368) (23,558)
------------ ------------ ------------ ------------
Income before provision for income taxes 808,012 1,209,011 232,438 210,350
------------ ------------ ------------ ------------
Provision (credit) for income taxes (Note 2):
Current 666 35,000 9,000 12,000
Deferred 36,000 46,000 (50,000)
------------ ------------ ------------ ------------
36,666 81,000 9,000 (38,000)
------------ ------------ ------------ ------------
Net income $ 771,346 $ 1,128,011 $ 223,438 $ 248,350
============ ============ ============ ============
Pro forma (unaudited) (See Note 2):
Historical income before provision
for income taxes $ 808,012 $ 1,209,011 $ 232,438 $ 210,350
Pro forma provision for income taxes 353,000 520,000 101,000 91,000
------------ ------------ ------------ ------------
Pro forma net income $ 455,012 $ 689,011 $ 131,438 $ 119,350
============ ============ ============ ============
Pro forma net income per common share
and common share equivalents $ .25 $ .04
============ ============
Pro forma weighted average number of
common shares and common share equivalents 2,743,475 2,743,475
============ ============
See accompanying notes to financial statements.
</TABLE>
F-3
<PAGE>
<TABLE>
<CAPTION>
NEW YORK HEALTH CARE, INC.
STATEMENTS OF SHAREHOLDERS' EQUITY
For The Years Ended December 31, 1994 and 1995 And For
The Three Months Ended March 31, 1996 (Unaudited) (a)
Additional
Common Stock Paid-In Retained
Shares Amount Capital Earnings Total
--------- ------- ------ ---------- ----------
<S> <C> <C> <C> <C> <C>
Balance at January 1, 1994 2,265,000 $22,650 $7,350 $2,051,599 $2,081,599
Net income 771,346 771,346
Distributions ($.04 per share) (100,230) (100,230)
--------- ------- ------ ---------- ----------
Balance at December 31, 1994 2,265,000 22,650 7,350 2,722,715 2,752,715
Net income 1,128,011 1,128,011
Distributions ($.37 per share) (840,032) (840,032)
--------- ------- ------ ---------- ----------
Balance at December 31, 1995 2,265,000 22,650 7,350 3,010,694 3,040,694
Net income (unaudited) 248,350 248,350
Distributions ($.35 per share)
(unaudited) (787,638) (787,638)
--------- ------- ------ ---------- ----------
Balance at March 31, 1996
(unaudited) 2,265,000 $22,650 $7,350 $2,471,406 $2,501,406
========= ======= ====== ========== ==========
</TABLE>
(a) Retroactive effect has been given to the March 26, 1996 recapitalization
referred to in Note 10.
See accompanying notes to financial statements.
F-4
<PAGE>
NEW YORK HEALTH CARE, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For The
For the Years Ended Three Months Ended
December 31, March 31,
---------------------------- -----------------------------
1994 1995 1995 1996
----------- ----------- ----------- -----------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income $ 771,346 $ 1,128,011 $ 223,438 $ 248,350
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 42,827 59,403 11,539 10,369
Bad debts expense 50,000 30,359
Deferred tax expense (credit) 36,000 46,000 (50,000)
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable
and unbilled receivables (1,033,667) (453,893) 295,945 841,155
(Increase) decrease in due from affiliate (68,149) 68,149 68,149
(Increase) decrease in due from shareholders (145,000) 145,000
(Increase) decrease in prepaid expenses (43,308) 7,159 35,600 12,248
Increase in deferred charges (21,514) (50,000)
(Increase) decrease in deposits 28,499 (3,600) 6,000
(Increase) decrease in sundry assets 5,460 2,000 (11,926)
Increase (decrease) in accounts payable
and accrued expenses 50,009 (135,563) (34,228) 104,449
Increase in accrued payroll 72,333 95,374 32,527 2,472
Increase (decrease) in income taxes payable 29,737 (29,737)
----------- ----------- ----------- -----------
Net cash provided by (used in)
operating activities (110,164) 697,777 627,044 1,264,665
----------- ----------- ----------- -----------
Cash flows from investing activities:
Acquisition of fixed assets (327,916) (27,416) (47,070) (9,184)
Proceeds from sale of investment 18,112
Increase in note receivable - shareholder (125,000)
----------- ----------- ----------- -----------
Net cash used in investing activities (309,804) (152,416) (47,070) (9,184)
----------- ----------- ----------- -----------
Cash flows from financing activities:
Net borrowings (repayments) under note payable 350,000 325,000 (325,000)
Borrowing of long-term debt 176,498
Repayment of long-term debt (32,210) (18,887) (7,893) (1,990)
Distributions (100,230) (695,105) (153,933) (787,638)
----------- ----------- ----------- -----------
Net cash provided by (used in)
financing activities 394,058 (388,992) (161,826) (1,114,628)
----------- ----------- ----------- -----------
Net increase (decrease) in cash and
cash equivalents (25,910) 156,369 418,148 140,853
Cash and cash equivalents at beginning of period 47,229 21,319 21,319 177,688
----------- ----------- ----------- -----------
Cash and cash equivalents at end of period $ 21,319 $ 177,688 $ 439,467 $ 318,541
=========== =========== =========== ===========
(See Note 13)
See accompanying notes to financial statements
</TABLE>
F-5
<PAGE>
NEW YORK HEALTH CARE, INC.
NOTES TO FINANCIAL STATEMENTS
(Amounts And Disclosures As Of March 31, 1996 And Subsequent Thereto
And For The Three Months Ended March 31, 1995 And 1996 Are Unaudited)
1. THE COMPANY:
New York Health Care, Inc. (the "Corporation") was incorporated in February
1983 under the laws of the State of New York and has elected "S"
corporation status under provisions of the Internal Revenue Service. The
Corporation was formed to provide the services of registered nurses and
nurses aides to hospitals, nursing homes and other healthcare providers
within the New York metropolitan area.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Interim Financial Information (Unaudited):
The financial statements and accompanying financial information as of March
31, 1996, and for the three months ended March 31, 1995 and 1996, are
unaudited but include all adjustments (consisting solely of normal
recurring accruals) which the Corporation considers necessary for a fair
presentation of the financial position at March 31, 1996, and the operating
results and cash flows for the three month periods ended March 31, 1995 and
1996. Results for interim periods are not necessarily indicative of results
for the entire year.
Estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Revenue Recognition:
The Corporation recognizes net patient service revenue based upon the date
services are rendered. Net patient service revenue is reported at the
estimated net realizable amounts from patients, third-party payers and
others. Unbilled services represent amounts due for services rendered which
were not billed at the end of each period.
F-6
<PAGE>
NEW YORK HEALTH CARE, INC.
NOTES TO FINANCIAL STATEMENTS
(Amounts And Disclosures As Of March 31, 1996 And Subsequent Thereto
And For The Three Months Ended March 31, 1995 And 1996 Are Unaudited)
Property, Plant and Equipment:
Property, plant and equipment is carried at cost and is being depreciated
under the straight-line method over the following estimated useful lives of
the assets or the life of the lease, whichever is shorter.
Machinery and equipment 5 years
Furniture and fixtures 7 years
Transportation equipment 5 years
Acquisition Costs:
On March 17, 1988, the Corporation purchased the customer lists, employee
lists and other intangible assets of National Medical Home Care at a cost
of $139,273. This cost is being amortized using the straight-line method
over a period of ten years. At December 31, 1995 and March 31, 1996, the
accumulated amortization was $108,516 and $111,999, respectively.
Deferred Registration Costs:
Costs relating to the Corporation's efforts to obtain additional financing
through a proposed public offering have been deferred and will be offset
against the proceeds of a successful offering or, if the offering is
unsuccessful, charged to operations.
Income Taxes:
The accompanying historical financial statements exclude a provision for
Federal income taxes because the Corporation elected to be treated as an S
corporation under the applicable provisions of the Internal Revenue Code.
Accordingly, the operations of the Corporation are included in the
individual income tax returns of the shareholders.
The Corporation uses the asset and liability method to calculate deferred
tax assets and liabilities. Deferred state and city taxes are recognized
based on the differences between financial reporting and income tax bases
of assets and liabilities using enacted income tax rates. Deferred state
and city income taxes arise from the use of the cash basis of accounting
for income tax purposes.
F-7
<PAGE>
NEW YORK HEALTH CARE, INC.
NOTES TO FINANCIAL STATEMENTS
(Amounts And Disclosures As Of March 31, 1996 And Subsequent Thereto
And For The Three Months Ended March 31, 1995 And 1996 Are Unaudited)
Pro forma Information (Unaudited):
a. Pro forma Net Income Per Common Share and Common Share Equivalents:
Pro forma net income per common share and common share equivalents has
been computed based upon the weighted average number of shares and
common share equivalents outstanding during each period. Common share
equivalents recognize the potential dilutive effects of the exercise
of outstanding options and warrants to acquire common stock. The
Corporation has used the anticipated initial public offering price of
$5.00 per common share for all periods presented for purposes of
computing the potential dilutive effects of common share equivalents.
The issuance of a stock option had the effect of increasing the
weighted average shares outstanding for all periods by 18,750 shares
calculated by using the treasury stock method.
Pursuant to the rules of the Securities and Exchange Commission,
dividends declared in the latest twelve month period would be deemed
to be in contemplation of the offering with the intention of repayment
out of offering proceeds to the extent that the dividend exceeded
earnings during the previous twelve months. The shares whose proceeds
would be necessary to pay the S-Corporation distribution declared and
paid during the three month period ended March 31, 1996 ($787,638) and
the dividend declared on July 10, 1996 ($2,200,000) has the pro forma
effect of increasing the weighted average shares outstanding for all
periods by 459,725 shares.
b. Pro Forma Balance Sheet:
The pro forma balance sheet as of March 31, 1996 presents the pro
forma effects of the S-Corporation distribution of $2,200,000 declared
on July 10, 1996.
c. Pro Forma Statement of Income Adjustment:
The pro forma statement of income information presents the pro forma
effects on the historical financial information of the Corporation's
termination of its S-Corporation status upon consummation of the
planned initial public offering. The unaudited proforma adjustment
included in the statements of income gives effect to a charge in lieu
of income taxes that would have been included in the provision for
income taxes had the Corporation been taxed as a C Corporation.
Cash Equivalents:
For purposes of the statement of cash flows, the Corporation considers all
highly liquid investments with maturities of three months or less when
purchased to be cash equivalents.
F-8
<PAGE>
NEW YORK HEALTH CARE, INC.
NOTES TO FINANCIAL STATEMENTS
(Amounts And Disclosures As Of March 31, 1996 And Subsequent Thereto
And For The Three Months Ended March 31, 1995 And 1996 Are Unaudited)
Stock Based Compensation:
In October 1995, the FASB issued SFAS No. 123, "Accounting for Stock-Based
Compensation", which requires adoption of the disclosure provisions no
later than fiscal years beginning after December 15, 1995 and adoption of
the measurement and recognition provisions for non-employee transactions no
later than after December 15, 1995. The new standard defines a fair value
method of accounting for the issuance of stock options and other equity
instruments. Under the fair value method, compensation cost is measured at
the grant date based on the fair value of the award and is recognized over
the service period, which is usually the vesting period. Pursuant to SFAS
No. 123, the Corporation is not required to adopt the fair value method of
accounting for employee stock-based transactions. The Corporation is
permitted to continue to account for such transactions under Accounting
Principles Board Opinion ("APB") No. 25, "Accounting for Stock Issued to
Employees", but is required to disclose in a note to the financial
statements pro forma net income, and per share amounts as if the
corporation had applied the new method of accounting. In 1996, the
Corporation adopted the disclosure provisions of SFAS No. 123. However, due
to the minimal impact, no disclosures were required.
Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of:
The Company has adopted Statement of Financial Accounting Standards ("FAS")
No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of," in the first quarter of 1996. FAS No.
121 establishes new accounting standards for measuring the impairment of
long-lived assets. The adoption of this new standard does not have a
significant effect on the Corporation's financial statements.
3. PROPERTY AND EQUIPMENT:
Property and equipment consist of the following:
<TABLE>
<CAPTION>
December 31, March 31,
1995 1996
------------ -----------
(Unaudited)
<S> <C> <C>
Machinery and equipment $150,058 $154,711
Furniture and fixtures 47,215 51,747
Transportation equipment 5,000 5,000
-------- --------
202,273 211,458
Less accumulated depreciation and amortization 105,842 112,729
-------- --------
$ 96,431 $ 98,729
======== ========
</TABLE>
F-9
<PAGE>
NEW YORK HEALTH CARE, INC.
NOTES TO FINANCIAL STATEMENTS
(Amounts And Disclosures As Of March 31, 1996 And Subsequent Thereto
And For The Three Months Ended March 31, 1995 And 1996 Are Unaudited)
4. NOTE PAYABLE - BANK:
The Corporation had arranged for a $1,300,000 line of credit with a bank
during 1994. In October 1995, the available line of credit was increased to
$2,000,000. The line of credit is collateralized by the Corporation's
accounts receivable and is guaranteed by certain shareholders. Interest is
payable monthly at 1.5% above the prime rate published by Chemical Bank.
The amount outstanding at December 31, 1995 and March 31, 1996 is
$1,225,000 and $900,000, respectively. On May 9, 1996, the Corporation
entered into a promissory note with its bank which increased the line of
credit to $3,500,000 and adjusted the interest payable to .75% above the
market prime as posted in the Wall Street Journal. The line of credit is
renewable in May 1997.
5. THIRD-PARTY RATE ADJUSTMENTS AND REVENUE:
Approximately 26% and 27% of net patient service revenue was derived under
New York State third-party reimbursement programs during the years ended
December 31, 1994 and 1995, respectively, and approximately 34% and 27% of
net patient service revenue was derived under New York State third-party
reimbursement programs during the three months ended March 31, 1995 and
1996, respectively. These revenues are based, in part, on cost
reimbursement principles and are subject to audit and retroactive
adjustment by the respective third-party fiscal intermediaries. Provision
for estimated amounts due to/from the Corporation has been made in the
financial statements. Differences between estimated revised rates and
subsequent revisions will be reflected in the statement of income in the
year revisions are calculated.
6. LONG-TERM DEBT:
Long-term debt consists of the following:
<TABLE>
<CAPTION>
December 31, March 31,
1995 1996
------------ ----------
(Unaudited)
<S> <C> <C> <C>
Capital leases collateralized by various machinery
and equipment are payable through April 1998. $13,482 $11,492
Less current maturities (6,980) (6,355)
------- --------
$ 6,502 $ 5,137
======= ========
</TABLE>
F-10
<PAGE>
NEW YORK HEALTH CARE, INC.
NOTES TO FINANCIAL STATEMENTS
(Amounts And Disclosures As Of March 31, 1996 And Subsequent Thereto
And For The Three Months Ended March 31, 1995 And 1996 Are Unaudited)
7. PERFORMANCE INCENTIVE PLAN AND 401(K) PLAN:
Performance Incentive Plan:
On March 26, 1996, the Corporation's Board of Directors adopted the
Performance Incentive Plan (the "Option Plan"). Under the terms of the
Option Plan, 210,000 shares of common stock may be granted. The Option Plan
will be administered by a Committee appointed by the Board of Directors.
The Committee will determine which key employee, officer or director on the
regular payroll of the Company, shall receive stock options. Granted
options are exercisable in three equal annual installments, commencing six
months after the date of grant, and expire ten years after the date of
grant. No options have been granted under the Option Plan.
401 (K) Plan:
The Corporation maintains an Internal Revenue Code Section 401 (k) salary
deferred savings plan (the "Plan") for all of its employees who have been
employed for at least 1 year and are at least 21 years old. Subject to
certain limitations, the Plan allows participants to voluntarily contribute
up to 15% of their pay on a pre-tax basis. The Corporation currently
contributes 50% of each dollar contributed to the Plan by participants up
to a maximum of 6% of the participants salary. The Plan also provides for
certain discretionary contributions by the Corporation as determined by the
Board of Directors. The Corporation's contributions amounted to $21,200 and
$41,900 for the years ended December 31, 1994 and 1995 and $7,500 and
$6,900 for the three months ended March 31, 1995 and 1996, respectively.
F-11
<PAGE>
NEW YORK HEALTH CARE, INC.
NOTES TO FINANCIAL STATEMENTS
(Amounts And Disclosures As Of March 31, 1996 And Subsequent Thereto
And For The Three Months Ended March 31, 1995 And 1996 Are Unaudited)
8. COMMITMENTS, CONTINGENCIES AND OTHER COMMENTS:
Lease Commitments:
The Corporation leases office space under noncancellable operating leases
in the New York metropolitan area that expire between December 1996 and
November 2000.
At December 31, 1995 (substantially the same at March 31, 1996), future
minimum lease payments due under operating and capital leases approximate:
<TABLE>
<CAPTION>
Operating Capital
Leases Leases
--------- -------
<S> <C> <C>
1997 $ 93,000 $ 8,204
1998 75,000 6,354
1999 69,000
2000 42,000
2001 38,000
--------- -------
Total minimum future payments $ 317,000 14,558
=========
Less amounts representing interest (3,066)
-------
Present value of net minimum lease payments $11,492
=======
</TABLE>
Rental expense charged to operations was approximately $66,000 and $86,000
for the years ended December 31, 1994 and 1995 and $20,400 and $33,100 for
the three months ended March 31, 1995 and 1996, respectively.
Employment Agreements:
On March 26, 1996, the Corporation entered into employment agreements with
two officers of the Corporation, with terms expiring on December 31, 1999.
The agreements call for aggregate annual compensation of approximately
$315,000 with annual increases of 10%, and provide for certain additional
benefits. Aggregate compensation paid to these two officers amounted to
$217,000 during the year ended December 31, 1995.
F-12
<PAGE>
NEW YORK HEALTH CARE, INC.
NOTES TO FINANCIAL STATEMENTS
(Amounts And Disclosures As Of March 31, 1996 And Subsequent Thereto
And For The Three Months Ended March 31, 1995 And 1996 Are Unaudited)
Concentrations of Credit Risk:
Financial instruments which potentially subject the Corporation to
concentrations of credit risk consist primarily of temporary cash
investments and commercial accounts receivable. The Corporation has cash
investment policies that restrict placement of these investments to
financial institutions evaluated as highly creditworthy. The Corporation
does not require collateral on commercial accounts receivable as the
customer base consists of large, well established institutions. As of
December 31, 1995, accounts receivable include $1,326,000 or 32% from three
hospitals, and as of March 31, 1996, accounts receivable include $1,442,000
or 44% from three hospitals.
Major Customers:
One major customer accounted for approximately 15.4% and 12.5% of net
patient service revenue for the years ended December 31, 1994 and 1995,
respectively.
One major customer accounted for approximately 11.4% and 10% of net patient
service revenue for the three months ended March 31, 1995 and 1996,
respectively.
Business Risks:
Certain factors relating to the industry in which the Corporation operates
and the Corporation's business should be carefully considered. The
Company's primary business, offering home health care services, is heavily
regulated at both the federal and state levels. While the Corporation is
unable to predict what regulatory changes may occur or the impact on the
Corporation of any particular change, the Corporation's operations and
financial results could be negatively affected.
Further, the Corporation operates in a highly competitive industry which
may limit the Corporation's ability to price its services at levels that
the Corporation believes appropriate. These competitive factors may
adversely affect the Corporation's financial results.
Reference is made to "Risk Factors" elsewhere in this registration
statement.
F-13
<PAGE>
NEW YORK HEALTH CARE, INC.
NOTES TO FINANCIAL STATEMENTS
(Amounts And Disclosures As Of March 31, 1996 And Subsequent Thereto
And For The Three Months Ended March 31, 1995 And 1996 Are Unaudited)
9. RELATED PARTY TRANSACTIONS:
In September 1995, the Corporation entered into a loan agreement with a
shareholder wherein the Corporation lent the shareholder $125,000. The note
is due at the earlier of (i) 30 days after notice of the filing of a
registration statement, or (ii) September 28, 1997. Interest is payable
monthly at the rate charged by the Corporation's lender. (See Note 4). The
shareholder's stock certificates are being held as collateral for the note.
In January 1996, the Corporation entered into a Service Agreement with a
company affiliated through common ownership. The Corporation has agreed to
provide administrative services relating to payroll, benefits management
and data processing to the company through June 30, 1997. The Company will
be reimbursed for all expenses attributable to such operations, presently
totaling $15,000 per year.
On November 1, 1995, the Corporation transferred the land and building
which it had acquired on April 18, 1994 to a company related through common
ownership. As a result of the transaction, the Corporation was relieved of
its mortgage obligation of $146,250 and the shareholders received a
non-cash distribution in 1995 of $144,927 which represented the net book
value of the land and building. No gain or loss was recognized upon the
transfer.
10. SHAREHOLDERS' EQUITY:
Common Stock and Recapitalization:
As effected on March 26, 1996, the shareholders and Board of Directors
authorized an increase in the number of authorized shares of common stock
from 200 to 10,000,000, an increase in par value to $.01 per share, a stock
split of 56,625 for 1 of the Corporation's common stock outstanding, and a
stock split of 48,343.75 for 1 of the Corporation's unissued common stock.
As a result, all historic share amounts and per share amounts in the
accompanying financial statements and notes have been adjusted to reflect
the stock split and increase in par value.
Preferred Stock:
On March 26, 1996, the shareholders and Board of Directors approved the
authorization of a total of 2,000,000 shares of preferred stock which may
be issued in one or more series with rights and preferences to be
determined by the Board of Directors.
F-14
<PAGE>
NEW YORK HEALTH CARE, INC.
NOTES TO FINANCIAL STATEMENTS
(Amounts And Disclosures As Of March 31, 1996 And Subsequent Thereto
And For The Three Months Ended March 31, 1995 And 1996 Are Unaudited)
Options:
On March 26, 1996, the Corporation issued an option to purchase 75,000
shares of common stock to the President of the Corporation at an exercise
price of $3.75 per share. The option may be exercised at any time through
March 26, 2006.
Dividend Policy:
The Corporation has operated as an S Corporation prior to the proposed
public offering and has paid out a substantial portion of its earnings to
its current shareholders as S Corporation distributions. On July 10, 1996,
the Board of Directors declared an S Corporation distribution of
$2,200,000. The Board of Directors intends to retain and reinvest any
future earnings into the development of the business. Any future payment of
dividends will be subject to the discretion of the Board of Directors.
11. FAIR VALUE OF FINANCIAL INSTRUMENTS:
The amounts included in the balance sheets at December 31, 1995 and March
31, 1996 for cash, accounts receivable, unbilled services, advances to
shareholders, line of credit, and accounts payable and accrued expenses
approximate fair value because of the short-term nature of these
instruments.
12. OTHER MATTERS:
Proposed Public Offering:
On March 6, 1996, the Corporation signed a letter of intent with an
investment banker for a proposed public offering of the Corporation's
common stock and warrants. The letter specifies that the investment banker
will underwrite, on a firm commitment basis, 1,050,000 shares of common
stock anticipated to be offered at $5.00 per share and 1,050,000 of
redeemable warrants at $.10 per redeemable warrant. The redeemable warrants
will be exercisable at any time during a period of four years commencing
one year after the effective date of the Prospectus at an exercise price of
$6.00 per share. The redeemable warrants will include an option, whereby,
under certain conditions, the Corporation can redeem the warrants.
F-15
<PAGE>
NEW YORK HEALTH CARE, INC.
NOTES TO FINANCIAL STATEMENTS
(Amounts And Disclosures As Of March 31, 1996 And Subsequent Thereto
And For The Three Months Ended March 31, 1995 And 1996 Are Unaudited)
13. SUPPLEMENTAL CASH FLOW DISCLOSURES:
<TABLE>
<CAPTION>
For the Years Ended Three Months Ended
December 31, March 31,
------------------------- ----------------------
1994 1995 1995 1996
------- -------- ------- -------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Cash paid during the period for:
Interest $76,607 $ 93,439 $29,411 $30,930
======= ======== ======= =======
Income taxes $12,379 $ -- $ -- $12,262
======= ======== ======= =======
Supplemental disclosure of non-cash investing and
financing activities:
Transfer of ownership of building to a
separate corporation:
Decrease in fixed assets $291,177
Decrease in long-term debt 146,250
--------
Non-cash distribution to shareholders $144,927
========
</TABLE>
14. SUBSEQUENT EVENT (UNAUDITED):
On July 8, 1996, the Corporation entered into an agreement with 1667
Flatbush LLC ("1667 Flatbush") a limited liability company owned by the
Corporation's officers and directors, whereby 1667 Flatbush purchased
$3,500,000 of the Corporation's accounts receivable for a purchase price of
$3,150,000. As a result of the Corporation's sale of accounts receivable
for less than their face value, the Corporation expects to recognize a net
charge to its earnings during the third quarter ended September 30, 1996 in
the amount of $170,000. The purchase price, represented by a negotiable
promissory note bearing interest at the rate of 12% per annum, is payable
$1,100,000 on August 1, 1996, $1,100,000 on September 1, 1996, and $950,000
at the earlier of October 1, 1996 or the effective date of the initial
public offering. The note is collateralized by a lien on the accounts
receivable purchased from the Corporation, and is personally guaranteed by
each of the members of 1667 Flatbush. The note permits prepayments of
principal without penalty.
F-16
<PAGE>
================================================================================
No dealer, sales representative or other individual has been authorized to give
any information or to make any representation not contained in this Prospectus
in connection with this offering other than those contained in this Prospectus
and if given or made, such information or representation must not be relied upon
as having been authorized by the Company or the Underwriter. This Prospectus
does not constitute an offer to sell or solicitation of an offer to buy the
Common Stock by anyone in any jurisdiction in which such offer or solicitation
is not authorized or in which the person making such offer or solicitation is
not qualified to do so or to any person to whom it is unlawful to make such
offer or solicitation. Neither the delivery of this Prospectus nor any sale made
hereunder shall under any circumstances create an implication that the
information contained herein is correct as of any time subsequent to its date.
-----------------------
TABLE OF CONTENTS
Page
Prospectus Summary ...................................................... 3
Risk Factors ............................................................ 9
Use of Proceeds ......................................................... 16
Dilution ................................................................ 17
Dividend Policy ......................................................... 19
Former S Corporation Tax Treatment ...................................... 19
Capitalization .......................................................... 19
Selected Financial Data ................................................. 21
Management's Discussion and Analysis
of Financial Condition and Results
of Operations ........................................................ 22
Business ................................................................ 26
Management .............................................................. 44
Principal Stockholders .................................................. 49
Certain Transactions .................................................... 50
Description of Securities ............................................... 52
Shares Eligible for Future Sale ......................................... 54
Underwriting ............................................................ 54
Legal Matters ........................................................... 56
Experts ................................................................. 57
Additional Information .................................................. 57
Index to Financial Statements ........................................... 58
Financial Statements .................................................... F-1
Until _____, 1996 (25 days after the date of this Prospectus), all dealers
effecting transactions in the registered securities, whether or not
participating in this distribution, may be required to deliver a Prospectus.
This delivery requirement is in addition to the obligation of dealers to deliver
a Prospectus when acting as Underwriter and with respect to their unsold
allotments or subscriptions.
================================================================================
================================================================================
1,050,000 Shares of
Common Stock
and
1,050,000 Warrants
NEW YORK HEALTH CARE, INC.
----------------------
P R O S P E C T U S
----------------------
RAS SECURITIES CORP.
______________, 1996
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article Third of the Certificate of Incorporation of New York Health Care,
Inc. (the "Registrant") provides with respect to the indemnification of
directors and officers, among other things, that (a) the Registrant may, to the
fullest extent permitted by Sections 721 through 726 of the New York Business
Corporation Law, as amended, indemnify all persons whom it may indemnify
pursuant thereto, (b) a director of the Registrant shall not be personally
liable to the Registrant or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability for certain transactions or
events as set forth in such Article Third, (c) each person who was or is made a
party, or is threatened to be made a party, to or is involved in any action,
suit or proceeding, by reason of the fact that he or she is or was a director or
officer of the Registrant, shall be indemnified and held harmless by the
Registrant to the fullest extent authorized by the New York Business Corporation
Law, against all expense, liability and loss reasonably incurred or suffered by
such person in connection therewith and (d) the right to indemnification and the
payment of expenses incurred in defending a proceeding in advance of its final
disposition conferred in such Article Third shall not be exclusive of any other
right which any person may have or hereafter acquire under any statute,
provision of the Certificate of Incorporation, by-law, agreement, vote of
stockholders and disinterested directors or otherwise.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth various expenses, other than the
Underwriters' fees and commissions, which will be incurred in connection with
the public offering to which this Registration Statement relates. Other than the
SEC registration fee and the NASD and Nasdaq filing fees, amounts set forth
below are estimates:
SEC registration fee ....................................... $ 5,508
NASD Filing Fee ............................................ 1,980
Nasdaq Filing Fee .......................................... 10,000
Boston Stock Exchange Filing Fee ........................... 250
Printing and engraving expenses ............................ 50,000
Legal fees and expenses .................................... 110,000
Blue Sky fees and expenses ................................. 30,000
Accounting fees and expenses ............................... 50,000
Transfer Agent fees ........................................ 3,000
Miscellaneous expenses ..................................... 39,262
--------
$300,000
========
II-1
<PAGE>
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
Securities which were issued or sold by the Registrant within the past
three years and which were not registered under the Securities Act of 1933, as
amended (the "Act"), are as follows:
1. On May 8, 1995, the Company issued 453,000 shares of its Common Stock to
Hirsch Chitrik and 113,250 shares of Common Stock to Sid Borenstein.
2. On March 26, 1996, the Company issued a stock option to its President
and Chief Executive Officer, Jerry Braun, for the purchase of 75,000 shares of
Common Stock at an exercise price of $3.75 per share during the period ending
March 31, 1999.
Exemption from registration under the Act is claimed for the sales of
Common Stock referred to above in reliance upon the exemption afforded by
Section 4(2) of the Act for transactions not involving a public offering. Each
certificate evidencing such shares of Common Stock bears an appropriate
restrictive legend, and "stop transfer" orders are maintained on the Company's
stock transfer records against each holder named above. None of these sales
involved participation by an underwriter or a broker-dealer.
ITEM 27. EXHIBITS
The following is a list of the Exhibits which comprise a part of the
Registration Statement:
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit Page
- ------ ---------------------- ----
<S> <C> <C>
1.1 Form of Underwriting Agreement.
3.1 Certificate of Incorporation of the Company.
3.2 Restated Certificate of Incorporation of the Company.
3.3 Certificate of Correction of Restated Certificate of Incorporation
of New York Health Care, Inc.
3.4 By-laws of the Company.
4.1 Form of certificate evidencing shares of Common Stock.*
4.2 Underwriter's Warrant Agreement and Form of Underwriter's Warrant.
4.3 Form of Warrant Agreement between the Company and the Warrant
Agent, including Form of Warrant.
5 Opinion of Scheichet & Davis, P.C. on legality of securities being
registered.*
</TABLE>
II-2
<PAGE>
<TABLE>
<S> <C> <C>
10.1 Purchase and Sale Agreement by and between the Company, National
Medical Homecare, Inc., Jerry Braun and Sam Soroka dated March 18,
1988.
10.2 Lease for 105 Stevens Avenue, White Plains, New York by and
between the Company and Vincent Rippa as receiver dated October
30, 1992.
10.3 Lease for 175 Fulton Avenue, Suite 301A, Hempstead, New York by
and between and the Company and Hempstead Associates Limited
Partnership dated July 22, 1993.
10.4 Deed for 1667 Flatbush Avenue, Brooklyn, New York from Tiara
Realty Co. to the Company dated April 22, 1994.
10.5 Agreement between Jerry Braun, Jacob Rosenberg, Samson Soroka,
Hirsch Chitrik, Sid Borenstein and the Company dated March 31,
1988.
10.6 Lease for 49 South Main Street, Spring Valley, New York by and
between the Company and Joffe Management dated November 1,
1994.
10.7 Agreement for Provisions of Home Health Aide and Personal Care
Worker Services by and between the Company and Kingsbridge
Heights Health Facilities Long Term Home Health Care Program dated
November 2, 1994.
10.8 State of New York Department of Health Office of Health Systems
Management Home Care Service Agency License for the Company
doing business in Rockland, Westchester and Bronx Counties dated
May 8, 1995.
10.9 State of New York Department of Health Office of Health Systems
Management Home Care Service Agency License for the Company
doing business in Dutchess, Orange, Putnam, Sullivan and Ulster
Counties dated May 8, 1995.
</TABLE>
II-3
<PAGE>
<TABLE>
<S> <C> <C>
10.10 State of New York Department of Health Office of Health Systems
Management Home Care Service Agency License for the Company
doing business in Nassau, Suffolk and Queens Counties dated May 8,
1995.
10.11 State of New York Department of Health Office of Health Systems
Management Home Care Service Agency License for the Company
doing business in Orange and Rockland Counties dated July 1, 1995.
10.12 Lease Renewal for 45 Grand Street, Newburgh, New York by and
between the Company and Educational and Charitable Foundation of
Eastern Orange County , Inc. dated July 12, 1995.
10.13 Lease for 91-31 Queens Boulevard, Elmhurst, New York by and
between the Company and Expressway Realty Company dated
September 15, 1995.
10.14 Settlement Agreement and General Release by and between the
Company and Samson Soroka dated September 28, 1995.
10.15 Personal Care Aide Agreement by and between the Company and
Nassau County Department of Social Services dated October 18, 1995.
10.16 Lease for 1667 Flatbush Avenue, Brooklyn, New York by and between
the Company and 1667 Flatbush Avenue LLC dated November 1,
1995.
10.17 State of New York Department of Health Office of Health Systems
Management Home Care Service Agency License for the Company
doing business in Bronx, Kings, New York, Queens and Richmond
Counties dated December 29, 1995.
10.18 Home Health Agency Agreement by and between the Company and
the Center for Nursing and Rehabliltation dated January 1,
1996.
10.19 Homemaker and Personal Care Agreements by and between the
Company and the County of Rockland Department of Social Services
dated January 1, 1996
10.20 Home Health Aide/ Personal Care Worker Services Agreement by and
between the Company and Beth Abraham Hospital dated January 12,
1996.
</TABLE>
II-4
<PAGE>
<TABLE>
<S> <C> <C>
10.21 Homemaker Services Agreement by and between the Company and
the Orange County Department of Social Services dated February 16,
1996
10.22 Personal Care Service Agreement by and between the Company and
the Orange County Department of Social Services dated February 16,
1996
10.23 Certified Home Health Agency Agreement by and between the
Company and New York Methodist Hospital dated February 28, 1996.
10.24 Employment Agreement by and between the Company and Jacob
Rosenberg dated March 26, 1996
10.25 Employment Agreement by and between the Company and Jerry Braun
dated March 26, 1996
10.26 Stock Option Agreement by and between the Company and Jerry
Braun dated March 26, 1996
10.27 Home Health Agency Agreement by and between the Company and the
Mount Sinai Hospital Home Health Agency dated April 1, 1996.
10.28 Absolute, Unconditional, Irrevocable and Limited Continuing
Guaranty of Payment by and between Jacob Rosenberg and United
Mizrahi Bank and Trust Company dated May 9, 1996.
10.29 Absolute, Unconditional, Irrevocable and Limited Continuing
Guaranty of Payment by and between Jerry Braun and United Mizrahi
Bank and Trust Company dated May 9, 1996.
10.30 Continuing General Security Agreement by and between the Company
and United Mizrahi Bank and Trust Company dated May 9, 1996.
10.31 Agreement for the Purchase of Accounts Receivable between the
Company and 1667 Flatbush Avenue LLC dated July 8, 1996.
10.32 401(k) Plan for the Company
10.33 Performance Incentive Plan for the Company
10.34 Services Agreement between the Company and Heart to Heart Health
Care Services, Inc., dated January 1, 1996.
</TABLE>
II-5
<PAGE>
<TABLE>
<S> <C> <C>
11 Computation of Earnings Per Common Share of the Company.
23.1 Consent of Scheichet & Davis, P.C.
23.2 Consent of Halpern & Pasternack, P.C.
23.3 Consent of M.R. Weiser & Co. LLP.
24 Power of Attorney (included on page II-5).
</TABLE>
- ----------
* To be filed by Amendment
(b) Financial Statement Schedules. (none).
ITEM 28. UNDERTAKINGS
The Registrant hereby undertakes:
(1) That for the purpose of determining any liability under the Act, treat
the information omitted from the form of Prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
Prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Act as part of this Registration Statement as of the time the
Commission declared it effective.
(2) That for the purpose of determining any liability under the Act, treat
each post-effective amendment that contains a form of Prospectus as a new
registration statement for the securities offered in the registration statement,
and that offering of the securities at that time as the initial bona fide
offering of those securities.
(3) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(a) To include any Prospectus required by Section 10(a)(3) of the Act;
(b) To reflect in the Prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement;
(c) To include any additional or changed material information or the
plan of distribution.
II-6
<PAGE>
(4) That, for the purpose of determining any liability under the Act, treat
each posteffective amendment as a new Registration Statement of the securities
offered, and the offering of the securities at that time to be the initial bona
fide offering.
(5) To file a post-effective amendment to remove from registration any of
the securities that remain unsold at the end of the offering.
(6) Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act, and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against the
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
The Registrant will provide to the Underwriter at the closing specified in
the underwriting agreement, certificates in such denominations and registered in
such names as required by the Representative to permit prompt delivery to each
Purchaser.
II-7
<PAGE>
POWER OF ATTORNEY
We the undersigned officers and directors of New York Health Care, Inc.
(the "Company"), do hereby constitute and appoint each of Jerry Braun and Jacob
Rosenberg as our true and lawful attorneys and agents to sign a Registration
Statement on Form SB-2 to be filed with the Securities and Exchange Commission
("SEC") and to do any and all acts and things and to execute any and all
instruments for us and in our names in the capacities indicated below, which
said attorneys and agents may deem necessary or advisable to enable the Company
to comply with the Securities Act of 1933, as amended, and any rules,
regulations and requirements of the SEC in connection with such Registration
Statement including, specifically, but without limitation, power and authority
to sign for us or any of us in our names and in the capacities indicated below,
any and all amendments (including post-effective amendments) hereto; and we do
hereby ratify and confirm all that the said attorneys and agents shall do or
cause to be done by virtue of this Power of Attorney.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form SB-2 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of New York, and State of New York, on the 16th day of
July, 1996.
New York Health Care, Inc.
By: /s/ Jerry Braun
----------------------------------
Jerry Braun, President and
Chief Executive Officer
II-8
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
/s/ Jerry Braun President,
- --------------------- Chief Executive Officer,
Jerry Braun and Director
July 16, 1996
/s/ Jacob Rosenberg Vice President, Chief Operating
- --------------------- Officer, Secretary and Director
Jacob Rosenberg July 16, 1996
/s/ Gilbert Barnett Chief Financial Officer
- --------------------- and Chief Accounting
Gilbert Barnett Officer July 16, 1996
/s/ Samson Soroka Director July 16, 1996
- ---------------------
Samson Soroka
/s/ Hirsch Chitrik Director July 16, 1996
- ---------------------
Hirsch Chitrik
/s/ Sid Borenstein Director July 16, 1996
- ---------------------
Sid Borenstein
II-9
1,050,000 Units
NEW YORK HEALTH CARE, INC.
UNDERWRITING AGREEMENT
, 1996
RAS Securities Corp.
As Representative of the
Several Underwriters listed on Schedule A hereto
2 Broadway
New York, New York 10004
Ladies and Gentlemen:
New York Health Care, Inc., a New York corporation (the "Company") confirms
its agreement with RAS Securities Corp. ("RAS") and each of the underwriters
named in Schedule A hereto (collectively, the "Underwriters," which term shall
also include any underwriter substituted as hereinafter provided in Section 11),
for whom RAS is acting as representative (in such capacity, RAS shall
hereinafter be referred to as "you" or the "Representative"), with respect to
the sale by the Company and the purchase by the Underwriters, acting severally
and not jointly, of the respective numbers of units set forth in said Schedule
A, each unit consisting of one share ("Shares") of the Company's common stock,
$..01 par value per share ("Common Stock"), and one warrant to acquire one
additional share of Common Stock ("Public Warrant"). The shares of Common Stock
and Public Warrants comprising the units will be immediately separable and
tradeable upon issuance and will not trade as units. Each Public Warrant is
exercisable from , 1997 until, , 2001, at an initial exercise price of $5.00 for
one share of Common Stock, subject to prior redemption by the Company as more
fully described in the Registration Statement and Prospectus referred to below.
Such 1,050,000 units are hereinafter referred to as the "Firm Units." Upon your
request, as provided in Section 2(b) of this Agreement, the Company shall also
issue and sell to you up to an additional 157,500 Shares and/or 157,500 Public
Warrants for the purpose of covering over-allotments, if any, in the sale of the
Firm Units. Such 157,500 Shares and/or 157,500 Public Warrants are hereinafter
referred to as the "Option Securities" The Firm Units and the Options Securities
are hereinafter collectively referred to as the "Units." The Company also
proposes to issue and sell to you warrants (the "Representative's Warrants")
pursuant to the Representative's Warrant Agreement dated , 1996 between the
Representative and the Company (the "Representative's Warrant Agreement") for
the purchase of an additional 105,000 Shares and/or 105,000 Public Warrants. The
Shares and/or Public Warrants issuable upon exercise of the Representative's
Warrants are hereinafter referred to
1
<PAGE>
as the "Representative's Securities." The shares of Common Stock issuable upon
exercise of the Public Warrants (including the Public Warrants issuable upon
exercise of the Representative's Warrants) are hereinafter sometimes referred to
as the "Warrant Shares." The Units, the Shares, the Public Warrants, the
Representative's Warrants, the Representative's Securities and the Warrant
Shares are more fully described in the Registration Statement and the Prospectus
referred to below.
1. Representations and Warranties. (a) The Company represents and warrants
to, and agrees with, each of the Underwriters as of the date hereof, and as of
the Closing Date (hereinafter defined) and the Option Closing Date (hereinafter
defined), if any, as follows:
(i) The Company has prepared and filed with the Securities and
Exchange Commission (the "Commission") a registration statement, and an
amendment or amendments thereto, on Form SB-2 (No. 333-_______ ), including any
related preliminary prospectus ("Preliminary Prospectus"), for the registration
of the Shares, the Public Warrants, the Representative's Securities and the
Warrant Shares under the Securities Act of 1933, as amended (the "Act"), which
registration statement and amendment or amendments have been prepared by the
Company in conformity with the requirements of the Act, and the Rules and
Regulations of the Commission thereunder. The Company will promptly file a
further amendment to said registration statement in the form heretofore
delivered to the Underwriters and will not file any other amendment thereto to
which the Underwriters shall have objected in writing after having been
furnished with a copy thereof. Except as the context may otherwise require, such
registration statement, as amended, on file with the Commission at the time the
registration statement becomes effective (including the prospectus, financial
statements, schedules, exhibits and all other documents or information
incorporated by reference therein) and all information deemed to be a part
thereof as of such time pursuant to paragraph (b) of Rule 430(A) of the rules
and regulations) is hereinafter called the "Registration Statement", and the
form of prospectus in the form first filed with the Commission pursuant to Rule
424(b) of the rules and regulations is hereinafter called the "Prospectus." For
purposes hereof, "Rules and Regulations" mean the rules and regulations adopted
by the Commission under either the Act or the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), as applicable.
(ii) Neither the Commission nor any state regulatory authority has
issued any order preventing or suspending the use of any Preliminary Prospectus,
the Registration Statement or Prospectus or any part of any thereof and no
proceedings for a stop order suspending the effectiveness of the Registration
Statement or any of the Company's securities have been instituted or are pending
or threatened. Each of the Preliminary Prospectus, the Registration Statement
and Prospectus at the time of filing thereof conformed with the requirements of
the Acts and the Rules and Regulations, and none of the Preliminary Prospectus,
the Registration Statement or Prospectus at the time of filing thereof contained
an untrue statement of a material fact or omitted to state a material fact
required to be stated therein and necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, except
that this representation and warranty does not apply to statements made in
reliance upon and in conformity with written information furnished to the
Company with respect to the Underwriters by or on behalf of the Underwriters
expressly for use in such Preliminary Prospectus, Registration Statement or
Prospectus or any amendment or supplement thereto. It is understood that the
statements set forth in the
2
<PAGE>
Prospectus on page 2 with respect to stabilization, under the heading
"Underwriting" and the identity of counsel to the Underwriters under the heading
"Legal Matters" constitute the only information furnished in writing by or on
behalf of the several Underwriters for inclusion in the Registration Statement
and Prospectus, as the case may be.
(iii) When the Registration Statement becomes effective and at all
times subsequent thereto up to the Closing Date (hereinafter defined) and each
Option Closing Date (hereinafter defined), if any, and during such longer period
as the Prospectus may be required to be delivered in connection with sales by
the Underwriters or a dealer, the Registration Statement and the Prospectus will
contain all statements which are required to be stated therein in accordance
with the Act and the Rules and Regulations, and will conform to the requirements
of the Act and the Rules and Regulations; neither the Registration Statement nor
the Prospectus, nor any amendment or supplement thereto, contains or will
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading,
provided, however, that this representation and warranty does not apply to
statements made or statements omitted in reliance upon and in conformity with
information furnished to the Company in writing by or on behalf of any
Underwriter (as set forth in paragraph 1(a)(ii) hereof) expressly for use in the
Preliminary Prospectus, Registration Statement or Prospectus or any amendment
thereof or supplement thereto.
(iv) The Company has been duly organized and is validly existing as a
corporation in good standing under the laws of the state of its incorporation.
The Company does not own an equity interest in any corporation, partnership,
trust, joint venture or other business entity. The Company is duly qualified and
licensed and in good standing as a foreign corporation in each jurisdiction in
which its ownership or leasing of any properties or the character of its
operations require such qualification or licensing except where the failure(s)
to be so qualified, licensed and in good standing, individually or in the
aggregate, would not materially and adversely affect the condition, financial or
otherwise, or the earnings, business affairs, position, prospects, value,
operation, properties, business or results of operations of the Company. The
Company has all requisite power and authority (corporate and other), and has
obtained any and all authorizations, approvals, orders, licenses, certificates,
franchises and permits of and from all governmental or regulatory officials and
bodies (including, without limitation, those having jurisdiction over
environmental or similar matters), necessary to own or lease its properties and
conduct its business as described in the Prospectus; the Company is and has been
doing business in compliance with all such authorizations, approvals, orders,
licenses, certificates, franchises and permits and all federal, state, local and
foreign laws, rules and regulations and the Company has not received any notice
of proceedings relating to the revocation or modification of any such
authorization, approval, order, license, certificate, franchise, or permit
which, singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would materially and adversely affect the condition,
financial or otherwise, or the earnings, business affairs, position prospects,
value, operations, properties, business, or results of operations of the
Company. The disclosures in the Registration Statement concerning the effects of
federal, state, local, and foreign laws, rules and regulations on the Company's
business as currently conducted and as contemplated are correct in all material
respects and do not omit to state a material fact necessary to make the
statements contained therein not
3
<PAGE>
misleading in light of the circumstances in which they were made.
(v) The Company has a duly authorized, issued and outstanding
capitalization as set forth in the Prospectus, and will have the adjusted
capitalization set forth therein on the Closing Date (hereinafter defined) and
the Option Closing Date (hereinafter defined), if any, based upon the
assumptions set forth therein, and the Company is not a party to or bound by any
instrument, agreement or other arrangement providing for it to issue any capital
stock, rights, warrants, options or other securities, except for this Agreement
and as described in the Prospectus. The Common Stock, the Shares, the Public
Warrants, the Representative's Warrants, the Representative's Securities and the
Warrant Shares (collectively, hereinafter sometimes referred to as the
"Securities") and all other securities issued or issuable by the Company conform
or, when issued and paid for, will conform, in all respects, to all statements
with respect thereto contained in the Registration Statement and the Prospectus.
All issued and outstanding securities of the Company have been duly authorized
and validly issued and are fully paid and non-assessable and the holders thereof
have no rights of rescission with respect thereto and are not subject to
personal liability by reason of being such holders; and none of such securities
were issued in violation of the preemptive rights of any holders of any security
of the Company or similar contractual rights granted by the Company. The
Securities are not and will not be subject to any preemptive or other similar
rights of any stockholder, have been duly authorized and, when issued, paid for
and delivered in accordance with the terms hereof, will be validly issued, fully
paid and non-assessable and will conform to the description thereof contained in
the Prospectus; the holders thereof will not be subject to any liability solely
as such holders; all corporate action required to be taken for the
authorization, issue and sale of the Securities has been duly and validly taken;
and the certificates representing the Securities are in due and proper form.
Upon the issuance and delivery pursuant to the terms hereof of the Securities to
be sold by the Company hereunder, the Underwriters or the Representative, as the
case may be, will acquire good and marketable title to such Securities free and
clear of any lien, charge, claim, encumbrance, pledge, security interest, defect
or other restriction or equity of any kind whatsoever.
(vi) The financial statements of the Company together with the related
notes and schedules (if any) thereto, included in the Registration Statement,
each Preliminary Prospectus and the Prospectus fairly present the financial
position, income, changes in cash flow, changes in stockholders' equity and the
results of operations of the Company at the respective dates and for the
respective periods to which they apply and the pro forma financial information
included in the Registration Statement, each Preliminary Prospectus and the
Prospectus presents fairly on a basis consistent with that of the audited
financial statements included therein, the Company's pro forma net income or
loss per share, as the case may be, pro forma net tangible book value, and the
pro forma capitalization and such financial statements have been prepared in
conformity with generally accepted accounting principles and the Rules and
Regulations, consistently applied throughout the periods involved. There has
been no material adverse change or development involving a material change in
the condition, financial or otherwise, or in the earnings, business affairs,
position, prospects, value, operation, properties, business or results of
operation of the Company whether or not arising in the ordinary course of
business, since the date of the financial statements included in the
Registration Statement and the Prospectus, and the outstanding debt, the
property, both tangible
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and intangible, and the business of the Company conforms in all material
respects to the descriptions thereof contained in the Registration Statement and
the Prospectus.
(vii) The Company (A) has paid all federal, state, local, and foreign
taxes for which it is liable, including, but not limited to, withholding taxes
and amounts payable under Chapters 21 through 24 of the Internal Revenue Code of
1986, as amended (the "Code"), and has furnished all information returns it is
required to furnish pursuant to the Code, (B) has established adequate reserves
for such taxes which are not due and payable, and (C) does not have any tax
deficiency or claims outstanding, proposed or assessed against it.
(viii) No transfer tax, stamp duty or other similar tax is payable by
or on behalf of the Underwriters in connection with (A) the issuance by the
Company of the Securities, (B) the purchase by the Underwriters of the Units,
the Shares, the Public Warrants and the Warrant Shares and the purchase by the
Representative of the Representative's Warrants from the Company, (C) the
consummation by the Company of any of its obligations under this Agreement, or
(D) resales of the Securities in connection with the distribution contemplated
hereby.
(ix) The Company maintains insurance policies, including, but not
limited to, general liability, product liability and property insurance, which
insures the Company and its employees, against such losses and risks generally
insured against by comparable businesses. The Company (A) has not failed to give
notice or present any insurance claim with respect to any matter, including but
not limited to the Company's business, property or employees, under the
insurance policy or surety bond in a due and timely manner, (B) does not have
any disputes or claims against any underwriter of such insurance policies or
surety bonds or has not failed to pay any premiums due and payable thereunder,
or (C) has not failed to comply with all conditions contained in such insurance
policies and surety bonds. There are no facts or circumstances under any such
insurance policy or surety bond which would relieve any insurer of its
obligation to satisfy in full any valid claim of the company.
(x) There is no action, suit, proceeding, inquiry, arbitration,
investigation, litigation or governmental proceeding (including, without
limitation, those having jurisdiction over environmental or similar matters),
domestic or foreign, pending or threatened against (or circumstances that may
give rise to the same), or involving the properties or business of the Company
which (A) questions the validity of the capital stock of the Company or this
Agreement, the Representative's Warrant Agreement, the Warrant Agreement (as
defined in Section 1(xxxiii) below) or of any action taken or to be taken by the
Company pursuant to or in connection with this Agreement, the Representative's
Warrant Agreement, or the Warrant Agreement, (B) is required to be disclosed in
the Registration Statement which is not so disclosed (and such proceedings as
are summarized in the Registration Statement are accurately summarized in all
material respects), or (C) if adversely determined, might materially and
adversely affect the condition, financial or otherwise, or the business affairs
or business prospects, earnings, liabilities, prospects, stockholders' equity,
value, properties, business or assets of the Company.
(xi) The Company has full legal right, power and authority to
authorize, issue, deliver and
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sell the Securities, enter into this Agreement, the Representative's Warrant
Agreement and the Warrant Agreement and to consummate the transactions provided
for herein and therein; and each of this Agreement, the Representative's Warrant
Agreement and the Warrant Agreement have been duly and properly authorized,
executed and delivered by the Company. This Agreement, the Representative's
Warrant Agreement and the Warrant Agreement each constitute a legal, valid and
binding agreement of the Company enforceable against the Company in accordance
with its terms, and neither the Company's issue and sale of the Securities or
execution or delivery of this Agreement, the Representative's Warrant Agreement
and the Warrant Agreement or its performance hereunder and thereunder, its
consummation of the transactions contemplated herein and therein, or the conduct
of its business as described in the Registration Statement, the Prospectus, and
any amendments or supplements thereto, conflicts with or will conflict with or
results or will result in any breach or violation of any of the terms or
provisions of, or constitutes or will constitute a default under, or result in
the creation or imposition of any lien, charge, claim, encumbrance, pledge,
security interest, defect or other restriction or equity of any kind whatsoever
upon, any property or assets (tangible or intangible) of the Company pursuant to
the terms of, (A) the certificate of incorporation or by-laws of the Company,
(B) any license, contract, indenture, mortgage, deed of trust, voting trust
agreement, stockholders agreement, note, loan or credit agreement or any other
agreement or instrument to which the Company is a party or by which it is or may
be bound or the which is properties or assets (tangible or intangible) is or may
be subject, or any indebtedness, or (C) any statute, judgment, decree, order,
rule or regulation applicable to the Company of any arbitrator, court,
regulatory body or administrative agency or other governmental agency or body
(including, without limitation, those having jurisdiction over environmental or
similar matters), domestic or foreign, having jurisdiction over the Company or
any of its activities or properties, in each case except for conflicts,
breaches, violations, defaults, creations or impositions which do not and would
not have a material adverse effect on the condition, financial or otherwise, or
the earnings, business affairs, position, shareholder's equity, value,
operation, properties, business or results of operations of the Company.
(xii) Other than as set forth in the Prospectus, no consent, approval,
authorization or order of, and no filing with, any court, regulatory body,
government agency or other body, domestic or foreign, is required for the
issuance of the Securities pursuant to the Prospectus and the Registration
Statement, the issuance of the Representative's Warrants, the execution,
delivery or performance of this Agreement, the Representative's Warrant
Agreement and the Warrant Agreement, and the transactions contemplated hereby
and thereby, including, without limitation, any waiver of any preemptive, first
refusal or other rights that any entity or person may have for the issue and/or
sale of any of the Securities, except such as have been or may be obtained under
the Act or may be required under state securities or Blue Sky laws in connection
with the Underwriters' purchase and distribution of the Securities and the
Representative's purchase of the Representative's Warrants to be sold by the
Company hereunder and thereunder.
(xiii) All executed agreements, contracts or other documents or copies
of executed agreements, contracts or other documents filed as exhibits to the
Registration Statement to which the Company is a party or by which it may be
bound or to which its assets, properties or business may be subject have been
duly and validly authorized, executed and delivered by the Company and
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<PAGE>
constitute the legal, valid and binding agreements of the Company, enforceable
against the Company, in accordance with their respective terms. The descriptions
in the Registration Statement of agreements, contracts and other documents and
statutes and regulations are accurate and fairly present the information
required to be shown with respect thereto by Form SB-2, and there are no
contracts or other documents which are required by the Act to be described in
the Registration Statement or filed as exhibits to the Registration Statement
which are not described or filed as required, and the exhibits which have been
filed are complete and correct copies of the documents of which they purport to
be copies.
(xiv) Subsequent to the respective dates as of which information is
set forth in the Registration Statement and Prospectus, and except as may
otherwise be indicated or contemplated herein or therein, the Company has not
(A) issued any securities or incurred any liability or obligation, direct or
contingent, for borrowed money, (B) entered into any transaction other than in
the ordinary course of business, or (C) declared or paid any dividend or made
any other distribution on or in respect of its capital stock of any class, and
there has not been any change in the capital stock, or any change in the debt
(long or short term) or liabilities or material change in or affecting the
business affairs or prospects, management, stockholders' equity, properties,
business, financial operations or assets of the Company.
(xv) No default exists in the due performance and observance of any
term, covenant or condition of any license, contract, indenture, mortgage,
installment sale agreement, lease, deed of trust, voting trust agreement,
stockholders agreement, partnership agreement, note, loan or credit agreement,
purchase order, or any other material agreement or instrument evidencing an
obligation for borrowed money, or any other material agreement or instrument to
which the Company is a party or by which the Company may be bound or to which
the property or assets (tangible or intangible) of the Company is subject or
affected, which default would have a material adverse effect on the condition,
financial or otherwise, earnings, business affairs, position, shareholder's
equity, value, operation, properties, business or results of operations of the
Company.
(xvi) The Company has generally enjoyed a satisfactory
employer-employee relationship with its employees and is in compliance in all
material respects with all federal, state, local, and foreign laws and
regulations respecting employment and employment practices, terms and conditions
of employment and wages and hours. There are no pending investigations involving
the Company, by the U.S. Department of Labor, or any other governmental agency
responsible for the enforcement of such federal, state, local, or foreign laws
and regulations. There is no unfair labor practice charge or complaint against
the Company pending before the National Labor Relations Board or any strike,
picketing, boycott, dispute, slowdown or stoppage pending or threatened against
or involving the Company, or any predecessor entity, and none has ever occurred.
No representation question exists respecting the employees of the Company and no
collective bargaining agreement or modification thereof is currently being
negotiated by the Company. No grievance or arbitration proceeding is pending
under any expired or existing collective bargaining agreements of the Company.
No labor dispute with the employees of the Company exists, or, to the knowledge
of the Company is imminent.
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(xvii) Except as described in the Prospectus, the Company does not
maintain, sponsor or contribute to any program or arrangement that is an
"employee pension benefit plan," an "employee welfare benefit plan," or a
"multiemployer plan" as such terms are defined in Sections 3(2), 3(1) and 3(37),
respectively, of the Employee Retirement Income Security Act of 1974, as amended
("ERISA") ("ERISA Plans"). The Company does not maintain or contribute, now or
at any time previously, to a defined benefit plan, as defined in Section 3(35)
of ERISA. No ERISA Plan (or any trust created thereunder) has engaged in a
"prohibited transaction" within the meaning of Section 406 of ERISA or Section
4975 of the Code, which could subject the Company to any tax penalty on
prohibited transactions and which has not adequately been corrected. Each ERISA
Plan is in compliance with all material reporting, disclosure and other
requirements of the Code and ERISA as they relate to any such ERISA Plan.
Determination letters have been received from the Internal Revenue Service with
respect to each ERISA Plan which is intended to comply with Code Section 401(a),
stating that such ERISA Plan and the attendant trust are qualified thereunder.
The Company has never completely or partially withdrawn from a "multiemployer
plan."
(xviii) Neither the Company nor any of its employees, directors,
stockholders, or affiliates (within the meaning of the Rules and Regulations) of
any of the foregoing has taken or will take, directly or indirectly, any action
designed to or which has constituted or which might be expected to cause or
result in, under the Exchange Act, or otherwise, stabilization or manipulation
of the price of any security of the Company to facilitate the sale or resale of
the Securities or otherwise.
(xix) None of the patents, patent applications, trademarks, service
marks, trade names and copyrights, and licenses and rights to the foregoing
presently owned or held by the Company are in dispute or are in any conflict
with the right of any other person or entity. The Company (A) owns or has the
license or other right to use, free and clear of all liens, charges, claims,
encumbrances, pledges, security interests, defects or other restrictions or
equities of any kind whatsoever, all patents, trademarks, service marks, trade
names and copyrights, technology and licenses and rights with respect to the
foregoing, used in the conduct of its business as now conducted or proposed to
be conducted without infringing upon or otherwise acting adversely to the right
or claimed right of any person, corporation or other entity under or with
respect to any of the foregoing and (B) except as set forth in the Prospectus,
is not obligated or under any liability whatsoever to make any payments by way
of royalties, fees or otherwise to any owner or licensee of, or other claimant
to, any patent, trademark, service mark, tradename, copyright, know-how,
technology or other intangible asset, with respect to the use thereof or in
connection with the conduct of its business or otherwise.
(xx) The Company has not received any notice of infringement of or
conflict with asserted rights of others with respect to any trademark, service
mark, trade name or copyright or other intangible asset used or held for use by
it in connection with the conduct of its businesses which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding, might
have a material adverse effect on the condition, financial or otherwise, or the
business affairs, position, properties, stockholder's equity, financial
operations or assets of the Company.
(xxi) The Company has good and marketable title to, or valid and
enforceable leasehold
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estates in, all items of real and personal property stated in the Prospectus, to
be owned or leased by it free and clear of all liens, charges, claims,
encumbrances, pledges, security interest, defects, or other restrictions or
equities of any kind whatsoever, other than those referred to in the Prospectus
and liens for taxes not yet due and payable.
(xxii) M. R. Weiser & Co. LLP., Certified Public Accountants, whose
report is filed with the Commission as a part of the Registration Statement, are
independent certified public accountants as required by the Act and the Rules
and Regulations.
(xxiii) The Company has caused to be duly executed legally binding and
enforceable agreements pursuant to which each of its officers, directors or any
person or entity deemed to be an affiliate of the Company and any stockholders
of the Company has agreed not to, directly or indirectly, sell of any shares of
Common Stock (either pursuant to Rule 144 of the Rules and Regulations or
otherwise) or dispose of any beneficial interest therein for a period of not
less than 24 months following the effective date of the Registration Statement
without the prior written consent of the Representative and that any Common
Stock which has been issued and is outstanding on the effective date of the
Registration Statement and is to be sold or otherwise disposed of pursuant to
such Rule 144 with the consent of the Representative shall only be sold or
otherwise disposed of through the Representative. The Company will cause the
Transfer Agent, as defined below, to mark an appropriate legend on the face of
stock certificates representing all of such securities and to place "stop
transfer" orders on the Company's stock ledgers.
(xxiv) There are no claims, payments, issuances, arrangements or
understandings, whether oral or written, for services in the nature of a
finder's or origination fee with respect to the sale of the Securities hereunder
or any other arrangements, agreements, understandings, payments or issuance with
respect to the Company, or any of its officers, directors, stockholders,
partners, employees or affiliates that may affect the Underwriters'
compensation, as determined by the National Association of Securities Dealers,
Inc. ("NASD") and the Company is aware that the Representative and each of the
Underwriter's shall compensate any of their respective personnel who may have
acted in such capacities as they shall determine in their sole discretion.
(xxv) The Shares, the Common Stock and the Public Warrants have been
approved for quotation on the Nasdaq SmallCap Market and, upon notice of
issuance, listing on the Boston Stock Exchange ("BSE").
(xxvi) Neither the Company, nor any of its officers, employees, agents
or any other person acting on behalf of the Company has, directly or indirectly,
given or agreed to give any money, gift or similar benefit (other than legal
price concessions to customers in the ordinary course of business) to any
customer, supplier, employee or agent of a customer or supplier, or official or
employee of any governmental agency (domestic or foreign) or instrumentality of
any government (domestic or foreign) or any political party or candidate for
office (domestic or foreign) or other person who was, is, or may be in a
position to help or hinder the business of the Company (or assist the Company in
connection with any actual or proposed transaction) which (A) might subject the
Company, or any
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<PAGE>
other such person to any damage or penalty in any civil, criminal or
governmental litigation or proceeding (domestic or foreign), (B) if not given in
the past, might have had a materially adverse effect on the assets, business,
operations or prospects of the Company, or (C) if not continued in the future,
might adversely affect the assets, business, operations or prospects of the
Company. The Company's internal accounting controls are sufficient to cause the
Company to comply with the Foreign Corrupt Practices Act of 1977, as amended.
(xxvii) Except as set forth in the Prospectus, no officer, director,
or stockholder of the Company, or any "affiliate" or "associate" (as these terms
are defined in Rule 405 promulgated under the Rules and Regulations) of any of
the foregoing persons or entities has or has had, either directly or indirectly,
(A) an interest in any person or entity which (1) furnishes or sells services or
products which are furnished or sold or are proposed to be furnished or sold by
the Company, or (2) purchases from or sells or furnishes to the Company any
goods or services, or (B) a beneficiary interest in any contract or agreement to
which the Company is a party or by which it may be bound or affected. Except as
set forth in the Prospectus under "Certain Transactions," there are no existing
agreements, arrangements, understandings or transactions, or proposed
agreements, arrangements, understandings or transactions, between or among the
Company, and any officer, director, Principal Security Holder (as such term is
defined in the Prospectus) of the Company, or any partner, affiliate or
associate of any of the foregoing persons or entities.
(xxviii) Any certificate signed by any officer of the Company and
delivered to the Underwriters or to Bachner, Tally, Polevoy & Misher LLP ("
Underwriters' Counsel") shall be deemed a representation and warranty by the
Company to the Underwriters as to the matters covered thereby.
(xxix) The minute books of the Company have been made available to the
Underwriters and contain a complete summary of all meetings and actions of the
directors and stockholders of the Company, since the time of its incorporation
and reflects all transactions referred to in such minutes accurately in all
material respects.
(xxx) Except and to the extent described in the Prospectus, no holders
of any securities of the Company or of any options, warrants or other
convertible or exchangeable securities of the Company have the right to include
any securities issued by the Company in the Registration Statement or any
registration statement under the Act and no person or entity holds any
anti-dilution rights with respect to any securities of the Company.
(xxxi) The Company has as of the effective date of the Registration
Statement (A) entered into employment agreements with Jerry Braun and Jacob
Rosenberg providing for annual salaries of $175,000 and $140,000 respectively,
each on terms and conditions satisfactory to the Representative, and (B)
purchased "key-man" insurance on the lives of Jerry Braun and Jacob Rosenberg
which name the Company as the sole beneficiary on terms and conditions
satisfactory to the Representative.
(xxxii) The Company has entered into a warrant agreement with respect
to the Public
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Warrants, substantially in the form filed as Exhibit __________ to the
Registration Statement ("Warrant Agreement") with Continental Stock Transfer and
Trust Company in form and substance satisfactory to the Representative.
(xxxiii) Immediately prior to the effective date of the Registration
Statement there shall be no more than an aggregate of 2,265,000 shares of Common
Stock issued and outstanding (including any and all (A) securities with
equivalent rights as the Common Stock, (B) Common Stock or such equivalent
securities, issuable upon the exercise of options, warrants and other contract
rights, and (C) securities convertible directly or indirectly into Common Stock
or such equivalent securities, and excluding the Representative's Warrants).
2. Purchase, Sale and Delivery of the Securities.
(a) On the basis of the representations, warranties, covenants and
agreements herein contained, but subject to the terms and conditions herein set
forth, the Company agrees to sell to each Underwriter, and each Underwriter,
severally and not jointly, agrees to purchase from the Company at a price of
$4.59 per Unit, that number of Firm Units set forth in Schedule A opposite the
name of such Underwriter, subject to such adjustment as the Representative in
its sole discretion shall make to eliminate any sales or purchases of fractional
shares, plus any additional number of Firm Units which such Underwriter may
become obligated to purchase pursuant to the provisions of Section 11 hereof.
(b) In addition, on the basis of the representations, warranties,
covenants and agreements, herein contained, but subject to the terms and
conditions herein set forth, the Company hereby grants an option to the
Underwriters, severally and not jointly, to purchase all or any part of an
additional 157,500 Shares at a price of $4.50 per Share and/or 157,500 Public
Warrants at a price of $.09 per Public Warrant. The option granted hereby will
expire 45 days after the date the Registration Statement becomes effective and
may be exercised in whole or in part from time to time upon notice by the
Representative to the Company setting forth the number of Option Securities as
to which the several Underwriters are then exercising the option and the time
and date of payment and delivery for any such Option Securities. Any such time
and date of delivery (an "Option Closing Date") shall be determined by the
Representative, but shall not be later than seven full business days after the
exercise of said option, nor in any event prior to the Closing Date (hereinafter
defined), unless otherwise agreed upon by the Representative and the Company.
Nothing herein contained shall obligate the Underwriters to make any
over-allotments. No Option Securities shall be delivered unless the Firm Units
shall be simultaneously delivered or shall theretofore have been delivered as
herein provided.
(c) Payment of the purchase price for, and delivery of certificates
evidencing the Firm Units shall be made at the offices of RAS Securities Corp.
at 2 Broadway, New York, New York 10004, or at such other place as shall be
agreed upon by the Representative and the Company. Such delivery and payment
shall be made at 10:00 a.m. (New York City time) on , 1996 or at such other time
and date as shall be agreed upon by the Representative and the Company, but no
less than three (3) nor more than ten (10) full business days after the
effective date of the Registration
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<PAGE>
Statement (such time and date of payment and delivery being herein called
"Closing Date"). In addition, in the event that any or all of the Option
Securities are purchased by the Underwriters, payment of the purchase price for,
and delivery of certificates for, such Option Securities shall be made at the
above mentioned office of the Representative or at such other place as shall be
agreed upon by the Representative and the Company on each Option Closing Date as
specified in the notice from the Representative to the Company. Delivery of the
certificates for the Firm Units and the Option Securities if any, shall be made
to the Underwriters against payment by the Underwriters, severally and not
jointly, of the purchase price for the Firm Units and the Option Securities if
any, to the order of the Company by New York Clearing House Funds. In the event
such option is exercised, each of the Underwriters, acting severally and not
jointly, shall purchase that proportion of the total number of Option Securities
then being purchased which the number of Firm Units set forth in Schedule A
hereto opposite the name of such Underwriter bears to the total number of Firm
Units, subject in each case to such adjustments as the Representative in its
discretion shall make to eliminate any sales or purchases of fractional shares.
Certificates for the Firm Units and the Option Securities if any, shall be in
definitive, fully registered form, shall bear no restrictive legends and shall
be in such denominations and registered in such names as the Underwriters may
request in writing at least two (2) business days prior to Closing Date or the
relevant Option Closing Date, as the case may be. The certificates for the Firm
Units and the Option Securities if any, shall be made available to the
Representative at such office or such other place as the Representative may
designate for inspection, checking and packaging no later than 9:30 a.m. on the
last business day prior to Closing Date or the relevant Option Closing Date, as
the case may be.
(d) On the Closing Date, the Company shall issue and sell to the
Representative the Representative's Warrants at a purchase price of $.0001 per
warrant, which warrants shall entitle the holders thereof to purchase an
aggregate of 105,000 Shares and/or 105,000 Public Warrants. The Representative's
Warrants shall be exercisable for a period of four (4) years commencing one (1)
year from the Closing Date at a price of $6.00 per Share and $.12 per Public
Warrant. The Representative's Warrant Agreement and form of Warrant Certificates
with respect to each of the (i) Representative's Warrants to purchase Shares and
(ii) Representative's Warrants to purchase Public Warrants, shall be
substantially in the form filed as Exhibit __________ to the Registration
Statement. Payment for the Representative's Warrants shall be made on the
Closing Date.
3. Public Offering of the Units. As soon after the Registration Statement
becomes effective as the Representative deems advisable, the Underwriters shall
make a public offering of the Firm Units and such of the Option Securities as
they may determine (other than to residents of or in any jurisdiction in which
qualification of the Shares and Public Warrants are required and has not become
effective) at the price and upon the other terms set forth in the Prospectus.
The Representative may from time to time increase or decrease the public
offering price after distribution of the Units has been completed to such extent
as the Representative, in its sole discretion deems advisable. The Underwriters
may enter into one or more agreements as the Underwriters, in each of their sole
discretion, deem advisable with one or more broker-dealers who shall act as
dealers in connection with such public offering. Investors in the public
offering will be required to purchase one Share and one Public Warrant together
or multiples thereof. Such units of Securities will however be immediately
separable and tradeable upon issuance and will not be registered or listed
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on any exchange for trading as units.
4. Covenants and Agreements of the Company. The Company covenants and
agrees with each of the Underwriters as follows:
(a) The Company shall use its best efforts to cause the Registration
Statement and any amendments thereto to become effective as promptly as
practicable (such Registration Statement to be in form and substance
satisfactory to the Representative and Underwriters' Counsel) and will not at
any time, whether before or after the effective date of the Registration
Statement, file any amendment to the Registration Statement or supplement to the
Prospectus or file any document under the Act or Exchange Act before termination
of the offering of the Units by the Underwriters of which the Representative
shall not previously have been advised and furnished with a copy, or to which
the Representative shall have objected or which is not in compliance with the
Act, the Exchange Act or the Rules and Regulations.
(b) As soon as the Company is advised or obtains knowledge thereof,
the Company will advise the Representative and confirm by notice in writing, (i)
when the Registration Statement, as amended, becomes effective, if the
provisions of Rule 430A promulgated under the Act will be relied upon, when the
Prospectus has been filed in accordance with said Rule 430A and when any
post-effective amendment to the Registration Statement becomes effective, (ii)
of the issuance by the Commission of any stop order or of the initiation, or the
threatening, of any proceeding, suspending the effectiveness of the Registration
Statement or any order preventing or suspending the use of the Preliminary
Prospectus or the Prospectus, or any amendment or supplement thereto, or the
institution of proceedings for that purpose (iii) of the issuance by the
Commission or by any state securities commission of any proceedings for the
suspension of the qualification of any of the Securities for offering or sale in
any jurisdiction or of the initiation, or the threatening, of any proceeding for
that purpose, (iv) of the receipt of any comments from the Commission; and (v)
of any request by the Commission for any amendment to the Registration Statement
or any amendment or supplement to the Prospectus or for additional information.
If the Commission or any state securities commission authority shall enter a
stop order or suspend such qualification at any time, the Company will make
every effort to obtain promptly the lifting of such order.
(c) The Company shall file the Prospectus (in form and substance
satisfactory to the Representative and Underwriters' Counsel) or transmit the
Prospectus by a means reasonably calculated to result in filing with the
Commission pursuant to Rule 424 (b)(1) (or, if applicable and if consented to by
the Representative, pursuant to Rule 424 (b)(47) not later than the Commission's
close of business on the earlier of (i) the second business day following the
execution and delivery of this Agreement and (ii) the fifth business day after
the effective date of the Registration Statement.
(d) The Company will give the Representative notice of its intention
to file or prepare any amendment to the Registration Statement (including any
post-effective amendment) or any amendment or supplement to the Prospectus
(including any revised prospectus which the Company proposes for use by the
Underwriters in connection with the offering of the Securities which differs
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<PAGE>
from the corresponding prospectus on file at the Commission at the time the
Registration Statement becomes effective, whether or not such revised prospectus
is required to be filed pursuant to Rule 424(b) of the Rules and Regulations),
and will furnish the Representative with copies of any such amendment or
supplement a reasonable amount of time prior to such proposed filing or use, as
the case may be, and will not file any such prospectus to which the
Representative or Underwriters' Counsel, shall reasonably object.
(e) The Company shall take all action, in cooperation with the
Representative, at or prior to the time the Registration Statement becomes
effective, to qualify the Units for offering and sale under the securities laws
of such jurisdictions as the Representative may designate to permit the
continuance of sales and dealings therein for as long as may be necessary to
complete the distribution, and shall make such applications, file such documents
and furnish such information as may be required for such purpose; provided,
however, the Company shall not be required to qualify as a foreign corporation
or file a general or limited consent to service of process in any such
jurisdiction. In each jurisdiction where such qualification shall be effected,
the Company will, unless the Representative agrees that such action is not at
the time necessary or advisable, use all reasonable efforts to file and make
such statements or reports at such times as are or may reasonably be required by
the laws of such jurisdiction to continue such qualification. It is agreed that
Underwriters' Counsel (or its designees) shall perform all such required Blue
Sky legal services.
(f) During the time when a prospectus is required to be delivered
under the Act, the Company shall use all reasonable efforts to comply with all
requirements imposed upon it by the Act and the Exchange Act, as now and
hereafter amended and by the Rules and Regulations, as from time to time in
force, so far as necessary to permit the continuance of sales of or dealings in
the Securities in accordance with the provisions hereof and the Prospectus, or
any amendments or supplements thereto. If at any time when a prospectus relating
to the Securities is required to be delivered under the Act, any event shall
have occurred as a result of which, in the reasonable opinion of counsel for the
Company or Underwriters' Counsel, the Prospectus, as then amended or
supplemented, 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, in the light of the circumstances under which they were
made, not misleading, or if it is necessary at any time to amend the Prospectus
to comply with the Act and the Rules and Regulations, the Company will notify
the Representative promptly and prepare and file with the Commission an
appropriate amendment or supplement in accordance with Section 10 of the Act,
each such amendment or supplement to be satisfactory to Underwriters' Counsel,
and the Company will furnish to the Underwriters copies of such amendment or
supplement as soon as available and in such quantities as the Underwriters may
request.
(g) As soon as practicable, but in any event not later than 45 days
after the end of the 12- month period beginning on the day after the end of the
fiscal quarter of the Company during which the effective date of the
Registration Statement occurs (90 days in the event that the end of such fiscal
quarter is the end of the Company's fiscal year), the Company shall make
generally available to its security holders, in the manner specified in Rule
158(b) of the Rules and Regulations, and to the Representative, an earnings
statement which will be in the detail required by, and will otherwise
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comply with, the provisions of Section 11(a) of the Act and Rule 158(a) of the
Rules and Regulations, which statement need not be audited unless required by
the Act, covering a period of at least 12 consecutive months after the effective
date of the Registration Statement.
(h) During a period of seven years after the date hereof, the Company
will furnish to its stockholders, as soon as practicable, annual reports
(including financial statements audited by independent public accountants) and
unaudited quarterly reports of earnings, and will deliver to the Representative:
(i) concurrently with furnishing such quarterly reports to its
stockholders, statements of income of the Company for each quarter in the
form furnished to the Company's stockholders and certified by the Company's
principal financial or accounting officer;
(ii) concurrently with furnishing such annual reports to its
stockholders, a balance sheet of the Company as at the end of the preceding
fiscal year, together with statements of operations, stockholders' equity,
and cash flows of the Company for such fiscal year, accompanied by a copy
of the certificate thereon of independent certified public accountants;
(iii) as soon as they are available, copies of all reports (financial
or other) mailed to stockholders;
(iv) as soon as they are available, copies of all reports and
financial statements furnished to or filed with the Commission, the NASD or
any securities exchange;
(v) every press release and every material news item or article of
interest to the financial community in respect of the Company or its
affairs which was released or prepared by or on behalf of the Company; and
(vi) any additional information of a public nature concerning the
Company (and any future subsidiaries) or its businesses which the
Representative may reasonably request.
During such seven-year period, if the Company has active subsidiaries, the
foregoing financial statements will be on a consolidated basis to the extent
that the accounts of the Company and its subsidiaries are consolidated, and will
be accompanied by similar financial statements for any significant subsidiary
which is not so consolidated.
(i) The Company will maintain a Transfer Agent, counsel, accounting
firm, financial printer and, if necessary under the jurisdiction of
incorporation of the Company, a Registrar (which may be the same entity as the
Transfer Agent) for its Units, Common Stock and Public Warrants all of whom
shall be reasonably acceptable to the Representative. Such Transfer Agent shall,
for a period of five years following the Closing Date, deliver to the
Representative the monthly securities position of the Company's stockholders of
record.
(j) The Company will furnish to the Representative or on the
Representative's order, without
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charge, at such place as the Representative may designate, copies of each
Preliminary Prospectus, the Registration Statement any pre-effective or
post-effective amendments thereto (two of which copies will be signed and will
include all financial statements and exhibits), the Prospectus, and all
amendments and supplements thereto, including any Prospectus prepared after the
effective date of the Registration Statement, in each case as soon as available
and in such quantities as the Representative may reasonably request.
(k) On or before the effective date of the Registration Statement, the
Company shall provide the Representative with true copies of duly executed,
legally binding and enforceable agreements pursuant to which for a period of not
less than 24 months after the effective date of the Registration Statement, each
holder of securities issued by the Company and outstanding at the effective date
of the Registration Statement (including securities convertible into Common
Stock of the Company) agrees that it or he or she will not, directly or
indirectly, issue, offer to sell, sell, grant an option for the sale of, assign,
transfer, pledge, hypothecate or otherwise encumber or dispose of any of such
securities (either pursuant to Rule 144 of the Rules and Regulations or
otherwise) or dispose of any beneficial interest therein without the prior
written consent of the Representative (collectively, the "Lock-up Agreements").
The Lock-up Agreements shall also provide that any such securities that may be
sold pursuant to Rule 144 (with the Representative's consent) shall be executed
through the Representative. The commission for any such open market transactions
shall not exceed 5% and the sales price shall be reasonably related to the
market. During the three year period commencing with the effective date of the
Registration Statement, the Company shall not issue any securities under
Regulation S and not, without the prior written consent of the Representative,
sell, contract or offer to sell, issue, transfer, assign, pledge, distribute, or
otherwise dispose of, directly or indirectly, any debt security of the Company
or any shares of Common Stock or any issue of preferred stock of the Company, or
any options, rights or warrants with respect to any shares of Common Stock or
any issue of preferred stock of the Company, (other than upon exercise of (i)
the Representative's Warrants (ii) options granted to Jerry Braun to purchase up
to 75,000 shares of Common Stock at $3.75 per share (iii) options granted
pursuant to an incentive stock option plan of the Company in effect prior to the
filing of the initial Registration Statement, such plan to provide that the
Board of Directors of the Company shall have the power to grant, at its
discretion, options to eligible individuals, to purchase up to an aggregate
amount of 210,000 shares of Common Stock at an exercise price per share equal to
the market price of a share of Common Stock at the close of business on the date
of any such option grant, such plan to otherwise be on terms and conditions
satisfactory to the Representative and (iv) options granted pursuant to any
further qualified option plan of the Company, approved by the Company's
shareholders pursuant to a proxy after the Closing Date, which in any event
shall not provide for options to purchase more than 210,000 shares of Common
Stock per year and shall otherwise be on terms and conditions satisfactory to
the Representative). On or before the Closing Date, the Company shall deliver
instructions to the Transfer Agent authorizing it to place appropriate legends
on the certificates representing the securities subject to the Lock-up Agreement
and to place appropriate stop transfer orders on the Company's ledgers.
(l) Neither the Company, nor any of its officers, directors,
stockholders or affiliates (within the meaning of the Rules and Regulations)
will take, directly or indirectly, any action designed to,
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<PAGE>
or which might in the future reasonably be expected to cause or result in,
stabilization or manipulation of the price of any securities of the Company.
(m) The Company shall apply the net proceeds from the sale of the
Securities in the manner, and subject to the conditions, set forth under "Use of
Proceeds" in the Prospectus. No portion of the net proceeds will be used,
directly or indirectly, to acquire any securities issued by the Company.
(n) The Company shall timely file all such reports, forms or other
documents as may be required (including, but not limited to, a Form SR as may be
required pursuant to Rule 463 under the Act) from time to time, under the Act,
the Exchange Act and the Rules and Regulations, and all such reports, forms and
documents filed shall comply as to form and substance with the applicable
requirements under the Act, the Exchange Act and the Rules and Regulations.
(o) The Company shall furnish to the Representative as early as
practicable prior to each of the date hereof, the Closing Date and each Option
Closing Date, if any, but no later than two (2) full business days prior
thereto, a copy of the latest available unaudited interim financial statements
of the Company (which in no event shall be as of a date more than thirty (30)
days prior to the date of the Registration Statement) which have been read by
the Company's independent public accountants, as stated in their letters to be
furnished pursuant to Section 6(j) hereof.
(p) The Company shall cause the Shares, the Common Stock and the
Public Warrants to be listed on the Nasdaq SmallCap Market and upon the request
of the Representative to be listed on the BSE, and for a period of seven (7)
years from the date hereof, use its best efforts to maintain such listings of
the Shares, the Common Stock and the Public Warrants to the extent outstanding.
(q) For a period of five (5) years from the Closing Date, the Company
shall furnish to the Representative at the Representative's request and at the
Company's sole expense, (i) the list of holders of all of the Company's
securities and (ii) a Blue Sky "Trading Survey" for secondary sales of the
Company's securities prepared by counsel to the Company.
(r) The Company shall as soon as practicable, (i) but in no event more
than five business days before the effective date of the Registration Statement,
file a Form 8-A with the Commission providing for the registration under the
Exchange Act of the Securities and (ii) but in no event more than 30 days from
the effective date of the Registration Statement, take all necessary and
appropriate actions to be included in Standard and Poor's Corporation
Descriptions and Moody's Manual in order to satisfy the requirements for "manual
exemption" in those states where available and to maintain such inclusion for as
long as the Securities are outstanding.
(s) Until the completion of the distribution of the Securities, the
Company shall not without the prior written consent of the Representative and
Underwriters' Counsel, issue, directly or indirectly any press release or other
communication or hold any press conference with respect to the Company or its
activities or the offering contemplated hereby, other than trade releases issued
in the ordinary course of the Company's business consistent with past practices
with respect to the Company's operations.
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<PAGE>
(t) For a period of three (3) years after the effective date of the
Registration Statement, the Representative shall have the right to designate one
(1) individual for election to the Company's Board of Directors ("Board") and
the Company shall cause such individual to be elected to the Board. In the event
the Representative shall not have designated such individual at the time of any
meeting of the Board or such person is unavailable to serve, the Company shall
notify the Representative of each meeting of the Board and an individual
designated by the Representative shall be permitted to attend all meetings of
the Board and to receive all notices and other correspondence and communications
sent by the Company to members of the Board. Such individual shall be reimbursed
for all out-of-pocket expenses incurred in connection with his or her service
on, or attendance at meetings of, the Board. The Company shall provide its
outside directors with compensation in the form of cash and/or options on its
Common Stock as deemed appropriate and customary for similar companies.
(u) For a period equal to the lesser of (i) seven (7) years from the
date hereof, and (ii) the date of the sale to the public of the securities
issuable upon exercise of the Representative's Securities, the Company will not
take any action or actions which may prevent or disqualify the Company's use of
any form otherwise available for the registration under the Act of the
securities issuable upon exercise of the Representative's Securities.
(v) Commencing one year from the date hereof, the Company shall pay
the Representative a commission equal to five percent (5%) of the exercise price
of the Public Warrants, payable on the date of the exercise thereof on terms
provided for in the Warrant Agreement. The Company will not solicit the exercise
of the Public Warrants other than through the Representative and will not
authorize any other dealer or engage in such solicitation without the
Representative's prior written consent.
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<PAGE>
(w) On or before the effective date of the Registration Statement, the
Company shall have retained a financial public relations firm reasonably
satisfactory to the Representative, which shall be continuously engaged from
such engagement date to a date twelve (12) months from the Closing Date.
5. Payment of Expenses.
(a) The Company hereby agrees to pay on each of the Closing Date and
the Option Closing Date (to the extent not paid at the Closing Date) all
expenses and fees (other than fees of Underwriters' Counsel, except as provided
in (iv) below) incident to the performance of the obligations of the Company
under this Agreement, the Representative's Warrant Agreement and the Warrant
Agreement including, without limitation, (i) the fees and expenses of
accountants and counsel for the Company, (ii) all costs and expenses incurred in
connection with the preparation, duplication, printing, (including mailing and
handling charges) filing, delivery and mailing (including the payment of postage
with respect thereto) of the Registration Statement and the Prospectus and any
amendments and supplements thereto and the printing, mailing (including the
payment of postage with respect thereto) and delivery of this Agreement, the
Representative's Warrant Agreement, the Warrant Agreement, and related
documents, including the cost of all copies thereof and of the Preliminary
Prospectuses and of the Prospectus and any amendments thereof or supplements
thereto supplied to the Underwriters and such dealers as the Underwriters may
request, in quantities as hereinabove stated, (iii) the printing, engraving,
issuance and delivery of the Securities, including, but not limited to, (x) the
purchase by the Underwriters of the Securities and the purchase by the
Representative of the Representative's Warrants from the Company, (y) the
consummation by the Company of any of its obligations under this Agreement, the
Representative's Warrant Agreement, and the Warrant Agreement, and (z) resale of
the Securities by the Underwriters in connection with the distribution
contemplated hereby, (iv) the qualification of the Securities under state or
foreign securities or "Blue Sky" laws and determination of the status of such
securities under legal investment laws, including the costs of printing and
mailing the "Preliminary Blue Sky Memorandum", the "Supplemental Blue Sky
Memorandum" and "Legal Investments Survey," if any, and disbursements and fees
of counsel in connection therewith, provided, however, that the Company's
obligation with respect to such "Blue Sky" fees and disbursement of counsel
shall not exceed $30,000 (v) advertising costs and expenses, including but not
limited to costs and expenses in connection with the "road show", information
meetings and presentations, bound volumes and prospectus memorabilia, tombstones
in the Wall Street Journal and other appropriate publications, (vi) costs, fees
and expenses in connection with due diligence investigations, including but not
limited to the costs of background checks on key management and/or personnel of
the Company and the fees of any independent counsel or consultant retained,
(vii) fees and expenses of the transfer agent, warrant agent, escrow agent, if
any, and registrar, (viii) applications for assignments of a rating of the
Securities by qualified rating agencies, (ix) the fees payable to the
Commission, Nasdaq and the NASD, and (x) the fees and expenses incurred in
connection with the listing of the Securities on the Nasdaq SmallCap Market, the
BSE and any other exchange.
(b) If this Agreement is terminated by the Underwriters in accordance
with the provisions of Section 6, Section 10(a) or Section 12, the Company shall
reimburse and indemnify the
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<PAGE>
Representative for all of its actual out-of-pocket expenses, including the fees
and disbursements of Underwriters' Counsel (and in addition to fees and expenses
of Underwriter's Counsel incurred pursuant to Section 5(a)(iv) above for which
the Company shall remain liable), provided, however, that in the event of a
termination pursuant to Section 10(a) hereof such obligation of the Company
shall not exceed $50,000.
(c) The Company further agrees that, in addition to the expenses
payable pursuant to subsection (a) of this Section 5, it will pay to the
Representative on the Closing Date by certified or bank cashier's check or, at
the election of the Representative, by deduction from the proceeds of the
offering contemplated herein a non-accountable expense allowance equal to three
percent (3%) of the gross proceeds received by the Company from the sale of the
Firm Units. In the event the Representative elects to exercise the
over-allotment option described in Section 2(b) hereof, the Company further
agrees to pay to the Representative on each Option Closing Date (by certified or
bank cashier's check or, at the Representative's election, by deduction from the
proceeds of the offering) a non-accountable expense allowance equal to three
percent (3%) of the gross proceeds received by the Company from the sale of the
relevant Option Securities.
(d) The Underwriters shall not be responsible for any expense of the
Company or others or for any charge or claim related to the offering
contemplated by hereunder in the event that the sale of the Securities as
contemplated hereunder is not consummated.
6. Conditions of the Underwriters' Obligations. The obligations of the
Underwriters hereunder shall be subject to the continuing accuracy of the
representations and warranties of the Company herein as of the date hereof and
as of the Closing Date and each Option Closing Date, if any, as if they had been
made on and as of the Closing Date or each Option Closing Date, as the case may
be; the accuracy on and as of the Closing Date or Option Closing Date, if any,
of the statements of the officers of the Company made pursuant to the provisions
hereof; and the performance by the Company on and as of the Closing Date and
each Option Closing Date, if any, of its covenants and obligations hereunder and
to the following further conditions:
(a) The Registration Statement, which shall be in form and substance
satisfactory to the Representative and Underwriter's Counsel, shall have become
effective no later than 12:00 p.m., New York time, on the date of this Agreement
or such later date and time as shall be consented to in writing by the
Representative and, at the Closing Date and each Option Closing Date, if any, no
stop order suspending the effectiveness of the Registration Statement shall have
been issued and no proceedings for that purpose shall have been instituted or
shall be pending or contemplated by the Commission and any request on the part
of the Commission for additional information shall have been complied with to
the reasonable satisfaction of Underwriters' Counsel. If the Company has elected
to rely upon Rule 430A of the Rules and Regulations, the price of the Units and
any price-related information previously omitted from the effective Registration
Statement pursuant to such Rule 430A shall have been transmitted to the
Commission for filing pursuant to Rule 424(b) of the Rules and Regulations
within the prescribed time period, and prior to the Closing Date the Company
shall have provided evidence satisfactory to the Representative of such timely
filing, or a post-effective amendment providing such information shall have been
promptly filed and declared
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<PAGE>
effective in accordance with the requirements of Rule 430A of the Rules and
Regulations.
(b) The Representative shall not have advised the Company that the
Registration Statement, or any amendment thereto, contains an untrue statement
of fact which, in the Representative's opinion, is material, or omits to state a
fact which, in the Representative's opinion, is material and is required to be
stated therein or is necessary to make the statements therein not misleading, or
that the Prospectus, or any supplement thereto, contains an untrue statement of
fact which, in the Representative's opinion, is material and is required to be
stated therein or is necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(c) On or prior to the Closing Date, the Representative shall have
received from Underwriters' Counsel, such opinion or opinions with respect to
the organization of the Company, the validity of the Securities, the
Representative's Warrants, the Registration Statement, the Prospectus and other
related matters as the Representative may request and Underwriters' Counsel
shall have received such papers and information as they request to enable them
to pass upon such matters.
(d) On the Closing Date, the Underwriters shall have received the
favorable opinion of Scheichet & Davis, P.C., counsel to the Company, dated the
Closing Date, addressed to the Underwriters and in form and substance
satisfactory to Underwriters' Counsel, to the effect that:
(i) the Company (A) has been duly organized and is validly existing as
a corporation in good standing under the laws of its jurisdiction, and (B)
has all requisite corporate power and authority, and has obtained any and
all authorizations, approvals, orders, licenses, certificates, franchises
and permits of and from all governmental or regulatory officials and bodies
(including, without limitation, those having jurisdiction over
environmental or similar matters), to own or lease its properties and
conduct its business as described in the Prospectus; the Company is duly
qualified and licensed and in good standing as a foreign corporation in
each jurisdiction in which its ownership or leasing of any properties or
the character of its operations requires such qualification or licensing;
to such counsel's knowledge, the Company has not received any notice of
proceedings relating to the revocation or modification of any such
authorization, approval, order, license, certificate, franchise, or permit
which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would materially adversely affect the
business, operations, condition, financial or otherwise, or the earnings,
business affairs or prospects, properties, business, assets or results of
operations of the Company. The disclosures in the Registration Statement
concerning the effects of federal, state and local laws, rules and
regulations on the Company's business as currently conducted and as
contemplated are correct in all material respects and do not omit to state
a fact necessary to make the statements contained therein not misleading in
light of the circumstances in which they were made.
(ii) to such counsel's knowledge, the Company does not own an equity
interest in any other corporation, partnership, joint venture, trust or
other business entity;
(iii) the Company has a duly authorized, issued and outstanding
capitalization as set forth
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in the Prospectus, and any amendment or supplement thereto, under
"Capitalization", and, to such counsel's knowledge, after due inquiry, the
Company is not a party to or bound by any instrument, agreement or other
arrangement providing for it to issue any capital stock, rights, warrants,
options or other securities, except for this Agreement, the
Representative's Warrant Agreement, the Warrant Agreement and as described
in the Prospectus. The Securities, and all other securities issued or
issuable by the Company, conform in all material respects to all statements
with respect thereto contained in the Registration Statement and the
Prospectus. All issued and outstanding securities of the Company have been
duly authorized and validly issued and are fully paid and non-assessable;
the holders thereof have no rights of rescission with respect thereto, and
are not subject to personal liability under the laws of the State of New
York as currently in effect by reason of being such holders; and none of
such securities were issued in violation of the preemptive rights of any
holders of any security of the Company. The Securities to be sold by the
Company hereunder and under the Representative's Warrant Agreement are not
and will not be subject to any preemptive or other similar rights of any
stockholder, have been duly authorized and, when issued, paid for and
delivered in accordance with the terms hereof, will be validly issued,
fully paid and non-assessable and conform to the description thereof
contained in the Prospectus; the holders thereof will not be subject to any
liability solely as such holders; all corporate action required to be taken
for the authorization, issue and sale of the Securities has been duly and
validly taken; and the certificates representing the Securities are in due
and proper form. The Public Warrants and the Representative's Warrants
constitute valid and binding obligations of the Company to issue and sell,
upon exercise thereof and payment therefore the number and type of
securities of the Company called for thereby. Upon the issuance and
delivery pursuant to this Agreement of the Securities to be sold by the
Company, the Underwriters and the Representative will acquire good and
marketable title to the Securities free and clear of any pledge, lien,
charge, claim, encumbrance, pledge, security interest, or other restriction
or equity of any kind whatsoever. No transfer tax is payable by or on
behalf of the Underwriters in connection with (A) the issuance by the
Company of the Securities, (B) the purchase by the Underwriters and the
Representative of the Securities from the Company, (C) consummation by the
Company of any of its obligations under this Agreement, or (D) resales of
the Securities in connection with the distribution contemplated hereby.
(iv) the Registration Statement is effective under the Act, and, if
applicable, filing of all pricing information has been timely made in the
appropriate form under Rule 430A, and, to such counsel's knowledge, after
due inquiry no stop order suspending the use of the Preliminary Prospectus,
the Registration Statement or Prospectus or any part of any thereof or
suspending the effectiveness of the Registration Statement has been issued
and no proceedings for that purpose have been instituted or are pending,
threatened or contemplated under the Act;
(v) each of the Preliminary Prospectus, the Registration Statement,
and the Prospectus and any amendments or supplement thereto (other than the
financial statements and other financial and statistical data included
therein, as to which no opinion need be rendered) comply as to form in all
material respects with the requirements of the Act and the Rules and
Regulations.
(vi) to the best of such counsel's knowledge, (A) there are no
agreements, contracts or other documents required by the Act to be
described in the Registration Statement and the Prospectus and
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filed as exhibits to the Registration Statement other than those described
in the Registration Statement (or required to be filed under the Exchange
Act if upon such filing they would be incorporated, in whole or in part, by
reference therein) and the Prospectus and filed as exhibits thereto, and
the exhibits which have been filed are correct copies of the documents of
which they purport to be copies; (B) the descriptions in the Registration
Statement and the Prospectus and any supplement or amendment thereto of
contracts and other documents to which the Company is a party or by which
it is bound, including any document to which the Company is a party or by
which it is bound, incorporated by reference into the Prospectus and any
supplement or amendment thereto, are accurate in all material respects and
fairly represent the information required to be shown under the Act and the
Rules and Regulations of the Commission thereunder; (C) there is not
pending or threatened against the Company any action, arbitration, suit,
proceeding, inquiry, investigation, litigation, governmental or other
proceeding (including, without limitation, those having jurisdiction over
environmental or similar matters), domestic or foreign, pending or
threatened against (or circumstances that may give rise to the same), or
involving the properties or business of the Company which (1) is required
to be disclosed in the Registration Statement which is not so disclosed
(and such proceedings as are summarized in the Registration Statement are
accurately summarized in all respects), (2) questions the validity of the
capital stock of the Company or this Agreement or of any action taken or to
be taken by the Company pursuant to or in connection with any of the
foregoing; (D) no statute or regulation or legal or governmental proceeding
required to be described in the Prospectus is not described as required;
and (E) except as disclosed in the Prospectus, there is no action, suit or
proceeding pending, or threatened, against or affecting the Company before
any court or arbitrator or governmental body, agency or official (or any
basis thereof known to such counsel) in which an adverse decision which may
result in a material adverse change in the condition, financial or
otherwise, or the earnings, position, prospects, stockholders' equity,
value, operation, properties, business or results of operations of the
Company, could adversely affect the present or prospective ability of the
Company to perform its obligations under this Agreement, the
Representative's Warrant Agreement or the Warrant Agreement or which in any
manner draws into question the validity or enforceability of this
Agreement, the Representative's Warrant Agreement or the Warrant Agreement;
(vii) the Company has full legal right, power and authority to enter
into this Agreement, the Representative's Warrant Agreement and the Warrant
Agreement and to consummate the transactions provided for therein; and this
Agreement, the Representative's Warrant Agreement and the Warrant Agreement
has been duly authorized, executed and delivered by the Company. This
Agreement, the Representative's Warrant Agreement and the Warrant Agreement
assuming due authorization, execution and delivery by each other party
hereto and thereto constitutes a legal, valid and binding agreement of the
Company enforceable against the Company in accordance with its terms
(except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general application
relating to or affecting enforcement of creditors' rights and the
application of equitable principles in any action, legal or equitable, and
except as rights to indemnity or contribution may be limited by applicable
law), and neither the Company's execution or delivery of this Agreement,
the Representative's Warrant Agreement and the Warrant Agreement, its
performance hereunder or thereunder, its consummation of the transactions
contemplated herein or therein, or the conduct of its business as described
in the
23
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Registration Statement, the Prospectus, and any amendments or supplements
thereto, conflicts with or will conflict with or results or will result in
any breach or violation of any of the terms or provisions of, or
constitutes or will constitute a default under, or result in the creation
or imposition of any lien, charge, claim, encumbrance, pledge, security
interest, defect or other restriction or equity of any kind whatsoever
upon, any property or assets (tangible or intangible) of the Company
pursuant to the terms of, (A) the certificate of incorporation or by-laws
of the Company, (B) any license, contract, indenture, mortgage, deed of
trust, voting trust agreement, stockholders agreement, note, loan or credit
agreement or any other agreement or instrument to which the Company is a
party or by which it is or may be bound or to which any of its properties
or assets (tangible or intangible) is or may be subject, or any
indebtedness, or (C) any statute, judgment, decree, order, rule or
regulation applicable to the Company of any arbitrator, court, regulatory
body or administrative agency or other governmental agency or body
(including, without limitation, those having jurisdiction over
environmental or similar matters), domestic or foreign, having jurisdiction
over the Company or any of its activities or properties, except for
conflicts, breaches, violations, defaults, creations or impositions which
do not and would not have a material adverse effect on the condition,
financial or otherwise, or the earnings, business affairs, position,
shareholder's equity, value, operations, properties, business or results of
operations of the Company.
(viii) except as described in the Prospectus, no consent, approval,
authorization or order, and no filing with, any court, regulatory body,
government agency or other body (other than such as may be required under
Blue Sky laws, as to which no opinion need be rendered) is required in
connection with the issuance of the Securities pursuant to the Prospectus
and the Registration Statement, the issuance of the Representative's
Warrants, the performance of this Agreement, the Representative's Warrant
Agreement and the Warrant Agreement and the transactions contemplated
hereby and thereby;
(ix) the properties and business of the Company conform to the
description thereof contained in the Registration Statement and the
Prospectus;
(x) the Company is not in breach of, or in default under, any term or
provision of any license, contract, indenture, mortgage, installment sale
agreement, deed of trust, lease, voting trust agreement, stockholders'
agreement, partnership agreement, note, loan or credit agreement or any
other agreement or instrument evidencing an obligation for borrowed money,
or any other agreement or instrument to which the Company is a party or by
which the Company may be bound or to which the property or assets (tangible
or intangible) of the Company is subject or affected, which could
materially adversely affect the Company; and the Company is not in
violation of any term or provision of its Certificate of Incorporation or
By-Laws, or in violation of any franchise, license, permit, judgment,
decree, order, statute, rule or regulation the result of which would
materially and adversely affect the condition, financial or otherwise, or
the earnings, business affairs, position, shareholders' equity, value
operation, properties, business or results of operations of the Company.
(xi) the Company owns or possesses, free and clear of all liens or
encumbrances and rights thereto or therein by third parties, the requisite
licenses or other rights to use all trademarks, service marks, copyrights,
service names, trade names, patents, patent applications and licenses
necessary
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to conduct its business (including, without limitation any such licenses or
rights described in the Prospectus as being owned or possessed by the
Company), and to the best of such counsel's knowledge after reasonable
investigation, there is no claim or action by any person pertaining to, or
proceeding, pending, or threatened, which challenges the exclusive rights
of the Company with respect to any trademarks, service marks, copyrights,
service names, trade names, patents, patent applications and licenses used
in the conduct of the Company's business (including, without limitations,
any such licenses or rights described in the Prospectus as being owned or
possessed by the Company).
(xii) except as described in the Prospectus, the Company does not (A)
maintain, sponsor, or contribute to any ERISA Plans, (B) maintain or
contribute now or at any time previously, to a defined benefit plan, as
defined in Section 3(35) of ERISA, and (C) has never completely or
partially withdrawn from a "multiemployer plan"; and
(xiii) the Securities have been approved for listing on the Nasdaq
SmallCap Market and the BSE, and the Company's Registration Statement on
Form 8-A under the Exchange Act has become effective.
(xiv) to such counsel's knowledge, the persons listed under the
caption "PRINCIPAL SECURITY HOLDERS" in the Prospectus are the respective
"beneficial owners" (as such phrase is defined in regulation 13d-3 under
the Exchange Act) of the securities set forth opposite their respective
names thereunder as and to the extent set forth therein;
(xv) to such counsel's knowledge, except as described in the
Prospectus, no person, corporation, trust, partnership, association or
other entity has the right to include and/or register any securities of the
Company in the Registration Statement, require the Company to file any
registration statement or, if filed, to include any security in such
registration statement;
(xvi) to such counsel's knowledge, except as described in the
Prospectus, there are no claims, payments, issuances, arrangements or
understandings for services in the nature of a finder's or origination fee
with respect to the sale of the Units hereunder or the financial consulting
arrangement between the Representative and the Company, if any, or any
other arrangements, agreements, understandings, payments or issuances that
may affect the Underwriters' compensation, as determined by the NASD;
(xvii) the Lock-up Agreements are legal, valid and binding obligations
of the parties thereto, enforceable against each such party and any
subsequent holder of the securities subject thereto in accordance with its
terms (except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of general
application relating to or affecting enforcement of creditors' rights and
the application of equitable principles in any action, legal or equitable);
and
(xviii) all action under the Act necessary to make the public offering
and consummate the sale of the Securities as provided in this Agreement has
been taken by the Company. The provisions
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of the Certificate of Incorporation and By-laws of the Company comply as to
form in all material respects with the Act and the Rules and Regulations.
Such counsel shall state that such counsel has participated in conferences
with officers and other representatives of the Company and representatives of
the independent public accountants for the Company, at which conferences such
counsel made inquiries of such officers, representatives and accountants and
discussed the contents of the Preliminary Prospectus, the Registration
Statement, the Prospectus, and related matters were discussed and, although such
counsel is not passing upon and does not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the
Preliminary Prospectus, the Registration Statement and Prospectus, on the basis
of the foregoing, no facts have come to the attention of such counsel which
leads counsel to believe that either the Registration Statement or any amendment
thereto, at the time such Registration Statement or amendment became effective
or the Preliminary Prospectus or Prospectus or amendment or supplement thereto
as of the date of such opinion contained any untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary
to make the statements therein not misleading (it being understood that such
counsel need express no opinion with respect to the financial statements and
schedules and other financial and statistical data included in the Preliminary
Prospectus, the Registration Statement or Prospectus).
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws other than the laws of the United States and
jurisdictions in which they are admitted, to the extent such counsel deems
proper and to the extent specified in such opinion, if at all, upon an opinion
or opinions (in form and substance satisfactory to Underwriters' Counsel) of
other counsel acceptable to Underwriters' Counsel, familiar with the applicable
laws; (B) as to matters of fact, to the extent they deem proper, on certificates
and written statements of responsible officers of the Company and certificates
or other written statements of officers of departments of various jurisdictions
having custody of documents respecting the corporate existence or good standing
of the Company, provided that copies of any such statements or certificates
shall be delivered to Underwriters' Counsel if requested; and (C) as to
regulatory matters, to the extent specified in such opinion and to the extent
reliance is reasonable, on the opinion of special regulatory counsel to the
Company. The opinion of such counsel for the Company shall state that the
opinion of any such other counsel is in form satisfactory to such counsel and
that the Representative and they are justified in relying thereon.
At each Option Closing Date, if any, the Underwriters shall have received
the favorable opinion of Scheichet & Davis, P.C., counsel to the Company, dated
the Option Closing Date, addressed to the Underwriters and in form and substance
satisfactory to Underwriters' Counsel confirming as of such Option Closing Date
the statements made in its opinion delivered on the Closing Date.
(e) On or prior to each of the Closing Date and the Option Closing
Date, if any, Underwriters' Counsel shall have been furnished such documents,
certificates and opinions as they may reasonably require for the purpose of
enabling them to review or pass upon the matters referred to in subsection (c)
of this Section 6, or in order to evidence the accuracy, completeness or
satisfaction of any of the representations, warranties or covenants of the
Company herein contained.
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(f) Prior to each of Closing Date and each Option Closing Date, if
any, (i) there shall have been no adverse change nor development involving a
prospective change in the condition, financial or otherwise, prospects,
stockholders' equity or the business activities of the Company, whether or not
in the ordinary course of business, from the latest dates as of which such
condition is set forth in the Registration Statement and Prospectus; (ii) there
shall have been no transaction, not in the ordinary course of business, entered
into by the Company, (iii) the Company shall not be in default under any
provision of any instrument relating to any outstanding indebtedness; (iv) the
Company shall not have issued any securities (other than the Securities) or
declared or paid any dividend or made any distribution in respect of its capital
stock of any class and there shall not have been any change in the capital or
any change in the debt (long or short term) or liabilities or obligations of the
Company (contingent or otherwise); (v) no material amount of the assets of the
Company shall have been pledged or mortgaged, except as set forth in the
Registration Statement and Prospectus (vi) no action, suit or proceeding, at law
or in equity, shall have been pending or threatened (or circumstances giving
rise to same) against the Company, or affecting any of its properties or
business before or by any court or federal, state or foreign commission, board
or other administrative agency wherein an unfavorable decision, ruling or
finding may adversely affect the business, operations, management prospects or
financial condition or assets of the Company, except as set forth in the
Registration Statement and Prospectus: and (vii) no stop order shall have been
issued under the Act and no proceedings therefor shall have been initiated,
threatened or contemplated by the Commission.
(g) At each of the Closing Date and each Option Closing Date, if any,
the Underwriters shall have received a certificate of the principal executive
officer and the chief financial or chief accounting officer of the Company,
dated the Closing Date or Option Closing Date, as the case may be, to the effect
that each of such persons has carefully examined the Registration Statement, the
Prospectus and this Agreement, and that:
(i) The representations and warranties in this Agreement of the
Company are true and correct, as if made on and as of the Closing Date or
the Option Closing Date, as the case may be, and the Company has complied
with all agreements and covenants and satisfied all conditions contained in
this Agreement on its part to be performed or satisfied at or prior to such
Closing Date or Option Closing Date, as the case may be;
(ii) No stop order suspending the effectiveness of the Registration
Statement or any part thereof has been issued, and no proceedings for that
purpose have been instituted or are pending or, are contemplated or
threatened under the Act;
(iii) The Registration Statement and the Prospectus and, if any, each
amendment and each supplement thereto, contain all statements and
information required to be included therein, and none of the Registration
Statement, the Prospectus nor any amendment or supplement thereto includes
any 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 and neither the Preliminary Prospectus or any supplement
thereto included any untrue statement of a material fact or omitted to
state any material fact required to be stated therein or necessary to make
the statements therein, in light of the
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<PAGE>
circumstances under which they were made, not misleading; and
(iv) Since the dates as of which information is given in the
Registration Statement and the Prospectus, (A) there has not been any
material change in the shares of Common Stock or liabilities of the Company
except as set forth in or contemplated by the Prospectus; (B) there has not
been any material adverse change in the general affairs, management,
business, financial condition or results of operations of the Company,
whether or not arising from transactions in the ordinary course of
business, as set forth in or contemplated by the Prospectus; (C) the
Company has not sustained any material loss or interference with its
business from any court or from legislative or other governmental action,
order or decree, whether foreign or domestic, or from any other occurrence,
not described in the Registration Statement and Prospectus; (D) there has
not occurred any event that makes untrue or incorrect in any material
respect any statement or information contained in the Registration
Statement or Prospectus or that is not reflected in the Registration
Statement or Prospectus but should be reflected therein in order to make
the statements or information therein, in light of the circumstances in
which they were made, not misleading in any material respect; (E) the
Company has not incurred up to and including the Closing Date or the Option
Closing Date, as the case may be, other than in the ordinary course of its
business, any material liabilities or obligations, direct or contingent;
(F) the Company has not paid or declared any dividends or other
distributions on its capital stock; (G) the Company has not entered into
any transactions not in the ordinary course of business; (H) there has not
been any change in the capital stock or long-term debt or any increase in
the short-term borrowings (other than any increase in the short-terms
borrowings in the ordinary course of business) of the Company; (I) the
Company has not sustained any material loss or damage to its property or
assets, whether or not insured; and (J) there has occurred no event
required to be set forth in an amended or supplemented Prospectus which has
not been set forth.
References to the Registration Statement and the Prospectus in this subsection
(g) are to such documents as amended and supplemented at the date of such
certificate.
(h) By the Closing Date, the Underwriters will have received clearance
from the NASD as to the amount of compensation allowable or payable to the
Underwriters, as described in the Registration Statement.
(i) At the time this Agreement is executed, the Underwriters shall
have received a letter, dated such date, addressed to the Underwriters in form
and substance satisfactory (including the non-material nature of the changes or
decreases, if any, referred to in clause (iii) below) in all respects to the
Underwriters and Underwriters' Counsel, from M. R. Weiser & Co. LLP,:
(i) confirming that they are independent accountants with respect to
the Company within the meaning of the Act and the applicable Rules and
Regulations;
(ii) stating that it is their opinion that the financial statements of
the Company included in the Registration Statement comply as to form in all
material respects with the applicable accounting requirements of the Act
and the Rules and Regulations thereunder and that the Representative may
rely upon the opinion of M.R. Weiser & Co. LLP, with respect to the
financial statements and
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<PAGE>
supporting schedules included in the Registration Statement;
(iii) stating that, on the basis of a limited review which included a
reading of the latest available unaudited interim financial statements of
the Company (with an indication of the date of the latest available
unaudited interim financial statements), a reading of the latest available
minutes of the stockholders and board of directors and the various
committees of the boards of directors of the Company, consultations with
officers and other employees of the Company responsible for financial and
accounting matters and other specified procedures and inquiries, nothing
has come to their attention which would lead them to believe that (A) the
unaudited financial statements, if any, of the Company included in the
Registration Statement do not comply as to form in all material respects
with the applicable accounting requirements of the Act and the Rules and
Regulations or are not fairly presented in conformity with generally
accepted accounting principles applied on a basis substantially consistent
with that of the audited financial statements of the Company included in
the Registration Statement, or (B) at a specified date not more than five
(5) days prior to the effective date of the Registration Statement, there
has been any change in the capital stock or long-term debt of the Company,
or any decrease in the stockholders' equity or net current assets or net
assets of the Company as compared with amounts shown in the [ ] 199__
balance sheet included in the Registration Statement, other than as set
forth in or contemplated by the Registration Statement, or, if there was
any change or decrease, setting forth the amount of such change or
decrease;
(iv) setting forth, at a date not later than five (5) days prior to
the date of the Registration Statement, the amount of liabilities of the
Company (including a breakdown of commercial paper and notes payable to
banks) ;
(v) stating that they have compared specific dollar amounts, numbers
of shares, percentages of revenues and earnings, statements and other
financial information pertaining to the Company set forth in the Prospectus
in each case to the extent that such amounts, numbers, percentages,
statements and information may be derived from the general accounting
records, including work sheets, of the Company and excluding any questions
requiring an interpretation by legal counsel, with the results obtained
from the application of specified readings, inquiries and other appropriate
procedures (which procedures do not constitute an examination in accordance
with generally accepted auditing standards) set forth in the letter and
found them to be in agreement;
(vi) stating that they have in addition carried out certain specified
procedures, not constituting an audit, with respect to certain pro forma
financial information which is included in the Registration Statement and
the Prospectus and that nothing has come to their attention as a result of
such procedures that caused them to believe such unaudited pro forma
financial information does not comply in form in all respects with the
applicable accounting requirements of Rule 11-02 of Regulation S-X or that
the pro forma adjustments have not been properly applied to the historical
amounts in the compilation of that information;
(vii) stating that they have not during the immediately preceding five
(5) year period brought to the attention of any of the Company's management
any "weakness," as defined in Statement of
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Auditing Standard No. 60 "Communication of Internal Control Structure
Related Matters Noted in an Audit," in any of the Company's internal controls;
and
(viii) statements as to such other matters incident to the transaction
contemplated hereby as the Representative may request.
(j) On or prior to the Closing Date and each Option Closing Date, if
any, the Underwriters shall have received from M.R. Weiser & Co. LLP, a letter,
dated as of the Closing Date or the Option Closing Date, as the case may be, to
the effect that they reaffirm the statements made in the letter furnished
pursuant to subsection (i) of this Section, except that the specified date in
the referred to shall be a date not more than five days prior to the Closing
Date or the Option Closing Date, as the case may be, and, if the Company has
elected to rely on Rule 430A of the Rules and Regulations, to the further effect
that they have carried out procedures as specified in clause (v) of subsection
(i) of this Section with respect to certain amounts, percentages and financial
information as specified by the Representative and deemed to be a part of the
Registration Statement pursuant to Rule 430A(b) and have found such amounts,
percentages and financial information to be in agreement with the records
specified in such clause (v).
(k) On each of Closing Date and Option Closing Date, if any, there
shall have been duly tendered to the Representative for the several
Underwriters' accounts the appropriate number of Securities.
(l) No order suspending the sale of the Securities in any jurisdiction
designated by the Representative pursuant to subsection (e) of Section 4 hereof
shall have been issued on either the Closing Date or the Option Closing Date, if
any, and no proceedings for that purpose shall have been instituted or shall be
contemplated.
(m) On or before Closing Date, the Shares, the Common Stock and the
Public Warrants shall have been approved for quotation on the Nasdaq SmallCap
Market and shall have been authorized upon official notice of issuance for
trading on the BSE.
(n) On or before Closing Date, there shall have been delivered to the
Representative the Lock-up Agreements, in form and substance satisfactory to the
Representative.
(o) On or before the Closing Date, the Company shall have executed (i)
a financial consulting agreement and (ii) a mergers and acquisition agreement,
each with the Representative and each in form and substance satisfactory to the
Representative.
(p) On or before the Closing Date, the Company shall have executed the
Representative's Warrant Agreement and the Warrant Agreement together with the
applicable Warrant Certificates, each in form and substance satisfactory to the
Representative.
(q) On or before the Closing Date the Representative shall have
received executed copies of the employment agreements and insurance policies
referred to in Section 1 (a) (xxxi) hereof, each
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to the satisfaction of the Representative.
(r) Each of the employee bonus pool plan and incentive stock option
plan of the Company shall be in effect as of the Closing Date, shall be in
accordance with terms of the Letter Agreement dated March 6, 1996 between the
Company and RAS and shall otherwise be on terms and conditions satisfactory to
the Representative.
If any condition to the Underwriters' obligations hereunder to be fulfilled
prior to or at the Closing Date or the relevant Option Closing Date, as the case
may be, is not so fulfilled, the Representative may terminate this Agreement or,
if the Representative so elects, it may waive any such conditions which have not
been fulfilled or extend the time for their fulfillment.
7. Indemnification.
(a) The Company agrees to indemnify and hold harmless each of the
Underwriters (for purposes of this Section 7 "Underwriter" shall include the
officers, directors, partners, employees, agents and counsel of the Underwriter,
including specifically each person who may be substituted for an Underwriter as
provided in Section 11 hereof), and each person, if any, who controls the
Underwriter ("controlling person") within the meaning of Section 15 of the Act
or Section 20(a) of the Exchange Act, from and against any and all losses,
claims, damages, expenses or liabilities, joint or several (and actions in
respect thereof), whatsoever (including but not limited to any and all expenses
whatsoever reasonably incurred in investigating, preparing or defending against
any litigation, commenced or threatened, or any claim whatsoever), as such are
incurred, to which the Underwriter or such controlling person may become subject
under the Act, the Exchange Act, or any other statute or at common law or
otherwise or under the laws of foreign countries, arising out of or based upon
any untrue statement or alleged untrue statement of a material fact contained
(i) in any Preliminary Prospectus, the Registration Statement or the Prospectus
(as from time to time amended and supplemented); (ii) in any post-effective
amendment or amendments or any time new registration statement and prospectus in
which is included securities of the Company issued or issuable upon exercise of
the Securities; or (iii) in any application or other document or written
communication (in this Section 7 collectively called "Application") executed by
the Company or based upon written information furnished by the Company in any
jurisdiction in order to qualify the Securities under the securities laws
thereof or filed with the Commission, any securities commission or agency,
Nasdaq, the BSE or any securities exchange; or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary to make
the statements therein not misleading (in the case of the Prospectus, in the
light of the circumstances under which they were made), unless such statement or
omission was made in reliance upon and in conformity with written information
furnished to the Company with respect to any Underwriter by or on behalf of such
Underwriter expressly for use in any Preliminary Prospectus, the Registration
Statement or Prospectus, or any amendment thereof or supplement thereto, or in
any Application, as the case may be.
The indemnity agreement in this subsection (a) shall be in addition to any
liability which the Company may have at common law or otherwise.
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(b) Each of the Underwriters agrees severally, but not jointly, to
indemnify and hold harmless the Company, each of its directors, each of its
officers who has signed the Registration Statement, and each other person, if
any, who controls the Company within the meaning of the Act, to the same extent
as the foregoing indemnity from the Company to the Underwriters but only with
respect to statements or omissions, if any, made in any Preliminary Prospectus,
the Registration Statement or Prospectus or any amendment thereof or supplement
thereto or in any Application made in reliance upon, and in strict conformity
with, written information furnished to the Company with respect to any
Underwriter by such Underwriter expressly for use in such Preliminary
Prospectus, the Registration Statement or Prospectus or any amendment thereof or
supplement thereto or in any such Application, provided that such written
information or omissions only pertain to disclosures in the Preliminary
Prospectus, the Registration Statement or Prospectus directly relating to the
transactions effected by the Underwriters in connection with this offering. The
Company acknowledges that the statements with respect to the public offering of
the Securities set forth under the heading "Underwriting" and the stabilization
legend in the Prospectus have been furnished by the Underwriters expressly for
use therein and constitute the only information furnished in writing by or on
behalf of the Underwriters for inclusion in the Prospectus.
(c) Promptly after receipt by an indemnified party under this Section
7 of notice of the commencement of any action, suit or proceeding, such
indemnified party shall, if a claim in respect thereof is to be made against one
or more indemnifying parties under this Section 7, notify each party against
whom indemnification is to be sought in writing of the commencement thereof (but
the failure so to notify an indemnifying party shall not relieve it from any
liability which it may have under this Section 7 except to the extent that it
has been prejudiced in any material respect by such failure or from any
liability which it may have otherwise). In case any such action is brought
against any indemnified party, and it notifies an indemnifying party or parties
of the commencement thereof, the indemnifying party or parties will be entitled
to participate therein, and to the extent it may elect by written notice
delivered to the indemnified party promptly after receiving the aforesaid notice
from such indemnified party, to assume the defense thereof with counsel
reasonably satisfactory to such indemnified party. Notwithstanding the
foregoing, the indemnified party or parties shall have the right to employ its
or their own counsel in any such case but the fees and expenses of such counsel
shall be at the expense of such indemnified party or parties unless (i) the
employment of such counsel shall have been authorized in writing by the
indemnifying parties in connection with the defense of such action at the
expense of the indemnifying party, (ii) the indemnifying parties shall not have
employed counsel reasonably satisfactory to such indemnified party to have
charge of the defense of such action within a reasonable time after notice of
commencement of the action, or (iii) such indemnified party or parties shall
have reasonably concluded that there may be defenses available to it or them
which are different from or additional to those available to one or all of the
indemnifying parties (in which case the indemnifying parties shall not have the
right to direct the defense of such action on behalf of the indemnified party or
parties), in any of which events such fees and expenses of one additional
counsel shall be borne by the indemnifying parties. In no event shall the
indemnifying parties be liable for fees and expenses of more than one counsel
(in addition to any local counsel) separate from their own counsel for all
indemnified parties in connection with any one action or separate but similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances. Anything in this Section 7 to the contrary
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<PAGE>
notwithstanding, an indemnifying party shall not be liable for any settlement of
any claim or action effected without its written consent; provided, however,
that such consent was not unreasonably withheld.
(d) In order to provide for just and equitable contribution in any
case in which (i) an indemnified party makes claim for indemnification pursuant
to this Section 7, but it is judicially determined (by the entry of a final
judgment or decree by a court of competent jurisdiction and the expiration of
time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding the fact that
the express provisions of this Section 7 provide for indemnification in such
case, or (ii) contribution under the Act may be required on the part of any
indemnified party, then each indemnifying party shall contribute to the amount
paid as a result of such losses, claims, damages, expenses or liabilities (or
actions in respect thereof) (A) in such proportion as is appropriate to reflect
the relative benefits received by each of the contributing parties, on the one
hand, and the party to be indemnified on the other hand, from the offering of
the Securities or (B) if the allocation provided by clause (A) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of each of the contributing parties, on the one hand, and the party to be
indemnified on the other hand in connection with the statements or omissions
that resulted in such losses, claims, damages, expenses or liabilities, as well
as any other relevant equitable considerations. In any case where the Company is
a contributing party and the Underwriters are the indemnified party, the
relative benefits received by the Company, on the one hand, and the
Underwriters, on the other, shall be deemed to be in the same proportion as the
total net proceeds from the offering of the Units (before deducting expenses)
bear to the total underwriting discounts received by the Underwriters hereunder,
in each case as set forth in the table in the cover page of the Prospectus.
Relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Company, or by the Underwriters, and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such untrue
statement or omission. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages, expenses or liabilities (or actions in
respect thereof) referred to above in this subdivision (d) shall be deemed to
include 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 (d) the Underwriters shall
not be required to contribute any amount in excess of the underwriting discount
applicable to the Securities purchased by the Underwriters hereunder. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. For purposes of this Section 7, each person,
if any, who controls the Company within the meaning of the Act, each officer of
the Company who has signed the Registration Statement, and each director of the
Company shall have the same rights to contribution as the Company, subject in
each case to this subparagraph (d), Any party entitled to contribution will,
promptly after receipt of notice of commencement of any action, suit or
proceeding against such party in respect to which a claim for contribution may
be made against another party or parties under this subparagraph (d), notify
such party or parties from whom contribution may be sought, but the omission so
to notify such party or parties shall not relieve the
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<PAGE>
party or parties from whom contribution may be sought from any obligation it or
they may have hereunder or otherwise than under this subparagraph (d), or to the
extent that such party or parties were not adversely affected by such omission.
The contribution agreement set forth above shall be in addition to any
liabilities which any indemnifying party may have at common law or otherwise.
8. Representations and Agreements to Survive Delivery. All representations,
warranties and agreements contained in this Agreement or contained in
certificates of officers of the Company submitted pursuant hereto, shall be
deemed to be representations, warranties and agreements at the Closing Date and
any Option Closing Date, as the case may be, and such representations,
warranties and agreements of the Company and the respective indemnity agreements
contained in Section 7 hereof, shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of any Underwriter,
the Company, any controlling person of any Underwriter or the Company, and shall
survive termination of this Agreement or the issuance and deliver of the
Securities to the Underwriters and the Representative, as the case may be.
9. Effective Date. This Agreement shall become effective at 10:00 a.m., New
York City time, on the next full business day following the date hereof, or at
such earlier time after the Registration Statement becomes effective as the
Representative, in it's discretion, shall release the Securities for the sale to
the public; provided, however, that the provisions of Sections 5, 7 and 10 of
this Agreement shall at all times be effective. For purposes of this Section 9,
the Securities to be purchased hereunder shall be deemed to have been so
released upon the earlier of dispatch by the Representative of telegrams to
securities dealers releasing such shares for offering or the release by the
Representative for publication of the first newspaper advertisement which is
subsequently published relating to the Securities.
10. Termination.
(a) Subject to subsection (b) of this Section 10, the Representative
shall have the right to terminate this Agreement, (i) if any domestic or
international event or act or occurrence has disrupted, or in the
Representative's opinion will in the immediate future disrupt the financial
markets; or (ii) any material adverse change in the financial markets shall have
occurred; or (iii) if trading on the New York Stock Exchange, the American Stock
Exchange, or in the over-the-counter market shall have been suspended, or
minimum or maximum prices for trading shall have been fixed, or maximum ranges
for prices for securities shall have been required on the over-the-counter
market by the NASD or by order of the Commission or any other government
authority having jurisdiction; or (iv) if the United States shall have become
involved in a war or major hostilities, or if there shall have been an
escalation in an existing war or major hostilities or a national emergency shall
have been declared in the United States; or (v) if a banking moratorium has been
declared by a state or federal authority; or (vi) if a moratorium in foreign
exchange trading has been declared; or (vii) if the Company, shall have
sustained a loss material or substantial to the Company by fire, flood,
accident, hurricane, earthquake, theft, sabotage or other calamity or malicious
act which, whether or not such loss shall have been insured, will, in the
Representative's opinion, make it inadvisable to proceed with the delivery of
the Securities; or (vii) if there shall have been such a material adverse change
in the condition (financial or otherwise), business affairs or prospects of
34
<PAGE>
the Company, whether or not arising in the ordinary course of business, which
would render, in the Representative's judgment, either of such parties unable to
perform satisfactorily its respective obligations as contemplated by this
Agreement or the Registration Statement, or such material adverse change in the
general market, political or economic conditions, in the United States or
elsewhere as in the Representative's judgment would make it inadvisable to
proceed with the offering, sale and/or delivery of the Securities.
(b) If this Agreement is terminated by the Representative in
accordance with the provisions of Section 10(a), the Company shall promptly
reimburse and indemnify the Representative for all of its actual out-of-pocket
expenses, including the fees and disbursements of counsel for the Underwriters
in an amount not to exceed $50,000 (less amounts previously paid pursuant to
Section 5(c) above). Notwithstanding any contrary provision contained in this
Agreement, if this Agreement shall not be carried out within the time specified
herein, or any extension thereof granted to the Representative, by reason of any
failure on the part of the Company to perform an undertaking or satisfy any
condition of this Agreement to be performed or satisfied by the Company
(including, without limitation, pursuant to Section 6 or Section 12) then, the
Company shall promptly reimburse and indemnify the Representative for all of its
actual out-of-pocket expenses, including the fees and disbursements of counsel
for the Underwriters (less amounts previously paid pursuant to Section 5 (c)
above). In addition, the Company shall remain liable for all Blue Sky counsel
fees and expenses and Blue Sky filing fees. Notwithstanding any contrary
provision contained in this Agreement, any election hereunder or any termination
of this Agreement (including, without limitation, pursuant to Sections 6, 10, 11
and 12 hereof), and whether or not this Agreement is otherwise carried out, the
provisions of Section 5 and Section 7 shall not be in any way affected by such
election or termination or failure to carry out the terms of this Agreement or
any part hereof.
11. Substitution of the Underwriters. If one or more of the Underwriters
shall fail (otherwise than for a reason sufficient to justify the termination of
this Agreement under the provisions of Section 6, Section 10 or Section 12
hereof) to purchase the Securities which it or they are obligated to purchase on
such date under this Agreement (the "Defaulted Securities"), the Representative
shall have the right, within 24 hours thereafter, to make arrangement for one or
more of the non-defaulting Underwriters, or any other underwriters, to purchase
all, but not less than all, of the Defaulted Securities in such amounts as may
be agreed upon and upon the terms herein set forth; if, however, the
Representative shall not have completed such arrangements within such 24-hour
period, then:
(a) if the number of Defaulted Securities does not exceed 10% of the
total number of Firm Units to be purchased on such date, the non-defaulting
Underwriters shall be obligated to purchase the full amount thereof in the
proportions that their respective underwriting obligations hereunder bear to the
underwriting obligations of all non-defaulting Underwriters, or
(b) if the number of Defaulted Securities exceeds 10% of the total
number of Firm Units, this Agreement shall terminate without liability on the
part of any non-defaulting Underwriters.
35
<PAGE>
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of any default by such Underwriter under
this Agreement.
In the event of any such default which does not result in a termination of
this Agreement, the Representative shall have the right to postpone the Closing
Date for a period not exceeding seven days in order to effect any required
changes in the Registration Statement or Prospectus or in any other documents.
12. Default by the Company. If the Company shall fail at the Closing Date
or any Option Closing Date, as applicable, to sell and deliver the number of
Units which it is obligated to sell hereunder on such date, then this Agreement
shall terminate (or, if such default shall occur with respect to any Option
Securities to be purchased on any Option Closing Date, the Underwriters may at
the Representative's option, by notice from the Representative to the Company,
terminate the Underwriters' obligation to purchase Option Securities from the
Company on such date) without any liability on the part of any non-defaulting
party other than pursuant to Section 5, Section 7 and Section 10 hereof. No
action taken pursuant to this Section shall relieve the Company from liability,
if any, in respect of such default.
13. Notices. All notices and communications hereunder, except as herein
otherwise specifically provided, shall be in writing and shall be deemed to have
been duly given if mailed or transmitted by any standard form of
telecommunication. Notices to the Underwriters shall be directed to the
Representative at 2 Broadway, New York, New York 10004, Attention: Mr. Robert A.
Schneider, Chairman of the Board, with a copy to Bachner, Tally, Polevoy &
Misher LLP, 380 Madison Avenue, New York, NY 10017, Attention: Fran Stoller,
Esq. Notices to the Company shall be directed to the Company at New York Health
Care, Inc. 1667 Flatbush Avenue, Brooklyn, New York, Attn: Jerry Braun, with a
copy to Scheichet & Davis, P.C., 505 Park Avenue, New York, NY 10022, Attention:
William Davis, Esq.
14. Parties. This Agreement shall inure solely to the benefit of and shall
be binding upon, the Underwriters, the Company and the controlling persons,
directors and officers referred to in Section 7 hereof, and their respective
successors, legal representatives and assigns and no other person shall have or
be construed to have any legal or equitable right, remedy or claim under or in
respect of or by virtue of this Agreement or any provisions herein contained. No
purchaser of Securities from any Underwriter shall be deemed to be a successor
by reason merely of such purchase.
15. Construction. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of New York without giving
effect to the choice of law or conflict of laws principles.
16. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and all of which
taken together shall be deemed to be one and the same instrument.
36
<PAGE>
17. Entire Agreement; Amendments. This Agreement, the Representative's
Warrant Agreement and the Warrant Agreement constitute the entire agreement of
the parties hereto and supersede all prior written or oral agreements,
understandings and negotiations with respect to the subject matter hereof. This
Agreement may not be amended except in a writing, signed by the Representative
and the Company.
If the foregoing correctly sets forth the understanding between the
Underwriters and the Company, please so indicate in the space provided below for
that purpose, whereupon this letter shall constitute a binding agreement among
us.
Very truly yours,
NEW YORK HEALTH CARE, INC.
By:
--------------------------------------
Jerry Braun, President
Confirmed and accepted as of
the date first above written
RAS SECURITIES CORP.
For itself and as Representative of the several
Underwriters named in Schedule A hereto
By:
-----------------------------
Robert A. Schneider, Chairman
37
<PAGE>
SCHEDULE A
Name of Underwriters Number of Firm
Securities to
be purchased
TOTAL..................................................
=============
38
CERTIFICATE OF INCORPORATION
OF
NEW YORK HEALTH CARE, INC.
Under Section 402 of the Business Corporation Law
IT IS HEREBY CERTIFIED THAT:
(1) The name of the Corporation is:
NEW YORK HEALTH CARE, INC.
(2) The purpose of the Corporation is to engage in any lawful act or activity
for which corporations may be organized pursuant to the Business Corporation Law
of the State of New York. The Corporation is not to engage in any act or
activity requiring any consents or approvals by law.
For the accomplishment of the aforesaid purposes, and in furtherance
thereof, the Corporation shall have, and may exercise, all of the powers
conferred by the Business Corporation Law upon corporations formed thereunder,
subject to any limitations contained in Article 2 of said law or in accordance
with the provisions of any other statute of the State of New York.
(3) The number of shares which the Corporation shall have the authority to issue
is 200 Shares at no par value.
(4) The principal office of the corporation is to be located in the City of New
York County of Kings State of New York.
(5) The Secretary of State is designated as agent of the Corporation upon whom
process against it may be served. The post office address to which the Secretary
of State shall mail a copy of any process against the Corporation served upon
him is:
c/o Sam Soroka
4704-13th Ave.
Brooklyn, NY 11219
The undersigned incorporator is of the age of eighteen years or older.
IN WITNESS WHEREOF, this certificate has been subscribed this 16th day of
February, 1983 by the undersigned who affirms that the statements made herein
are true under the penalties of perjury.
/s/ Helen C. Mlock 170 Washington Avenue, Albany, NY 12210
- ---------------------------- ---------------------------------------
Helen C. Mlock, Incorporator Address
State of New York }
} ss:
Department of State }
I hereby certify that I have compared the annexed copy of the original document
filed by the Department of State and that the same is a correct transcript of
said original.
Witness my hand and seal of the Department of State on MAR 26 1996
[SEAL]
STATE OF NEW YORK
DEPARTMENT OF STATE
/s/ Alexander F. Treadwell
Secretary of State
DOS-200 (Rev. 1/95)
<PAGE>
RESTATED
CERTIFICATE OF INCORPORATION F960326000392
OF
NEW YORK HEALTH CARE, INC.
Under Section 807 of the
Business Corporation Law
UNI-37
The undersigned, being, respectively, the president and secretary of the
corporation, hereby certify as follows:
FIRST: The name of the corporation is
NEW YORK HEALTH CARE, INC.
SECOND: The date when the Certificate of Incorporation was filed by the
Department of State is the twenty-fourth day of February, 1983.
THIRD: (a) The text of the Certificate of Incorporation is amended as
follows:
(A) Paragraph (3) relating to the authorized shares is amended to
change the authorized shares from 200 common shares no par value to
10,000,000 common shares at $.01 par value; and to add a Class of
2,000,000 preferred shares at $.01 par value; (B) Paragraph (2)
relating to the corporate purposes; (C) Paragraph (5) relating to the
address for process; (D) Paragraph (6) relating to indemnification is
added;
(b) The text of the Certificate of Incorporation, as amended heretofore, is
hereby restated as further amended to read as herein set forth in full:
"(1): The name of the corporation is
NEW YORK HEALTH CARE, INC.
(2): The corporation is formed to engage in any lawful act or activity for
which corporations may be organized under the Business Corporation Law of the
State of New York, provided that it is not formed to engage in any act or
activity which requires the consent or approval of any state official,
department, board, agency or other body, without such approval or consent first
being obtained.
1
<PAGE>
(3): (a) The corporation shall be authorized to issue the following shares:
Class Number of Shares Par Value
----- ---------------- ---------
COMMON 10,000,000 $.01
PREFERRED 2,000,000 $.01
(b) No holder of any shares of the corporation shall, because of his
ownership of shares of the corporation, have a pre-emptive or other right to
purchase, subscribe for, or take any part of any shares of the corporation, or
any part of any notes, debentures, bonds, or other securities convertible into
or providing for options or warrants to purchase shares of the corporation which
are issued, offered, or sold by the corporation after its incorporation, whether
the shares, notes, debentures, bonds, or other securities, be authorized by this
certificate of incorporation or by an amended certificate duly filed and in
effect at the time of the issuance, offer, or sale of such shares, notes,
debentures, bonds, or other securities. Any part of the shares authorized by
this certificate of incorporation, or by an amended certificate duly filed and
any part of any notes, debentures, bonds, or other securities convertible into
or providing for options or warrants to purchase shares of the corporation may
at any time be issued, offered for sale, and sold or disposed of by the
corporation, pursuant to a resolution of its Board of Directors and to such
persons and upon such terms and conditions as the Board of Directors may, in its
sole discretion, deem proper and advisable, without first offering to existing
shareholders any part of such shares, notes, debentures, bonds, or other
securities.
(c) The Preferred shares shall be issued from time to time in one or more
series, with such distinctive serial designations as shall be stated and
expressed in the resolution or resolutions providing for the issue of such
shares from time to time adopted by the Board of Directors; and in such
resolution or resolutions providing for the issue of shares of each particular
series; the Board of Directors is expressly authorized to fix the annual rate or
rates of dividends for the particular series; the dividend payment dates for the
particular series and the date from which dividends on all shares of such series
issued prior to the record date for the first dividend payment date shall be
cumulative; the redemption price or prices for the particular series; the voting
powers for the particular series; the rights, if any, of holders of the shares
of the particular series to convert the same into shares of any other series or
class or other securities of the corporation, with any provisions for the
subsequent adjustment of such conversion rights; and to classify or reclassify
any unissued preferred shares by fixing or altering from time to time any of the
foregoing rights, privileges and qualifications.
All the Preferred shares of any one series shall be identical with each
other in all respects, except that shares of any one series issued at different
times may differ as to the dates from which dividends thereon shall be
cumulative; and all preferred shares shall be of equal rank, regardless of
series, and shall be identical in all respects except as to the particulars
fixed by the Board as hereinabove provided or as fixed herein.
2
<PAGE>
(4): The principle office of the corporation in the State of New York shall
be located in the County of Kings.
(5): The Secretary of State is designated as the agent of the corporation
upon whom process against the corporation may be served, and the address to
which the Secretary of State shall mail a copy of any process against the
corporation served upon him is c/o Scheichet & Davis, P.C., 505 Park Avenue, New
York, New York 10022.
(6): (a) The corporation may, to the fullest extent permitted by Section
721 through 726 of the Business Corporation Law of New York, indemnify any and
all directors and officers whom it shall have power to indemnify under the said
sections from and against any and all of the expenses, liabilities or other
matters referred to in or covered by such section, and the indemnification
provided for herein shall not be deemed exclusive of any other rights to which
the persons so indemnified may be entitled under any By-Law, agreement, vote of
shareholders or disinterested directors or otherwise, both as to action in
his/her official capacity and as to action in another capacity by holding such
office, and shall continue as to a person who has ceased to be a director or
officer and shall inure to the benefits of the heirs, executors and
administrators of such a person.
(b) A director of this Corporation shall not be personally liable to the
Corporation or its shareholders for damages for any breach of duty in his/her
capacity as a director, unless a judgement or other final adjudication adverse
to him/her establishes that (i) his/her acts or omissions were in bad faith or
involved intentional misconduct or a knowing violation of law, or (ii) he/she
personally gained in fact a financial or other advantage to which he/she was not
legally entitled or (iii) his/her acts violated Section 719 of the Business
Corporation Law."
FOURTH: That the 40 presently issued Common shares without par value are
hereby changed, on a one for 48,500 basis, into 1,940,000 issued Common shares
par value $.01 per share.
That the 160 presently unissued Common shares without par value are hereby
changed, on a one for 50,375 basis, into 8,060,000 unissued Common shares par
value $.01 per share.
FIFTH: The Restated Certificate of Incorporation was authorized by the
unanimous written consent of the holders of all of the outstanding shares
entitled to vote thereon. Said authorization is subsequent to the affirmative
vote of the Board of Directors.
3
<PAGE>
IN WITNESS THEREOF, we hereunto sign our names and affirm that the
statements made herein are true under the penalties of perjury, this 21st day of
March 1996.
NEW YORK HEALTH CARE, INC.
S/JERRY BRAUN
-----------------------------------
Jerry Braun, President
S/JACOB ROSENBERG
-----------------------------------
Jacob Rosenberg, Secretary
4
<PAGE>
F960326000392
RESTATED
CERTIFICATE OF INCORPORATION
OF
NEW YORK HEALTH CARE, INC.
Under Section 807 of the
Business Corporation Law
Scheichet & Davis, P.C.
505 Park Avenue
New York, New York 10022
FILED
MAR 26 3:41 PM '96
fac $50 tax
RECEIVED
MAR 26 10 45 am '96
UNI-37
BILLED
ICC
STATE OF NEW YORK
DEPARTMENT OF STATE
FILED MAR 26 1996
TAX $ 50
-------------
BY: fac
-------------
Kings
960326000409
5
EXHIBIT 3.3
CERTIFICATE OF CORRECTION
OF
RESTATED CERTIFICATE OF INCORPORATION
OF
NEW YORK HEALTH CARE, INC.
Under Section 105 of the
Business Corporation Law
Scheichet & Davis, P. C.
505 Park Avenue
New York, New York 10022
<PAGE>
CERTIFICATE OF CORRECTION
OF
RESTATED CERTIFICATE OF INCORPORATION
0F
NEW YORK HEALTH CARE, INC.
Under Section 105 of the
Business Corporation Law
The undersigned being respectively, the president and secretary of the
corporation, does hereby certify and sets forth as follows:
FIRST: The name of the corporation is
NEW YORK HEALTH CARE, INC.
SECOND: The date of the filing of Restated Certificate of Incorporation to
be corrected was filed with the Department of State is the twenty-sixth day of
March, 1996.
THIRD: The nature of the incorrect statements are as follows:
In paragraph FOURTH the figures specifying the rate of change of issued and
unissued shares of the previously existing 200 no par value Common shares to
issued and unissued shares at .01 par value were incorrectly stated thereby
causing the resulting amount of issued and unissued shares of the new Common
stock structure to be incorrectly stated.
FOURTH: The provision in the certificate as corrected is as follows:
"FOURTH: That the 40 presently issued Common shares without par value
are hereby changed, on a 1 for 56,625 basis, into 2,265,000 issued Common
shares par value $.01 per share.
That the 16O presently unissued Common shares without par value are
hereby changed, on a 1 for 48,343.75 basis into 7,735,000 unissued Common
shares par value $.01 per share."
IN WITNESS WHEREOF, We hereunto sign our names this sixteenth day of
May, 1996, and affirm that the statements contained herein are true under the
penalties of perjury.
NEW YORK HEALTH CARE, INC.
/s/ Jerry Braun
-----------------------------
Jerry Braun, President
/s/ Jacob Rosenberg
-----------------------------
Jacob Rosenberg, Secretary
BY-LAWS
of
NEW YORK HEALTH CARE, INC
ARTICLE I - OFFICES
The principal office of the corporation shall be in the Borough of Brooklyn
County of Kings State of New York. The corporation may also have offices at such
other places within or without the State of New York as the board may from time
to time determine or the business of the corporation may require.
ARTICLE II - SHAREHOLDERS
1. PLACE OF MEETINGS.
Meetings of shareholders shall be held at the principal office of the
corporation or at such place within or without the State of New York as the
board shall authorize.
2. ANNUAL MEETING.
The annual meeting of the shareholders shall be held on the First Tuesday
of April at 10:00 a.m. in each year if not a legal holiday, and, if a legal
holiday, then on the next business day following at the same hour, when the
shareholders shall elect a board and transact such other business as may
properly come before the meeting.
3. SPECIAL MEETINGS.
Special meetings of the shareholders may be called by the board or by the
president and shall be called by the president or the secretary at the request
in writing of a majority of the board or at the request in writing by
shareholders owning a majority in amount of the shares issued and outstanding.
Such request shall state the purpose or purposes of the proposed meeting.
Business transacted at a special meeting shall be confined to the purposes
stated in the notice.
4. FIXING RECORD DATE.
For the purpose of determining the shareholders entitled to notice of or
to vote at any meeting of shareholders or any adjournment thereof, or to express
consent to or dissent from any proposal without a meeting, or for the purpose of
determining shareholders entitled to receive payment of any dividend or the
allotment of any rights, or for the purpose of any other
By-Laws A
<PAGE>
action, the board shall fix, in advance, a date as the record date for any such
determination of shareholders. Such date shall not be more than fifty nor less
than ten days before the date of such meeting, nor more than fifty days prior to
any other action. If no record date is fixed it shall be determined in
accordance with the provisions of law.
5. NOTICE OF MEETINGS OF SHAREHOLDERS.
Written notice of each meeting of shareholders shall state the purpose or
purposes for which the meeting is called, the place, date and hour of the
meeting and unless it is the annual meeting, shall indicate that it is being
issued by or at the direction of the person or persons calling the meeting.
Notice shall be given either personally or by mail to each shareholder entitled
to vote at such meeting, not less than ten nor more than fifty days before the
date of the meeting. If action is proposed to be taken that might entitle
shareholders to payment for their shares, the notice shall include a statement
of that purpose and to that effect. If mailed, the notice is given when
deposited in the United States mail, with postage thereon prepaid, directed to
the shareholder at his address as it appears on the record of shareholders, or,
if he shall have filed with the secretary a written request that notices to him
be mailed to some other address, then directed to him at such other address.
6. WAIVERS.
Notice of meeting need not be given to any shareholder who signs a waiver
of notice, in person or by proxy, whether before or after the meeting. The
attendance of any shareholder at a meeting, in person or by proxy, without
protesting prior to the conclusion of the meeting the lack of notice of such
meeting, shall constitute a waiver of notice by him.
7. QUORUM OF SHAREHOLDERS.
When a quorum is once present to organize a meeting, it is not broken by
the subsequent withdrawal of any shareholders.
The shareholders present may adjourn the meeting despite the absence of a
quorum.
By-Laws B
<PAGE>
action, the board shall fix, in advance, a date as the record date for any such
determination of shareholders. Such date shall not be more than fifty nor less
than ten days before the date of such meeting, nor more than fifty days prior to
any other action. If no record date is fixed it shall be determined in
accordance with the provisions of law.
5. NOTICE OF MEETINGS OF SHAREHOLDERS.
Written notice of each meeting of shareholders shall state the purpose or
purposes for which the meeting is called, the place, date and hour of the
meeting and unless it is the annual meeting, shall indicate that it is being
issued by or at the direction of the person or persons calling the meeting.
Notice shall be given either personally or by mail to each shareholder entitled
to vote at such meeting, not less than ten nor more than fifty days before the
date of the meeting. If action is proposed to be taken that might entitle
shareholders to payment for their shares, the notice shall include a statement
of that purpose and to that effect. If mailed, the notice is given when
deposited in the United States mail, with postage thereon prepaid, directed to
the shareholder at his address as it appears on the record of shareholders, or,
if he shall have filed with the secretary a written request that notices to him
be mailed to some other address, then directed to him at such other address.
6. WAIVERS.
Notice of meeting need not be given to any shareholder who signs a waiver
of notice, in person or by proxy, whether before or after the meeting. The
attendance of any shareholder at a meeting, in person or by proxy, without
protesting prior to the conclusion of the meeting the lack of notice of such
meeting, shall constitute a waiver of notice by him.
7. QUORUM OF SHAREHOLDERS.
Unless the certificate of incorporation provides otherwise, the holders
of a majority of the shares entitled to vote thereat shall constitute a quorum
at a meeting of shareholders for the transaction of any business, provided that
when a specified item of business is required to be voted on by a class or
classes, the holders of a majority of the shares of such class or classes shall
constitute a quorum for the transaction of such specified item of business.
When a quorum is once present to organize a meeting, it is not broken by
the subsequent withdrawal of any shareholders.
The shareholders present may adjourn the meeting despite the absence of a
quorum.
By-Laws B
<PAGE>
8. PROXIES.
Every shareholder entitled to vote at a meeting of shareholders or to
express consent or dissent without a meeting may authorize another person or
persons to act for him by proxy.
Every proxy must be signed by the shareholder or his attorney-in-fact. No
proxy shall be valid after expiration of eleven months from the date thereof
unless otherwise provided in the proxy. Every proxy shall be revocable at the
pleasure of the shareholder executing it, except as otherwise provided by law.
9. QUALIFICATION OF VOTERS.
Every shareholder of record shall be entitled at every meeting of
shareholders to one vote for every share standing in his name on the record of
shareholders, unless otherwise provided in the certificate of incorporation.
10. VOTE OF SHAREHOLDERS.
Except as otherwise required by statute or by the certificate of
incorporation;
(a) directors shall be elected by a plurality of the votes cast at a
meeting of shareholders by the holders of shares entitled to vote in the
election;
(b) all other corporate action shall be authorized by a majority of the
votes cast.
11. WRITTEN CONSENT OF SHAREHOLDERS.
Any action that may be taken by vote may be taken without a meeting on
written consent, setting forth the action so taken, signed by the holders of all
the outstanding shares entitled to vote thereon or signed by such lesser number
of holders as may be provided for in the certificate of incorporation.
ARTICLE III - DIRECTORS
1. BOARD OF DIRECTORS.
Subject to any provision in the certificate of incorporation the business
of the corporation shall be managed by its board of directors, each of whom
shall be at least 18 years of age and shall be shareholders.
2. NUMBER OF DIRECTORS.
The number of directors shall be Three. When all of the shares are owned
by less than three shareholders, the number of directors may be less than three
but not less than the number of shareholders.
By-Laws C
<PAGE>
3. ELECTION AND TERM OF DIRECTORS.
At each annual meeting of shareholders, the shareholders shall elect
directors to hold office until the next annual meeting. Each director shall hold
office until the expiration of the term for which he is elected and until his
successor has been elected and qualified, or until his prior resignation or
removal.
4. NEWLY CREATED DIRECTORSHIPS AND VACANCIES.
Newly created directorships resulting from an increase in the number of
directors and vacancies occurring in the board for any reason except the removal
of directors without cause may be filled by a vote of a majority of the
directors then in office, although less than a quorum exists, unless otherwise
provided in the certificate of incorporation. Vacancies occurring by reason of
the removal of directors without cause shall be filled by vote of the
shareholders unless otherwise provided in the certificate of incorporation. A
director elected to fill a vacancy caused by resignation, death or removal shall
be elected to hold office for the unexpired term of his predecessor.
5. REMOVAL OF DIRECTORS.
Any or all of the directors may be removed for cause by vote of the
shareholders or by action of the board. Directors may be removed without cause
only by vote of the shareholders.
6. RESIGNATION.
A director may resign at any time by giving written notice to the board,
the president or the secretary of the corporation. Unless otherwise specified in
the notice, the resignation shall take effect upon receipt thereof by the board
or such officer, and the acceptance of the resignation shall not be necessary to
make it effective.
7. QUORUM OF DIRECTORS.
Unless otherwise provided in the certificate of incorporation, a majority
of the entire board shall constitute a quorum for the transaction of business or
of any specified item of business.
8. ACTION OF THE BOARD.
Unless otherwise required by law, the vote of a majority of the directors
present at the time of the vote, if a quorum is present at such time, shall be
the act of the board. Each director present shall have one vote regardless of
the number of shares, if any, which he may hold.
By-Laws D
<PAGE>
9. PLACE AND TIME OF BOARD MEETINGS.
The board may hold its meetings at the office of the corporation or at
such other places, either within or without the State of New York, as it may
from time to time determine.
10. REGULAR ANNUAL MEETING.
A regular annual meeting of the board shall be held immediately following
the annual meeting of shareholders at the place of such annual meeting of
shareholders.
11. NOTICE OF MEETINGS OF THE BOARD, ADJOURNMENT.
(a) Regular meetings of the board may be held without notice at such time
and place as it shall from time to time determine. Special meetings of the board
shall be held upon notice to the directors and may be called by the president
upon three days notice to each director either personally or by mail or by wire;
special meetings shall be called by the president or by the secretary in a like
manner on written request of two directors. Notice of a meeting need not be
given to any director who submits a waiver of notice whether before or after the
meeting or who attends the meeting without protesting prior thereto or at its
commencement, the lack of notice to him.
(b) A majority of the directors present, whether or not a quorum is
present, may adjourn any meeting to another time and place. Notice of the
adjournment shall be given all directors who were absent at the time of the
adjournment and, unless such time and place are announced at the meeting, to the
other directors.
12. CHAIRMAN.
At all meetings of the board the president, or in his absence, a chairman
chosen by the board shall preside.
13. EXECUTIVE AND OTHER COMMITTEES.
The board, by resolution adopted by a majority of the entire board, may
designate from among its members an executive committee and other committees,
each consisting of three or more directors. Each such committee shall serve at
the pleasure of the board.
14. COMPENSATION.
No compensation shall be paid to directors, as such, for their services,
but by resolution of the board a fixed sum and expenses for actual attendance,
at each regular or special meeting of the board may be author-
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ized. Nothing herein contained shall be construed to preclude any director from
serving the corporation in any other capacity and receiving compensation
therefor.
ARTICLE IV - OFFICERS
1. OFFICES, ELECTION, TERM.
(a) Unless otherwise provided for in the certificate of incorporation, the
board may elect or appoint a president, one or more vice-presidents, a secretary
and a treasurer, and such other officers as it may determine, who shall have
such duties, powers and functions as hereinafter provided.
(b) All officers shall be elected or appointed to hold office until the
meeting of the board following the annual meeting of shareholders.
(c) Each officer shall hold office for the term for which he is elected or
appointed and until his successor has been elected or appointed and qualified.
2. REMOVAL, RESIGNATION, SALARY, ETC.
(a) Any officer elected or appointed by the board may be removed by the
board with or without cause.
(b) In the event of the death, resignation or removal of an officer, the
board in its discretion may elect or appoint a successor to fill the unexpired
term.
(c) Any two or more offices may be held by the same person, except the
offices of president and secretary. When all of the issued and outstanding stock
of the corporation is owned by one person, such person may hold all or any
combination of offices.
(d) The salaries of all officers shall be fixed by the board.
(e) The directors may require any officer to give security for the faithful
performance of his duties.
3. PRESIDENT.
The president shall be the chief executive officer of the corporation; he
shall preside at all meetings of the shareholders and of the board; he shall
have the management of the business of the corporation and shall see that all
orders and resolutions of the board are carried into effect.
4. VICE-PRESIDENTS.
During the absence or disability of the president, the vice-president, or
if there are more than one, the executive vice-president, shall have all
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the powers and functions of the president. Each vice-president shall perform
such other duties as the board shall prescribe.
5. SECRETARY.
The secretary shall:
(a) attend all meetings of the board and of the shareholders;
(b) record all votes and minutes of all proceedings in a book to be kept
for that purpose;
(c) give or cause to be given notice of all meetings of shareholders and of
special meetings of the board;
(d) keep in safe custody the seal of the corporation and affix it to any
instrument when authorized by the board;
(e) when required, prepare or cause to be prepared and available at each
meeting of shareholders a certified list in alphabetical order of the names of
shareholders entitled to vote thereat, indicating the number of shares of each
respective class held by each;
(f) keep all the documents and records of the corporation as required by
law or otherwise in a proper and safe manner.
(g) perform such other duties as may be prescribed by the board.
6. ASSISTANT-SECRETARIES.
During the absence or disability of the secretary, the assistant-secretary,
or if there are more than one, the one so designated by the secretary or by the
board, shall have all the powers and functions of the secretary.
7. TREASURER.
The treasurer shall:
(a) have the custody of the corporate funds and securities;
(b) keep full and accurate accounts of receipts and disbursements in the
corporate books;
(c) deposit all money and other valuables in the name and to the credit of
the corporation in such depositories as may be designated by the board;
(d) disburse the funds of the corporation as may be ordered or authorized
by the board and preserve proper vouchers for such disbursements;
(e) render to the president and board at the regular meetings of the
board, or whenever they require it, an account of all his transactions as
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treasurer and of the financial condition of the corporation;
(f) render a full financial report at the annual meeting of the
shareholders if so requested;
(g) be furnished by all corporate officers and agents at his request, with
such reports and statements as he may require as to all financial transactions
of the Corporation;
(h) perform such other duties as are given to him by these by-laws or as
from time to time are assigned to him by the board or the president.
8. ASSISTANT-TREASURER.
During the absence or disability of the treasurer, the
assistant-treasurer, or if there are more than one, the one so designated by the
secretary or by the board, shall have all the powers and functions of the
treasurer.
9. SURETIES AND BONDS.
In case the board shall so require, any officer or agent of the
corporation shall execute to the corporation a bond in such sum and with such
surety or sureties as the board may direct, conditioned upon the faithful
performance of his duties to the corporation and including responsibility for
negligence and for the accounting for all property, funds or securities of the
corporation which may come into his hands.
ARTICLE V - CERTIFICATES FOR SHARES
1. CERTIFICATES.
The shares of the corporation shall be represented by certificates. They
shall be numbered and entered in the books of the corporation as they are
issued. They shall exhibit the holder's name and the number of shares and shall
be signed by the president or a vice-president and the treasurer or the
secretary and shall bear the corporate seal.
2. LOST OR DESTROYED CERTIFICATES.
The board may direct a new certificate or certificates to be issued in
place of any certificate or certificates theretofore issued by the corporation,
alleged to have been lost or destroyed, upon the making of an affidavit of that
fact by the person claiming the certificate to be lost or destroyed. When
authorizing such issue of a new certificate or certificates, the board may, in
its discretion and as a condition precedent to the issuance thereof, require the
owner of such lost or destroyed certificate or certificates, or his legal
representative, to advertise the same in such manner as it shall
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require and/or give the corporation a bond in such sum and with such surety or
sureties as it may direct as indemnity against any claim that may be made
against the corporation with respect to the certificate alleged to have been
lost or destroyed.
3. TRANSFERS OF SHARES.
(a) Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto, and cancel the old certificate; every such transfer shall be entered on
the transfer book of the corporation which shall be kept at its principal
office. No transfer shall be made within ten days next preceding the annual
meeting of shareholders.
(b) The corporation shall be entitled to treat the holder of record of
any share as the holder in fact thereof and, accordingly, shall not be bound to
recognize any equitable or other claim to or interest in such share on the part
of any other person whether or not it shall have express or other notice
thereof, except as expressly provided by the laws of New York.
4. CLOSING TRANSFER BOOKS.
The board shall have the power to close the share transfer books of the
corporation for a period of not more than ten days during the thirty day period
immediately preceding (1) any shareholders' meeting, or (2) any date upon which
shareholders shall be called upon to or have a right to take action without a
meeting, or (3) any date fixed for the payment of a dividend or any other form
of distribution, and only those shareholders of record at the time the transfer
books are closed, shall be recognized as such for the purpose of (1) receiving
notice of or voting at such meeting, or (2) allowing them to take appropriate
action, or (3) entitling them to receive any dividend or other form of
distribution.
ARTICLE VI - DIVIDENDS
Subject to the provisions of the certificate of incorporation and to
applicable law, dividends on the outstanding shares of the corporation may be
declared in such amounts and at such time or times as the board may determine.
Before payment of any dividend, there may be set aside out of the net profits of
the corporation available for dividends such sum or sums as the board from time
to time in its absolute discretion deems proper as a reserve fund to meet
contingencies, or for equalizing dividends, or for repairing or maintaining any
property of the corporation, or for such other
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purpose as the board shall think conducive to the interests of the corporation,
and the board may modify or abolish any such reserve.
ARTICLE VII - CORPORATE SEAL
The seal of the corporation shall be circular in form and bear the name
of the corporation, the year of its organization and the words "Corporate Seal,
New York." The seal may be used by causing it to be impressed directly on the
instrument or writing to be sealed, or upon adhesive substance affixed thereto.
The seal on the certificates for shares or on any corporate obligation for the
payment of money may be a facsimile, engraved or printed.
ARTICLE VIII - EXECUTION OF INSTRUMENTS
All corporate instruments and documents shall be signed or countersigned,
executed, verified or acknowledged by such officer or officers or other person
or persons as the board may from time to time designate.
ARTICLE IX - FISCAL YEAR
The fiscal year shall begin the first day of January in each year.
ARTICLE X - REFERENCES TO CERTIFICATE OF INCORPORATION
Reference to the certificate of incorporation in these by-laws shall
include all amendments thereto or changes thereof unless specifically excepted.
ARTICLE XI - BY-LAW CHANGES
AMENDMENT, REPEAL, ADOPTION, ELECTION OF DIRECTORS.
(a) Except as otherwise provided in the certificate of incorporation the
by-laws may be amended, repealed or adopted by vote of the holders of the shares
at the time entitled to vote in the election of any directors. By-laws may also
be amended, repealed or adopted by the board but any by-law adopted by the board
may be amended by the shareholders entitled to vote thereon as hereinabove
provided.
(b) If any by-law regulating an impending election of directors is
adopted, amended or repealed by the board, there shall be set forth in the
notice of the next meeting of shareholders for the election of directors the
by-law so adopted, amended or repealed, together with a concise statement of the
changes made.
By-Laws J
NEW YORK HEALTH CARE, INC.
AND
CONTINENTAL STOCK TRANSFER
AND TRUST COMPANY
----------
REDEEMABLE WARRANT AGREEMENT
Dated as of __________ , 1996
<PAGE>
AGREEMENT, dated as of this __________ day of __________ , 1996, between
NEW YORK HEALTH CARE, INC., a New York corporation (the "Company"), and
CONTINENTAL STOCK TRANSFER AND TRUST COMPANY, as Warrant Agent (the "Warrant
Agent").
W I T N E S S E T H:
WHEREAS, in connection with (i) the offering to the public pursuant to the
Prospectus (the "Prospectus") contained in the Company's Registration Statement
on Form SB-2 (Registration No.__________ ) of up to 1,050,000 shares of the
Company's common stock, $.001 par value per share (the "Common Stock"), (ii) the
offering to the public pursuant to the Prospectus of up to 1,050,000 redeemable
warrants (the "Warrants"), each Warrant entitling the holder thereof to purchase
one additional share of Common Stock, (iii) the over-allotment option to
purchase up to an additional 157,500 shares of Common Stock and/or 157,500
Warrants, (the "Over-allotment Option"), and (iv) the sale to RAS Securities
Corp. ("RAS"), its successors and assigns (the "Representative"), of warrants
(the "Representative's Warrants") to purchase up to 105,000 shares of Common
Stock and/or 105,000 Warrants, the Company will issue up to 1,312,500 Warrants
(subject to increase as provided in the Representative's Warrant Agreement and
herein); and
WHEREAS, the Company desires to provide for the issuance of certificates
representing the Warrants; and
WHEREAS, the Company desires the Warrant Agent to act on behalf of the
Company, and the Warrant Agent is willing to so act, in connection with the
issuance, registration, transfer and exchange of certificates representing the
Warrants and the exercise of the Warrants.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
hereinafter set forth and for the purpose of defining the terms and provisions
of the Warrants and the certificates representing the Warrants and the
respective rights and obligations thereunder of the Company, RAS, the holders of
certificates representing the Warrants and the Warrant Agent, the parties hereto
agree as follows:
SECTION 1. Definitions. As used herein, the following terms shall have the
following
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meanings, unless the context shall otherwise require:
(a) "Common Stock" shall mean stock of the Company of any class whether now
or hereafter authorized, which has the right to participate in the voting and in
the distribution of earnings and assets of the Company without limit as to
amount or percentage.
(b) "Corporate Office" shall mean the office of the Warrant Agent (or its
successor) at which at any particular time its principal business in New York,
New York, shall be administered, which office is located on the date hereof at 2
Broadway, New York, New York 10004.
(c) "Exercise Date" shall mean, subject to the provisions of Section 5(b)
hereof, as to any Warrant, the date on which the Warrant Agent shall have
received both (i) the Warrant Certificate representing such Warrant, with the
exercise form thereon duly executed by the Registered Holder hereof or his
attorney duly authorized in writing, and (ii) payment in cash or by check made
payable to the Warrant Agent for the account of the Company, of the amount in
lawful money of the United States of America equal to the applicable Purchase
Price in good funds.
(d) "Initial Warrant Exercise Date" shall mean __________ ,1997.
(e) "Initial Warrant Redemption Date" shall mean __________ , 1998.
(f) "Purchase Price" shall mean, subject to modification and adjustment as
provided in Section 8, $6.00 and further subject to the Company's right, in its
sole discretion, to decrease the Purchase Price.
(g) "Registered Holder" shall mean the person in whose name any certificate
representing the Warrants shall be registered on the books maintained by the
Warrant Agent pursuant to Section 6.
(h) "Subsidiary" or "Subsidiaries" shall mean any corporation or
corporations, as the case may be, of which stock having ordinary power to elect
a majority of the Board of Directors of such corporation (regardless of whether
or not at the time stock of any other class or classes of such corporation shall
have or may have voting power by reason of the happening of any contingency) is
at the time directly or indirectly owned by the Company or by one or more
Subsidiaries, or by the Company and one or more Subsidiaries.
(i) "Transfer Agent" shall mean Continental Stock Transfer and Trust
Company, or its
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authorized successor.
(j) "Underwriting Agreement" shall mean the underwriting agreement dated
__________ , 1996 between the Company and the Representative relating to the
purchase for resale to the public of 1,050,000, shares of Common Stock and
1,050,000 Warrants plus an over-allotment option of 157,500 shares of Common
Stock and/or 157,500 Warrants.
(k) "Representative's Warrant Agreement" shall mean the agreement dated as
of __________ , 1996 between the Company and the Representative relating to and
governing the terms and provisions of the Representative's Warrants.
(l) "Warrant Certificate" shall mean a certificate representing each of the
Warrants substantially in the form annexed hereto as Exhibit A.
(m) "Warrant Expiration Date" shall mean, unless the Warrants are redeemed
as provided in Section 9 hereof prior to such date, 5:00 p.m. (New York time),
on __________ , 2001, or, if such date shall in the State of New York be a
holiday or a day on which banks are authorized to close, then 5:00 p.m. (New
York time) on the next following day which in the State of New York is not a
holiday or a day on which banks are authorized to close, subject to the
Company's right, prior to the Warrant Expiration Date, in its sole discretion,
to extend such Warrant Expiration Date on five business days prior written
notice to the Registered Holders.
(n) "Warrant Agent" shall mean Continental Stock Transfer and Trust
Company, or its authorized successor.
SECTION 2. Warrants and Issuance of Warrant Certificates.
(a) Each Warrant shall initially entitle the Registered Holder of the
Warrant Certificate representing such Warrant to purchase at the Purchase Price
therefor from the Initial Warrant Exercise Date until the Warrant Expiration
Date one share of Common Stock upon the exercise thereof, subject to
modification and adjustment as provided in Section 8.
(b) Upon execution of this Agreement, Warrant Certificates representing
1,050,000 Warrants to purchase up to an aggregate of 1,050,000 shares of Common
Stock (subject to modification and adjustment as provided in Section 8) shall be
executed by the Company and delivered to the Warrant Agent.
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(c) Upon exercise of the Over-allotment Option, in whole or in part,
Warrant Certificates representing up to 157,500 Warrants to purchase up to an
aggregate of 157,500 shares of Common Stock (subject to modification and
adjustment as provided in Section 8) shall be executed by the Company and
delivered to the Warrant Agent.
(d) Upon exercise of the Representative's Warrants as provided therein,
Warrant Certificates representing all or a portion of 105,000 Warrants to
purchase up to an aggregate of 105,000 shares of Common Stock (subject to
modification and adjustment as provided in Section 8 hereof and in the
Representative's Warrant Agreement), shall be countersigned, issued and
delivered by the Warrant Agent upon written order of the Company signed by its
Chairman of the Board, President or a Vice President and by its Treasurer or an
Assistant Treasurer or its Secretary or an Assistant Secretary.
(e) From time to time, up to the Warrant Expiration Date, as the case may
be, the Warrant Agent shall countersign and deliver Warrant Certificates in
required denominations of one or whole number multiples thereof to the person
entitled thereto in connection with any transfer or exchange permitted under
this Agreement. No Warrant Certificates shall be issued except (i) Warrant
Certificates initially issued hereunder, (ii) Warrant Certificates issued upon
any transfer or exchange of Warrants, (iii) Warrant Certificates issued in
replacement of lost, stolen, destroyed or mutilated Warrant Certificates
pursuant to Section 7, (iv) Warrant Certificates issued pursuant to the
Representative's Warrant Agreement (including Warrants in excess of the
Representative's Warrants to purchase 105,000 shares of Common Stock and/or
105,000 Warrants issued as a result of the anti-dilution provisions contained in
the Representative's Warrant Agreement), and (v) at the option of the Company,
Warrant Certificates in such form as may be approved by its Board of Directors,
to reflect any adjustment or change in the Purchase Price, the number of shares
of Common Stock purchasable upon exercise of the Warrants or the redemption
price therefor made pursuant to Section 8 hereof.
SECTION 3. Form and Execution of Warrant Certificates.
(a) The Warrant Certificates shall be substantially in the form annexed
hereto as Exhibit A (the provisions of which are hereby incorporated herein) and
may have such letters, numbers or
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other marks of identification or designation and such legends, summaries or
endorsements printed, lithographed or engraved thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this Agreement,
or as may be required to comply with any law or with any rule or regulation made
pursuant thereto or with any rule or regulation of any stock exchange on which
Warrants may be listed, or to conform to usage. The Warrant Certificates shall
be dated the date of issuance thereof (whether upon initial issuance, transfer,
exchange or in lieu of mutilated, lost, stolen or destroyed Warrant
Certificates).
(b) Warrant Certificates shall be executed on behalf of the Company by its
Chairman of the Board, President or any Vice President and by its Treasurer or
an Assistant Treasurer or its Secretary or an Assistant Secretary, by manual
signatures or by facsimile signatures printed thereon, and shall have imprinted
thereon a facsimile of the Company's seal. Warrant Certificates shall be
manually countersigned. In case any officer of the Company who shall have signed
any of the Warrant Certificates shall cease to be such officer of the Company
before the date of issuance of the Warrant Certificates or before
countersignature by the Warrant Agent and issue and delivery thereof, such
Warrant Certificates, nevertheless, may be countersigned by the Warrant Agent,
issued and delivered with the same force and effect as though the person who
signed such Warrant Certificates had not ceased to be such officer of the
Company.
SECTION 4. Exercise.
(a) Warrants in denominations of one or whole number multiples thereof may
be exercised at any time commencing with the Initial Warrant Exercise Date, and
ending at the close of business on the Warrant Expiration Date, upon the terms
and subject to the conditions set forth herein (including the provisions set
forth in Sections 5 and 9 hereof) and in the applicable Warrant Certificate. A
Warrant shall be deemed to have been exercised immediately prior to the close of
business on the Exercise Date, provided that the Warrant Certificate
representing such Warrant, with the exercise form thereon duly executed by the
Registered Holder thereof or his attorney duly authorized in writing, together
with payment in cash or by check made payable to the Warrant Agent for the
account of the Company, of an amount in lawful money of the United States of
America equal to the applicable Purchase Price has been received in good funds
by the Warrant Agent. The
5
<PAGE>
person entitled to receive the securities deliverable upon such exercise shall
be treated for all purposes as the holder of such securities as of the close of
business on the Exercise Date. As soon as practicable on or after the Exercise
Date and in any event within five business days after such date, the Warrant
Agent on behalf of the Company shall cause to be issued to the person or persons
entitled to receive the same a Common Stock certificate or certificates for the
shares of Common Stock deliverable upon such exercise, and the Warrant Agent
shall deliver the same to the person or persons entitled thereto. Upon the
exercise of any Warrant, the Warrant Agent shall promptly notify the Company in
writing of such fact and of the number of securities delivered upon such
exercise and, subject to subsection (b) below, shall cause all payments of an
amount in cash or by check made payable to the order of the Company, equal to
the Purchase Price, to be deposited promptly in the Company's bank account.
(b) At any time upon the exercise of any Warrants after one (1) year and
one day from the date hereof, the Warrant Agent shall, on a daily basis, within
two business days after such exercise, notify the Representative, and its
successors or assigns, of the exercise of any such Warrants and shall, on a
weekly basis (subject to collection of funds constituting the tendered Purchase
Price, but in no event later than five business days after the last day of the
calendar week in which such funds were tendered), remit to the Representative
(so long as the Representative solicited the exercise of such Warrant as
indicated upon the Subscription Form attached to the Warrant Certificate
tendered for exercise), an amount equal to five percent (5%) of the Purchase
Price of such Warrants being then exercised unless (1) the Representative shall
have notified the Warrant Agent that the payment of such amount with respect to
such Warrant is violative of the General Rules and Regulations promulgated under
the Securities Exchange Act of 1934, as amended, (the "Exchange Act"), or the
rules and regulations of the National Association of Securities Dealers, Inc.
("NASD") or applicable state securities of "blue sky" laws, or (2) the Warrants
are those underlying the Representative's Warrants, or (3) the market price of
the Common Stock on the subject Exercise Date is lower than the Purchase Price,
or (4) the Warrants are held in a discretionary account, or (5) the Warrants are
exercised in an unsolicited transaction, in any of which events the Warrant
Agent shall pay such amount to the Company; provided that the Warrant Agent
shall not be obligated to pay any amounts pursuant to this Section 4(b) during
any week that such amounts payable are less than $1,000 and the Warrant Agent's
obligation to make such payments shall be suspended until the amount payable
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aggregate $1,000, and provided further, that, in any event, any such payment
(regardless of amount) shall be made not less frequently than monthly.
(c) The Company shall not be required to issue fractional shares upon the
exercise of Warrants. Warrants may only be exercised in such multiples as are
required to permit the issuance by the Company of one or more whole shares. If
one or more Warrants shall be presented for exercise in full at the same time by
the same Registered Holder, the number of whole shares which shall be issuable
upon such exercise thereof shall be computed on the basis of the aggregate
number of shares purchasable on exercise of the Warrants so presented. If any
fraction of a share would, except for the provisions provided herein, be
issuable on the exercise of any Warrant (or specified portion thereof), the
Company shall pay an amount in cash equal to such fraction multiplied by the
then current market value of a share of Common Stock, determined as follows:
(1) If the Common Stock is listed or admitted to unlisted trading
privileges on the New York Stock Exchange ("NYSE") or the American Stock
Exchange ("AMEX") or is traded on The Nasdaq National Market ("Nasdaq/NM"),
the current market value of a share of Common Stock shall be the closing
sale price of the Common Stock at the end of the regular trading session on
the last business day prior to the date of exercise of the Warrants on
whichever of such exchanges or Nasdaq/NM had the highest average daily
trading volume for the Common Stock on such day; or
(2) If the Common Stock is not listed or admitted to unlisted trading
privileges on either the NYSE or the AMEX and is not traded on Nasdaq/NM,
but is quoted or reported on Nasdaq, the current market value of a share of
Common Stock shall be the average of the last reported closing bid and
asked prices (or the last sale price, if then reported by Nasdaq) of the
Common Stock at the end of the regular trading session on the last business
day prior to the date of exercise of the Warrants as quoted or reported on
Nasdaq, as the case may be; or
(3) If the Common Stock is not listed or admitted to unlisted trading
privileges on either of the NYSE or the AMEX, and is not traded on
Nasdaq/NM or quoted or reported on Nasdaq, but is listed or admitted to
unlisted trading privileges on the BSE or other national securities
exchange (other than the NYSE or the AMEX), the current market value of a
share of Common Stock shall be the closing sale price of the Common Stock
at the end of the regular trading session on the last business day prior to
the date of exercise of the Warrants on whichever of such exchanges has the
highest average daily trading volume for the Common Stock on such day; or
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(4) If the Common Stock is not listed or admitted to unlisted trading
privileges on any national securities exchange, or listed for trading on
Nasdaq/NM or quoted or reported on Nasdaq, but is traded in the
over-the-counter market, the current market value of a share of Common
Stock shall be the average of the last reported bid and asked prices of the
Common Stock reported by the National Quotation Bureau, Inc. on the last
business day prior to the date of exercise of the Warrants; or
(5) If the Common Stock is not listed or admitted to unlisted trading
privileges on any national securities exchange, or listed for trading on
Nasdaq/NM or quoted or reported on Nasdaq, and bid and asked prices of the
Common Stock are not reported by the National Quotation Bureau, Inc., the
current market value of a share of Common Stock shall be an amount, not
less than the book value thereof as of the end of the most recently
completed fiscal quarter of the Company ending prior to the date of
exercise, determined in accordance with generally accepted accounting
principles, consistently applied.
SECTION 5. Reservation of Shares; Listing; Payment of Taxes; etc.
(a) The Company covenants that it will at all times reserve and keep
available out of its authorized Common Stock, solely for the purpose of issue
upon exercise of Warrants, such number of shares of Common Stock as shall then
be issuable upon the exercise of all outstanding Warrants. The Company covenants
that all shares of Common Stock which shall be issuable upon exercise of the
Warrants shall, at the time of delivery thereof, be duly and validly issued and
fully paid and nonassessable and free from all preemptive or similar rights,
taxes, liens and charges with respect to the issue thereof, and that upon
issuance such shares shall be listed on each securities exchange, if any, on
which the other shares of outstanding Common Stock of the Company are then
listed.
(b) The Company covenants that if any securities to be reserved for the
purpose of exercise of Warrants hereunder require registration with, or approval
of, any governmental authority under any federal securities law before such
securities may be validly issued or delivered upon such exercise, then the
Company will file a registration statement under the federal securities laws or
a post effective amendment, use its best efforts to cause the same to become
effective and use its best efforts to keep such registration statement current
while any of the Warrants are outstanding and
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deliver a prospectus which complies with Section 10(a)(3) of the Securities Act
of 1933, as amended, (the "Act"), to the Registered Holder exercising the
Warrant (except, if in the opinion of counsel to the Company, such registration
is not required under the federal securities law or if the Company receives a
letter from the staff of the Securities and Exchange Commission (the
"Commission") stating that it would not take any enforcement action if such
registration is not effected). The Company will use its best efforts to obtain
appropriate approvals or registrations under state "blue sky" securities laws.
With respect to any such securities, however, Warrants may not be exercised by,
or shares of Common Stock issued to, any Registered Holder in any state in which
such exercise would be unlawful.
(c) The Company shall pay all documentary, stamp or similar taxes and other
governmental charges that may be imposed with respect to the issuance of
Warrants, or the issuance or delivery of any shares of Common Stock upon
exercise of the Warrants; provided, however, that if shares of Common Stock are
to be delivered in a name other than the name of the Registered Holder of the
Warrant Certificate representing any Warrant being exercised, then no such
delivery shall be made unless the person requesting the same has paid to the
Warrant Agent the amount of transfer taxes or charges incident thereto, if any.
(d) The Warrant Agent is hereby irrevocably authorized as the Transfer
Agent to requisition from time to time certificates representing shares of
Common Stock or other securities required upon exercise of the Warrants, and the
Company will comply with all such requisitions.
SECTION 6. Exchange and Registration of Transfer.
(a) Warrant Certificates may be exchanged for other Warrant Certificates
representing an equal aggregate number of Warrants or may be transferred in
whole or in part. Warrant Certificates to be so exchanged shall be surrendered
to the Warrant Agent at its Corporate Office, and the Company shall execute and
the Warrant Agent shall countersign, issue and deliver in exchange therefor the
Warrant Certificate or Certificates which the Register Holder making the
exchange shall be entitled to receive.
(b) The Warrant Agent shall keep, at such office, books in which, subject
to such reasonable regulations as it may prescribe, it shall register Warrant
Certificates and the transfer thereof. Upon
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due presentment for registration of transfer of any Warrant Certificate at such
office, the Company shall execute and the Warrant Agent shall issue and deliver
to the transferee or transferees a new Warrant Certificate or Certificates
representing an equal aggregate number of Warrants.
(c) With respect to any Warrant Certificates presented for registration of
transfer, or for exchange or exercise, the subscription or exercise form, as the
case may be, on the reverse thereof shall be duly endorsed or be accompanied by
a written instrument or instruments or transfer and subscription, in form
satisfactory to the Company and the Warrant Agent, duly executed by the
Registered Holder thereof or his attorney duly authorized in writing.
(d) No service charge shall be made for any exchange or registration of
transfer of Warrant Certificates. However, the Company may require payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection therewith.
(e) All Warrant Certificates surrendered for exercise or for exchange shall
be promptly canceled by the Warrant Agent.
(f) Prior to due presentment for registration or transfer thereof, the
Company and the Warrant Agent may deem and treat the Registered Holder of any
Warrant Certificate as the absolute owner thereof of each Warrant represented
thereby (notwithstanding any notations of ownership or writing thereon made by
anyone other than the Company or the Warrant Agent) for all purposes and shall
not be affected by any notice to the contrary.
SECTION 7. Loss or Mutilation. Upon receipt by the Company and the Warrant
Agent of evidence satisfactory to them of the ownership of and the loss, theft,
destruction or mutilation of any Warrant Certificate and (in the case of loss,
theft or destruction) of indemnity satisfactory to them, and (in case of
mutilation) upon surrender and cancellation thereof, the Company shall execute
and the Warrant Agent shall countersign and deliver in lieu thereof a new
Warrant Certificate representing an equal aggregate number of Warrants.
Applicants for a substitute Warrant Certificate shall also comply with such
other reasonable regulations and pay such other reasonable charges as the
Warrant Agent may prescribe.
SECTION 8. Adjustment of Purchase Price and Number of Shares of Common
Stock
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Deliverable.
(a)(i) Except as hereinafter provided, in the event the Company shall, at
any time or from time to time after the date hereof, issue any shares of Common
Stock for a consideration per share less than the "Fair Market Value" (as
defined in Section 8(g)) or issue any shares of Common Stock as a stock dividend
to the holders of Common Stock, or subdivide or combine the outstanding shares
of Common Stock into a greater or lesser number of shares (any such issuance,
subdivision or combination being herein called a "Change of Shares"), then, and
thereafter upon each further Change of Shares, the Purchase Price for the
Warrants (whether or not the same shall be issued and outstanding) in effect
immediately prior to such Change of Shares shall be changed to a price
(including any applicable fraction of a cent to the nearest cent) determined by
dividing (i) the sum of (a) the total number of shares of Common Stock
outstanding immediately prior to such Change of Shares, multiplied by the
Purchase Price in effect immediately prior to such Change of Shares and (b) the
consideration, if any, received by the Company upon such sale, issuance,
subdivision or combination, by (ii) the total number of shares of Common Stock
outstanding immediately after such Change of Shares; provided, however, that in
no event shall the Purchase Price be adjusted pursuant to this computation to an
amount in excess of the Purchase Price in effect immediately prior to such
computation, except in the case of a combination of outstanding shares of Common
Stock.
For the purposes of any adjustment to be made in accordance with this
Section 8(a), the following provisions shall be applicable:
(A) In case of the issuance or sale of shares of Common Stock (or of
other securities deemed hereunder to involve the issuance or sale of shares
of Common Stock) for a consideration part or all of which shall be cash,
the amount of the cash portion of the consideration therefor deemed to have
been received by the Company shall be (i) the subscription price, if shares
of Common Stock are offered by the Company for subscription, or (ii) the
public offering price (before deducting therefrom any compensation paid or
discount allowed in the sale, underwriting or purchase thereof by
underwriters or dealers or others performing similar services, or any
expenses incurred in connection therewith), if such securities are sold to
underwriters or dealers for public offering without a subscription
offering, or (iii) the gross amount of cash actually received by the
Company for such securities, in any other case, in each case, without
deduction for any expenses incurred by
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the Company in connection with such transaction.
(B) In case of the issuance or sale (other than as a dividend or other
distribution on any stock of the Company) of shares of Common Stock (or of
other securities deemed hereunder to involve the issuance or sale of shares
of Common Stock) for a consideration part or all of which shall be other
than cash, the amount of the consideration therefor other than cash deemed
to have been received by the Company shall be the value of such
consideration as determined in good faith by the Board of Directors of the
Company on the basis of a record of values of similar property or services.
(C) Shares of Common Stock issuable by way of dividend or other
distribution on any stock of the Company shall be deemed to have been
issued immediately after the opening of business on the day following the
record date for the determination of shareholders entitled to receive such
dividend or other distribution and shall be deemed to have been issued
without consideration.
(D) The reclassification of securities of the Company other than
shares of Common Stock into securities including shares of Common Stock
shall be deemed to involve the issuance of such shares of Common Stock for
a consideration other than cash immediately prior to the close of business
on the date fixed for the determination of security holders entitled to
receive such shares, and the value of the consideration allocable to such
shares of Common Stock shall be determined as provided in subsection (B) of
this Section 8(a).
(E) The number of shares of Common Stock at any time outstanding shall
be deemed to include the aggregate maximum number of shares issuable
(subject to readjustment upon the actual issuance thereof) upon the
exercise of options, rights or warrants and upon the conversion or exchange
of convertible or exchangeable securities.
(ii) Upon each adjustment of the Purchase Price pursuant to this Section 8,
the number of shares of Common Stock purchasable upon the exercise of each
Warrant shall be the number derived by multiplying the number of shares of
Common Stock purchasable immediately prior to such adjustment by the Purchase
Price in effect prior to such adjustment and dividing the product so obtained by
the applicable adjusted Purchase Price.
(b) In case the Company shall at any time after the date hereof issue
options, rights or warrants to subscribe for shares of Common Stock, or issue
any securities convertible into or exchangeable for shares of Common Stock, for
a consideration per share (determined as provided
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in Section 8(a)(i) and as provided below) less than the Fair Market Value in
effect immediately prior to the issuance of such options, rights or warrants, or
such convertible or exchangeable securities, or without consideration (including
the issuance of any such securities by way of dividend or other distribution),
the Purchase Price for the Warrants (whether or not the same shall be issued and
outstanding) in effect immediately prior to the issuance of such options, rights
or warrants, or such convertible or exchangeable securities, as the case may be,
shall be reduced to a price determined by making the computation in accordance
with the provisions of Section 8(a)(i) hereof, provided that:
(A) The aggregate maximum number of shares of Common Stock, as the
case may be, issuable or that may become issuable under such options,
rights or warrants (assuming exercise in full even if not then currently
exercisable or currently exercisable in full) shall be deemed to be issued
and outstanding at the time such options, rights or warrants were issued,
for a consideration equal to the minimum purchase price per share provided
for in such options, rights or warrants at the time of issuance, plus the
consideration, if any, received by the Company for such options, rights or
warrants; provided, however, that upon the expiration or other termination
of such options, rights or warrants, if any thereof shall not have been
exercised, the number of shares of Common Stock deemed to be issued and
outstanding pursuant to this subsection (A) (and for the purposes of
subsection (E) of Section 8(a)(i) hereof) shall be reduced by the number of
shares as to which options, warrants and/or rights shall have expired, and
such number of shares shall no longer be deemed to be issued and
outstanding, and the Purchase Price then in effect shall forthwith be
readjusted and thereafter be the price that it would have been had
adjustment been made on the basis of the issuance only of the shares
actually issued plus the shares remaining issuable upon the exercise of
those options, rights or warrants as to which the exercise rights shall not
have expired or terminated unexercised.
(B) The aggregate maximum number of shares of Common Stock issuable or
that may become issuable upon conversion or exchange of any convertible or
exchangeable securities (assuming conversion or exchange in full even if
not then currently convertible or exchangeable in full) shall be deemed to
be issued and outstanding at the time of issuance of such securities, for a
consideration equal to the consideration received by the Company for such
securities, plus the minimum consideration, if any, receivable by the
Company upon the conversion or exchange
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thereof; provided, however, that upon the termination of the right to
convert or exchange such convertible or exchangeable securities (whether by
reason of redemption or otherwise), the number of shares of Common Stock
deemed to be issued and outstanding pursuant to this subsection (B) (and
for the purposes of subsection (E) of Section 8(a)(i) hereof) shall be
reduced by the number of shares as to which the conversion or exchange
rights shall have expired or terminated unexercised, and such number of
shares shall no longer be deemed to be issued and outstanding, and the
Purchase Price then in effect shall forthwith be readjusted and thereafter
be the price that it would have been had adjustment been made on the basis
of the issuance only of the shares actually issued plus the shares
remaining issuable upon conversion or exchange of those convertible or
exchangeable securities as to which the conversion or exchange rights shall
not have expired or terminated unexercised.
(C) If any change shall occur in the price per share provided for in
any of the options, rights or warrants referred to in subsection (A) of
this Section 8(b), or in the price per share or ratio at which the
securities referred to in subsection (B) of this Section 8(b) are
convertible or exchangeable, such options, rights or warrants or conversion
or exchange rights, as the case may be, to the extent not theretofore
exercised, shall be deemed to have expired or terminated on the date when
such price change became effective in respect of shares not theretofore
issued pursuant to the exercise or conversion or exchange thereof, and the
Company shall be deemed to have issued upon such date new options, rights
or warrants or convertible or exchangeable securities.
(c) In case of any reclassification or change of outstanding shares of
Common Stock issuable upon exercise of the Warrants (other than a change in par
value, or from par value to no par value, or from no par value to par value or
as a result of a subdivision or combination), or in case of any consolidation or
merger of the Company with or into another corporation (other than a merger with
a Subsidiary in which merger the Company is the continuing corporation and which
does not result in any reclassification or change of the then outstanding shares
of Common Stock or other capital stock issuable upon exercise of the Warrants
(other than a change in par value, or from par value to no par value, or from no
par value to par value or as a result of subdivision or combination)) 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, then, as a condition of such
reclassification, change, consolidation, merger, sale or conveyance, the
Company, or such successor or purchasing corporation, as the case
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may be, shall make lawful and adequate provision whereby the Registered Holder
of each Warrant then outstanding shall have the right thereafter to receive on
exercise of such Warrant the kind and amount of securities and property
receivable upon such reclassification, change, consolidation, merger, sale or
conveyance by a holder of the number of securities issuable upon exercise of
such Warrant immediately prior to such reclassification, change, consolidation,
merger, sale or conveyance and shall forthwith file at the Corporate Office of
the Warrant Agent a statement signed by its President or a Vice President and by
its Treasurer or an Assistant Treasurer or its Secretary or an Assistant
Secretary evidencing such provision. Such provisions shall include provision for
adjustments which shall be as nearly equivalent as may be practicable to the
adjustments provided for in Section 8(a) and (b). The above provisions of this
Section 8(c) shall similarly apply to successive reclassifications and changes
of shares of Common Stock and to successive consolidations, mergers, sales or
conveyances.
(d) Irrespective of any adjustments or changes in the Purchase Price or the
number of shares of Common Stock purchasable upon exercise of the Warrants, the
Warrant Certificates theretofore and thereafter issued shall, unless the Company
shall exercise its option to issue new Warrant Certificates pursuant to Section
2(e) hereof, continue to express the Purchase Price per share and the number of
shares purchasable thereunder as the Purchase Price per share and the number of
shares purchasable thereunder were expressed in the Warrant Certificates when
the same were originally issued.
(e) After each adjustment of the Purchase Price pursuant to this Section 8,
the Company will promptly prepare a certificate signed by the Chairman or
President, and by the Treasurer or an Assistant Treasurer or the Secretary or an
Assistant Secretary, of the Company setting forth: (i) the Purchase Price as so
adjusted, (ii) the number of shares of Common Stock purchasable upon exercise of
each Warrant, after such adjustment, and (iii) a brief statement of the facts
accounting for such adjustment. The Company will promptly file such certificate
with the Warrant Agent and cause a brief summary thereof to be sent by ordinary
first class mail to each Registered Holder at his last address as it shall
appear on the registry books of the Warrant Agent. No failure to mail such
notice nor any defect therein or in the mailing thereof shall affect the
validity thereof except as the holder to whom the Company failed to mail such
notice, or except as to the holder whose notice was defective. The affidavit of
an officer of the Warrant Agent or the Secretary or an Assistant Secretary
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of the Company that such notice has been mailed shall, in the absence of fraud,
be prima facie evidence of the facts stated therein.
(f) No adjustment of the Purchase Price shall be made as a result of or in
connection with (A) the issuance of shares of Common Stock underlying the
Warrants or the units issuable upon exercise of the Representative's Warrants
pursuant to the Representative's Warrant Agreement, or (B) the issuance or sale
of shares of Common Stock if the amount of said adjustment shall be less than
$.10, provided, however, that in such case, any adjustment that would otherwise
be required then to be made shall be carried forward and shall be made at the
time of and together with the next subsequent adjustment that shall amount,
together with any adjustment so carried forward, to at least $.10. In addition,
Registered Holders shall not be entitled to cash dividends paid by the Company
prior to the exercise of any Warrant or Warrants held by them.
(g) "Fair Market Value" shall mean the value of a share of Common Stock as
determined in accordance with the following provisions:
(1) If the Common Stock is listed or admitted to unlisted trading
privileges on the NYSE or the AMEX or is traded on the Nasdaq/NM, the Fair
Market Value of a share of Common Stock shall be equal to the average of
the closing sale price of the Common Stock during the thirty (30) trading
days immediately preceding the date of the event which requires the
determination of Fair Market Value on whichever of such exchanges or
Nasdaq/NM had the total highest daily trading volume for the Common Stock
during such thirty (30) day trading period.
(2) If the Common Stock is not listed or admitted to unlisted trading
privileges on either the NYSE or the AMEX and is not traded on Nasdaq/NM,
but is quoted or reported on Nasdaq, the Fair Market Value of a share of
Common Stock shall be the average of the last reported closing bid and
asked prices (or the last sale price, if then reported on Nasdaq) of the
Common Stock during the thirty (30) trading days immediately preceding the
date of event which requires the determination of Fair Market Value.
(3) If the Common Stock is not listed or admitted to unlisted trading
privileges on either of the NYSE or the AMEX and is not traded on Nasdaq/NM
or quoted or reported on Nasdaq, but is listed or admitted to unlisted
trading privileges on the BSE or another national securities exchange
(other than the NYSE or the AMEX), the Fair Market Value of a share of
Common Stock shall be the average of the closing sale price of the Common
Stock during the thirty (30) trading days
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immediately preceding the date of the event which requires the
determination of Fair Market Value.
(4) If the Common Stock is not listed or admitted to unlisted trading
privileges on any national securities exchange, or listed for trading on
Nasdaq/NM or quoted or reported on Nasdaq, but is traded in the
over-the-counter market, the Fair Market Value of a share of Common Stock
shall be the average of the average of the last reported bid and asked
prices of the Common Stock reported by the National Quotation Bureau, Inc.
for the thirty (30) trading days immediately preceding the date of the
event which requires the determination of Fair Market Value.
(5) If the Common Stock is not listed or admitted to unlisted trading
privileges on any national securities exchange, or listed for trading on
Nasdaq/NM or quoted or reported on Nasdaq, and bid and asked prices of the
Common Stock are not reported by the National Quotation Bureau, Inc., the
Fair Market Value of a share of Common Stock shall be an amount, not less
than the book value thereof as of the end of the most recently completed
fiscal quarter of the company ending prior to the date requiring a
determination of fair market value, determined in accordance with general
accepted accounting principles, consistently applied.
SECTION 9. Redemption.
(a) Commencing on the Initial Warrant Redemption Date, the Company may, on
30 days' prior written notice redeem all the Warrants, other than the Warrants
underlying the Representative's Warrants which shall not be redeemable, at five
cents ($.05) per Warrant, provided, however, that before any such call for
redemption of Warrants can take place the closing sale price of the Common Stock
as quoted on the principal market on which such shares shall then be trading,
shall have, for each of the twenty (20) consecutive trading days ending on the
tenth (10th) day prior to the date on which the notice contemplated by (b) and
(c) below is given, equalled or exceeded $7.50 per share (subject to adjustment
in the event of any stock splits or other similar events as provided in Section
8 hereof).
(b) In case the Company shall exercise its right to redeem all of the
Warrants so redeemable, it shall give or cause notice to such effect to be given
to the Representative in the same manner that notice is required to be given by
the Representative's Warrant Agreement. The Representative may, at its option,
solicit exercises of the Warrants. In the event that the Representative does not
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commence solicitation of exercises of the Warrants within thirty (30) days of
notice from the Company, the Company may give notice of redemption to the
Registered Holders of the Warrants by mailing to such Registered Holders a
notice of redemption, first class, postage prepaid, at their last address as
shall appear on the records of the Warrant Agent. Any notice mailed in the
manner provided herein shall be conclusively presumed to have been duly given
whether or not the Registered Holder receives such notice. Not less than five
business days prior to the mailing to the Registered Holders of the Warrants of
the notice of redemption, the Company shall deliver or cause to be delivered to
the Representative a similar notice telephonically and confirmed in writing
together with a list of the Registered Holders (including their respective
addresses and number of Warrants beneficially owned) to whom such notice of
redemption has been or will be given.
(c) The notice of redemption shall specify (i) the redemption price, (ii)
the date fixed for redemption, which shall in no event be less than thirty (30)
days after the date of mailing of such notice, (iii) the place where the Warrant
Certificate shall be delivered and the redemption price shall be paid, (iv) that
the Representative is the Company's warrant solicitation agent and may receive
the commission contemplated by Section 4(b) hereof, and (v) that the right to
exercise the Warrant shall terminate at 5:00 p.m. (New York time) on the
business day immediately preceding the date fixed for redemption. The date fixed
for the redemption of the Warrants shall be the Redemption Date. No failure to
mail such notice nor any defect therein or in the mailing thereof shall affect
the validity of the proceedings for such redemption except as to a holder (a) to
whom notice was not mailed or (b) whose notice was defective. An affidavit of
the Warrant Agent or the Secretary or Assistant Secretary of the Company that
notice of redemption has been mailed shall, in the absence of fraud, be prima
facie evidence of the facts stated therein.
(d) Any right to exercise a Warrant shall terminate at 5:00 p.m. (New York
time) on the business day immediately preceding the Redemption Date. The
redemption price payable to the Registered Holders shall be mailed to such
persons at their addresses of record.
(e) The Company shall indemnify the Representative and each person, if any,
who controls the Representative within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act against all loss, claim, damage, expense or
liability (including all expenses reasonably incurred in investigating,
preparing or defending against any claim whatsoever) to which any of them may
become subject under the Act, the Exchange Act or otherwise, arising from the
registration
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statement or prospectus referred to in Section 5(b) hereof to the same extent
and with the same effect (including the provisions regarding contribution) as
the provisions pursuant to which the Company has agreed to indemnify the
Underwriters contained in Section 7 of the Underwriting Agreement.
(f) Five business days prior to the Redemption Date, the Company shall
furnish to the Representative (i) an opinion of counsel to the Company, dated
such date and addressed to Representative, and (ii) a "cold comfort" letter
dated such date addressed to the Representative, signed by the independent
public accountants who have issued a report on the Company's financial
statements included in such registration statement, in each case covering
substantially the same matters with respect to such registration statement (and
the prospectus included therein) and, in the case of such 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 underwriters in underwritten public offerings of
securities.
(g) The Company shall as soon as practicable after the Redemption Date, and
in any event within 15 months thereafter, make "generally available to its
security holders" (within the meaning of Rule 158 under the Act) an earnings
statement (which need not be audited) complying with Section 11(a) of the Act
and covering a period of at least 12 consecutive months beginning after the
Redemption Date.
(h) The Company shall deliver within five business days prior to the
Redemption Date copies of all correspondence between the Commission and the
Company, its counsel or auditors and all memoranda relating to discussions with
the Commission or its staff with respect to such registration statement and
permit the Representative to do such investigation, upon reasonable advance
notice, with respect to information contained in or omitted from the
registration statement as it deems reasonably necessary to comply with
applicable securities laws or rules of the NASD. Such investigation shall
include access to books, records and properties and opportunities to discuss the
business of the Company with its officers and independent auditors, all to such
reasonable extent and at such reasonable times and as often as the
Representative shall reasonably request.
SECTION 10. Concerning the Warrant Agent.
(a) The Warrant Agent acts hereunder as agent and in a ministerial capacity
for the Company
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and the Representative, and its duties shall be determined solely by the
provisions hereof. The Warrant Agent shall not, by issuing and delivering
Warrant Certificates or by any other act hereunder, be deemed to make any
representations as to the validity or value or authorization of the Warrant
Certificates or the Warrants represented thereby or of any securities or other
property delivered upon exercise of any Warrant or whether any stock issued upon
exercise of any Warrant is fully paid and nonassessable.
(b) The Warrant Agent shall not at any time be under any duty or
responsibility to any holder of Warrant Certificates to make or cause to be made
any adjustment of the Purchase Price provided in this Agreement, or to determine
whether any fact exists which may require any such adjustment, or with respect
to the nature or extent of any such adjustment, when made, or with respect to
the method employed in making the same. It shall not (i) be liable for any
recital or statement of fact contained herein or for any action taken, suffered
or omitted by it in reliance on any Warrant Certificate or other document or
instrument believed by it in good faith to be genuine and to have been signed or
presented by the proper party or parties, (ii) be responsible for any failure on
the part of the Company to comply with any of its covenants and obligations
contained in this Agreement or in any Warrant Certificate, or (iii) be liable
for any act or omission in connection with this Agreement except for its own
gross negligence or willful misconduct.
(c) The Warrant Agent may at any time consult with counsel satisfactory to
it (who may be counsel for the Company) and shall incur no liability or
responsibility for any action taken, suffered or omitted by it in good faith in
accordance with the opinion or advice of such counsel.
(d) Any notice, statement, instruction, request, direction, order or demand
of the Company shall be sufficiently evidenced by an instrument signed by the
Chairman of the Board of Directors, President or any Vice President (unless
other evidence in respect thereof is herein specifically prescribed). The
Warrant Agent shall not be liable for any action taken, suffered or omitted by
it in accordance with such notice, statement, instruction, request, direction,
order or demand.
(e) The Company agrees to pay the Warrant Agent reasonable compensation for
its services hereunder and to reimburse it for its reasonable expenses
hereunder; the Company further agrees to indemnify the Warrant Agent and save it
harmless against any and all losses, expenses and liabilities, including
judgments, costs and counsel fees, for anything done or omitted by the Warrant
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Agent in the execution of its duties and powers hereunder except losses,
expenses and liabilities arising as a result of the Warrant Agent's gross
negligence or willful misconduct.
(f) The Warrant Agent may resign its duties and be discharged from all
further duties and liabilities hereunder (except liabilities arising as a result
of the Warrant Agent's own gross negligence or willful misconduct), after giving
30 days' prior written notice to the Company. At least 15 days prior to the date
such resignation is to become effective, the Warrant Agent shall cause a copy of
such notice of resignation to be mailed to the Registered Holder of each Warrant
Certificate at the Company's expense. Upon such resignation the Company shall
appoint in writing a new warrant agent. If the Company shall fail to make such
appointment within a period of 30 days after it has been notified in writing of
such resignation by the resigning Warrant Agent, then the Registered Holder of
any Warrant Certificate may apply to any court of competent jurisdiction for the
appointment of a new warrant agent. Any new warrant agent, whether appointed by
the Company or by such a court, shall be a bank or trust company having a
capital and surplus, as shown by its last published report to its stockholders,
of not less than $10,000,000 or a stock transfer company doing business in
Massachusetts or New York. After acceptance in writing of such appointment by
the new warrant agent is received by the Company, such new warrant agent shall
be vested with the same powers, rights, duties and responsibilities as if it had
been originally named herein as the warrant agent, without any further
assurance, conveyance, act or deed; but if for any reason it shall be necessary
or expedient to execute and deliver any further assurance, conveyance, act or
deed, the same shall be done at the expense of the Company and shall be legally
and validly executed and delivered by the resigning Warrant Agent. Not later
than the effective date of any such appointment the Company shall file notice
thereof with the resigning Warrant Agent and shall forthwith cause a copy of
such notice to be mailed to the Registered Holder of each Warrant Certificate.
(g) Any corporation into which the Warrant Agent or any new warrant agent
may be converted or merged, any corporation resulting from any consolidation to
which the Warrant Agent or any new warrant agent shall be a party, or any
corporation succeeding to the corporate trust business of the Warrant Agent or
any new warrant agent shall be a successor warrant agent under this Agreement
without any further act, provided that such corporation is eligible for
appointment as successor to the Warrant Agent under the provisions of the
preceding paragraph. Any such
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successor warrant agent shall promptly cause notice of its succession as warrant
agent to be mailed to the Company and to the Registered Holders of each Warrant
Certificate.
(h) The Warrant Agent, its subsidiaries and affiliates, and any of its or
their officers or directors, may buy and hold or sell Warrants or other
securities of the Company and otherwise deal with the Company in the same manner
and to the same extent and with like effect as though it were not Warrant Agent.
Nothing herein shall preclude the Warrant Agent from acting in any other
capacity for the Company or for any other legal entity.
(i) The Warrant Agent shall retain for a period of two years from the date
of exercise any Warrant Certificate received by it upon such exercise.
SECTION 11. Modification of Agreement.
The Warrant Agent and the Company may by supplemental agreement make any
changes or corrections in this Agreement (i) that they shall deem appropriate to
cure any ambiguity or to correct any defective or inconsistent provision or
manifest mistake or error herein contained; (ii) to reflect an increase in the
number of Warrants which are to be governed by this Agreement resulting from a
subsequent public offering of Company securities which includes warrants having
the same terms and conditions as the Warrants originally covered by or
subsequently added to this Agreement under this Section 11; or (iii) that they
may deem necessary or desirable and which shall not adversely affect the
interests of the holders of Warrant Certificates; provided, however, that this
Agreement shall not otherwise be modified, supplemented or altered in any
respect except with the consent in writing of the Registered Holders
representing not less that 66-2/3% of the Warrants then outstanding (including,
for this purpose Warrants issuable to the Representative pursuant to the
Representative's Warrants, whether or not then outstanding); provided, further,
that no change in the number or nature of the securities purchasable upon the
exercise of any Warrant, or to increase the Purchase Price therefor, shall be
made without the consent in writing of the Registered Holder of the Warrant
Certificate, other than such changes as are specifically prescribed by this
Agreement as originally executed. In addition, this Agreement may not be
modified, amended or supplemented without the prior written consent of the
Representative, other than to cure any ambiguity or to correct any provision
which is inconsistent with any other provision of this Agreement or to make
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<PAGE>
any such change that is necessary or desirable and which shall not adversely
affect the interests of the Representative and except as may be required by law.
SECTION 12. Notices.
All notices, requests, consents and other communications hereunder shall be
in writing and shall be deemed to have been made when delivered or mailed
first-class postage prepaid, or delivered to a telegraph office for transmission
if to the Registered Holder of a Warrant Certificate, at the address of such
holder as shown on the registry books maintained by the Warrant Agent; if to the
Company at New York Health Care, Inc., 1667 Flatbush Avenue, Brooklyn, New York
11210, Attention: Jerry Braun, President, or at such other address as may have
been furnished to the Warrant Agent in writing by the company; and if to the
Warrant Agent, at its Corporate Office. Copies of any notice delivered pursuant
to this Agreement shall be delivered to RAS at RAS Securities Corp., 2 Broadway,
New York, New York 10004-2801, Attention: Mr. Robert A. Schneider, or at such
other address as may have been furnished to the Company and the Warrant Agent in
writing.
SECTION 13. Construction.
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York without giving effect to conflicts of laws.
SECTION 14. Binding Effect.
This Agreement shall be binding upon and inure to the benefit of the
Company, the Warrant Agent and their respective successors and assigns and the
holders from time to time of Warrant Certificates or any of them. Except as
hereinafter stated, nothing in this Agreement is intended or shall be construed
to confer upon any other person any right, remedy or claim or to impose upon any
other person any duty, liability or obligation. The Underwriters (as defined in
the Underwriting Agreement) are, and shall at all times irrevocably be deemed to
be, third-party beneficiaries of this Agreement, with full power, authority and
standing to enforce the rights granted to it hereunder.
23
<PAGE>
SECTION 15. Counterparts.
This Agreement may be executed in several counterparts, which taken
together shall constitute a single document.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the first date first above written.
NEW YORK HEALTH CARE, INC. CONTINENTAL STOCK TRANSFER
TRUST COMPANY
By: By:
----------------------------------- -----------------------------
Jerry Braun, President
24
<PAGE>
EXHIBIT A
No. W_____ VOID AFTER ______________, 2001
___________________ WARRANTS
REDEEMABLE WARRANT CERTIFICATE TO
PURCHASE ONE SHARE OF COMMON STOCK
NEW YORK HEALTH CARE, INC.
CUSIP _________
THIS CERTIFIES THAT, FOR VALUE RECEIVED
or registered assigns (the "Registered Holder") is the owner of the number of
Redeemable Warrants (the "Warrants") specified above. Each Warrant initially
entitles the Registered Holder to purchase, subject to the terms and conditions
set forth in this Certificate and the Warrant Agreement (as hereinafter
defined), one fully paid and nonassessable share of Common Stock, $.001 par
value, of New York Health Care, Inc., a New York corporation (the "Company"), at
any time between __________, 1997 (the "Initial Warrant Exercise Date"), and the
Expiration Date (as hereinafter defined) upon the presentation and surrender of
this Warrant Certificate with the Subscription Form on the reverse hereof duly
executed, at the corporate office of Continental Stock Transfer and Trust
Company, 2 Broadway, New York, New York 10004, as Warrant Agent, or its
successor (the "Warrant Agent"), accompanied by payment of $6.00 subject to
adjustment (the "Purchase Price"), in lawful money of the United States of
America in cash or by check made payable to the Warrant Agent for the account of
the Company.
This Warrant Certificate and each Warrant represented hereby are issued
pursuant to and are subject in all respects to the terms and conditions set
forth in the Redeemable Warrant Agreement (the "Warrant Agreement"), dated
__________, 1996, by and between the Company and the Warrant Agent.
In the event of certain contingencies provided for in the Warrant
Agreement, the Purchase Price and the number of shares of Common Stock subject
to purchase upon the exercise of each Warrant represented hereby are subject to
modification or adjustment.
Each Warrant represented hereby is exercisable at the option of the
Registered Holder, but no fractional interests will be issued. In the case of
the exercise of less than all the Warrant represented hereby, the Company shall
cancel this Warrant Certificate upon the surrender hereof and shall
25
<PAGE>
execute and deliver a new Warrant Certificate or Warrant Certificates of like
tenor, which the Warrant Agent shall countersign, for the balance of such
Warrants.
The term "Expiration Date" shall mean 5:00 p.m. (New York time) on
_________, 2001. If each such date shall in the State of New York be a holiday
or a day on which the banks are authorized to close, then the Expiration Date
shall mean 5:00 p.m. (New York time) the next following day which in the State
of New York is not a holiday or a day on which banks are authorized to close.
The Company shall not be obligated to deliver any securities pursuant to
the exercise of this Warrant unless a registration statement under the
Securities Act of 1933, as amended (the "Act), with respect to such securities
is effective or an exemption thereunder is available. The Company has covenanted
and agreed that it will file a registration statement under the Federal
securities laws, use its best efforts to cause the same to become effective, use
its best efforts to keep such registration statement current, if required under
the Act, while any of the Warrants are outstanding, and deliver a prospectus
which complies with Section 10(a)(3) of the Act to the Registered Holder
exercising this Warrant. This Warrant shall not be exercisable by a Registered
Holder in any state where such exercise would be unlawful.
This Warrant Certificate is exchangeable, upon the surrender hereof by the
Registered Holder at the corporate office of the Warrant Agent, for a new
Warrant Certificate or Warrant Certificates of like tenor representing an equal
aggregate number of Warrants, each of such new Warrant Certificates to represent
such number of Warrants as shall be designated by such Registered Holder at the
time of such surrender. Upon due presentment and payment of any tax or other
charge imposed in connection therewith or incident thereto, for registration of
transfer of this Warrant Certificate at such office, a new Warrant Certificate
of Warrant Certificates representing an equal aggregate number of Warrants will
be issued to the transferee in exchange therefor, subject to the limitations
provided in the Warrant Agreement.
Prior to the exercise of any Warrant represented hereby, the Registered
Holder shall not be entitled to any rights of a stockholder of the Company,
including, without limitation, the right to vote or to receive dividends or
other distributions, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided in the Warrant Agreement.
Subject to the provisions of the Warrant Agreement, this Warrant may be
redeemed at the option of the Company, at a redemption price of $.05 per
Warrant, at any time commencing one year after the Initial Warrant Exercise
Date, provided that (i) the closing bid price for the Common Stock is reported
by The Nasdaq Stock Market, Inc. ("Nasdaq"), if the Common Stock is then traded
in the over-the-counter market or (ii) the closing sale price, if the Common
Stock is then traded on Nasdaq/NM or a national securities exchange, shall have
equalled or exceeded for each of the twenty (20) consecutive trading days ending
on the tenth (10) day prior to the Notice of Redemption, as defined below, $7.50
per share (subject to adjustment in the event of any stock splits or other
similar events). Notice of redemption (the "Notice of Redemption") shall be
given not later than the thirtieth day before the date fixed for redemption, all
as provided in the Warrant Agreement. On and after the date fixed for
redemption, the Registered Holder shall have no rights with respect to the
26
<PAGE>
Warrants except to receive the $.05 per Warrant upon surrender of this Warrant
Certificate.
Under certain circumstances, RAS Securities Corp. collectively shall be
entitled to receive an aggregate of five percent (5%) of the Purchase Price of
the Warrants represented hereby.
Prior to due presentment for registration of transfer hereof, the Company
and the Warrant Agent may deem and treat the Registered Holder as the absolute
owner hereof and of each Warrant represented hereby (notwithstanding any
notations of ownership or writing hereon made by anyone other than a duly
authorized officer of the Company or the Warrant Agent) for all purposes and
shall not be affected by any notice to the contrary, except as provided in the
Warrant Agreement.
This Warrant Certificate shall be governed by and construed in accordance
with the laws of the State of New York without giving effect to conflicts of
laws.
This Warrant Certificate is not valid unless countersigned by the Warrant
Agent.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
duly executed, manually or in facsimile by two of its officers thereunto duly
authorized and a facsimile of its corporate seal to be imprinted hereon.
Dated: __________________________, 1996
[SEAL] NEW YORK HEALTH CARE, INC.
By: ____________________________
Jerry Braun, President
By: ____________________________
Jacob Rosenberg, Secretary
COUNTERSIGNED:
CONTINENTAL STOCK TRANSFER
AND TRUST COMPANY
as Warrant Agent
By:__________________________________
Name:________________________________
Title:_______________________________
27
<PAGE>
SUBSCRIPTION FORM
To Be Executed by the Registered Holder
in Order to Exercise Warrants
The undersigned Registered Holder hereby irrevocably elects to exercise
__________ Warrants represented by this Warrant Certificate, and to purchase the
securities issuable upon the exercise of such Warrants, and requests that
certificates for such securities shall be issued in name of
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
_____________________________
_____________________________
_____________________________
_____________________________
(please print or type name and address)
and be delivered to
_____________________________
_____________________________
_____________________________
_____________________________
(please print or type name and address)
and if such number of Warrants shall not be all the Warrants evidenced by this
Warrant Certificate, that a new Warrant Certificate for the balance of such
Warrants be registered in the name of, and delivered to, the Registered Holder
at the address stated below.
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<PAGE>
IMPORTANT: PLEASE COMPLETE THE FOLLOWING:
1 The exercise of this Warrant was solicited by RAS Securities Corp.
2. The exercise of this Warrant was not solicited.
Dated: ______________________________ X_________________________________________
__________________________________________
__________________________________________
Address
__________________________________________
Social Security or Taxpayer
Identification Number
__________________________________________
Signature Guaranteed
__________________________________________
29
<PAGE>
ASSIGNMENT
To Be Executed by the Registered Holder
in Order to Assign Warrants
FOR VALUE RECEIVED, __________________, hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER
_____________________________
_____________________________
_____________________________
_____________________________
(please print or type name and address)
______________________________________ of the Warrants represented by this
Warrant Certificate, and hereby irrevocably constitutes and appoints
_____________________________ Attorney to transfer this Warrant Certificate on
the of the Company, with full power of substitution in the premises.
Dated: ____________________ X__________________________
Signature Guaranteed
___________________________
THE SIGNATURE TO THE ASSIGNMENT OR THE SUBSCRIPTION FORM MUST CORRESPOND TO THE
NAME AS WRITTEN UPON THE FACE OF THIS WARRANT CERTIFICATE IN EVERY PARTICULAR,
WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER AND MUST BE
GUARANTEED BY A COMMERCIAL BANK OR TRUST COMPANY OR A MEMBER FIRM OF THE
CONTINENTAL STOCK EXCHANGE, PACIFIC STOCK EXCHANGE, MIDWEST STOCK EXCHANGE OR
BOSTON STOCK EXCHANGE.
30
NEW YORK HEALTH CARE, INC.
AND
RAS SECURITIES CORP.
----------
REPRESENTATIVE'S
WARRANT AGREEMENT
Dated as of __________, 1996
<PAGE>
REPRESENTATIVE'S WARRANT AGREEMENT dated as of _________, 1996 between NEW
YORK HEALTH CARE, INC., a New York corporation (the "Company") and RAS
SECURITIES CORP., its successors, designees and assigns (hereinafter referred to
as the "Representative").
W I T N E S S E T H:
WHEREAS, the Company proposes to issue to the Representative warrants
("Warrants") to purchase up to an aggregate of 105,000 shares of common stock,
$.001 par value, of the Company's ("Common Stock") and/or up to 105,000 warrants
("Underlying Warrants"), each Underlying Warrant entitling the holder to
purchase one share of Common Stock. (One share of Common Stock and one
Underlying Warrant are each hereinafter referred to as a "Warrant Security" and
more than one collectively referred to as the "Warrant Securities"); and
WHEREAS, the Representative has agreed pursuant to the underwriting
agreement (the "Underwriting Agreement") dated as of the date hereof among the
underwriters named therein ("Underwriters") and the Company to act as the
representative of such underwriters in connection with the Company's proposed
public offering of up to 1,050,000 shares of Common Stock and 1,050,000
redeemable warrants ("Redeemable Warrants") at a public offering price of $5.00
per share of Common Stock and $.10 per Redeemable Warrant (the "Public
Offering"); and
WHEREAS, the Warrants to be issued pursuant to this Agreement will be
issued on the Closing Date (as such term is defined in the Underwriting
Agreement) by the Company to the Representative in consideration for, and as
part of the Representative's compensation in connection with, the Representative
acting as the representative pursuant to the Underwriting Agreement;
NOW, THEREFORE, in consideration of the premises, the payment by the
Representative to the Company of an aggregate twenty-one dollars ($21.00), the
agreements herein set forth and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1
<PAGE>
1. Grant The Representative is hereby granted the right to purchase, at any
time from __________, 1997 until 5:00 P.M., New York time, on __________, 2001,
up to an aggregate of 105,000 shares of Common Stock (the "Shares") and/or
105,000 Underlying Warrants at an initial exercise price (subject to adjustment
as provided in Section 8 hereof) of $6.00 per Share and $.12 per Underlying
Warrant, subject to the terms and conditions of this Agreement. Each Underlying
Warrant is exercisable to purchase one additional share of Common Stock at an
initial exercise price of $ 6.00 from __________, 1997 until 5:00 P.M. New York
time on February __________, 2001 at which time the Underlying Warrants will
expire. Except as set forth herein, the Underlying Warrants issuable upon
exercise of the Warrants are in all respects identical to the Redeemable
Warrants being purchased by the Underwriters for resale to the public pursuant
to the terms and provisions of the Underwriting Agreement and the Redeemable
Warrant Agreement dated __________ 1996 between the Company and Continental
Stock Transfer & Trust Company ("Redeemable Warrant Agreement"). Except as set
forth herein, the shares issuable upon exercise of the Warrants are in all
respects identical to the shares of Common Stock being purchased by the
Underwriters for resale to the public pursuant to the terms and provisions of
the Underwriting Agreement.
2. Warrant Certificates. The warrant certificates (the "Warrant
Certificates") delivered and to be delivered pursuant to this Agreement shall be
(i) in the form set forth in Exhibit A, with respect to Warrants to purchase
Shares and (ii) in the form set forth in Exhibit B with respect to Warrants to
purchase Underlying Warrants, each attached hereto and made a part hereof, with
such appropriate insertions, omissions, substitutions, and other variations as
required or permitted by this Agreement.
3. Exercise of Warrant.
3.1 Method of Exercise. The Warrants initially are exercisable at the
initial exercise prices (subject to adjustment as provided in Section 8 hereof)
per Share and per Underlying Warrant as set forth in Section 6 hereof payable by
certified or official bank check in New York Clearing House funds, subject to
adjustment as provided in Section 8 hereof. Upon surrender of a Warrant
Certificate with the annexed Form of Election to Purchase duly executed,
together with
2
<PAGE>
payment of the Exercise Price (as hereinafter defined) for the Warrant
Securities purchased at the Company's principal offices (presently located at
1667 Flatbush Avenue, Brooklyn, New York, 11210) the registered holder of a
Warrant Certificate ("Holder" or "Holders") shall be entitled to receive a
certificate or certificates for the shares of Common Stock so purchased and/or a
certificate or certificates for the Underlying Warrants so purchased. The
purchase rights represented by each Warrant Certificate are exercisable at the
option of the Holders thereof, in whole or part (but not as to fractional shares
of the Common Stock and/or Underlying Warrants). In the case of the purchase of
less than all Warrant Securities purchasable under any Warrant Certificate, the
Company shall cancel said Warrant Certificate upon the surrender thereof and
shall execute and deliver a new Warrant Certificate of like tenor for the
balance of the Warrant Securities purchasable thereunder.
3.2 Exercise by Surrender of Warrant. In addition to the method of
payment set forth in Section 3.1 and in lieu of any cash payment required
thereunder, the Holder(s) of the Warrants shall have the right at any time and
from time to time to exercise the Warrants in full or in part by surrendering
the applicable Warrant Certificates in the manner specified in Section 3.1. The
number of shares of Common Stock to be issued pursuant to this Section 3.2 shall
be equal to the difference between (a) the number of shares of Common Stock in
respect of which the Warrants are exercised and (b) a fraction, the numerator of
which shall be the number of shares of Common Stock in respect of which the
Warrants are exercised multiplied by the Exercise Price (as hereinafter defined)
and the denominator of which shall be the Market Price. The number of Underlying
Warrants to be issued pursuant to this Section 3.2 shall be equal to the
difference between (a) the number of Underlying Warrants in respect of which the
Warrants are exercised and (b) a fraction, the numerator of which shall be the
number of Underlying Warrants in respect of which the Warrants are exercised
multiplied by the Exercise Price (as hereinafter defined) and the denominator of
which shall be the Market Price.
3.3 Definition of Market Price. As used herein, the phrase "Market
Price" at any date shall be deemed to be (i) when referring to the Common Stock,
the last reported sale price, or, in case no such reported sale takes place on
such day, the average of the last reported sale prices for the last three (3)
trading days, in either case as officially reported by the principal securities
exchange on which the Common Stock is listed or admitted to trading or by the
Nasdaq National Market ("NNM"), or, if the Common Stock is not listed or
admitted to trading on any national securities
3
<PAGE>
exchange or quoted by NNM, the average closing bid price as furnished by the
National Association of Securities Dealers, Inc. ("NASD") through Nasdaq or
similar organization if Nasdaq is no longer reporting such information, or if
the Common Stock is not quoted on Nasdaq, or such similar organization as
determined in good faith by resolution of the Board of Directors of the Company,
based on the best information available to it or (ii) when referring to an
Underlying Warrant, the last reported sale price, or, in the case no such
reported sale takes place on such day, the average of the last reported sale
prices for the last three (3) trading days, in either case as officially
reported by the principal securities exchange on which the Underlying Warrants
are listed or admitted to trading or by NNM, or, if the Underlying Warrants are
not listed or admitted to trading on any national securities exchange or quoted
by NNM, the average closing bid price as furnished by the NASD through Nasdaq or
similar organization if Nasdaq is no longer reporting such information, or if
the Underlying Warrant is not quoted on Nasdaq or such similar organization, the
Market Price of an Underlying Warrant shall equal the difference between the
Market Price of the Common Stock and the Exercise Price (as hereinafter defined)
of the Underlying Warrant. Notwithstanding the foregoing, for purposes of
Section 8, the Market Price of a share of Common Stock or an Underlying Warrant
shall be determined by reference to the relevant information set forth above
during the thirty (30) trading days immediately preceding the date of the event
requiring the determination of the Market Price (except that, in the event of a
public offering of shares of Common Stock, the Market Price of a share of Common
Stock or an Underlying Warrant shall be determined by reference to the trading
day immediately preceding the effective date of the public offering and not such
thirty (30) trading day period).
4. Issuance of Certificates. Upon the exercise of the Warrants, the
issuance of certificates for shares of Common Stock and Underlying Warrants
and/or other securities, properties or rights underlying such Warrants and, upon
the exercise of the Underlying Warrants, the issuance of certificates for shares
of Common Stock and/or other securities, properties or rights underlying such
Underlying Warrants, shall be made forthwith (and in any event within five (5)
business days thereafter) without charge to the Holder thereof including,
without limitation, any tax which may be payable in respect of the issuance
thereof, and such certificates shall (subject to the provisions
4
<PAGE>
of Sections 5 and 7 hereof) be issued in the name of, or in such names as may be
directed by, the Holder thereof; provided, however, that the Company shall not
be required to pay any tax which may be payable in respect of any transfer
involved in the issuance and delivery of any such certificates in a name other
than that of the Holder and the Company shall not be required to issue or
deliver such certificates unless or until the person or persons requesting the
issuance thereof shall have paid to the Company the amount of such tax or shall
have established to the satisfaction of the Company that such tax has been paid.
The Warrant Certificates and the certificates representing the Shares,
Underlying Warrants and the shares of Common Stock underlying such Underlying
Warrants (and/or other securities, property or rights issuable upon the exercise
of the Warrants or the Underlying Warrants) shall be executed on behalf of the
Company by the manual or facsimile signature of the then present Chairman or
Vice Chairman of the Board of Directors or President or Vice President of the
Company under its corporate seal reproduced thereon, attested to by the manual
or facsimile signature of the then present Secretary or Assistant Secretary of
the Company. Warrant Certificates shall be dated the date of execution by the
Company upon initial issuance, division, exchange, substitution or transfer.
5. Restriction On Transfer of Warrants. The Holder of a Warrant
Certificate, by its acceptance thereof, covenants and agrees that the Warrants
are being acquired as an investment and not with a view to the distribution
thereof; that the Warrants may not be sold, transferred, assigned, hypothecated
or otherwise disposed of, in whole or in part, for a period of one (1) year from
the date hereof, except to officers of the Representative.
6. Exercise Price.
6.1 Initial and Adjusted Exercise Price. Except as otherwise provided
in Section 8 hereof, the initial exercise price of each Warrant to purchase
Common Stock shall be $6.00 per share of Common Stock and the initial exercise
price of each Warrant to purchase Underlying Warrants shall be $.12 per
Underlying Warrant. The adjusted exercise price shall be the price which shall
result from time to time from any and all adjustments of the initial exercise
price in accordance with the provisions of Section 8 hereof and/or in accordance
with a reduction by the Company, in its sole
5
<PAGE>
discretion, of the exercise price of each Warrant to purchase Common Stock.
6.2 Exercise Price. The term "Exercise Price" herein shall mean the
applicable initial exercise price or with respect to Warrants to purchase Common
Stock the adjusted exercise price, depending upon the context.
7. Registration Rights.
7.1 Current Registration Under the Securities Act of 1933. The
Warrants, the Shares, the Underlying Warrants issuable upon exercise of the
applicable Warrants and the shares of Common Stock issuable upon exercise of
such Underlying Warrants have been registered under the Securities Act of 1933,
as amended (the "Act"), pursuant to the Company's Registration Statement on Form
SB-2 (Registration No.333-__________) (the "Registration Statement"). The
Company covenants and agrees to use its best efforts to maintain the
effectiveness of the Registration Statement for a period of five (5) years from
its effective date.
7.2 Contingent Registration Rights. In the event that, for any reason
whatsoever, the Company shall fail to maintain the effectiveness of the
registration Statement for a period of five (5) years from its effective date
and, in any event, from and after the fifth (5th) anniversary of the effective
date of the Registration Statement, the Representative shall have commencing the
date of any such occasion, the contingent registration rights ("Registration
Rights") set forth in Sections 7.3 and 7.4 hereof.
7.3 Piggyback Registration. (a) If, at any time commencing after the
effective date of the Registration Rights and expiring on the seventh (7th)
anniversary of the effective date of the Registration Statement, the Company
proposes to register any of its securities under the Act, either for its own
account or the account of any other security holder or holders of the Company
possessing registration rights ("Other Stockholders") (other than pursuant to
Form S-4, Form S-8 or comparable registration statement), it shall give written
notice, at least thirty (30) days prior to the filing of each such registration
statement, to the Representative and to all other Holders of Warrants, Shares,
Underlying Warrants and/or shares of Common Stock issuable upon exercise of the
Underlying Warrants (collectively, "Registrable Securities") of its intention to
do so. If the Representative or other Holders of Registrable Securities notify
the Company within twenty-one
6
<PAGE>
(21) days after the receipt of any such notice of its or their desire to include
any such securities in such proposed registration statement, the Company shall
afford the Representative and such other Holders of such securities the
opportunity to have any such securities registered under such registration
statement.
(b) If the registration of which the Company gives notice is for a
registered public offering involving an underwriting, the Company shall so
advise the Representative and such other Holders as part of the written notice
given pursuant to Section 7.3(a) hereof. The right of the Representative or any
such other Holder to registration pursuant to this Section 7.3 shall be
conditioned upon their participation in such underwriting and the inclusion of
their Registrable Securities in the underwriting to the extent hereinafter
provided. The Representative and all other Holders proposing to distribute their
securities through such underwriting shall (together with the Company and any
officer, directors or Other Stockholders distributing their securities through
such underwriting) enter into an underwriting agreement in customary form with
the representative of the underwriter or underwriters selected by the Company.
Notwithstanding any other provision of this Section 7.3, if the representative
of the underwriter or underwriters advises the Company in writing that marketing
factors require a limitation or elimination of the number of shares of Common
Stock or other securities to be underwritten, the representative may limit the
number of shares of Common Stock or other securities to be included in the
registration and underwriting. The Company shall so advise the Representative
and all other Holders of Registrable Securities requesting registration, and the
number of shares of Common Stock or other securities that are entitled to be
included in the registration and underwriting shall be allocated among the
Representative and other Holders requesting registration, in each case, in
proportion, as nearly as practicable, to the respective amounts of securities
which they had requested to be included in such registration at the time of
filing the registration statement.
(c) Notwithstanding the provisions of this Section 7.3, the Company
shall have the right at any time after it shall have given written notice
pursuant to Section 7.3(a) hereof (irrespective of whether a written request for
inclusion of any such securities shall have been made) to elect not to file any
such proposed registration statement, or to withdraw the same after the filing
but prior to the effective date thereof.
7.4 Demand Registration. (a) At any time commencing after the
effective date of the
7
<PAGE>
Registration Rights and ending on the fifth (5th) anniversary of the effective
date of the Registration Statement, the Representative and Holders of
Registrable Securities representing a "Majority" (as hereinafter defined) of
such securities (assuming the exercise of all of the Warrants and Underlying
Warrants) (the "Initiating Holders") shall have the right (which right is in
addition to the registration rights under Section 7.3 hereof), exercisable by
written notice to the Company, to have the Company prepare and file with the
Commission, on one occasion, a registration statement and such other documents,
including a prospectus, as may be necessary in the opinion of both counsel for
the Company and counsel for the Holders, in order to comply with the provisions
of the Act, so as to permit a public offering and sale of their respective
Registrable Securities for up to two hundred and seventy (270) days by such
Holders and any other Holders of Registrable Securities, as well as any other
security holders possessing similar registration rights, who notify the Company
within twenty-one (21) days after receiving notice from the Company of such
request.
(b) The Company covenants and agrees to give written notice of any
registration request under this Section 7.4 by any Holder or Holders to all
other registered Holders of Registrable Securities, as well as any other
security holders possessing similar registration rights, within ten (10) days
after the date of the receipt of any such registration request.
(c) If the Initiating Holders intend to distribute the Registrable
Securities covered by their request by means of an underwriting, they shall so
advise the Company as a part of their request made pursuant to Section 7.4(a)
hereof. The right of any Holder to registration pursuant to this Section 7.4
shall be conditioned upon such Holder's participation in such underwriting and
the inclusion of such Holder's Registrable Securities in the underwriting to the
extent and subject to the limitations provided herein. A Holder may elect to
include in such underwriting all or a part of the Registrable Securities it
holds.
(d) The Company shall (together with all Holders, officers, directors
and Other Stockholders proposing to distribute their securities through such
underwriting) enter into an underwriting agreement in customary form with the
representative of the underwriter of underwriters selected for such underwriting
by the Initiating Holders, which underwriter(s) shall be reasonably acceptable
to the Representative. Notwithstanding any other provision of this Section 7.4,
if the representative of the underwriter or underwriters advises the Initiating
Holders in writing that marketing factors require a limitation or elimination of
the number of shares of Common Stock or
8
<PAGE>
other securities to be underwritten, the representative may limit the number of
shares of Common Stock or other securities to be included in the registration
and underwriting. The Company shall so advise the Representative and all Holders
of Registrable Securities requesting registration, and the number of shares of
Common Stock or other securities that are entitled to be included in the
registration and underwriting shall be allocated among the Representative and
other Holders requesting registration, in each case, in proportion, as nearly as
practicable, to the respective amounts of securities which they had requested to
be included in such registration at the time of filing the registration
statement. If the Company or any Holder of Registrable Securities who has
requested inclusion in such registration as provided above disapproves of the
terms of any such underwriting, such person may elect to withdraw its securities
therefrom by written notice to the Company, the underwriter and the Initiating
Holders. Any securities so excluded shall be withdrawn from such registration.
No securities excluded from such registration by reason of such underwriters'
marketing limitations shall be included in such registration. To facilitate the
allocation of shares in accordance with this Section 7.4(d), the Company or
underwriter or underwriters selected as provided above may round the number of
securities of any holder which may be included in such registration to the
nearest 100 shares.
(e) In the event that the Initiating Holders are unable to sell all of
the Registrable Securities for which they have requested registration due to the
provisions of Section 7.4(d) hereof and if, at that time, the Initiating Holders
are not permitted to sell Registrable Securities under Rule 144(k), the
Initiating Holders shall be entitled to require the Company to afford the
Initiating Holders an opportunity to effect one additional demand registration
under this Section 7.4.
(f) In addition to the registration rights under Section 7.3 and
subsection (a) of Section 7.4 hereof, at any time commencing on the date hereof
and expiring five (5) years thereafter any Holder of Registrable Securities
shall have the right, exercisable by written request to the Company, to have the
Company prepare and file, on one occasion, with the Commission a registration
statement so as to permit a public offering and sale for 270 days by any such
Holder of its Registrable Securities provided, however, that the provisions of
Section 7.5(b) hereof, shall not apply to any such registration request and
registration and all costs incident thereto shall be at the expense of the
Holder or Holder's making such request.
(g) Notwithstanding anything to the contrary contained herein, if the
Company shall not
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have filed a registration statement for the Registrable Securities of the
Initiating Holders or the Holder(s) referred to in Section 7.5(f) above (the
"Paying Holders"), within the time period specified in Section 7.5(a) below, the
Company shall upon the written notice of election of the Initiating Holders or
the Paying Holders, as the case may be, repurchase (i) any and all Shares and/or
Underlying Warrants at the higher of the Market Price per share of Common Stock
or per Underlying Warrant, as the case may be, on (x) the date of the notice
sent to the Company under Section 7.4(a) or (f), as the case may be, or (y) the
expiration of the period specified in Section 7.5(a) and (ii) any and all
Warrants at such Market Price less the Exercise Price of such Warrant. Such
repurchase shall be in immediately available funds and shall close within five
(5) business days after the expiration of the period specified in Section
7.5(a).
7.5 Covenants of the Company With Respect to Registration. In
connection with any registration under Sections 7.3 and 7.4 hereof, the Company
covenants and agrees as follows:
(a) The Company shall use its best efforts to file a registration
statement within thirty (30) days of receipt of any demand therefor, shall use
its best efforts to have any registration statements declared effective at the
earliest possible time, and shall furnish each Holder desiring to sell
Registrable Securities such number of prospectuses as shall reasonably be
requested.
(b) The Company shall pay all costs (excluding fees and expenses of
Holder(s)' counsel and any underwriting or selling commissions), fees and
expenses in connection with all registration statements filed pursuant to
Sections 7.3 and 7.4 hereof including, without limitation, the Company's legal
and accounting fees, printing expenses, blue sky fees and expenses. If the
Company shall fail to comply with the provisions of Section 7.5(a), the Company
shall, in addition to any other equitable or other relief available to the
Holder(s), extend the exercise period of the Warrants by such number of days as
shall equal the delay caused by the Company's failure.
(c) The Company will take all necessary action which may be required
in qualifying or registering the Registrable Securities included in a
registration statement for offering and sale under the securities or blue sky
laws of such states as reasonably are requested by the Holder(s); provided that
the Company shall not be obligated to execute or file any general consent to
service of process or to qualify as a foreign corporation to do business under
the laws of any such jurisdiction.
(d) The Company shall indemnify the Holder(s) of the Registrable
Securities to be sold pursuant to any registration statement and each person, if
any, who controls such Holders within the
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meaning of Section 15 of the Act or Section 20(a) of the Securities Exchange Act
of 1934, as amended ("Exchange Act"), against all loss, claim, damage, expense
or liability (including all expenses reasonably incurred in investigating,
preparing or defending against any claim whatsoever) to which any of them may
become subject under the Act, the Exchange Act or otherwise, arising from such
registration statement but only to the same extent and with the same effect as
the provisions pursuant to which the Company has agreed to indemnify each of the
Underwriters contained in Section 7 of the Underwriting Agreement.
(e) The Holder(s) of the Registrable Securities to be sold pursuant to
a registration statement, and their successors and assigns, shall severally, and
not jointly, indemnify the Company, its officers and directors and each person,
if any, who controls the Company within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act, against all loss, claim, damage or expense or
liability (including all expenses reasonably incurred in investigating,
preparing or defending against any claim whatsoever) to which they may become
subject under the Act, the exchange Act or otherwise, arising from information
furnished by or on behalf of such Holders, or their successors or assigns, for
specific inclusion in such registration statement to the same extent and with
the same effect as the provisions contained in Section 7 of the Underwriting
Agreement pursuant to which the Underwriters have agreed to indemnify the
Company.
(f) For a period of one hundred eighty (180) days after the
effectiveness of any registration statement filed pursuant to Section 7.4
hereof, the Company shall not permit any other registration statement (other
than (1) a registration statement relating to the securities for which the
Company has granted demand registration rights, as described in the Prospectus
included in the Registration Statement, (2) a registration statement relating to
the shares of Common Stock issuable upon exercise of the Redeemable Warrants
issued to the public pursuant to the Registration Statement, (3) a registration
statement relating to the securities for which the Company has granted piggyback
registration rights, as described in the Prospectus included in the Registration
Statement and (4) a registration statement filed on Forms S-4 or S-8) to be or
remain effective during the effectiveness of a registration statement filed
pursuant to Section 7.4 hereof, without the prior written consent of the Holders
of the Registrable Securities representing a Majority of such securities.
(g) The Company shall furnish to each Holder participating in the
offering and to each underwriter, if any, a signed counterpart, addressed to
such Holder or underwriter, of (i) an opinion
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of counsel to the Company, dated the effective date of such registration
statement (and, if such registration includes an underwritten public offering,
an opinion dated the date of the closing under the underwriting agreement), and
(ii) a "cold comfort" letter dated the effective date of such registration
statement (and, if such registration includes an underwritten public offering, a
letter dated the date of the closing under the underwriting agreement) signed by
the independent public accountants who have issued a report on the Company's
financial statements included in such registration statement, in each case
covering substantially the same matters with respect to such registration
statement (and the prospectus included therein) and, in the case of such
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 underwriters in underwritten public
offerings of securities.
(h) The Company shall as soon as practicable after the effective date
of any registration statement filed pursuant to Sections 7.3 and 7.4 hereof, and
in any event within 15 months thereafter, make "generally available to its
security holders" (within the meaning of Rule 158 under the Act) an earnings
statement (which need not be audited) complying with Section 11(a) of the act
and covering a period of at least 12 consecutive months beginning after the
effective date of the registration statement.
(i) The Company shall deliver promptly to each Holder participating in
the offering requesting the correspondence and memoranda described below and to
the managing underwriters, copies of all written correspondence between the
Commission and the Company, its counsel or auditors and all memoranda relating
to discussions with the Commission or its staff with respect to the registration
statement and permit each Holder and underwriters to do such investigation, upon
reasonable advance notice, with respect to information contained in or omitted
from the registration statement as it deems reasonably necessary to comply with
applicable securities laws or rules of the NASD. Such investigation shall
include access to books, records and properties and opportunities to discuss the
business of the Company with its officers and independent auditors, all to such
reasonable extent and at such reasonable times and as often as any such Holder
or underwriter shall reasonably request.
(j) With respect to any registration under Section 7.4 hereof, the
Company shall enter into an underwriting agreement with the managing underwriter
selected for such underwriting
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by the Initiating Holders or the Paying Holders, as the case may be, which may
be the Representative. Such agreement shall be satisfactory in form and
substance to the Company, each Holder and such managing underwriters, and shall
contain such representations, warranties and covenants by the Company and such
other terms as are customarily contained in agreements of that type used by the
managing underwriter. The Holders shall be parties to any underwriting agreement
relating to an underwritten sale of their Registrable Securities and may, at
their option, require that any or all the representations, warranties and
covenants of the Company to or for the benefit of such underwriters shall also
be made to and for the benefit of such Holders. Such Holders shall not be
required to make any representations or warranties to or agreements with the
Company or the underwriters, except as they may relate to such Holders and their
intended methods of distribution.
(k) For purposes of this Agreement, the term "Majority" in reference
to the Holders of Registrable Securities, shall mean in excess of fifty percent
(50%) of the then outstanding Warrants, Shares, Underlying Warrants and/or
shares of Common Stock issued upon exercise of the Underlying Warrants that (i)
are not held by the Company, an affiliate, officer, creditor, employee or agent
thereof or any of their respective affiliates, members of their family, persons
acting as nominees or in conjunction therewith and (ii) have not been resold to
the public pursuant to a registration statement filed with the Commission under
the Act.
(l) Nothing contained in this Agreement shall be construed as
requiring the Holder(s) to exercise their Warrants or Underlying Warrants prior
to the initial filing of any registration statement or the effectiveness
thereof.
(m) In addition to the Registrable Securities, upon the written
request therefor, by any Holder(s), the Company shall include in the
registration statement any other securities of the Company held by such
Holder(s) as of the date of filing of such registration statement, including
without limitation restricted shares of Common Stock, options, warrants or any
other securities convertible into shares of Common Stock.
7.6 Restrictive Legends. In the event that the Company fails to
maintain the effectiveness of the Registration Statement, such that the
exercise, in part or in whole, of the Warrants and/or the Underlying Warrants
are not, at the time of such exercise, registered under the Act, any
certificates representing the Shares underlying the Warrants, the Underlying
Warrants underlying the Warrants and/or the shares of Common Stock underlying
the Underlying Warrants, and any of the other
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securities issuable upon exercise of the Warrants shall bear the following
restrictive legend:
The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended ("Act"), and may not be
offered or sold except pursuant to (i) an effective registration statement under
the Act, (ii) to the extent applicable, Rule 144 under the Act (or any similar
rule under such Act relating to the disposition of securities), or (iii) an
opinion ofcounsel, if such opinion shall be reasonably satisfactory to counsel
to the issuer, that an exemption from registration under such Act is available.
8. Adjustments to Exercise Price and Number of Securities.
8.1 Computation of Adjusted Exercise Price. Except as hereinafter
provided, in the event the Company shall at any time after the date hereof issue
or sell any shares of Common Stock (other than the issuances or sales referred
to in Section 8.7 hereof), including shares held in the Company's treasury and
shares of Common Stock issued upon the exercise of any options, rights or
warrants to subscribe for shares of Common Stock and shares of Common Stock
issued upon the direct or indirect conversion or exchange of securities for
shares of Common Stock, for a consideration per share less than the Market Price
in effect immediately prior to the issuance or sale of such shares, or without
consideration, then forthwith upon such issuance or sale, the Exercise Price
shall (until another such issuance or sale) be reduced to the price (calculated
to the nearest full cent) equal to the quotient derived by dividing (i) an
amount equal to the sum of (a) the total number of shares of Common Stock
outstanding immediately prior to the issuance or sale of such shares, multiplied
by the Exercise Price in effect immediately prior to such issuance or sale, and
(b) the aggregate of the amount of all consideration, if any, received by the
Company upon such issuance or sale, by (ii) the total number of shares of Common
Stock outstanding immediately after such issuance or sale; provided, however,
that in no event shall the Exercise Price be adjusted pursuant to this
computation to an amount in excess of the Exercise Price in effect immediately
prior to such computation, except in the case of a combination of outstanding
shares of Common Stock, as provided by Section 8.3 hereof.
For the purposes of this Section 8 the term Exercise Price shall mean the
Exercise Price per share of Common Stock set forth in Section 6 hereof, as
adjusted from time to time pursuant to the provisions of this Section 8.
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For the purposes of any computation to be made in accordance with this
Section 8.1, the following provisions shall be applicable:
(i) In case of the issuance or sale of shares of Common Stock for a
consideration part or all of which shall be cash, the amount of the cash
consideration therefor shall be deemed to be the amount of cash received by the
Company for such shares (or, if shares of Common Stock are offered by the
Company for subscription, the subscription price, or, if either of such
securities shall be sold to underwriters or dealers for public offering without
a subscription offering, the initial public offering price) before deducting
therefrom any compensation paid or discount allowed in the sale, underwriting or
purchase thereof by underwriters or dealers or other performing similar
services, or any expenses incurred in connection therewith.
(ii) In case of the issuance or sale (other than as a dividend or
other distribution on any stock of the Company) of shares of Common Stock for a
consideration part or all of which shall be other than cash, the amount of the
consideration therefor other than cash shall be deemed to be the value of such
consideration as determined in good faith by the Board of Directors of the
Company and shall include any amounts payable to security holders or any
affiliates thereof, including without limitation, pursuant to any employment
agreement, royalty, consulting agreement, covenant not to compete, earnout or
contingent payment right or similar arrangement, agreement or understanding,
whether oral or written; all such amounts being valued for the purposes hereof
at the aggregate amount payable thereunder, whether such payments are absolute
or contingent, and irrespective of the period or uncertainty of payment, the
rate of interest, if any, or the contingent nature thereof; provided, however,
that if any Holder(s) does not agree with such evaluation, a mutually acceptable
independent appraiser shall make such evaluation, the cost of which shall be
borne by the Company.
(iii) Shares of Common Stock issuable by way of dividend or other
distribution on any stock of the Company shall be deemed to have been issued
immediately after the opening of business on the day following the record date
for the determination of stockholders entitled to receive such dividend or other
distribution and shall be deemed to have been issued without consideration.
(iv) The reclassification of securities of the Company other than
shares of Common Stock into securities including shares of Common Stock shall be
deemed to involve the issuance of such shares of Common Stock for a
consideration other than cash immediately prior to the close of business on the
date fixed for the determination of security holders entitled to receive such
shares,
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and the value of the consideration allocable to such shares of Common Stock
shall be determined as provided in subsection (ii) of this Section 8.1.
(v) The number of shares of Common Stock at any one time outstanding
shall include the aggregate number of shares issued or issuable (subject to
readjustment upon the actual issuance thereof) upon the exercise of options,
rights, warrants and upon the conversion or exchange of convertible or
exchangeable securities.
8.2 Options, Rights, Warrants and Convertible and Exchangeable
Securities. In case the Company shall at any time after the date hereof issue
options, rights or warrants to subscribe for shares of Common Stock, or issue
any securities convertible into or exchangeable for shares of Common Stock, for
a consideration per share less than the Market Price in effect immediately prior
to the issuance of such options, rights or warrants, or such convertible or
exchangeable securities, or without consideration, the Exercise Price in effect
immediately prior to the issuance of such options, rights or warrants, or such
convertible or exchangeable securities, as the case may be, shall be reduced to
a price determined by making a computation in accordance with the provisions of
Section 8.1 hereof, provided that:
(a) The aggregate maximum number of shares of Common Stock, as the
case may be, issuable under such options, rights or warrants shall be deemed to
be issued and outstanding at the time such options, rights or warrants were
issued, and for a consideration equal to the minimum purchase price per share
provided for in such options, rights or warrants at the time of issuance, plus
the consideration (determined in the same manner as consideration received on
the issue or sale of shares in accordance with the terms of the Warrants), if
any, received by the Company for such options, rights or warrants.
(b) The aggregate maximum number of shares of Common Stock issuable
upon conversion or exchange of any convertible or exchangeable securities shall
be deemed to be issued and outstanding at the time of issuance of such
securities, and for a consideration equal to the consideration (determined in
the same manner as consideration received on the issue or sale of shares of
Common Stock in accordance with the terms of the Warrants) received by the
Company for such securities, plus the minimum consideration, if any, receivable
by the Company upon the conversion or exchange thereof.
(c) If any change shall occur in the price per share provided for in
any of the options,
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rights or warrants referred to in subsection (a) of this Section 8.2, or in the
price per share at which the securities referred to in subsection (b) of this
Section 8.2 are convertible or exchangeable, such options, rights or warrants or
conversion or exchange rights, as the case may be, shall be deemed to have
expired or terminated on the date when such price change became effective in
respect of shares not theretofore issued pursuant to the exercise or conversion
or exchange thereof, and the Company shall be deemed to have issued upon such
date new options, rights or warrants or convertible or exchangeable securities
at the new price in respect of the number of shares issuable upon the exercise
of such options, rights or warrants or the conversion or exchange of such
convertible or exchangeable securities.
8.3 Subdivision and Combination. In case the Company shall at any time
subdivide or combine the outstanding shares of Common Stock, the Exercise Price
shall forthwith be proportionately decreased in the case of subdivision or
increased in the case of combination.
8.4 Adjustment in Number of Securities. Upon each adjustment of the
Exercise Price pursuant to the provisions of this Section 8, the number of
Warrant Securities issuable upon the exercise at the adjusted exercise price of
each Warrant shall be adjusted to the nearest full amount by multiplying a
number equal to the Exercise Price in effect immediately prior to such
adjustment by the number of Warrant Securities issuable upon exercise of the
Warrants immediately prior to such adjustment and dividing the product so
obtained by the adjusted Exercise Price.
8.5 Definition of Common Stock. For the purpose of this Agreement, the
term "Common Stock" shall mean (i) the class of stock designated as Common Stock
in the Certificate of Incorporation of the Company as amended as of the date
hereof, or (ii) any other class of stock resulting from successive changes or
reclassifications of such Common Stock consisting solely of changes in par
value, or from par value to no par value, or from no par value to par value. The
Company covenants that so long as any of the Warrants are outstanding, the
Company shall not without the prior written consent of the Representative issue
any securities whatsoever other than Common Stock. In the event that the Company
shall, upon the consent of the Representative, after the date hereof issue
securities with greater or superior voting rights than the shares of Common
Stock outstanding as of the date hereof, the Holder, at its option, may receive
upon exercise of any Warrant either shares of Common Stock or a like number of
such securities with greater or superior voting rights.
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8.6 Merger or Consolidation. In case of any consolidation of the
Company with, or merger of the Company with, or merger of the Company into,
another corporation (other than a consolidation or merger which does not result
in any reclassification or change of the outstanding Common Stock), the
corporation formed by such consolidation or merger shall execute and deliver to
the Holder a supplemental warrant agreement providing that the holder of each
Warrant then outstanding or to be outstanding shall have the right thereafter
(until the expiration of such Warrant) to receive, upon exercise of such
warrant, the kind and amount of shares of stock and other securities and
property receivable upon such consolidation or merger, by a holder of the number
of shares of Common Stock of the Company for which such warrant might have been
exercised immediately prior to such consolidation, merger, sale or transfer.
Such supplemental warrant agreement shall provide for adjustments which shall be
identical to the adjustments provided in Section 8. The above provision of this
subsection shall similarly apply to successive consolidations or mergers.
8.7 No Adjustment of Exercise Price in Certain Cases. No adjustment of
the Exercise Price shall be made:
(a) Upon the issuance or sale of the Warrants, Underlying Warrants,
Redeemable Warrants or the shares of Common Stock issuable upon the
exercise of (i) the Warrants, (ii) the Underlying Warrants, or (iii) the
Redeemable Warrants; or
(b) If the amount of said adjustment shall be less than two cents (2)
per Warrant Security, provided, however, that in such case any adjustment
that would otherwise be required then to be made shall be carried forward
and shall be made at the time of and together with the next subsequent
adjustment which, together with any adjustment so carried forward, shall
amount to at least two cents (2) per Warrant Security.
8.8 Dividends and Other Distributions. In the event that the Company
shall at any time prior to the exercise of all Warrants declare a dividend
(other than a dividend consisting solely of shares of Common Stock) or otherwise
distribute to its stockholders any assets, property, rights, evidences of
indebtedness, securities (other than shares of Common Stock), whether issued by
the Company or by another, or any other thing of value, the Holders of the
unexercised Warrants shall thereafter be entitled, in addition to the shares of
Common Stock or other securities and property receivable upon the exercise
thereof, to receive, upon the exercise of such Warrants, the same property,
assets, rights, evidences of indebtedness, securities or any other thing of
value that they
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would have been entitled to receive at the time of such dividend or distribution
as if the Warrants had been exercised immediately prior to such dividend or
distribution. At the time of any such dividend or distribution, the Company
shall make appropriate reserves to ensure the timely performance of the
provisions of this subsection 8.8.
9. Exchange and Replacement of Warrant Certificates. Each Warrant
Certificate is exchangeable without expense, upon the surrender thereof by the
registered Holder at the principal executive office of the Company, for a new
Warrant Certificate of like tenor and date representing in the aggregate the
right to purchase the same number of Warrant Securities in such denominations as
shall be designed by the Holder thereof at the time of such surrender.
Upon receipt by the Company of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of any Warrant Certificate, and, in
case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to it, and reimbursement to the Company of all reasonable expenses
incidental thereto, and upon surrender and cancellation of the Warrants, if
mutilated, the Company will make and deliver a new Warrant Certificate of like
tenor, in lieu thereof.
10. Elimination of Fractional Interests. The Company shall not be required
to issue fractional shares of Common Stock or Underlying Warrants upon the
exercise of Warrants. Warrants may only be exercised in such multiples as are
required to permit the issuance by the Company of one or more whole shares of
Common Stock and/or Underlying Warrants. If one or more Warrants shall be
presented for exercise in full at the same time by the same Holder, the number
of whole shares of Common Stock or Underlying Warrants which shall be issuable
upon such exercise thereof shall be computed on the basis of the aggregate
number of shares of Common Stock and/or Underlying Warrants purchasable on
exercise of the Warrants so presented. If any fraction of a share of Common
Stock or Underlying Warrants would, except for the provisions provided herein,
be issuable on the exercise of any Warrant (or specified portion thereof), the
Company shall pay an amount in cash equal to such fraction multiplied by the
then current market value of a share of Common Stock or Underlying Warrants,
determined as follows:
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(1) If the Common Stock or Underlying Warrant, as the case may be, is
listed, or admitted to unlisted trading privileges on the New York Stock
Exchange ("NYSE") or the American Stock Exchange ("AMEX"), or is traded on the
NNM, the current market value of a share of Common Stock or Underlying Warrant,
as the case may be, shall be the closing sale price of the Common Stock or the
Underlying Warrant, as the case may be, at the end of the regular trading
session on the last business day prior to the date of exercise of the Warrants
on whichever of such exchanges or NNM had the highest average daily trading
volume for the Common Stock or the Underlying Warrant, as the case may be, on
such day; or
(2) If the Common Stock or the Underlying Warrant, as the case may be,
is not listed or admitted to unlisted trading privileges, on either the NYSE or
the AMEX and is not traded on NNM, but is quoted or reported on Nasdaq, the
current market value of a share of Common Stock or the Underlying Warrant, as
the case may be, shall be the average of the representative closing bid and
asked prices (or the last sale price, if then reported by Nasdaq) of the Common
Stock or the Underlying Warrant, as the case may be, at the end of the regular
trading session on the last business day prior to the date of exercise of the
Warrants as quoted or reported on Nasdaq, as the case may be; or
(3) If the Common Stock or the Underlying Warrant, as the case may be,
is not listed, or admitted to unlisted trading privileges, on either of the NYSE
or the AMEX, and is not traded on NNM or quoted or reported on Nasdaq, but is
listed or admitted to unlisted trading privileges on the BSE or another national
securities exchange (other than the NYSE or the AMEX), the current market value
of a share of Common Stock or Underlying Warrant, as the case may be, shall be
the closing sale price of the Common Stock or the Underlying Warrant, as the
case may be, at the end of the regular trading session on the last business day
prior to the date of exercise of the Warrants on whichever of such exchanges has
the highest average daily trading volume for the Common Stock or the Underlying
Warrant, as the case may be, on such day; or
(4) If the Common Stock or the Underlying Warrant, as the case may be,
is not listed or admitted to unlisted trading privileges on any national
securities exchange, or listed for trading on NNM or quoted or reported on
Nasdaq, but is traded in the over-the-counter market, the current market value
of a share of Common Stock or the Underlying Warrant, as the case may be, shall
be the average of the last reported bid and asked prices of the Common Stock or
the Underlying
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Warrant, as the case may be, reported by the National Quotation Bureau, Inc. on
the last business day prior to the date of exercise of the Warrants; or
(5) If the Common Stock or the Underlying Warrant, as the case may be,
is not listed, admitted to unlisted trading privileges on any national
securities exchange, or listed for trading on NNM or quoted or reported on
Nasdaq, and bid and asked prices of the Common Stock or the Underlying Warrant,
as the case may be, are not reported by the National Quotation Bureau, Inc., the
current market value of a share of Common Stock or the Underlying Warrant, as
the case may be, shall be an amount, not less than the book value thereof as of
the end of the most recently completed fiscal quarter of the Company ending
prior to the date of exercise, determined in accordance with generally
acceptable accounting principles, consistently applied.
11. Reservation and Listing of Securities. The Company shall at all times
reserve and keep available out of its authorized shares of Common Stock, solely
for the purpose of issuance upon the exercise of the Warrants and the Underlying
Warrants, such number of shares of Common Stock or other securities, properties
or rights as shall be issuable upon the exercise thereof. The Company covenants
and agrees that, upon exercise of the Warrants and payment of the Exercise Price
therefor, all shares of Common Stock and other Securities issuable upon such
exercise shall be duly and validly issued, fully paid, non-assessable and not
subject to the preemptive rights of any stockholder. The Company further
covenants and agrees that upon exercise of the Underlying Warrants underlying
the Warrants and payment of the respective Underlying Warrant exercise price
therefor, all shares of Common Stock and other securities issuable upon such
exercises shall be duly and validly issued, fully paid, non- assessable and not
subject to the preemptive rights of any stockholder. As long as the Warrants
shall be outstanding, the Company shall use its best efforts to cause all shares
of Common Stock issuable upon the exercise of the Warrants and Underlying
Warrants and all Underlying Warrants underlying the Warrants to be listed
(subject to official notice of issuance) on all securities exchanges on which
the Common Stock or the Underlying Warrants issued to the public in connection
herewith may then be listed and/or quoted on NNM.
12. Notices to Warrant Holders. Nothing contained in this Agreement shall
be construed
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<PAGE>
as conferring upon the Holders the right to vote or to consent or to receive
notice as a stockholder in respect of any meetings of stockholders for the
election of directors or any other matter, or as having any rights whatsoever as
a stockholder of the Company. If, however, at any time prior to the expiration
of the Warrants and their exercise, any of the following events shall occur:
(a) the Company shall take a record of the holders of its shares of
Common Stock for the purpose of entitling them to receive a dividend or
distribution payable other than in cash, or a cash dividend or distribution
payable other than out of current or retained earnings, as indicated by the
accounting treatment of such dividend or distribution on the books of the
Company; or
(b) the Company shall offer to all the holders of its Common Stock any
additional shares of capital stock of the Company or securities convertible into
or exchangeable for shares of capital stock of the Company, or any option, right
or warrant to subscribe therefor; or (c) a dissolution, liquidation or winding
up of the Company (other than in connection with a consolidation or merger) or a
sale of all or substantially all of its property, assets and business as an
entirety shall be proposed; then, in any one or more of said events, the Company
shall give written notice of such event at least fifteen (15) days prior to the
date fixed as a record date or the date of closing the transfer books for the
determination of the stockholders entitled to such dividend, distribution,
convertible or exchangeable securities or subscription rights, or entitled to
vote on such proposed dissolution, liquidation, winding up or sale. Such notice
shall specify such record date or the date of closing the transfer book, as the
case may be. Failure to give such notice or any defect therein shall not affect
the validity of any action taken in connection with the declaration or payment
of any such dividend, or the issuance of any convertible or exchangeable
securities, or subscription rights, options or warrants, or any proposed
dissolution, liquidation, winding up or sale.
13. Underlying Warrants.
The form of the certificate representing Underlying Warrants (and the form
of election to purchase shares of Common Stock upon the exercise of Underlying
Warrants and the form of assignment printed on the reverse thereof) shall be
substantially as set forth in Exhibit "A" to the Redeemable Warrant Agreement
provided, however, that the Underlying Warrants will be subject to redemption
only after the Warrants have been exercised and the Underlying Warrants are
22
<PAGE>
outstanding. Each Underlying Warrant shall entitle the Holder to purchase one
fully paid and non-assessable share of Common Stock at an initial purchase price
of $6.00 from __________, 1997 until 5:00 P.M. New York time on __________, 2001
at which time the Underlying Warrants shall expire. The exercise price of the
Underlying Warrants and the number of shares of Common Stock issuable upon the
exercise of the Underlying Warrants are subject to adjustment, whether or not
the Warrants have been exercised and the Underlying Warrants have been issued,
in the manner and upon the occurrence of the events set forth in Section 8 of
the Redeemable Warrant Agreement, which is hereby incorporated herein by
reference and made a part hereof as if set forth in its entirety herein. Subject
to the provisions of this Agreement and upon issuance of the Underlying
Warrants, each registered holder of such Underlying Warrant shall have the right
to purchase from the Company (and the Company shall issue to such registered
holders) up to the number of fully paid and non-assessable shares of Common
Stock (subject to adjustment as provided herein and in the Redeemable Warrant
Agreement), free and clear of all preemptive rights of stockholders, provided
that such registered holder complies with the terms governing exercise of the
Underlying Warrant set forth in the Redeemable Warrant Agreement, and pays the
applicable exercise price, determined in accordance with the terms of the
Redeemable Warrant Agreement. Upon exercise of the Underlying Warrants, the
Company shall forthwith issue to the registered holder of any such Underlying
Warrant in his name or in such name as may be directed by him, certificates for
the number of shares of Common Stock so purchased. Except as otherwise provided
herein and in Section 6.1 hereof, the Underlying Warrants shall be governed in
all respects by the terms of the Redeemable Warrant Agreement except that any
notice of redemption that the Company may issue with respect to the Redeemable
Warrants shall not be applicable to the Underlying Warrants. The Underlying
Warrants shall be transferable in the manner provided in the Redeemable Warrant
Agreement, and upon any such transfer, a new Underlying Warrant Certificate
shall be issued promptly to the transferee. The Company covenants to, and agrees
with, the Holder(s) that without the prior written consent of the Holder(s),
which will not be unreasonably withheld, the Redeemable Warrant Agreement will
not be modified, amended, canceled, altered or superseded, and that the company
will send to each Holder, irrespective of whether or not the Warrants have been
exercised, any and all notices required by the Redeemable Warrant Agreement to
be sent to holders of Underlying Warrants.
23
<PAGE>
14. Notices.
All notices, requests, consents and other communications hereunder shall be
in writing and shall be deemed to have been duly made and sent when delivered,
or mailed by registered or certified mail, return receipt requested:
(a) If to the registered Holder of the Warrants, to the address of
such Holder as shown on the books of the Company; or
(b) If to the Company, to the address set forth in Section 3 hereof or
to such other address as the Company may designate by notice to the Holders.
15. Supplements and Amendments. The Company and the Representative may from
time to time supplement or amend this Agreement without the approval of any
Holders of Warrant Certificates in order to cure any ambiguity, to correct or
supplement any provision contained herein which may be defective or inconsistent
with any provisions herein, or to make any other provisions in regard to matters
or questions arising hereunder which the Company and the Representative may deem
necessary or desirable and which the Company and the Representative deem shall
not adversely affect the interests of the Holders of Warrant Certificates.
16. Successors. All the covenants and provisions of this Agreement shall be
binding upon and inure to the benefit of the Company, the Holders and their
respective successors and assigns hereunder.
17. Termination. This Agreement shall terminate at the close of business on
__________, 2003. Notwithstanding the foregoing, the indemnification provisions
of Section 7 shall survive such termination until the close of business on
__________, 2005.
18. Governing Law; Submission to Jurisdiction. This Agreement and each
Warrant Certificate issued hereunder shall be deemed to be a contract made under
the laws of the State of New York and for all purposes shall be construed in
accordance with the laws of said State without giving effect to the rules of
said State governing the conflicts of laws.
24
<PAGE>
The Company, the Representative and any other registered Holders hereby
agree that any action, proceeding or claim against it arising out of, or
relating in any way to, this Agreement shall be brought and enforced in the
courts of the State of New York or of the United States of America for the
Southern District of New York, and irrevocably submits to such jurisdiction,
which jurisdiction shall be exclusive. The Company, the Representative and any
other registered Holders hereby irrevocably waive any objection to such
exclusive jurisdiction or inconvenient forum. Any such process or summons to be
served upon any of the Company, the Representative and the Holders (at the
option of the party bringing such action, proceeding or claim) may be served by
transmitting a copy thereof, by registered or certified mail, return receipt
requested, postage prepaid, addressed to it at the address set forth in Section
14 hereof. Such mailing shall be deemed personal service and shall be legal and
binding upon the party so served in any action, proceeding or claim. The
Company, the Representative and any other registered Holders agree that the
prevailing party(ies) in any such action or proceeding shall be entitled to
recover from the other party(ies) all of its'/their reasonable legal costs and
expenses relating to such action or proceeding and/or incurred in connection
with the preparation therefor.
19. Entire Agreement; Modification. This Agreement (including the
Underwriting Agreement and the Redeemable Warrant Agreement to the extent
portions thereof are referred to herein) contains the entire understanding
between the parties hereto with respect to the subject matter hereof and may not
be modified or amended except by a writing duly signed by the party against whom
enforcement of the modification or amendment is sought.
20. Severability. If any provision of this Agreement shall be held to be
invalid or unenforceable, such invalidity or unenforceability shall not affect
any other provision of this Agreement.
21. Captions. The caption headings of the Sections of this Agreement are
for convenience of reference only and are not intended, nor should they be
construed as, a part of this Agreement and shall be given no substantive effect.
25
<PAGE>
22. Benefits of this Agreement. Nothing in this Agreement shall be
construed to give to any person or corporation other than the Company and the
Representative and any other registered Holder(s) of the Warrant Certificates or
Warrants Securities any legal or equitable right, remedy or claim under this
Agreement; and this Agreement shall be for the sole benefit of the Company and
the Representative and any other registered Holders of Warrant Certificates or
Warrant Securities.
23. Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and such counterparts shall together constitute but one and the
same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
NEW YORK HEALTH CARE, INC.
By:
---------------------------------------
Name: Jerry Braun
Title: President
Attest:
- ------------------------
Name:
Title: RAS SECURITIES CORP.
By:
---------------------------------------------
Name:
Title:
26
<PAGE>
EXHIBIT A
[FORM OF WARRANT CERTIFICATE]
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES ISSUABLE
UPON EXERCISE THEREOF MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO (i) AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, (ii) TO THE
EXTENT APPLICABLE, RULE 144 UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH ACT
RELATING TO THE DISPOSITION OF SECURITIES), OR (iii) AN OPINION OF COUNSEL, IF
SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL FOR THE ISSUER, THAT AN
EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS CERTIFICATE IS
RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO HEREIN.
EXERCISABLE ON OR BEFORE
5:00 P.M., NEW YORK TIME, __________ , 2001
No. W- Warrants to Purchase
_______ Shares of Common Stock
WARRANT CERTIFICATE
This Warrant Certificate certifies that ___________ , or registered
assigns, is the registered holder of __________ Warrants to purchase initially,
at any time from __________ , 1997 until 5:00 p.m. New York time on __________,
2001 ("Expiration Date"), up to __________ fully-paid and non-assessable shares
of common stock, $.001 par value ("Common Stock") of New York Health Care, Inc.,
a New York corporation (the "Company"), at the initial exercise price, subject
to adjustment in certain events (the "Exercise Price"), of $6.00 per share of
Common Stock upon surrender of this Warrant Certificate and payment of the
Exercise Price at an office or agency of the Company, but subject to the
conditions set forth herein and in the Representative's Warrant Agreement dated
as of __________, 1996 between the Company and RAS SECURITIES CORP. (the
"Representative's Warrant Agreement"). Payment of the Exercise Price shall be
made by certified or official bank check in New York Clearing House funds
payable to the order of the Company or by surrender of this Warrant Certificate.
No Warrant may be exercised after 5:00 p.m., New York time, on the
Expiration Date, at which time all Warrants evidenced hereby, unless exercised
prior thereto, hereby shall thereafter be void.
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants issued pursuant to the Representative's Warrant
Agreement, which Representative's
27
<PAGE>
Warrant Agreement is hereby incorporated by reference in and made a part of this
instrument and is hereby referred to for a description of the rights, limitation
of rights, obligations, duties and immunities thereunder of the Company and the
holders (the words "holders" or "holder" meaning the registered holders or
registered holder) of the Warrants.
The Representative's Warrant Agreement provides that upon the occurrence of
certain events the Exercise Price and the type and/or number of the Company's
securities issuable thereupon may, subject to certain conditions, be adjusted.
In such event, the Company will, at the request of the holder, issue a new
Warrant Certificate evidencing the adjustment in the Exercise Price and the
number and/or type of securities issuable upon the exercise of the Warrants;
provided, however, that the failure of the Company to issue such new Warrant
Certificates shall not in any way change, alter, or otherwise impair, the rights
of the holder as set forth in the Representative's Warrant Agreement.
Upon due presentment for registration of transfer of this Warrant
Certificate at an office or agency of the Company, a new Warrant Certificate of
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of Warrants shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided herein and in the
Representative's Warrant Agreement, without any charge except for any tax or
other governmental charge imposed in connection with such transfer.
Upon the exercise of less than all of the Warrants evidenced by this
Certificate, the Company shall forthwith issue to the holder hereof a new
Warrant Certificate representing such numbered unexercised Warrants.
The Company may deem and treat the registered holder(s) hereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, and of any distribution to the holder(s) hereof, and for all
other purposes, and the Company shall not be affected by any notice to the
contrary.
All terms used in this Warrant Certificate which are defined in the
Representative's Warrant Agreement shall have the meanings assigned to them in
the Representative's Warrant Agreement.
28
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
duly executed under its corporate seal.
Dated as of , 1996
NEW YORK HEALTH CARE, INC.
By:
--------------------------------------
Name: Jerry Braun
Title: President
Attest:
- -----------------------
Name: Jacob Rosenberg
Title: Secretary
29
<PAGE>
EXHIBIT B
[FORM OF WARRANT CERTIFICATE]
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES ISSUABLE
UPON EXERCISE THEREOF MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO (i) AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, (ii) TO THE
EXTENT APPLICABLE, RULE 144 UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH ACT
RELATING TO THE DISPOSITION OF SECURITIES), OR (iii) AN OPINION OF COUNSEL, IF
SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL FOR THE ISSUER, THAT AN
EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS CERTIFICATE IS
RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO HEREIN.
EXERCISABLE ON OR BEFORE
5:00 P.M., NEW YORK TIME, __________ , 2001
No. W- Warrants to Purchase______
Underlying Warrants
WARRANT CERTIFICATE
This Warrant Certificate certifies that __________ , or registered assigns,
is the registered holder of __________ Warrants to purchase initially, at any
time from __________ , 1997 until 5:00 p.m. New York time on __________, 2001
("Expiration Date"), up to warrants (each such Underlying Warrant entitling the
owner to purchase one fully-paid and non-assessable share of common stock, $.001
par value ("Common Stock") of New York Health Care, Inc., a New York corporation
(the "Company")), at the initial exercise price, subject to adjustment in
certain events (the "Exercise Price"), of $.12 per Underlying Warrant upon
surrender of this Warrant Certificate and payment of the Exercise Price at an
office or agency of the Company, but subject to the conditions set forth herein
and in the Representative's Warrant Agreement dated as of __________, 1996
between the Company and RAS SECURITIES CORP. (the "Representative's Warrant
Agreement"). Payment of the Exercise Price shall be made by certified or
official bank check in New York Clearing House funds payable to the order of the
Company or by surrender of this Warrant Certificate.
No Warrant may be exercised after 5:00 p.m., New York time, on the
Expiration Date, at which time all Warrants evidenced hereby, unless exercised
prior thereto, hereby shall thereafter be void.
30
<PAGE>
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants issued pursuant to the Representative's Warrant
Agreement, which Representative's Warrant Agreement is hereby incorporated by
reference in and made a part of this instrument and is hereby referred to for a
description of the rights, limitation of rights, obligations, duties and
immunities thereunder of the Company and the holders (the words "holders" or
"holder" meaning the registered holders or registered holder) of the Warrants.
The Representative's Warrant Agreement provides that upon the occurrence of
certain events the Exercise Price and the type and/or number of the Company's
securities issuable thereupon may, subject to certain conditions, be adjusted.
In such event, the Company will, at the request of the holder, issue a new
Warrant Certificate evidencing the adjustment in the Exercise Price and the
number and/or type of securities issuable upon the exercise of the Warrants;
provided, however, that the failure of the Company to issue such new Warrant
Certificates shall not in any way change, alter, or otherwise impair, the rights
of the holder as set forth in the Representative's Warrant Agreement.
Upon due presentment for registration of transfer of this Warrant
Certificate at an office or agency of the Company, a new Warrant Certificate of
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of Warrants shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided herein and in the
Representative's Warrant Agreement, without any charge except for any tax or
other governmental charge imposed in connection with such transfer.
Upon the exercise of less than all of the Warrants evidenced by this
Certificate, the Company shall forthwith issue to the holder hereof a new
Warrant Certificate representing such numbered unexercised Warrants.
The Company may deem and treat the registered holder(s) hereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, and of any distribution to the holder(s) hereof, and for all
other purposes, and the Company shall not be affected by any notice to the
contrary.
All terms used in this Warrant Certificate which are defined in the
Representative's Warrant Agreement shall have the meanings assigned to them in
the Representative's Warrant Agreement.
31
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
duly executed under its corporate seal.
Dated as of , 1996
NEW YORK HEALTH CARE, INC.
By:
--------------------------------------
Name: Jerry Braun
Title: President
Attest:
- -----------------------
Name: Jacob Rosenberg
Title: Secretary
32
<PAGE>
[FORM OF ELECTION TO PURCHASE PURSUANT TO SECTION 3.1]
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase:
___________Shares
___________Underlying Warrants
and herewith tenders in payment for such securities a certified or official bank
check payable in New York Clearing House Funds to the order of New York Health
Care, Inc., in the amount of $__________, all in accordance with the terms of
Section 3.1 of the Representative's Warrant Agreement dated as of __________,
1996 between New York Health Care, Inc., and RAS Securities Corp. The
undersigned request that a certificate for such Securities be registered in the
name of __________ whose address is ______________ and that such Certificate be
delivered to __________ whose address is __________ .
Signature_____________________
(Signature must conform in all respects to name
of holder as specified on the face of the Warrant
Certificate.)
______________________________
(Insert Social Security or Other Identifying
Number of Holder)
33
<PAGE>
[FORM OF ASSIGNMENT]
(To be executed by the registered holder if such holder
desires to transfer the Warrant Certificate.)
FOR VALUE RECEIVED ______________________________ hereby sells, assigns and
___________ unto
________________________________________________________________________________
(Please print name and address of transferee)
______ Warrant Certificate, together with all right, title and interest therein,
and does hereby reasonably constitute and appoint __________, as Attorney, to
transfer the within Warrant Certificate on the books of the within-named
Company, with full power of substitution.
Date: _____________________ Signature: __________________________
(Signature must conform in all respects to name
of holder as specified on the face of the Warrant
Certificate.)
_____________________________________
(Insert Social Security or Other Identifying
Number of Assignee)
34
PURCHASE AND SALE AGREEMENT
THIS AGREEMENT is made and entered into, effective as of the 18th day of
March, 1988, by and between NATIONAL MEDICAL HOMECARE, INC., a Delaware
corporation having a place of business at 60-71 Metropolitan Avenue, Ridgewood,
New York (the "Seller"), NEW YORK HEALTH CARE, INC., a New York corporation
having a place of business at 4211 13th Avenue, Brooklyn, New York (the
"Purchaser"), and JERRY BRAUN of 924 E. 28th Street Brooklyn, New York 11210 and
SAM SOROKA of 1422 E. 12th Street Brooklyn, New York 11230 (collectively the
"Shareholders").
WHEREAS, the Seller owns all of the tangible and intangible assets of a
private home health agency business serving the New York City metropolitan area;
and
WHEREAS, the Purchaser desires to purchase from the Seller, and the Seller
desires to sell, transfer and convey to the Purchaser, certain of such tangible
and intangible assets;
WHEREAS, Shareholders own a controlling interest in Purchaser;
NOW, THEREFORE, in consideration of the mutual promises of the parties
provided in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Seller and the
Purchaser agree as follows:
<PAGE>
1. Definitions. Where used in this Agreement:
(a) "Agreement" refers to this entire document including all
amendments, schedules, exhibits and other documents incorporated and/or referred
to herein.
(b) "Closing Date" shall mean March 25, 1988.
(c) "Facilities" shall mean the private home health agency business
operated from 2515 86th Street, Brooklyn, New York; 220-24 Jamaica Avenue,
Queens Village, New York; and 566 Merrick Road, Rockville Centre, New York.
(d) "Purchased Assets" shall mean: (1) all of the machinery,
equipment, furniture, furnishings, fixtures, personalty, and inventory (but no
office supplies) used or useful in respect of the ownership and operation of the
Facilities as are more particularly described in Exhibit A to this Agreement;
and (2) all of the intangible assets used or useful in the ownership or
operation of the Facilities including, but not limited to copies of Seller's
school curriculum, personal care aide's exams and approval letter, active and
inactive medical and personnel records, customer lists, and all other books and
records of or in respect of the Facilities; and (3) the exclusive right of the
Purchaser to represent itself as carrying on the business of the Facilities in
continuation of or in succession to the Seller, and the right to use appropriate
words indicating that the business of the Facilities is so carried on. Anything
herein contained to the contrary notwithstanding, the personal care services
-2-
<PAGE>
training plan transferred hereby that needs to be so approved is presently
approved by the New York Department of Social Services.
The Purchased Assets shall not include the agreements, contracts or leases
described on Exhibit C hereto or any of Seller's other customer agreements or
arrangements. Seller agrees to withdraw, in favor of Buyer, from and after the
Closing Date, from the customer agreements and arrangements currently in effect
with respect to the business of the Facilities except that Seller does not agree
to withdraw from its current arrangement with Westchester County Department of
Social Services and no right to conduct business therewith is conveyed to
Purchaser hereunder. Purchaser shall make such new arrangements or agreements
with such customers of the Facilities as are appropriate for Purchaser to fully
assume and continue the business of the Facilities with such customers from and
after the Closing Date. The Purchased Assets shall also not include the cash,
accounts receivable of the Facilities as of the Closing Date, the name of the
Seller, tangible property also used in Seller's durable medical equipment
business, technology or software licensed by and for Seller or non-transferable
government licenses and permits, and Medicaid and Medicare provider numbers.
Notwithstanding the foregoing, Purchaser may announce and represent that it is
the successor to Seller with respect to the Purchased Assets.
2. Purchase and Sale. The Seller agrees to sell, assign, transfer and
convey to the Purchaser good and merchantable
-3-
<PAGE>
right, title and interest in and to the Purchased Assets, free and clear of all
liens and encumbrances of any nature or kind, and the Purchaser agrees to
purchase the Purchased Assets from the Seller at the closing of the
purchase-and-sale transaction contemplated in this Agreement (the "Closing").
The price for such transactions shall be One Hundred Twenty-Five Thousand
Dollars ($125,000) to be paid to the Seller as follows:
(a) Twenty Thousand Dollars ($20,000) to be paid to Seller upon the
execution of this Agreement by certified or cashier's check;
(b) Fifty-Five Thousand Dollars ($55,000) to be paid to the Seller at
Closing by certified or cashier's check; and
(c) A non-negotiable Promissory Note (the "Note"), substantially in
the form attached hereto as Exhibit B-1, in the aggregate principal amount of
Fifty-Thousand Dollars ($50,000) payable on the six-month anniversary of the
Closing Date to be delivered at Closing. The Note shall be secured by (i) the
personal guarantees (the "Guarantees"), substantially in the form attached
hereto as Exhibit B-2, of Jerry Braun and Sam Soroka, and (ii) a security
interest in the accounts receivable of the Purchaser as provided in the security
agreement (the "Security Agreement"), substantially in the form attached hereto
as Exhibit F. The Note and the security interest shall be subordinate to a loan
from United Mizrachy Bank (the "Bank") in an amount not to exceed $800,000
pursuant to a loan agreement between the Bank and Purchaser as in effect on the
date of this Agreement. In agreeing to extend credit to
-4-
<PAGE>
Purchaser and accepting the Guarantees as security therefor, Seller has relied
upon the personal financial statement of each of the Shareholders previously
delivered to Seller as constituting a fair and accurate reflection of the
financial position of the applicable Shareholder.
The purchase price shall include the consideration for the restrictive
covenants contained herein and shall be allocated in accordance with Schedule 1
attached hereto.
3. Representations, Warranties and Covenants of the Seller. The Seller
represents, warrants and covenants that:
(a) The Seller is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware, and has full and
complete authority, and all necessary rights and legal capacity, to enter into
and comply with each term and condition of this Agreement and to transfer and
convey the Purchased Assets to the Purchaser in accordance with the terms of
this Agreement. All corporate actions required to be taken by the Seller under
this Agreement have been or will be duly taken. This Agreement is a valid and
binding obligation of the Seller and is enforceable against the Seller in
accordance with its terms and conditions.
(b) Except as disclosed on Exhibit C, none of the agreements and
undertakings of the Seller under this Agreement is or will be as of the Closing
Date in conflict with, in violation of, or prohibited under, the terms of any
contract, agreement or obligation of the Seller or the articles of incorporation
or by-laws of the Seller or any laws, rules,
-5-
<PAGE>
regulations or judgments. The execution of this Agreement has been duly
authorized by the Seller's board of directors, and the consummation of the
transactions contemplated hereby has been or will have been duly authorized by
the Seller's board of directors prior to the Closing Date.
(c) To the knowledge of the Seller, there is no litigation,
investigation or other proceeding pending or, threatened which would adversely
affect the Facilities, the Purchased Assets, the business operations of the
Facilities, or this Agreement or the transactions contemplated hereby, and the
Seller knows of no events, circumstances, reports or claims of any kind that
might result in, provide a basis for, or give rise to, any such litigation,
investigation or other proceeding.
(d) The Seller has, and as of Closing will have, good and merchantable
right, title and interest to the Purchased Assets, free and clear of all liens,
encumbrances, judgments, tenancies, covenants, claims, conditions and
restrictions of any kind.
(e) There are no oral or written contracts, leases or agreements of
any kind, which cannot be performed in less than 2 months and which are valued
at greater than $5,000, affecting or in respect of the Facilities or the
Purchased Assets, other than those described on Exhibit C, copies of which have
been previously provided to Purchaser. Nothing herein contained shall be
construed either to constitute an agreement by Seller to transfer or assign to
Purchaser the contracts, leases and agreements described on Exhibit C or to
constitute a
-6-
<PAGE>
representation that the same are still in force and effect or are assignable or
transferable to Purchaser.
(f) There are no claims, executory contracts or threatened (to
Seller's knowledge), or pending liabilities which might adversely affect the
Purchaser's title to or limit Purchaser's use of the Purchased Assets, or might
affect the transaction contemplated by this Agreement, other than those
described in Exhibit D to this Agreement.
(g) All returns, reports and filings of any nature or kind (including,
but not limited to, federal, state and local tax filings) required to be filed
by the Facilities have been properly completed and timely filed in compliance
with all requirements applicable thereto, and all taxes or other obligations
which are due and payable with respect to the Facilities and the Purchased
Assets, and with respect to this transaction, have been or will be timely paid.
(h) No shareholder of the Seller is, or has been, actively involved in
the day-to-day operation of the Facilities.
(i) No representation, warranty or covenant of the Seller in this
Agreement, nor any statement, schedule or certificate furnished or to be
furnished to the Purchaser pursuant to this Agreement or in connection with the
transaction contemplated hereby, includes any misstatement of material fact or
omits to state any fact necessary to render the facts stated therein not
misleading in light of the circumstances relevant to such representation,
warranty or covenant.
-7-
<PAGE>
4. Representations, Warranties and Covenants of the Purchaser. The
Purchaser represents, warrants and covenants that:
(a) The Purchaser is a corporation duly organized, validly existing
and in good standing under the laws of the State of New York, and has full and
complete authority, and all necessary rights and legal capacity, to enter into
and comply with each term and condition of this Agreement, the Notes, and the
Security Agreement and to purchase the Purchased Assets from the Seller in
accordance with the terms of this Agreement. All actions required to be taken by
the Purchaser under this Agreement have been or will be duly taken prior to the
Closing Date. This Agreement, the Notes, and the Security Agreement are valid
and binding obligations of the Purchaser and are enforceable against the
Purchaser in accordance with their terms and conditions.
(b) None of the agreements and undertakings of the Purchaser under
this Agreement, the Notes, or the Security Agreement are or will be in conflict
with, in violation of, or prohibited under, the terms of any contract, agreement
or obligation of the Purchaser or the articles of incorporation or by-laws of
the Purchaser or any laws, rules, regulations or judgments. The execution of
this Agreement, the Notes, and the Security Agreement and the consummation of
the transaction contemplated hereby have been duly authorized by the Purchaser's
board of directors.
(c) To the knowledge of the Purchaser, there is no
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<PAGE>
litigation, investigation or other proceeding pending or, threatened which would
adversely affect this Agreement or the transactions contemplated hereby, and the
Purchaser knows of no events, circumstances, reports or claims of any kind that
might result in, provide a basis for, or give rise to any such litigation,
investigation or other proceeding.
The Shareholders, jointly and severally, represent, warrant and covenant
that the Guarantees are the valid and binding obligations of each of them and
are enforceable against each of them respectively in accordance with the terms
and conditions thereof.
5. Employees. The Purchaser shall have the right to employ such employees
of Seller engaged in the operation of the agency business at the Facilities as
Purchaser shall desire. Annexed hereto as Exhibit G is a "nursing division list
of employees by location" listing various employees of Seller ("Listed
Employees"), upon which Purchaser has indicated by check mark and initialling
those persons to whom Purchaser intends to offer employment immediately after
the Closing (each an "Indicated Employee") (those Listed Employees for which no
such indication is made shall hereinafter be referred to as "Non-Indicated
Employees"). Seller shall be responsible for the payment of all wages and
benefits due to such employees through the Closing Date (together with all FICA,
unemployment and other withholding taxes payable in connection with such wages)
or otherwise on account of their employment by Seller.
If, during the one hundred twenty (120) days following the
-9-
<PAGE>
Closing Date, Purchaser directly or through an affiliated entity employs any
person who was a Non-Indicated Employee, Purchaser shall reimburse Seller for
serverance costs and expenses incurred by Seller in connection with the
termination of that person's employment with Seller. Purchaser shall hold Seller
harmless from any liabilities resulting from its employment, subsequent to the
date of Closing, of such employees. Seller shall hold Purchaser harmless from
any liabilities resulting either from Seller's employment of persons in the
Facilities prior to Closing or from Seller's termination of such employees
(except to the extent of severance to be reimbursed by Purchaser as expressly
provided above). This paragraph shall survive the Closing of this transaction.
6. Closinq. (a) On the Closing Date, the Closing shall commence at 10:01
A.M., Eastern time, in the offices of Simon, Meyrowitz, Meyrowitz & Schlussel,
277 Broadway, New York, New York.
(b) At the Closing the Seller will deliver a bill of sale to the
Purchased Assets substantially in the form attached hereto as Exhibit E.
7. Conditions to Closinq.
All of the obligations of the Purchaser under this Agreement are, at
its option, subject to the fulfillment, prior to or at the Closing, of each of
the following conditions:
Each of the representations, warranties, covenants, agreements,
statements, schedules and certificates of the
-10-
<PAGE>
Seller pursuant to this Agreement shall be true, accurate and correct as of the
Closing Date.
8. Restrictive Covenant. Seller agrees that, for a period of three (3)
years after the Closing Date, but provided Purchaser makes all payments when due
under the Note, Seller shall not directly or indirectly through its subsidiaries
or affiliates, either as a principal, agent, employee, employer, shareholder,
partner, or otherwise, own, operate, engage in, assist, or manage an agency
business to provide temporary medical homecare personnel to home health
providers within New York City in competition with the agency business being
operated by Purchaser as acquired hereunder, except as required to conclude the
current contract with Westchester County Department of Social Services which
expires on March 31, 1988. Purchaser shall be entitled to injunctive relief to
enforce the provisions of this Section 8, and this Section shall survive the
Closing.
9. NYDSS Approval and Facilities' Operation.
(a) Pending the approval of the New York Department of Social Services
("NYDSS") of Purchaser's right to contract together with rate approvals with
respect to Nassau County Department of Social Services ("Nassau") or termination
pursuant to Section 9(b), the following provisions shall apply:
(i) Purchaser shall assume the full performance of Seller's
contracts with Nassau as a subcontractor of Seller, billings for which shall
continue to be made under Seller's
-11-
<PAGE>
name and using Seller's MMIS Provider Identification Number.
(ii) Purchaser shall provide all personnel and supplies and shall
pay all expenses necessary to carry out the contractual obligations of the
service provider under the contracts with Nassau.
(iii) Seller shall continue to collect receivables from Medicaid,
and shall pay to Purchaser all amounts received from Medicaid for services
performed under the subcontracts after the Closing Date (except as provided in
Section 9(a)(iv) below) within ten (10) days of Seller's receipt of such
payments. If such payments shall not be made when due, then such payments shall
bear interest at the rate of 18% per annum but in no event greater than the
maximum rate permitted by applicable law. In conjunction with such payment to
Purchaser, Seller shall provide Purchaser with a written statement of the total
amounts Seller has received from Medicaid since the last such statement and the
amounts of such payments to Purchaser for the same period. In addition, Seller
shall provide Purchaser with a copy of all statements received from Medicaid
and with a statement containing the method used in computing the payments due
Purchaser.
(iv) If Purchaser continues to provide services to Nassau as
subcontractor to Seller pursuant to this Section 9(a) after ninety (90) days
from the Closing Date, Purchaser shall pay to Seller five percent (5%) of the
gross receivables attributable to services provided under such contracts on and
after such ninetieth (90th) day as additional compensation for
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<PAGE>
the continued use of Seller's MMIS Provider Identification Number.
(v) Purchaser, at its own expense, shall maintain comprehensive
liability insurance and professional malpractice insurance, insuring against
such risks and in such amounts as shall have been carried by Seller prior to the
Closing Date. Seller shall be named as an additional insured on each such policy
of insurance, which shall be subject to amendment, modification, or cancellation
only after ten (10) days' prior written notice to Seller.
(b) The provisions of Section 9(a) shall be terminated and of no
further force or effect upon the first to occur of (i) the obtaining of the
approval referred to in Section 9(a) or (ii) one hundred eighty days from the
Closing Date unless extended by written notice from Seller to Purchaser.
(c) If the provisions of Section 9(a) are terminated as a result of
Section 9(b)(i), the subcontract with respect to the provision of services
thereto shall terminate, and Purchaser shall cease using Seller's MMIS Provider
Identification Number with respect to future billings for Nassau, and thereafter
Purchaser shall provide services to Nassau under Purchaser's own MMIS Provider
Identification Number pursuant to a direct contract between Purchaser and
Nassau.
(d) If the provisions of Section 9(a) are terminated as a result of
Section 9(b)(ii), then the subcontract created by Section 9(a) shall terminate
and Purchaser shall cease using
-13-
<PAGE>
Seller's MMIS Provider Identification Number
10. Indemnification. From the Closing Date, Purchaser shall indemnify,
defend and hold harmless Seller and its directors, officers, shareholders,
employees, affiliates and assigns (each an "Indemnified Party") against and in
respect of any liability, obligation, loss, damage, penalty, claim, action, cost
or expense (including but not limited to reasonable attorneys' fees and
expenses) which in any way relates to Purchaser's operation of the Facilities or
Purchaser's use of Seller's MMIS Provider Identification Number. An Indemnified
Party seeking indemnification hereunder shall, as a condition precedent thereto,
give Purchaser written notice of the claim(s) for which indemnification is
sought and tender to Purchaser the right to defend against and settle any such
claim(s). Purchaser shall reimburse an Indemnified Party on demand for any
payment made by an Indemnified Party at any time after the Closing Date in
respect of any liability or claim to which the foregoing indemnity relates. This
Section 10 survives the termination of this Agreement.
11. Termination.
(a) Anything herein to the contrary notwithstanding, this Agreement
may be terminated and the transactions contemplated hereby abandoned by the
applicable party as follows:
(i) The Seller and Purchaser mutually consent to such
termination;
(ii) By Purchaser if the conditions set forth in
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<PAGE>
Section 7 shall not have been met prior to the Closing Date; or
(iii) By the Purchaser if the Seller breaches any material
provision of this Agreement, and by the Seller if the Purchaser breaches any
material provision of this Agreement.
(b) This Agreement shall expire if the Closing shall not have occurred
prior to or on March 25, 1988 (unless such date is extended by mutual written
agreement of the parties).
(c) If this Agreement is terminated pursuant to Section 11, the
following provisions shall be applicable and shall survive the termination or
expiration of this Agreement:
(i) If this Agreement is terminated pursuant to Section ll(a) or
ll(b), the Purchaser shall take all necessary steps to transfer to the Seller
the Personal Aide's training plan developed by the Seller and to terminate and
disavow any rights to or interest in such training plan, including, without
limitation, any right to have the same registered or approved in Purchaser's
name before or by any governmental agency.
(ii) If this Agreement is terminated pursuant to Section ll(a) or
ll(b), the Purchaser shall return to the Seller all documents, records, and data
of any nature which it acquired from the Seller pertaining to the Facilities and
shall keep in confidence and trust all information acquired from such documents,
records, and data and shall not use or disclose any such information without the
prior written consent of the Seller.
(iii) If this Agreement is terminated by Seller pursuant to
Section ll(a)(iii) for Purchaser's failure or
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<PAGE>
refusal to close in breach of this Agreement, the Seller shall be entitled to
retain the deposit of twenty thousand dollars ($20,000) pursuant to Section 2(a)
as liquidated damages, together with any interest accrued thereon, as Seller's
sole remedy for monetary damages for Purchaser's refusal or failure to proceed
to Closing.
(iv) If this Agreement is terminated pursuant to Section ll(a)(i)
or ll(a)(ii) or by Purchaser pursuant to Section ll(a)(iii) for Seller's breach
prior to Closing, Seller shall return to the Purchaser the deposit made pursuant
to Section 2(a) within fifteen (15) days, and the parties shall return to the
status quo ante.
(v) If this Agreement is terminated by Seller pursuant to Section
ll(a)(iii) for Purchaser's breach, Purchaser and Guarantors agree that, for a
period of two (2) years after such termination, they shall not, collectively or
individually, directly or indirectly, either as a principal, agent, employee,
employer, shareholder, partner, or otherwise, own, operate, engage in, assist,
or manage an agency business to provide temporary medical homecare personnel to
home health providers within New York City in competition with the agency
business being operated by Seller. This Section ll(c)(v) shall survive the
termination of this Agreement.
12. Miscellaneous Provisions.
(a) Interpretation and Construction. This Agreement fully integrates
all of the agreements and understandings of the parties relating to this
purchase-and-sale transaction;
-16-
<PAGE>
there are no agreements, warranties, or representations, express or implied,
except those that are expressly set forth herein. All exhibits to this Agreement
are incorporated herein. This Agreement supersedes all prior agreements between
the Seller and the Purchaser. Except where the context of this Agreement clearly
requires another interpretation, plural words have been used to include the
singular and vice versa, and masculine, feminine and neuter words have been used
interchangeably.
(b) Conduct of Business Pending Closing. Between the date of this
Agreement and the Closing Date, the Seller shall operate the Facilities in the
regular and ordinary course of business. The Seller shall maintain the Purchased
Assets in good condition and shall use its best efforts to preserve the
Facilities' good will. The inventory and consumable supplies of the Facilities
shall be maintained in amounts and types normally maintained in light of past
experience and in the ordinary course of business at the Facilities.
(c) Record Retention. For a period of seven (7) years from the Closing
Date, the Purchaser shall retain all active and inactive medical and personnel
records which are part of the Purchased Assets to be purchased pursuant to this
Agreement. The Purchaser shall permit the Seller or its representatives to
examine and copy such records upon reasonable notice and at the Seller's
expense. If reasonably necessary to fulfill a legal requirement, the Seller
shall be entitled to obtain and use the original of any document;
-17-
<PAGE>
provided it leaves a copy of such document with the Purchaser.
(d) Access by Purchaser. Following the execution of this Agreement,
Seller shall permit Purchaser to review all of Seller's files including
personnel files, patient files, contracts, etc., as well as to interview
personnel. Seller shall further introduce Purchaser to the appropriate parties
with whom Seller has contracts to supply services and to Seller's personnel and
to Seller's customers. Seller will execute such further documents as may be
necessary and/or convenient to facilitate the transfers contemplated hereunder.
Seller will also cooperate with Purchaser's efforts in obtaining a license to
the home health care computer software package currently used by Seller but
which Seller will not need after the Closing. All of the foregoing is to be done
in such a manner as to permit a smooth transition.
(e) Cooperation With Collections. The Purchaser agrees to cooperate
with Seller in Seller's efforts after the Closing to collect the accounts
receivable of the Facilities retained by Seller hereunder, and to provide access
to the records of the Facilities as may be reasonably requested by Seller solely
for purposes of effecting such collection.
(f) Riqht to Waive Conditions. The Seller and the Purchaser each
reserve the right to waive any of the rights granted to them under the terms and
conditions of this Agreement and to sell or purchase, as the case may be, the
Purchased Assets in accordance with such of the terms and conditions of this
Agreement as have not been so waived. Any
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<PAGE>
such waiver must be evidenced by a writing signed by the party against whom
waiver is sought.
(g) Binding Effect. This Agreement shall be binding upon and shall
inure to the benefit of and be enforceable by or against the Purchaser and the
Seller and their respective successors and permitted assigns.
(h) Notices. All notices shall be in writing, shall be delivered
personally or by certified mail (return receipt requested) or by overnight mail
or courier service, and shall be effective upon the earlier of receipt or the
fifth day following posting by such certified mail, postage prepaid and
addressed as follows:
To the Purchaser:
NEW YORK HEALTH CARE, INC.
4211 13th Avenue
Brooklyn, New York 11219
Attention: President
To the Seller:
NATIONAL MEDICAL HOMECARE, INC.
91 Holmes Road
Newington, Connecticut 06111
Attention: Senior Vice President
With a copy to:
Simon, Meyrowitz, Meyrowitz & Schlussel
277 Broadway
New York, New York 10007
Attention: David Meyrowitz
(i) Amendments; Assignment. This Agreement may not be amended or
modified in any respect except by written instruments signed by the Purchaser
and the Seller. Neither party may, without the other's consent, assign its
rights and obligations hereunder.
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<PAGE>
(j) Captions. Captions of this Agreement are for convenience of
reference only and shall not define or limit any of the terms or provisions
hereof.
(k) Severability. Should any one or more of the provisions of this
Agreement be determined to be invalid, unlawful or unenforceable in any
respects, the validity, legality and enforceability of the remaining provisions
of this Agreement shall not in any way be affected or impaired thereby.
(l) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but such counterparts shall
together constitute but one and the same instrument.
(m) Governinq Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of New York.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed,
effective the day and year first above written.
NATIONAL MEDICAL HOMECARE, INC.
/s/ Raymond H. Noeker, Jr.
--------------------------
By: Raymond H. Noeker, Jr.
Its: Senior Vice President
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<PAGE>
Attest: NEW YORK HEALTH CARE, INC.
/s/ Jerry Braun, Pres
- ------------------ -----------------------------
By: Sam Soroka By: Jerry Braun
Its: Secretary Its: President
/s/ Jerry Braun
-----------------------------
Jerry Braun
-----------------------------
Sam Soroka
STATE OF CONNECTICUT )
) ss. Hartford
COUNTY OF HARTFORD )
On this day of 18th day of March 1988, before me, the undersigned, a Notary
Public in and for said County, in said State, personally appeared Raymond H.
Noeker, Jr., to me personally known, who, being by me duly sworn, did say that
he is the Senior Vice President of NATIONAL MEDICAL HOMECARE, INC. and
acknowledged the execution of the foregoing instrument to be the voluntary act
and deed of such corporation, by it and by him voluntarily executed.
WITNESS my hand and Notarial Seal the day and year first above written.
/s/ Cheryl Hafey
---------------------------
Notary Public
CHERYL HAFEY
My Commission Expires: NOTARY PUBLIC
MY COMMISSION EXPIRES MARCH 31, 1989
STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
On this 18th day of March, 1988, before me, the undersigned, a Notary
Public in and for said County, in said State, personally appeared Jerry Braun
and Sam Soroka, to me
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<PAGE>
personally known, who, being by me duly sworn, did say that they are the
President and Secretary, respectively, of NEW YORK HEALTH CARE, INC. and
acknowledged the execution of the foregoing instrument to be the voluntary act
and deed of such corporation, by it and by them voluntarily executed.
WITNESS my hand and Notarial Seal the day and year first above written.
/s/ David H. Meyrowitz
----------------------
Notary Public
My Commission Expires:
DAVID H. MEYROWITZ
Notary Public, State of New York
No. 30-2686535
Qualified in Nassau County
Commission Expires November 30, 1989
-22-
<PAGE>
EXHIBITS TO PURCHASE AND SALE AGREEMENT
Exhibit A: Equipment and Fixtures
Exhibit B-1: Form of Promissory Note
Exhibit C: Contracts, Leases and Agreements
Exhibit D: Contingent Liabilities
Exhibit E: Form of Bill of Sale
Exhibit F: Form of Security Agreement
Exhibit G: Listed Employees
<PAGE>
NATIONAL MEDICAL HOMECARE, INC.
NEW YORK HEALTH CARE, INC.
Exhibit A
Equipment and Fixtures
Bensonhurst - Nursing
1 desk
8 tables used as desk
7 secretary chairs
3 metal chairs
3 fabric covered screen dividers
4 2 drawer cabinets
1 copy machine
3 4 drawer storage cabinets
Queens Villaqe - Nursing
7 Two pedestal desks
1 Executive desk with 7 drawers
14 swivel chairs (secretary)
3 swivel arm chairs
1 Executive arm chair
1 large arm chair
5 folding tables
1 small storage cabinet
1 large storage cabinet
3 room dividers
13 4 drawer filinq cabinets
2 5 drawer filing cabinets.
2 2 drawer filing cabinets
2 file cabinets on wheels 44 x 30
1 4 drawer filing cabinet
3 arm chairs
1 Mail scale
1 Fax machine and storage cabinet on wheels
1 Postage Meter
1 copy machine
1 typewriter and table
<PAGE>
RVC - Nursinq
1 desk - double pedestal
5 free standing desks - no drawers - attached to wall
1 folding table
7 secretary chairs
1 large push button console
1 typewriter - IBM Selectric
1 storage cabinet - 2 door, 4 shelves
4 4 drawer file cabinets
5 2 drawer file cabinets
1 brown cabinet - 2 drawers
1 copy machine
MT Vernon - Nursing
1 single pedestal desks
2 double pedestal desks
3 secretary chairs
9 regular chairs - no arms
2 folding tables
1 storage cabinet
1 5 drawer cabinet
2 4 drawer cabinets
1 typewriter IBM Selectric
1 copy machine
1 fax machine
1 Pitney Bowes postage meter
<PAGE>
Exhibit B-1
NEW YORK HEALTH CARE, INC.
NON-NEGOTIABLE PROMISSORY NOTE
$50,000 _______ ____ , 1988
NEW YORK HEALTH CARE, INC. (the "Maker"), a New York corporation, for value
received, hereby promises to pay to the order of NATIONAL MEDICAL HOMECARE, INC.
(the "Creditor"), a Delaware corporation, the principal sum of FIFTY THOUSAND
DOLLARS ($50,000) due and payable on_____, 1988, and to pay interest (computed
on the basis of a 360-day year of twelve 30-day months) on the unpaid balance
from the date of this Note at the annual prime lending rate of Citibank, N.A. as
may be in effect from time to time, plus one and one-half percent (1.5%), such
interest payments to be made quarterly beginning_____, 1988, and to pay on
demand interest on any overdue principal at the rate of eighteen percent (18%)
per annum but in no event greater than the maximum rate allowed by applicable
law.
Payments of principal and interest shall be made in such coin or currency
of the United States of America as at the time of payment is legal tender for
the payment of public and private debts by check mailed and addressed to the
Creditor at 91 Holmes Road, Newington, Connecticut 06111, or to such other
address designated by the Creditor or in such other manner as the Creditor shall
so designate in writing.
This Note is non-negotiable.
The Maker shall be entitled to prepay this Note in whole or in part without
premium or penalty. Prepayments shall be applied to the installments of
principal due hereunder in reverse chronological order (last to first) of when
due.
This Note is secured by and subject to a Security Agreement of the Maker in
favor of the Creditor covering certain collateral, all as more particularly
described and provided in such Security Agreement, and is entitled to the
benefits thereof.
The Maker and all guarantors hereby waive diligence, presentment, demand,
notice of non-payment, protest and all other demands and notices in connection
with the delivery, acceptance, performance or enforcement of this Note. In the
event of any default hereunder, or if Maker or any endorser hereof or any
guarantor of any obligation of Maker hereunder shall be in
<PAGE>
default under any instrument or document evidencing, governing or securing this
Note, the Maker and each and all endorsers and guarantors of this Note agree to
pay all costs of collection, including reasonable attorneys' fees. This Note
shall be the joint and several obligation of the Maker and all guarantors, and
shall be binding upon them and their successors and assigns.
This Note shall be governed by and construed in accordance with the laws of
the State of New York.
NEW YORK HEALTH CARE, INC.
By________________________
Its
<PAGE>
Exhibit B-2
PERSONAL GUARANTY
_______ __ , 1988
National Medical Home Care, Inc.
91 Holmes Road
Newington, Connecticut 06111
Gentlemen:
In connection with a Promissory Note (the "Note") issued to NATIONAL
MEDICAL HOMECARE, INC. ("NMH") by NEW YORK HEALTH CARE, INC. ("NYHC"), the
undersigned (the "Guarantor") hereby unconditionally guarantees to you full and
prompt payment when due of all amounts payable by NYHC in accordance with the
terms of the Note or any agreement, instrument, writing or arrangement relating
to the Note, irrespective of the validity or enforceability thereof. The
Guarantor will pay any such amounts promptly as if such amounts constituted the
direct and primary obligation of the undersigned. NMH shall not be required to
make any demand on, or pursue or exhaust any of its rights or remedies against,
NYHC or its property or any other guarantor of the obligations of NYHC with
respect to the payment of any such amounts.
The Guarantor hereby waives demand, presentment, protest and notice of
non-payment or protest and of your acceptance of this Guaranty and of any loan
made, extensions granted or other actions taken in reliance hereon and all other
demands and notices of any description in connection with this Guaranty and the
liabilities assumed hereby.
The liability of the Guarantor with respect to this Guaranty shall not be
terminated by, and the Guarantor assents to, any extension or postponement of
the time of payment of the Note, or any other indulgence, any modification,
waiver or amendment of the terms of any agreement relating to the Note, any
substitution, exchange or release of collateral, and the addition or release of
any other party guaranteeing the obligations of NYHC, whether or not notice
thereof is given to the Guarantor.
<PAGE>
Upon any default of NYHC, the liability of the Guarantor shall be effective
immediately without any suit or action against NYHC. No delay or omission on
your part in exercising any right hereunder shall operate as a waiver of such
right or any other right, and no waiver shall be valid unless in writing signed
by NMH, and then only to the extent in such writing specifically set forth. A
waiver on one occasion shall not be a bar to or waiver of any right on any other
occasion. All remedies herein or afforded by law shall be cumulative and shall
be available to NMH until all obligations of the Guarantor hereunder have been
paid or satisfied in full.
Notwithstanding anything herein contained to the contrary, no action shall
be taken for the enforcement of this Guaranty until Guarantor receives ten days'
written notice of the Guarantor's liability under this Guaranty. Copies of any
such notice shall be delivered by certified mail, return receipt requested.
The obligations of the Guarantor hereunder shall not be affected by any
action taken under the Note or any agreement, instrument or other document
relating to the Note in the exercise of any right or remedy therein conferred,
or by any invalidity or unenforceability thereof, or by any other circumstance
whatsoever, whether with or without notice to or knowledge of the Guarantor,
which may in any manner vary the risk of the Guarantor under this Guaranty, it
being the the purpose and intent of the Guarantor that this Guaranty and the
obligations of the Guarantor hereunder shall be absolute and unconditional under
any and all circumstances and shall continue until the Note is fully paid or
discharged.
The Guarantor further agrees to pay all costs and expenses, including
reasonable attorney's fees, arising out of or with respect to the enforcement,
validity, enforceability or preservation of this Guaranty.
No amendment or supplement to or other modification of this Guaranty and no
consent or waiver hereunder shall be of any effect unless it is in writing and
executed by NMH.
This Guaranty shall inure to the benefit of NMH, its successors and
assigns, and shall be binding upon the Guarantor, his successors and assigns.
This Guaranty shall be governed by and construed in accordance with the
laws of the State of New York.
IN WITNESS WHEREOF, the Guarantor has duly executed this instrument as of
this ____ day of ___________, 1988.
----------------------------------
[Name of Guarantor]
<PAGE>
STATE OF NEW YORK )
) ss.
COUNTY OF ________)
On this ____ day of ________________, 1988, before me, the undersigned, a
Notary Public in and for said County, in said State, personally appeared
_____________, to me personally known, who, being by me duly sworn, acknowledged
the execution of the foregoing instrument to be his voluntary act and deed, by
him voluntarily executed.
WITNESS my hand and Notarial Seal the day and year first above written.
----------------------------------
Notary Public
My Commission Expires:
<PAGE>
NATIONAL MEDICAL HOMECARE, INC.
NEW YORK HEALTH CARE, INC.
Exhibit C
Contracts, Leases and Agreements
Reference Section 3(e):
Party Type of Agreement
- ----- -----------------
Visiting Nurse Service of Vendor Relationship
New York Home Care (Home Health Services)
Montefiore Medical Center HHA Vendor Relationship
(Home Health Services)
Metropolitan Jewish Geriatric Vendor Relationship
Center HHA (Home Health Services)
Franklin General Hospital HHA Vendor Relationship
(Home Health Services)
Booth Memorial Medical Vendor Relationship
Center HHA (Home Health Services)
Hebrew Hospital for Chronic Marketing Letter
Sick LTHHCP (Home Health Services)
Metropolitan Jewish Geriatric Marketing Letter
Center LTHHCP (Home Health Services)
Franklin General Hospital Marketing Letter
LTHHCP (Home Health Services)
Saint Cabrini Nursing Home Marketing Letter
LTHHCP (Home Health Services)
Visiting Nurse Association of Vendor Relationship
Brooklyn HHA (Home Health Services)
Beth Abraham HHA Vendor Relationship
Chronic Care Management (Home Health Services)
Nursing Sisters Home Visiting Vendor Relationship
Service HHA (Home Health Services)
<PAGE>
NATIONAL MEDICAL HOMECARE, INC.
NEW YORK HEALTH CARE, INC.
Exhibit C
Contracts, Leases and Agreements
(Continued)
JHMCB Center for Nursing and Marketing Letter
Rehab. LTHHCP (Home Health Services)
Westchester County DSS PCA/ Vendor Relationship
HHA (Home Health Services)
Nassau County DSS PCA/HHA Vendor Relationship
(Home Health Services)
Leases for the following properties:
* 2515 86th Street, Brooklyn, New York
* 220-24 Jamaica Avenue, Queens Village, New York
** 566 Merrick Road, Rockville Centre, New York
* Not assigned to, or assumed by Purchaser. Seller shall indemnify
and hold Purchaser harmless from any liability for such leases.
** Being subleased by Purchaser from Seller under separate letter
agreement of even date herewith.
Reference Section 3(b):
Seller's Subcontract with Purchaser to provide services to Nassau County
Department of Social Services requires the latter's consent, which is not being
obtained.
<PAGE>
NATIONAL MEDICAL HOMECARE, INC.
NEW YORK HEALTH CARE, INC.
Exhibit D
Contingent Liabilities
Reference Section 3(f): NONE
<PAGE>
Exhibit E
BILL OF SALE
NATIONAL MEDICAL HOMECARE, INC.
TO
NEW YORK HEALTH CARE, INC.
KNOW ALL MEN BY THESE PRESENTS, that NATIONAL MEDICAL HOMECARE, INC., a
Delaware corporation ("Seller") in consideration of the sum of SEVENTY-FIVE
THOUSAND DOLLARS ($75,000) paid to it by NEW YORK HEALTH CARE, INC. a New York
corporation ("Purchaser"), receipt of which is hereby acknowledged, and in
further consideration of the delivery to it by Purchaser of a Promissory Note
("Note") in the aggregate principal amount of FIFTY THOUSAND DOLLARS ($50,000),
does by these presents hereby grant, bargain, sell, convey, transfer, assign,
set over, and deliver unto Purchaser all right, title and interest in and to the
tangible and intangible assets ("Assets") used or useful in respect of the
ownership and operation of the private home health agency business of the Seller
operated from 2515 86th Street, Brooklyn, New York; 220-24 Jamaica Avenue,
Queens Village, New York; and 566 Merrick Road, Rockville Centre, New York
("Facilities"), such Assets being more particularly described in Schedule 1
attached hereto, as the same shall exist on the date hereof, free and clear of
all liens and encumbrances of any nature or kind.
TO HAVE AND TO HOLD the Assets unto Purchaser, its successors and assigns
forever.
IN WITNESS WHEREOF, Seller has caused this Bill of Sale to be executed as
of this ____ day of ____________, 1988 by its duly authorized representative.
NATIONAL MEDICAL HOMECARE, INC.
-------------------------------
By: Raymond H. Noeker, Jr.
Its: Senior Vice President
<PAGE>
SCHEDULE 1
SCHEDULE OF ASSETS
1. Tangible Assets
All of the machinery, equipment, furniture, furnishings, fixtures,
personally and inventory (but no office supplies) used or useful in respect of
the ownership and operation of the Facilities, as are more particularly
described in Exhibit A hereto.
2. Intangible Assets
All of the intangible assets used or useful in the ownership or operation
of the Facilities including, but not limited to copies of Seller's school
curriculum, personal care aide's exams and approval letter, medical and
personnel records, customer lists, and all other books and records of or in
respect of the Facilities, and the exclusive right of the Purchaser to represent
itself as carrying on the business of the Facilities in continuation of or in
succession to the Seller, and the right to use appropriate words indicating that
the business of the Facilities is so carried on.
3. Exclusions
The Assets shall not include the agreements, contracts or leases described
in Exhibit B hereto or any of Seller's other customer agreements or
arrangements. The Assets shall also not include the cash, accounts receivable of
the Facilities as of the date hereof, the name of the Seller, leased equipment,
tangible property also used in Seller's durable medical equipment business,
technology or software licensed by Seller, or non-transferable government
licenses and permits, and Medicaid and Medicare provider numbers.
<PAGE>
CLOSING STATEMENT
SIMON, MEYROWITZ, MEYROWITZ & SCHLUSSEL
277 Broadway
New York, New York 10007
1 \r\CLOSTMT.NYH
<PAGE>
NEW YORK HEALTH CARE, INC.
WITH NATIONAL MEDICAL HEALTH CARE, INC.
MARCH 18, 1988
INDEX
1. Summary of Transaction
2. Purchase and Sale Agreement
3. Promissory Note
4. Personal Guarantees
5. Security Agreement
6. Bill of Sale
7. Assignment
8. Sublease Letter
9. Corporate Resolution
10. Financing Statements
11. Copies of Checks
1 \r\CLOSTMT.NYH
<PAGE>
SUMMARY OF TRANSACTION
PURCHASER: New York Health Care, Inc.
SELLER: National Medical Health Care, Inc.
DATE OF CLOSING: March 18, 1988
NATURE OF TRANSACTION: Purchase of certain equipment and
fixtures (see Exhibit 2, Purchase and
Sale Agreement Exhibit A), the
assignment to purchaser (see Exhibit 7)
and/or withdrawal in favor of Purchaser
in connection with certain contracts,
leases and agreements (see Exhibit 2,
Purchase and Sale Agreement Exhibit C).
Certain intangible assets specifically
school curriculum, personal care aide's
exams and approval letter, medical and
personnel records, customer lists, and
all other books and records of or in
respect of the Facilities, and the
exclusive right of the Purchaser to
represent itself as carrying on the
business of the Facilities in
continuation of or in succession to the
Seller, and the right to use appropriate
words indicating that the business of
the Facilities is so carried on (See
Exhibit 2, Schedule 1).
PURCHASE PRICE: $125,000.00
PAYMENT TERMS: (a) $20,000.00 to be paid upon execution
of agreement
(b) $55,000.00 to be paid at closing.
(c) $50,000.00 evidenced by a non-
negotiable promissory note (See Exhibit
3).
TERMS OF NOTE: The note is due and payable on September
18, 1988. The interest rate on the note
is one and one half percent above the
prime lending rate of Citibank, N.A.
Interest only payment is due June 18.
1988: the full balance together with
interest then outstanding will be due
September 18. 1988. Payments of
1 \r\CLOSTMT.NYH
<PAGE>
TERMS OF NOTE (cont'd): principal and interest shall be made by
check to Creditor at 91 Holmes Road,
Newington, Connecticut. This note is
guaranteed by both Sam Soroka and Jerry
Braun (See Exhibit 4). This note is
secured by and subject to a Security
Agreement of the Maker in favor of the
creditor covering certain collateral
described in the Security Agreement (See
Exhibit 5).
RESTRICTIVE COVENANT: Seller agrees that for a period of three
(3) years after the closing date,
provided Purchaser makes all payments
when due under the note, Seller shall
not directly or indirectly, through its
subsidiaries or affiliates, either as a
principal agent, employee, employer,
shareholder, partner or otherwise, own,
operate, engage in, assist or manage an
agency business to provide temporary
medical homecare personnel to home
health providers within New York City in
competition with the agency business
being operated by Purchaser as acquired
hereunder. The only exception to this
covenant will be Seller's conclusion of
his current contract with the
Westchester County Department of Social
Services.
FOOTNOTE
--------
Originally, this transaction also contemplated the withdrawal by Seller in favor
of the Purchaser in connection with the Westchester County Department of Social
Services contract. Due to various problems connected with the same, withdrawal
in favor of Seller could not be accomplished and accordingly, the transaction
originally contemplated was amended to reflect a reduction of the purchase price
from $200,000.00 to $125,000.00.
SIMON, MEYROWITZ, MEYROWITZ & SCHLUSSEL
277 Broadway
New York, New York 10007
2 \r\CLOSTMT.NYH
<PAGE>
EXHIBIT F
SECURITY AGREEMENT
This SECURITY AGREEMENT (this "Agreement") is made and dated as of
______________ ____, 1988 by and between New York Health Care, Inc. (the
"Company"), a New York corporation, and National Medical Homecare, Inc. (the
"Secured Party"), a Delaware corporation.
BACKGROUND
A. The Company and the Secured Party have entered into a Purchase and Sale
Agreement dated as of ________________ __, _____ (the "Purchase Agreement")
pursuant to which the Company has purchased certain assets of the Secured Party
and as part of the purchase price therefor has executed and delivered a Note in
the aggregate principal amount of Fifty Thousand Dollars ($50,000) payable to
the Secured Party.
B. As required by the Purchase Agreement, the Company, by appropriate
corporate action, has determined to create a security interest in certain of its
property to secure to the Secured Party the repayment of all indebtedness of the
Company to the Secured Party arising under the Purchase Agreement or otherwise.
NOW THEREFORE, in consideration for and in order to induce the Secured
Party to sell the Purchased Assets to the Company, the Company hereby agrees as
follows:
1. Definitions.
All capitalized terms not otherwise defined herein shall have the
respective meanings ascribed to them in the Purchase Agreement.
2. Security.
2.1 To secure the prompt payment when due of the Company's obligations
under the Purchase Agreement and the Note and all other indebtedness of the
Company to the Secured Party, including without limitation future advances made
to or on behalf of the Company and renewals or extensions of any indebtedness
(collectively, the "Indebtedness"), and the performance and observance by the
Company of its other covenants, obligations and conditions under the Purchase
Agreement and the Note, the Company hereby assigns and pledges to the Secured
Party, and grants to the Secured Party a continuing security interest in, all of
the Company's right,
<PAGE>
title and interest in the accounts receivable of the Company (the "Collateral"),
provided, however, that the Secured Party's security interest hereunder shall be
subordinate to a loan from United Mizrachy Bank (the "Bank") to the Company in
an amount not to exceed $800,000 pursuant to a loan agreement between the Bank
and the Company as in effect on the date of this Agreement.
2.2 This Agreement is given by the Company pursuant to and is subject
to the Purchase Agreement and the Note, and all of the terms, covenants,
conditions and other provisions thereof are hereby deemed incorporated in this
Agreement with the same effect as if fully set forth herein. The Purchase
Agreement and the Note, include, and should be referred to for a more particular
description of, provisions with respect to advances and payment of the
Indebtedness.
2.3 To protect the security afforded by this Agreement, the Company
agrees as follows:
(a) The Company will faithfully abide by, perform and discharge
each and every obligation, covenant, condition, duty and agreement to be
performed by the Company so as to prevent the material impairment of the
Collateral.
(b) At the Company's sole cost and expense, the Company will
appear in and defend or, in its discretion, compromise or settle, if such
compromise or settlement shall, taken as a whole, be beneficial to the Company,
any action or proceeding arising under, growing out of or in any manner
connected with the Collateral; and
(c) Should the Company fail to make any payment, do any act or
refrain from any act which this Agreement requires the Company to make, do or
refrain from, respectively, then the Secured Party may, but shall have no
obligation to (and shall not thereby release the Company from any obligation
hereunder), make, do or prevent the same, respectively, in such manner and to
such extent as the Secured Party may deem necessary or advisable to protect the
security provided hereby, which rights of the Secured Party shall specifically
include, without limiting the Secured Party's general powers herein granted, the
right to appear in and defend any action or proceeding purporting to affect the
security hereof and the rights or powers of the Secured Party hereunder (or any
of them), and also the right to perform and discharge each and every one, or any
one or more, of the obligations, covenants, conditions, duties and agreements of
the Company concerning the Collateral; and in exercising any such powers, the
Company may pay necessary or advisable costs and expenses, employ counsel and
incur and pay reasonable attorneys' fees, and the Company will reimburse the
Secured Party for such costs, expenses and fees together with interest at the
rate set forth for the payment of interest on the Note.
<PAGE>
2.4 The Company will, from time to time, do and perform any other act
or acts and will execute, acknowledge, deliver, file, register, record and
deposit (and will refile, reregister, rerecord and redeposit whenever required)
any and all further instruments required by law or requested by the Secured
Party in order to confirm, or further assure, the interest of the Secured Party
hereunder, including filings on Uniform Commercial Code (UCC) forms.
2.5 The Company does hereby make, constitute and appoint any officer
or agent of the Secured Party as the Company's true and lawful attorney-in-fact,
with power to endorse the name of the Company upon any notes, checks, drafts,
money orders, or other instruments of payment with respect to the Collateral
that may come into possession of the Secured Party in full or part payment of
the Indebtedness; to sign and endorse the name of the Company upon any invoice,
freight or express bill, bill of lading, storage or warehouse receipts, drafts
against debtors, assignments, certifications and notices in connection with the
Collateral, and any instruments or documents relating thereto or to the
Company's rights therein; to give written notice to such office and officials of
the United States Post Office to effect such change or changes of address so
that all mail addressed to the Company may be delivered directly to the Secured
Party; granting unto the Company's said attorney full power to do any and all
things necessary to be done in and about the premises as fully and effectually
as the Company might or could do, and hereby ratifying all that said attorney
shall lawfully do or cause to be done by virtue hereof. This power of attorney
shall be irrevocable for the term of this Agreement and all transactions
hereunder and thereafter as long as any Indebtedness is outstanding.
3. Default; Remedies.
3.1 If the Company fails to make payment of any Indebtedness when due,
or otherwise fails to observe and perform any of its agreements under this
Agreement, the Purchase Agreement or the Note, the Secured Party may at any time
or from time to time, upon five (5) days' written notice to the Company,
exercise in respect of the Collateral in addition to all other rights, powers
and remedies provided for herein, therein, or otherwise available to them, all
the rights and remedies of a secured party on default under the Uniform
Commercial Code (whether or not the Uniform Commercial Code applies to the
Collateral) and under any other applicable law as in effect in any relevant
jurisdiction. The Company agrees that, to the extent notice of sale or other
disposition shall be required by applicable law, ten days' notice to the Company
of the time and place of any public sale or other disposition or the time after
which any private sale or other intended
<PAGE>
disposition may be made shall constitute reasonable notification thereof. No
notification need be given to the Company if it has signed a statement
renouncing any right to notification of sale or other intended disposition.
3.2 The Secured Party may adjourn any public or private sale or other
disposition from time to time by announcement at the time and place fixed
therefor, and such sale or other disposition may, without further notice, be
made at the time and place to which it was so adjourned. The Secured Party shall
have the right upon any such public sale or other disposition and, to the extent
permitted by law, upon any such private sale or other disposition to purchase
the whole or any part of the Collateral so sold or disposed of.
3.3 To the extent permitted by applicable law, the Company waives all
claims, damages and demands against the Secured Party arising out of the
exercise of its rights hereunder.
3.4 The Company recognizes that in the event the Company fails to
perform, observe or discharge any of its obligations or liabilities under this
Agreement or the Purchase Agreement or the Note, no remedy at law will provide
adequate relief to the Secured Party, and the Company agrees that the Secured
Party shall be entitled to temporary and permanent injunctive relief in any such
case without the necessity of proving actual damages.
3.5 The rights and remedies provided under this Agreement are
cumulative and may be exercised singly or concurrently, and are not exclusive of
any rights and remedies provided at law or in equity or in the Purchase
Agreement or Note.
3.6 The Secured Party hereby agrees with the Company that, so long as
both (a) no Default or Event of Default shall exist under the Purchase Agreement
and (b) the Company shall not be in default of any of its obligations,
covenants, agreements or duties hereunder or under the Purchase Agreement or the
Note, the Secured Party will not exercise or enforce, or seek to exercise or
enforce, or avail itself of, any of the rights, powers, privileges,
authorizations or benefits assigned and transferred to the Secured Party
pursuant to this Agreement.
4. Continuing Liability.
4.1 The Company hereby agrees that, anything herein to the contrary
notwithstanding, the Company shall remain liable under each contract, agreement,
interest or obligation assigned, or as to which a security interest has been
granted, to the Secured Party hereunder to observe and perform all the
covenants, conditions and obligations to be observed and
<PAGE>
performed by the Company thereunder, all in accordance with and pursuant to the
terms and provisions thereof. The Secured Party shall have no duty,
responsibility, obligation or liability under any such contract, agreement,
interest or obligation by reason of or arising out of this Agreement or the
granting to the Secured Party of a security interest therein or the receipt by
the Secured Party of any payment relating to any such contract, agreement,
interest or obligation pursuant hereto, nor shall the Secured Party be required
or obligated in any manner to perform or fulfill any of the obligations of the
Company thereunder or pursuant thereto, or to make any payment, or to make any
inquiry as to the nature or the sufficiency of any payment received by it or the
sufficiency of any performance by any party under any such contract, agreement,
interest or obligation, or to present or file any claim, or to take any action
to collect or enforce any performance or the payment of any amounts which may
have been assigned to it, in which it has been granted a security interest or to
which it may be entitled at any time or times.
5. Limitation by Law; Severability.
5.1 All rights, remedies and powers provided in this Agreement may be
exercised only to the extent that the exercise thereof does not violate any
applicable provision of law, and all the provisions of this Agreement are
intended to be subject to all applicable mandatory provisions of law which may
be controlling and to be limited to the extent necessary so that they will not
render this Agreement illegal, invalid, unenforceable, in whole or in part, or
not entitled to be recorded, registered, or filed under the provisions of any
applicable law.
5.2 Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction the substantive laws of which are held to be
applicable hereto shall not invalidate the remaining provisions hereof, and any
such prohibition or unenforceability in any such jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.
6. Waivers; Amendments.
None of the terms or provisions of this Agreement may be waived,
altered, modified or amended by any act, delay, omission or otherwise except by
an instrument in writing which is duly executed by the Company and the Secured
Party. Any such waiver, alteration, modification or amendment shall be valid
only to the extent therein set forth. A waiver by the Secured Party of any right
or remedy under this Agreement on any one occasion shall not be construed as a
bar to any right, remedy or power which the Secured Party would otherwise have
had on any future occasion. No failure to exercise nor any
<PAGE>
delay in exercising on the part of the Secured Party any right, remedy or power
under this Agreement shall operate as a waiver thereof; further, no single or
partial exercise of any right, remedy or power under this Agreement shall
preclude any other or further exercise thereof or the exercise of any other
right, remedy or power.
7. Binding Effect; Successors and Assigns.
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and shall inure to the benefit of their respective successors and
assigns, and nothing herein or in the Purchase Agreement or the Note is intended
or shall be construed to give any person, other than such successors or assigns,
any right, remedy or claim under, to or in respect of this Agreement or the
Collateral.
8. Termination of this Agreement.
This Agreement shall continue in full force and effect so long as any
Indebtedness remains outstanding.
9. Notices.
All notices or other communications hereunder shall be given in the
manner and to the addresses determined under the Purchase Agreement.
10. Applicable Law.
This Agreement shall be governed by, and be construed and interpreted
in accordance with, the internal laws of the State of New York without reference
to principles of conflict of laws, except as required by mandatory provisions of
law.
11. THE COMPANY ACKNOWLEDGES THAT THE TRANSACTION OF WHICH THIS AGREEMENT
IS A PART IS A COMMERCIAL TRANSACTION, AND TO THE EXTENT ALLOWED BY APPLICABLE
LAW, HEREBY WAIVES ITS RIGHTS TO NOTICE AND HEARING WITH RESPECT TO ANY
PREJUDGMENT REMEDY WHICH THE SECURED PARTY OR ITS SUCCESSORS OR ASSIGNS MAY
DESIRE TO USE.
<PAGE>
EXHIBIT G
LISTED EMPLOYEES
NURSING DIVISION
LIST OF EMPLOYEES BY LOCATION
[Check and Initial Indicated Employees]
BENSONHURST
____ Coreschi, Virginia - Manager
____ Falcone, Ann M. - Clerk
____ Cuadrado, Joann G. - Coordinator
____ Jenkins, Sheila - Coordinator
____ Pinto, Susan - Coordinator
QUEENS VILLAGE
____ McGinnis, Geovana - Payroll Supervisor
_X__ Vollmerding, Judith - Nurse
____ Zavelo, Elissa H. - Coordinator
____ Feldman, Beverly - Accounts Receivable Clerk
____ Jocaby, Beth J. - Billing Clerk
____ Thompson, Sandra D. - Payroll and Billing Clerk
ROCKVILLE CENTER
_X__ Koren, Jennifer S. - Coordinator
_X__ Walsh, Katherine - Coordinator
____ Mollitor, Patricia T. - Coordinator (on call)
____ Sanfilippo, Margurite - Manager
WESTCHESTER
____ Essex, Dorothy G. - Coordinator
_X__ O'Neal, Joanne - Coordinator (on call)
_X__ Pacheco, Victor M. - Coordinator
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Security
Agreement or caused this Security Agreement to be executed and delivered by
their duly authorized officers of the date first set forth above.
COMPANY:
NEW YORK HEALTHCARE, INC.
By ______________________________________
Its___________________________________
SECURED PARTY:
NATIONAL MEDICAL HOMECARE,
INC.
By_______________________________________
Its___________________________________
<PAGE>
[NMH LETTERHEAD]
_________________ ___ , 1988
New York Health Care, Inc.
4211 13th Avenue
Brooklyn, New York 11219
Attention: Mr. Jerry Braun
RE: Sublease of Space For
Home Health Agency Business
Dear Jerry:
In connection with the sale today to New York Health Care, Inc. ("NYHC") of
the assets of National Medical Homecare, Inc.'s ("NMH") New York City private
home health agency business, NMH hereby agrees to sublease space to NYHC for the
temporary operation of such business in the following location on the terms set
forth:
Location Sq. ft. Rent/Sq. ft. Term
- -------- ------- ------------ ----
Annual
566 Merrick Road $9.00 6 months
Rockville Centre, N.Y.
The sublease will commence today and can be terminated by you at any time
short of the specified term in each case by giving NMH two weeks prior written
notice, which need not be directed to the end of any period. The above rates
include general utilities and taxes but are exclusive of telephone usage for
which you will be required to pay a prorate portion of the basic charges, based
upon space utilization, plus the amount of any toll call or other charges fairly
allocable to your use.
In addition, NYHC shall provide general liability insurance for itself,
naming NMH as an additional insured in such amounts as are usual and customary
for like businesses and facilities, and shall be responsible for any substantial
damage or destruction to the premises caused by its or its employees' negligence
except to the extent any required repair or replacement is adequately
compensated for by insurance proceeds.
<PAGE>
New York Health Care, Inc.
________ _ , 1988
Page Two
In all other respects not inconsistent with the above, NYHC assumes with
respect to NMH the same obligations regarding the subleased space as NMH owes to
its landlord as provided in the applicable lease for each such space.
Please indicate your acceptance of the foregoing by executing this letter
in the space provided below.
Very truly yours,
NATIONAL MEDICAL HOMECARE, INC.
By ____________________________________
Its ___________________________________
Acknowledged and agreed this
___ day of ___, 1988
New York Home Health Care, Inc.
By_____________________________
Its ___________________________
9391G/0238G
JEK/88-0204
<PAGE>
NEW YORK HEALTH CARE, INC.
NON-NEGOTIABLE PROMISSORY NOTE
$50,000 March 18, 1988
NEW YORK HEALTH CARE, INC. (the "Maker"), a New York corporation, for value
received, hereby promises to pay to the order of NATIONAL MEDICAL HOMECARE, INC.
(the "Creditor"), a Delaware corporation, the principal sum of FIFTY THOUSAND
DOLLARS ($50,000) due and payable on September 18, 1988, and to pay interest
(computed on the basis of a 360-day year of twelve 30-day months) on the unpaid
balance from the date of this Note at the annual prime lending rate of Citibank,
N.A. as may be in effect from time to time, plus one and one-half percent
(1.5%), such interest payments to be made quarterly beginning June 18, 1988, and
to pay on demand interest on any overdue principal at the rate of eighteen
percent (18%) per annum but in no event greater than the maximum rate allowed
by applicable law.
Payments of principal and interest shall be made in such coin or currency
of the United States of America as at the time of payment is legal tender for
the payment of public and private debts by check mailed and addressed to the
Creditor at 91 Holmes Road, Newington, Connecticut 06111, or to such other
address designated by the Creditor or in such other manner as the Creditor shall
so designate in writing.
This Note is non-negotiable.
The Maker shall be entitled to prepay this Note in whole or in part without
premium or penalty. Prepayments shall be applied to the installments of
principal due hereunder in reverse chronological order (last to first) of when
due.
This Note is secured by and subject to a Security Agreement of the Maker in
favor of the Creditor covering certain collateral, all as more particularly
described and provided in such Security Agreement, and is entitled to the
benefits thereof.
The Maker and all guarantors hereby waive diligence, presentment, demand,
notice of non-payment, protest and all other demands and notices in connection
with the delivery, acceptance, performance or enforcement of this Note. In the
event of any default hereunder, or if Maker or any endorser hereof or any
guarantor of any obligation of Maker hereunder shall be in
<PAGE>
default under any instrument or document evidencing, governing or securing this
Note, the Maker and each and all endorsers and guarantors of this Note agree to
pay all costs of collection, including reasonable attorneys' fees. This Note
shall be the joint and several obligation of the Maker and all guarantors, and
shall be binding upon them and their successors and assigns.
This Note shall be governed by and construed in accordance with the laws of
the State of New York.
NEW YORK HEALTH CARE, INC.
By /s/ Jerry Braun
-----------------------------
Its President
<PAGE>
STATE OF NEW YORK )
) SS.
COUNTY OF NEW YORK )
On this 18th day of March, 1988, before me, the undersigned, a Notary
Public in and for said County, in said State, personally appeared Jerry Braun,
to me personally known, who, being by me duly sworn, acknowledged the execution
of the foregoing instrument to be his voluntary act and deed, by him voluntarily
executed.
WITNESS my hand and Notarial Seal the day and year first above written.
/s/ David H. Meyrowitz
-------------------------------
Notary Public
My Commission Expires:
DAVID H. MEYROWITZ
Notary Public, State of New York
No. 30-2686635
Qualified in Nassau County
Commission Expires November 30, 1989
<PAGE>
PERSONAL GUARANTY
March 18, 1988
National Medical Home Care, Inc.
91 Holmes Road
Newington, Connecticut 06111
Gentlemen:
In connection with a Promissory Note (the "Note") issued to NATIONAL
MEDICAL HOMECARE, INC. ("NMH") by NEW YORK HEALTH CARE, INC. ("NYHC"), the
undersigned (the "Guarantor") hereby unconditionally guarantees to you full and
prompt payment when due of all amounts payable by NYHC in accordance with the
terms of the Note or any agreement, instrument, writing or arrangement relating
to the Note, irrespective of the validity or enforceability thereof. The
Guarantor will pay any such amounts promptly as if such amounts constituted the
direct and primary obligation of the undersigned. NMH shall not be required to
make any demand on, or pursue or exhaust any of its rights or remedies against,
NYHC or its property or any other guarantor of the obligations of NYHC with
respect to the payment of any such amounts.
The Guarantor hereby waives demand, presentment, protest and notice of
non-payment or protest and of your acceptance of this Guaranty and of any loan
made, extensions granted or other actions taken in reliance hereon and all other
demands and notices of any description in connection with this Guaranty and the
liabilities assumed hereby.
The liability of the Guarantor with respect to this Guaranty shall not be
terminated by, and the Guarantor assents to, any extension or postponement of
the time of payment of the Note, or any other indulgence, any modification,
waiver or amendment of the terms of any agreement relating to the Note, any
substitution, exchange or release of collateral, and the addition or release of
any other party guaranteeing the obligations of NYHC, whether or not notice
thereof is given to the Guarantor.
<PAGE>
Upon any default of NYHC, the liability of the Guarantor shall be effective
immediately without any suit or action against NYHC. No delay or omission on
your part in exercising any right hereunder shall operate as a waiver of such
right or any other right, and no waiver shall be valid unless in writing signed
by NMH, and then only to the extent in such writing specifically set forth. A
waiver on one occasion shall not be a bar to or waiver of any right on any other
occasion. All remedies herein or afforded by law shall be cumulative and shall
be available to NMH until all obligations of the Guarantor hereunder have been
paid or satisfied in full.
Notwithstanding anything herein contained to the contrary, no action shall
be taken for the enforcement of this Guaranty until Guarantor receives ten days'
written notice of the Guarantor's liability under this Guaranty. Copies of any
such notice shall be delivered by certified mail, return receipt requested.
The obligations of the Guarantor hereunder shall not be affected by any
action taken under the Note or any agreement, instrument or other document
relating to the Note in the exercise of any right or remedy therein conferred,
or by any invalidity or unenforceability thereof, or by any other circumstance
whatsoever, whether with or without notice to or knowledge of the Guarantor,
which may in any manner vary the risk of the Guarantor under this Guaranty, it
being the purpose and intent of the Guarantor that this Guaranty and the
obligations of the Guarantor hereunder shall be absolute and unconditional under
any and all circumstances and shall continue until the Note is fully paid or
discharged.
The Guarantor further agrees to pay all costs and expenses, including
reasonable attorney's fees, arising out of or with respect to the enforcement,
validity, enforceability or preservation of this Guaranty.
No amendment or supplement to or other modification of this Guaranty and no
consent or waiver hereunder shall be of any effect unless it is in writing and
executed by NMH.
This Guaranty shall inure to the benefit of NMM, its successors and
assigns, and shall be binding upon the Guarantor, his successors and assigns.
This Guaranty shall be governed by and construed in accordance with the
laws of the State of New York.
IN WITNESS WHEREOF, the Guarantor has duly executed this instrument as of
this 18th day of March, 1988.
/s/ Jerry Braun
----------------------------------
Jerry Braun
<PAGE>
PERSONAL GUARANTY
March 18, 1988
National Medical Home Care, Inc.
91 Holmes Road
Newington, Connecticut 06111
Gentlemen:
In connection with a Promissory Note (the "Note") issued to NATIONAL
MEDICAL HOMECARE, INC. ("NMH") by NEW YORK HEALTH CARE, INC. ("NYHC"), the
undersigned (the "Guarantor") hereby unconditionally guarantees to you full and
prompt payment when due of all amounts payable by NYHC in accordance with the
terms of the Note or any agreement, instrument, writing or arrangement relating
to the Note, irrespective of the validity or enforceability thereof. The
Guarantor will pay any such amounts promptly as if such amounts constituted the
direct and primary obligation of the undersigned. NMH shall not be required to
make any demand on, or pursue or exhaust any of its rights or remedies against,
NYHC or its property or any other guarantor of the obligations of NYHC with
respect to the payment of any such amounts.
The Guarantor hereby waives demand, presentment, protest and notice of
non-payment or protest and of your acceptance of this Guaranty and of any loan
made, extensions granted or other actions taken in reliance hereon and all other
demands and notices of any description in connection with this Guaranty and the
liabilities assumed hereby.
The liability of the Guarantor with respect to this Guaranty shall not be
terminated by, and the Guarantor assents to, any extension or postponement of
the time of payment of the Note, or any other indulgence, any modification,
waiver or amendment of the terms of any agreement relating to the Note, any
substitution, exchange or release of collateral, and the addition or release of
any other party guaranteeing the obligations of NYHC, whether or not notice
thereof is given to the Guarantor.
<PAGE>
Upon any default of NYHC, the liability of the Guarantor shall be effective
immediately without any suit or action against NYHC. No delay or omission on
your part in exercising any right hereunder shall operate as a waiver of such
right or any other right, and no waiver shall be valid unless in writing signed
by NMH, and then only to the extent in such writing specifically set forth. A
waiver on one occasion shall not be a bar to or waiver of any right on any other
occasion. All remedies herein or afforded by law shall be cumulative and shall
be available to NMH until all obligations of the Guarantor hereunder have been
paid or satisfied in full.
Notwithstanding anything herein contained to the contrary, no action shall
be taken for the enforcement of this Guaranty until Guarantor receives ten days'
written notice of the Guarantor's liability under this Guaranty. Copies of any
such notice shall be delivered by certified mail, return receipt requested.
The obligations of the Guarantor hereunder shall not be affected by any
action taken under the Note or any agreement, instrument or other document
relating to the Note in the exercise of any right or remedy therein conferred,
or by any invalidity or unenforceability thereof, or by any other circumstance
whatsoever, whether with or without notice to or knowledge of the Guarantor,
which may in any manner vary the risk of the Guarantor under this Guaranty, it
being the the purpose and intent of the Guarantor that this Guaranty and the
obligations of the Guarantor hereunder shall be absolute and unconditional under
any and all circumstances and shall continue until the Note is fully paid or
discharged.
The Guarantor further agrees to pay all costs and expenses, including
reasonable attorney's fees, arising out of or with respect to the enforcement,
validity, enforceability or preservation of this Guaranty.
No amendment or supplement to or other modification of this Guaranty and no
consent or waiver hereunder shall be of any effect unless it is in writing and
executed by NMH.
This Guaranty shall inure to the benefit of NMH, its successors and
assigns, and shall be binding upon the Guarantor, his successors and assigns.
This Guaranty shall be governed by and construed in accordance with the laws of
the State of New York.
IN WITNESS WHEREOF, the Guarantor has duly executed this instrument as
of this 18th day of March, 1988.
/s/ Sam Soroka
-----------------------------------
Sam Soroka
<PAGE>
STATE OF NEW YORK )
) SS.
COUNTY OF NEW YORK )
On this 18th day of MARCH, 1988, before me, the undersigned, a Notary
Public in and for said County, in said State, personally appeared Sam Soroka, to
me personally known, who, being by me duly sworn, acknowledged the execution of
the foregoing instrument to be his voluntary act and deed, by him voluntarily
executed.
WITNESS my hand and Notarial Seal the day and year first above written.
/s/ David H. Meyrowitz
-------------------------------
Notary Public
My Commission Expires:
DAVID H. MEYROWITZ
Notary Public, State of New York
No. 30-2686635
Qualified in Nassau County
Commission Expires November 30, 1989
<PAGE>
SECURITY AGREEMENT
This SECURITY AGREEMENT (this "Agreement") is made and dated as of March
18, 1988 by and between New York Health Care, Inc. (the "Company"), a New York
corporation, and National Medical Homecare, Inc. (the "Secured Party"), a
Delaware corporation.
BACKGROUND
A. The Company and the Secured Party have entered into a Purchase and Sale
Agreement dated as of March 18, 1988 (the "Purchase Agreement") pursuant to
which the Company has purchased certain assets of the Secured Party and as part
of the purchase price therefor has executed and delivered a Note in the
aggregate principal amount of Fifty Thousand Dollars ($50,000) payable to the
Secured Party.
B. As required by the Purchase Agreement, the Company, by appropriate
corporate action, has determined to create a security interest in certain of its
property to secure to the Secured Party the repayment of all indebtedness of the
Company to the Secured Party arising under the Purchase Agreement or otherwise.
NOW THEREFORE, in consideration for and in order to induce the Secured
Party to sell the Purchased Assets to the Company, the Company hereby agrees as
follows:
1. Definitions.
All capitalized terms not otherwise defined herein shall have the
respective meanings ascribed to them in the Purchase Agreement.
2. Security.
2.1 To secure the prompt payment when due of the Company's obligations
under the Purchase Agreement and the Note and all other indebtedness of the
Company to the Secured Party, including without limitation future advances made
to or on behalf of the Company and renewals or extensions of any indebtedness
(collectively, the "Indebtedness"), and the performance and observance by the
Company of its other covenants, obligations and conditions under the Purchase
Agreement and the Note, the Company hereby assigns and pledges to the Secured
Party, and grants to the Secured Party a continuing security interest in, all of
the Company's right,
<PAGE>
title and interest in the accounts receivable of the Company (the "Collateral"),
provided, however, that the Secured Party's security interest hereunder shall be
subordinate to a loan from United Mizrachy Bank (the "Bank") to the Company in
an amount not to exceed $800,000 pursuant to a loan agreement between the Bank
and the Company as in effect on the date of this Agreement.
2.2 This Agreement is given by the Company pursuant to and is subject
to the Purchase Agreement and the Note, and all of the terms, covenants,
conditions and other provisions thereof are hereby deemed incorporated in this
Agreement with the same effect as if fully set forth herein. The Purchase
Agreement and the Note, include, and should be referred to for a more particular
description of, provisions with respect to advances and payment of the
Indebtedness.
2.3 To protect the security afforded by this Agreement, the Company
agrees as follows:
(a) The Company will faithfully abide by, perform and discharge
each and every obligation, covenant, condition, duty and agreement to be
performed by the Company so as to prevent the material impairment of the
Collateral.
(b) At the Company's sole cost and expense, the Company will
appear in and defend or, in its discretion, compromise or settle, if such
compromise or settlement shall, taken as a whole, be beneficial to the Company,
any action or proceeding arising under, growing out of or in any manner
connected with the Collateral; and
(c) Should the Company fail to make any payment, do any act or
refrain from any act which this Agreement requires the Company to make, do or
refrain from, respectively, then the Secured Party may, but shall have no
obligation to (and shall not thereby release the Company from any obligation
hereunder), make, do or prevent the same, respectively, in such manner and to
such extent as the Secured Party may deem necessary or advisable to protect the
security provided hereby, which rights of the Secured Party shall specifically
include, without limiting the Secured Party's general powers herein granted, the
right to appear in and defend any action or proceeding purporting to affect the
security hereof and the rights or powers of the Secured Party hereunder (or any
of them), and also the right to perform and discharge each and every one, or any
one or more, of the obligations, covenants, conditions, duties and agreements of
the Company concerning the Collateral; and in exercising any such powers, the
Company may pay necessary or advisable costs and expenses, employ counsel and
incur and pay reasonable attorneys' fees, and the Company will reimburse the
Secured Party for such costs, expenses and fees together with interest at the
rate set forth for the payment of interest on the Note.
<PAGE>
2.4 The Company will, from time to time, do and perform any other act
or acts and will execute, acknowledge, deliver, file, register, record and
deposit (and will refile, reregister, rerecord and redeposit whenever required)
any and all further instruments required by law or requested by the Secured
Party in order to confirm, or further assure, the interest of the Secured Party
hereunder, including filings on Uniform Commercial Code (UCC) forms.
2.5 The Company does hereby make, constitute and appoint any officer
or agent of the Secured Party as the Company's true and lawful attorney-in-fact,
with power to endorse the name of the Company upon any notes, checks, drafts,
money orders, or other instruments of payment with respect to the Collateral
that may come into possession of the Secured Party in full or part payment of
the Indebtedness; to sign and endorse the name of the Company upon any invoice,
freight or express bill, bill of lading, storage or warehouse receipts, drafts
against debtors, assignments, certifications and notices in connection with the
Collateral, and any instruments or documents relating thereto or to the
Company's rights therein; to give written notice to such office and officials of
the United States Post Office to effect such change or changes of address so
that all mail addressed to the Company may be delivered directly to the Secured
Party; granting unto the Company's said attorney full power to do any and all
things necessary to be done in and about the premises as fully and effectually
as the Company might or could do, and hereby ratifying all that said attorney
shall lawfully do or cause to be done by virtue hereof. This power of attorney
shall be irrevocable for the term of this Agreement and all transactions
hereunder and thereafter as long as any Indebtedness is outstanding.
3. Default; Remedies.
3.1 If the Company fails to make payment of any Indebtedness when due,
or otherwise fails to observe and perform any of its agreements under this
Agreement, the Purchase Agreement or the Note, the Secured Party may at any time
or from time to time, upon five (5) days' written notice to the Company,
exercise in respect of the Collateral in addition to all other rights, powers
and remedies provided for herein, therein, or otherwise available to them, all
the rights and remedies of a secured party on default under the Uniform
Commercial Code (whether or not the Uniform Commercial Code applies to the
Collateral) and under any other applicable law as in effect in any relevant
jurisdiction. The Company agrees that, to the extent notice of sale or other
disposition shall be required by applicable law, ten days' notice to the Company
of the time and place of any public sale or other disposition or the time after
which any private sale or other intended
<PAGE>
disposition may be made shall constitute reasonable notification thereof. No
notification need be given to the Company if it has signed a statement
renouncing any right to notification of sale or other intended disposition.
3.2 The Secured Party may adjourn any public or private sale or other
disposition from time to time by announcement at the time and place fixed
therefor, and such sale or other disposition may, without further notice, be
made at the time and place to which it was so adjourned. The Secured Party shall
have the right upon any such public sale or other disposition and, to the extent
permitted by law, upon any such private sale or other disposition to purchase
the whole or any part of the Collateral so sold or disposed of.
3.3 To the extent permitted by applicable law, the Company waives all
claims, damages and demands against the Secured Party arising out of the
exercise of its rights hereunder.
3.4 The Company recognizes that in the event the Company fails to
perform, observe or discharge any of its obligations or liabilities under this
Agreement or the Purchase Agreement or the Note, no remedy at law will provide
adequate relief to the Secured Party, and the Company agrees that the Secured
Party shall be entitled to temporary and permanent injunctive relief in any such
case without the necessity of proving actual damages.
3.5 The rights and remedies provided under this Agreement are
cumulative and may be exercised singly or concurrently, and are not exclusive of
any rights and remedies provided at law or in equity or in the Purchase
Agreement or Note.
3.6 The Secured Party hereby agrees with the Company that, so long as
both (a) no Default or Event of Default shall exist under the Purchase Agreement
and (b) the Company shall not be in default of any of its obligations,
covenants, agreements or duties hereunder or under the Purchase Agreement or the
Note, the Secured Party will not exercise or enforce, or seek to exercise or
enforce, or avail itself of, any of the rights, powers, privileges,
authorizations or benefits assigned and transferred to the Secured Party
pursuant to this Agreement.
4. Continuing Liability.
4.1 The Company hereby agrees that, anything herein to the contrary
notwithstanding, the Company shall remain liable under each contract, agreement,
interest or obligation assigned, or as to which a security interest has been
granted, to the Secured Party hereunder to observe and perform all the
covenants, conditions and obligations to be observed and
<PAGE>
performed by the Company thereunder, all in accordance with and pursuant to the
terms and provisions thereof. The Secured Party shall have no duty,
responsibility, obligation or liability under any such contract, agreement,
interest or obligation by reason of or arising out of this Agreement or the
granting to the Secured Party of a security interest therein or the receipt by
the Secured Party of any payment relating to any such contract, agreement,
interest or obligation pursuant hereto, nor shall the Secured Party be required
or obligated in any manner to perform or fulfill any of the obligations of the
Company thereunder or pursuant thereto, or to make any payment, or to make any
inquiry as to the nature or the sufficiency of any payment received by it or the
sufficiency of any performance by any party under any such contract, agreement,
interest or obligation, or to present or file any claim, or to take any action
to collect or enforce any performance or the payment of any amounts which may
have been assigned to it, in which it has been granted a security interest or to
which it may be entitled at any time or times.
5. Limitation by Law; Severability.
5.1 All rights, remedies and powers provided in this Agreement may be
exercised only to the extent that the exercise thereof does not violate any
applicable provision of law, and all the provisions of this Agreement are
intended to be subject to all applicable mandatory provisions of law which may
be controlling and to be limited to the extent necessary so that they will not
render this Agreement illegal, invalid, unenforceable, in whole or in part, or
not entitled to be recorded, registered, or filed under the provisions of any
applicable law.
5.2 Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction the substantive laws of which are held to be
applicable hereto shall not invalidate the remaining provisions hereof, and any
such prohibition or unenforceability in any such jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.
6. Waivers; Amendments.
None of the terms or provisions of this Agreement may be waived,
altered, modified or amended by any act, delay, omission or otherwise except by
an instrument in writing which is duly executed by the Company and the Secured
Party. Any such waiver, alteration, modification or amendment shall be valid
only to the extent therein set forth. A waiver by the Secured Party of any right
or remedy under this Agreement on any one occasion shall not be construed as a
bar to any right, remedy or power which the Secured Party would otherwise have
had on any future occasion. No failure to exercise nor any
<PAGE>
delay in exercising on the part of the Secured Party any right, remedy or power
under this Agreement shall operate as a waiver thereof; further, no single or
partial exercise of any right, remedy or power under this Agreement shall
preclude any other or further exercise thereof or the exercise of any other
right, remedy or power.
7. Binding Effect; Successors and Assigns.
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and shall inure to the benefit of their respective successors and
assigns, and nothing herein or in the Purchase Agreement or the Note is intended
or shall be construed to give any person, other than such successors or assigns,
any right, remedy or claim under, to or in respect of this Agreement or the
Collateral.
8. Termination of this Agreement.
This Agreement shall continue in full force and effect so long as any
Indebtedness remains outstanding.
9. Notices.
All notices or other communications hereunder shall be given in the
manner and to the addresses determined under the Purchase Agreement.
10. Applicable Law.
This Agreement shall be governed by, and be construed and interpreted
in accordance with, the internal laws of the State of New York without reference
to principles of conflict of laws, except as required by mandatory provisions of
law.
11. THE COMPANY ACKNOWLEDGES THAT THE TRANSACTION OF WHICH THIS AGREEMENT
IS A PART IS A COMMERCIAL TRANSACTION, AND TO THE EXTENT ALLOWED BY APPLICABLE
LAW, HEREBY WAIVES ITS RIGHTS TO NOTICE AND HEARING WITH RESPECT TO ANY
PREJUDGMENT REMEDY WHICH THE SECURED PARTY OR ITS SUCCESSORS OR ASSIGNS MAY
DESIRE TO USE.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Security
Agreement or caused this Security Agreement to be executed and delivered by
their duly authorized officers of the date first set forth above.
COMPANY:
NEW YORK HEALTHCARE, INC.
By /s/ Jerry Braun
-----------------------------------
Its President
-------------------------------
SECURED PARTY:
NATIONAL MEDICAL HOMECARE, INC.
By /s/ Raymond H. Noeker, Jr.
-----------------------------------
Its Senior Vice President
-------------------------------
<PAGE>
NATIONAL MEDICAL HOMECARE, INC.
NEW YORK HEALTH CARE, INC.
Exhibit B
Contracts, Leases and Agreements
(Continued)
JHMCB Center for Nursing and Marketing Letter
Rehab. LTHHCP (Home Health Services)
Westchester County DSS PCA/ Vendor Relationship
HHA (Home Health Services)
Nassau County DSS PCA/HHA Vendor Relationship
(Home Health Services)
Leases for the following properties:
* 2515 86th Street, Brooklyn, New York
* 220-24 Jamaica Avenue, Queens Village, New York
** 566 Merrick Road, Rockville Centre, New York
* Not assigned to, or assumed by Purchaser. Seller shall indemnify and
hold Purchaser harmless from any liability for such leases.
** Being subleased by Purchaser from Seller under separate letter
agreement of even date herewith.
5805H
<PAGE>
NATIONAL MEDICAL HOMECARE, INC.
NEW YORK HEALTH CARE, INC.
Exhibit B
Contracts, Leases and Agreements
Party Type of Agreement
- ----- -----------------
Visiting Nurse Service of Vendor Relationship
New York Home Care (Home Health Services)
Montefiore Medical Center HHA Vendor Relationship
(Home Health Services)
Metropolitan Jewish Geriatric Vendor Relationship
Center HHA (Home Health Services)
Franklin General Hospital HHA Vendor Relationship
(Home Health Services)
Booth Memorial Medical Vendor Relationship
Center HHA (Home Health Services)
Hebrew Hospital for Chronic Marketing Letter
Sick LTHHCP (Home Health Services)
Metropolitan Jewish Geriatric Marketing Letter
Center LTHHCP (Home Health Services)
Franklin General Hospital Marketing Letter
LTHHCP (Home Health Services)
Saint Cabrini Nursing Home Marketing Letter
LTHHCP (Home Health Services)
Visiting Nurse Association of Vendor Relationship
Brooklyn HHA (Home Health Services)
Beth Abraham HHA Vendor Relationship
Chronic Care Management (Home Health Services)
Nursing Sisters Home Visiting Vendor Relationship
Service HHA (Home Health Services)
<PAGE>
RVC - Nursing
1 desk - double pedestal
5 free standing desks - no drawers - attached to wall
1 folding table
7 secretary chairs
1 large push button console 1 typewriter - IBM Selectric
1 storage cabinet - 2 door, 4 shelves
4 4 drawer file cabinets
5 2 drawer file cabinets
1 brown cabinet - 2 drawers
1 copy machine
MT Vernon - Nursing
1 single pedestal desks
2 double pedestal desks
3 secretary chairs
9 regular chairs - no arms
2 folding tables
1 storage cabinet
1 5 drawer cabinet
2 4 drawer cabinets
1 typewriter IBM Selectric
1 copy machine
1 fax machine
1 Pitney Bowes postage meter
<PAGE>
NATIONAL MEDICAL HOMECARE, INC.
NEW YORK HEALTH CARE, INC.
Exhibit A
Equipment and Fixtures
Bensonhurst - Nursing
1 desk
8 tables used as desk
7 secretary chairs
3 metal chairs
3 fabric covered screen dividers
4 2 drawer cabinets
1 copy machine
3 4 drawer storage cabinets
Queens Village - Nursing
7 Two pedestal desks
1 Executive desk with 7 drawers
14 swivel chairs (secretary)
3 swivel arm chairs
1 Executive arm chair
1 large arm chair
5 folding tables
1 small storage cabinet
1 large storage cabinet
3 room dividers
13 4 drawer filing cabinets
2 5 drawer filing cabinets
2 2 drawer filing cabinets
2 file cabinets on wheels
1 4 drawer filing cabinet 44 x 30
3 arm chairs
1 Mail scale
1 Fax machine and storage cabinet on wheels
1 Postage Meter
1 copy machine
1 typewriter and table
<PAGE>
SCHEDULE 1
SCHEDULE OF ASSETS
1. Tangible Assets
All of the machinery, equipment, furniture, furnishings, fixtures,
personalty and inventory (but no office supplies) used or useful in respect of
the ownership and operation of the Facilities, as are more particularly
described in Exhibit A hereto.
2. Intangible Assets
All of the intangible assets used or useful in the ownership or operation
of the Facilities including, but not limited to copies of Seller's school
curriculum, personal care aide's exams and approval letter, medical and
personnel records, customer lists, and all other books and records of or in
respect of the Facilities, and the exclusive right of the Purchaser to represent
itself as carrying on the business of the Facilities in continuation of or in
succession to the Seller, and the right to use appropriate words indicating that
the business of the Facilities is so carried on.
3. Exclusions
The Assets shall not include the agreements, contracts or leases described
in Exhibit B hereto or any of Seller's other customer agreements or
arrangements. The Assets shall also not include the cash, accounts receivable of
the Facilities as of the date hereof, the name of the Seller, leased equipment,
tangible property also used in Seller's durable medical equipment business,
technology or software licensed by Seller, or non-transferable government
licenses and permits, and Medicaid and Medicare provider numbers.
<PAGE>
BILL OF SALE
NATIONAL MEDICAL HOMECARE, INC.
TO
NEW YORK HEALTH CARE, INC.
KNOW ALL MEN By THESE PRESENTS, that NATIONAL MEDICAL HOMECARE, INC., a
Delaware corporation ("Seller") in consideration of the sum of SEVENTY-FIVE
THOUSAND DOLLARS ($75,000) paid to it by NEW YORK HEALTH CARE, INC. a New York
corporation ("Purchaser"), receipt of which is hereby acknowledged, and in
further consideration of the delivery to it by Purchaser of a Promissory Note
("Note") in the aggregate principal amount of FIFTY THOUSAND DOLLARS ($50,000),
does by these presents hereby grant, bargain, sell, convey, transfer, assign,
set over, and deliver unto Purchaser all right, title and interest in and to the
tangible and intangible assets ("Assets") used or useful in respect of the
ownership and operation of the private home health agency business of the Seller
operated from 2515 86th Street, Brooklyn, New York; 220-24 Jamaica Avenue,
Queens Village, New York; and 566 Merrick Road, Rockville Centre, New York
("Facilities"), such Assets being more particularly described in Schedule 1
attached hereto, as the same shall exist on the date hereof, free and clear of
all liens and encumbrances of any nature or kind.
TO HAVE AND TO HOLD the Assets unto Purchaser, its successors and assigns
forever.
IN WITNESS WHEREOF, Seller has caused this Bill of Sale to be executed as
of this 18th day of March, 1988 by its duly authorized representative.
NATIONAL MEDICAL HOMECARE, INC.
/s/ Raymond H. Noeker, Jr.
----------------------------------
By: Raymond H. Noeker, Jr.
Its: Senior Vice President
<PAGE>
ASSIGNMENT
National Medical Homecare, Inc. ("NMH") hereby transfers, conveys, and
assigns to New York Health Care, Inc. ("NYHC") such rights, title and interest
as NMH may have in the contracts or agreements with the parties hereinafter
listed, and NYHC hereby agrees to assume any of NMH's obligations under such
contracts and agreements:
Montefiore Medical Center HHA, dated February 1, 1987
Metropolitan Jewish Geriatric Center, dated February 1, 1987
Booth Memorial Medical Center HHA, dated January 1, 1987
Hebrew Hospital for Chronic Sick LTHHCP, dated November 1, 1986
Saint Cabrini Nursing Home LTHHCP, dated October 7, 1987
Nursing Sisters Home Visiting Service HHA, executed February 26, 1985
JHMCB Center for Nursing and Rehab. LTHHCP, dated May 2, 1986
IN WITNESS WHEREOF, the parties hereto have caused this Assignment to be
executed and delivered this 18th day of March, 1988.
National Medical Homecare, Inc.
By /s/ Raymond H. Noeker, Jr.
-------------------------------------
New York Health Care, Inc.
By
-------------------------------------
5744H
<PAGE>
National
[LOGO] Medical
Homecare
Northeast Region
17 Market Square
Newington, CT 06111
(203) 666-1501
Mr. Jerry Braun, President
New York Health Care, Inc.
4211 13th Avenue
Brooklyn, New York 11219
RE: Sublease of Space for Home Health Agency Business
Dear Jerry:
In connection with the sale of today to New York Health Care, Inc. ("NYHC") of
the assets of National Medical Homecare, Inc.'s ("NMH") New York City private
home health agency business, NMH hereby agrees to sublease space to NYHC for the
temporary operation of such business in the following location on the terms set
forth:
Location Sq. Ft. Rent/Sq. Ft. Term
- -------- ------- ------------ ----
Annual
------
566 Merrick Road 368 $9.00 6 Months
Rockville, Centre, N.Y.
The sublease will commence today and can be terminated by you at any time short
of the specified term in each case by giving NMH two weeks prior written notice,
which need not be directed to the end of any period. The above rates include
general utilities and taxes but are exclusive of telephone usage for which you
will be required to pay a prorate portion of the basic charges, based upon space
utilization, plus the amount of any toll call or other charges fairly allocable
to your use.
In addition, NYHC shall provide general liability insurance for itself, naming
NMH as an additional insured in such amounts as are usual and customary for like
businesses and facilities, and shall be responsible for any substantial damage
or destruction to the premises caused by its or its employees' negligence except
to the extent any required repair or replacement is adequately compensated for
by insurance proceeds.
<PAGE>
[LOGO] National
Medical
Homecare
Mr. Jerry Braun
March 14, 1988
Page 2
In all other respects not inconsistent with the above, NYHC assumes with respect
to NMH the same obligations regarding the subleased space as NMH owes to its
landlord as provided in the applicable lease for each such space.
Please indicate your acceptance of the foregoing by executing this letter in the
space provided below.
Very truly yours,
NATIONAL MEDICAL HOMECARE, INC.
By /s/ Raymond H. Noeker, Jr.
--------------------------------
Its Senior Vice President
--------------------------------
Acknowledged and agreed this
18th day of March, 1988
New York Home Health Care, Inc.
By /s/ Jerry Braun
--------------------------------
Its President
--------------------------------
<PAGE>
NATIONAL MEDICAL HOMECARE, INC.
CERTIFICATE OF SECRETARY
I, James A. Fishback, do hereby certify that I am the duly elected,
qualified and acting Secretary of National Medical Homecare, Inc., a Delaware
corporation (the "Corporation"), that the following resolutions were unanimously
approved by the Sole Director of the Corporation on February 12, 1988, and that
said resolutions have not been rescinded or modified as of the date of this
Certificate:
RESOLVED, that the Corporation approves the sale of the assets of the
Corporation's home health agency business in New York City to New York
Health Care, Inc., Jerry Braun, and Sam Soroka, and
RESOLVED FURTHER, that any Officer of the Corporation, including
specifically Raymond H. Noeker, Jr., Senior Vice President, be, and he
hereby is, authorized and directed on behalf of the Corporation to
execute and deliver such documents, including without limitation a
Purchase And Sale Agreement, and to take such action as such Officer
may deem necessary or appropriate to carry out the foregoing.
IN WITNESS WHEREOF, I have hereunto affixed my signature as of this 12th
day of February, 1988.
/s/ James A. Fishback
----------------------------------
James A. Fishback
Secretary
<PAGE>
NEW YORK HEALTH CARE, INC.
CERTIFICATE OF SECRETARY
I, Sam Soroka, do hereby certify that I am the duly elected, qualified
and action Secretary of New York Health Care, Inc., a New York Corporation
(the "Corporation"), that the following resolutions were unanimously
approved by the Directors of the Corporation on March 18, 1988, and that
said resolutions have not been rescinded or modified as of the date of this
Certificate:
RESOLVED, that the Corporation approves the purchase of certain assets
from National Medical Homecare, Inc., and
RESOLVED FURTHER, that any Officer of the Corporation, including
specifically Jerry Braun, President, be, and he hereby is, authorized
and directed on behalf of the Corporation to execute and deliver such
documents, including without limitation a Purchase And Sale Agreement,
and to take such action as such Officer may deem necessary or
appropriate to carry out the foregoing.
IN WITNESS WHEREOF, I have hereunto affixed my signature as of this 18th
day of March, 1988.
/s/ Sam Soroka
----------------------------------
SAM SOROKA
Secretary
<PAGE>
SCHEDULE 1
DEBTOR SECURED PARTY
------ -------------
New York Health Care, Inc. National Medical Homecare, Inc.
4211 13th Avenue 60-71 Metropolitan Avenue
Brooklyn, New York Ridgewood, New York
This Financing Statement covers the following:
All of Company's right, title and interest in the accounts receivable of
the Company, pursuant to a Security Agreement, dated March 18, 1988 (the
"Agreement"), provided, however, that the Secured Party's security interest
hereunder shall be subordinate to a loan from United Mizrachy Bank (the "Bank")
to the Company in an amount not to exceed $800,000 pursuant to a loan agreement
between the Bank and the Company as in effect on the date of the Agreement.
5726H
<PAGE>
Uniform Commercial Code--FINANCING STATEMENT--Form WCC-1
JULIUS BLUMBER, INC. N. Y. C. 10013
IMPORTANT-- Read instructions on back before filling out form
<TABLE>
<S> <C> <C>
This FINANCING STATEMENT is presented to a
Filing Officer for filing pursuant to the | NO. of Additional |
Uniform Commercial Code. | Sheets Presented: | 3. [ ] The Debtor is a transmitting utility.
- ------------------------------------------------------------------------------------------------------------------------------------
1. Debtor(s) (Last Name first) and Address(es): | 2. Secured Party(ies) |
| Name(s) and Address(es) |4. For Filing Officer: Date, Time, No. Filing Office
| |
New York Health Care, Inc. | National Medical Homecare, |
4211 13th Avenue Inc. | 60-71 Metropolitan Avenue |
Brooklyn, New York | Ridgewood, New York |
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5. This Financing Statement covers the following types (or items) of property: |6. Assignee(s) of Secured Party and Address(es)
See Schedule 1 attached hereto. |
|
----------------------------------------------------
|7 [ ] The described crops are growing or to
| be grown on:*
| [ ] The described goods are or are to be
| affixed to:*
[ ] Products of the Collateral are also covered. | [ ] The lumber to be cut or minerals or the like
- -------------------------------------------------------------------------------- (including oil and gas) is on*
8. Describe Real Estate Here: [ ] This statement is to be | 9. Name of *(Describe Real Estate Below)
indexed in the Real | a Record ----------------------------------------------------
Estate Records: | Owner
|
-----------------------------------------------------------------
No. & Street Town or City County Section Block Lot
- ------------------------------------------------------------------------------------------------------------------------------------
10. This statement is filed without the debtor's signature to perfect a security interest in collateral (check appropriate box)
[ ] under a security agreement signed by debtor authorizing secured party to file this statement, or
[ ] which is proceeds of the original collateral described above in which a security interest was perfected, or
[ ] acquired after a change of name, identity or corporate structure of the debtor, or [ ] as to which the filing has lapsed, or
already subject to a security interest in another jurisdiction:
[ ] when the collateral was brought into the state, or [ ] when the debtor's location was charged to this state.
</TABLE>
NEW YORK HEALTH CARE. INC. NATIONAL MEDICAL HOMECARE, INC.
- ------------------------------------- ---------------------------------------
By /s/ Jerry Braun By /s/ Raymond H. Noeker, Sr. VP.
- ------------------------------------- ---------------------------------------
Signature(s) of Debtor(s) Signature(s) of Secured Party(ies)
(1) Filing Officer Copy-Numerical
(5/82) STANDARD FORM -- FORM UCC -- Approved by Secretary of State of New York
STANDARD FORM OF OFFICE LEASE
The Real Estate Board of New York, Inc.
AGREEMENT OF LEASE, made as of this 30th day of October 1992, between Vincent
Rippa as Receiver, having an address at 11 Martine Avenue, White Plains, New
York 10606 party of the first part, hereinafter referred to as OWNER, and NEW
YORK HEALTH CARE, INC. 1498 Flatbush Avenue, Brooklyn, NY 11210, party of the
second part, hereinafter referred to as TENANT.
WITNESSETH:
Owner hereby leases to Tenant and Tenant hereby hires from Owner Suite
501/502 1686.6 Square Feet in the building known as 105 Stevens Avenue in the
City of Mt. Vernon, County of Westchester, for the term of Four (4) Years (or
until such term shall sooner cease and expire as hereinafter provided) to
commence on the 1st day of January nineteen hundred and 93, and to end on the
31st day of December, nineteen hundred and 96, both dates inclusive, at an
annual rental rate of From 1/1/93 to 12/31/93 = $1,300.00 per month [Initialed
/s/ JB], From 1/1/94 to 12/31/94 = $1,500.00 per month, From 1/1//95 to 12/31/95
= $1,600.00 per month, From 1/1/96 to 12/31/96 = $1,700.00 per month. Including
electric as set forth in paragraph 37D. which Tenant agrees to pay in lawful
money of the United States which shall be legal tender in payment of all debts
and dues, public and private, at the time of payment, in equal monthly
installments in advance on the first day of each month during said term, at the
office of Owner or such other place as Owner may designate, without any set off
or deduction whatsoever, except that Tenant shall pay the first_____ monthly
installment(s) on the execution hereof (unless this lease be a renewal).
In the event that, at the commencement of the term of this lease, or
thereafter, Tenant shall be in default in the payment of rent to Owner pursuant
to the terms of another lease with Owner or with Owner's predecessor in
interest, Owner may at Owner's option and without notice to Tenant add the
amount of such arrears to any monthly installment of rent payable hereunder and
the same shall be payable to Owner as additional rent.
The parties hereto, for themselves, their heirs, distributees, executors,
administrators, legal representatives, successors and assigns, hereby covenant
as follows:
Rent
1. Tenant shall pay the rent as above and as hereinafter provided.
Occupancy
2. Tenant shall use and occupy demised premises for See Rider Article #38 and
for no other purpose.
Tenant Alterations:
3. Tenant shall make no changes in or to the demised premises of any nature
without Owner's prior written constant. Subject to the prior written consent of
Owner, and to the provisions of this article, Tenant, at Tenant's expense, may
make alterations, installations, additions or improvements which are
nonstructural and which do not affect utility services or plumbing and
electrical lines, in or to the interior of the demised premises by using
contractors or mechanics first approved in each instance by Owner. Tenant shall,
before making any alterations, additions, installations or improvements, at its
expense, obtain all permits, approvals and certificates required by any
governmental or quasi-governmental bodies and (upon completion) certificates of
final approval thereof and shall deliver promptly duplicates of all such
permits, approvals and certificates to Owner and Tenant agrees to carry and will
cause Tenant's contractors and sub-contractors to carry such workman's
compensation, general liability, personal and property damage insurance as Owner
may require. If any mechanic's lien is filed against the demised premises, or
the building of which the same forms a part, for work claimed to have been done
for, or materials furnished to, Tenant, whether or not done pursuant to this
article, the same shall be discharged by Tenant within thirty days thereafter at
Tenant's expense, by payment or filing the bond required by law. All fixtures
and all paneling, partitions, railings and like installations, installed in the
premises at any time, either by Tenant or by Owner on Tenant's behalf, shall,
upon installation, become the property of Owner and shall remain upon and be
surrendered with the demised premises unless Owner, by notice to Tenant no later
than twenty days prior to the date fixed as the termination of this lease,
elects to relinquish Owner's right thereto and to have them removed by Tenant,
in which event the same shall be removed from the premises by Tenant prior to
the expiration of the lease at the Tenant's expense. Nothing in this Article
shall be construed to give Owner title to or to prevent Tenant's removal of
trade fixtures, moveable office furniture and equipment, but upon removal of any
such from the premises or upon removal of other installations as may be required
by Owner, Tenant shall immediately and at its expense, repair and restore the
premises to the condition existing prior to installation and repair any damage
to the demised premises or the building due to such removal. All property
permitted or required to be removed by Tenant at the end of the term remaining
in the premises after Tenant's removal shall be deemed abandoned and may, at the
election of Owner, either be retained as Owner's property or may be removed from
the premises by Owner, at Tenant's expense.
Maintenance and Repairs
4. Tenant shall, throughout the term of this lease, take good care of the
demised premises and the fixtures and appurtenances therein. Tenant shall be
responsible for all damage or injury to the demised premises or any other part
of the building and the systems and equipment thereof, whether requiring
structural or nonstructural repairs caused by or resulting from carelessness,
omission, neglect or improper conduct of Tenant, Tenant's subtenants, agents,
employees, invitees or licensees, or which arise out of any work, labor, service
or equipment done for or supplied to Tenant or any subtenant or arising out of
the installation, use or operation of the property or equipment of Tenant or any
subtenant. Tenant shall also repair all damages to the building and the demised
premises caused by the moving of Tenant's fixtures, furniture and equipment.
Tenant shall promptly make, at Tenant's expense, all repairs in and to the
demised premises for which Tenant is responsible, using only the contractor for
the trade or trades in question, selected from a list of at least two
contractors per trade submitted by Owner. Any other repairs in or to the
building or the facilities and systems thereof for which Tenant is responsible
shall be performed by Owner at the Tenant's expense. Owner shall maintain in
good working order and repair the exterior and the structural portions of the
building, including the structural portions of its demised premises and the
public portions of the building interior and the building plumbing, electrical,
heating and ventilating systems (to the extent such systems presently exist)
serving the demised premises. Tenant agrees to give prompt notice of any
defective condition in the premises for which Owner may be responsible
hereunder. There shall be no allowance to Tenant for diminution of rental value
and no liability on the part of Owner by reason of inconvenience, annoyance or
injury to business arising from Owner or others making repairs, alterations,
additions or improvements in or to any portion of the building or the demised
premises or in and to the fixtures, appurtenances or equipment thereof. It is
specifically agreed that Tenant shall not be entitled to any setoff or reduction
of rent by reason of any failure of Owner to comply with the covenants of this
or any other article of this Lease. Tenant agrees that Tenant's sole remedy at
law in such instance will be by way of an action for damages for breach of
contract. The provisions of this Article 4 shall not apply in the case of fire
or other casualty which are dealt with in Article 9 hereof.
Window Cleaning:
5. Tenant will not clean nor require, permit, suffer or allow any window in the
demised premises to be cleaned from the outside in violation of Section 202 of
the Labor Law or any other applicable law or of the Rules of the Board of
Standards and Appeals, or of any other Board or body having or asserting
jurisdiction.
Requirements of Law, Fire Insurance, Floor Loads:
6. Prior to the commencement of the lease term, if Tenant is then in possession,
and at all times thereafter, Tenant, at Tenant's sole cost and expense, shall
promptly comply with all present and future laws, orders and regulations of all
state, federal, municipal and local governments, departments, commissions and
boards and any direction of any public officer pursuant to law, and all orders,
rules, and regulations of the New York Board of Fire Underwriters, Insurance
Services Office, or any similar body which shall impose any violation, order, or
duty upon Owner or Tenant with respect to the demised premises, whether or not
arising out of Tenant's permitted use or manner of use thereof, (including
Tenant's permitted use) or, with respect to the building if arising out of
Tenant's
<PAGE>
use or manner of use of the premises or the building (including the use
permitted under the lease). Nothing herein shall require Tenant to make
structural repairs or alterations unless Tenant has, by its manner of use of the
demised premises or method of operation therein, violated any such laws,
ordinances, orders, rules, regulations or requirements with respect thereto.
Tenant may, after securing Owner to Owner's satisfaction against all damages,
interest, penalties and expenses, including but not limited to, reasonable
attorney's fees, by cash deposit or by surety bond in an amount and in a company
satisfactory to Owner, contest and appeal any such laws, ordinances, orders,
rules, regulations or requirements provided same is done with all reasonable
promptness and provided such appeal shall not subject Owner to prosecution for a
criminal offense or constitute a default under any lease or mortgage under which
Owner may be obligated or cause the demised premises or any part thereof to be
condemned or vacated. Tenant shall not do or permit any act or thing to be done
in or to the demised premises which is contrary to law, or which will invalidate
or be in conflict with public liability, fire or other policies of insurance at
any time carried by or for the benefit of Owner with respect to the demised
premises or the building of which the demised premises form a part, or which
shall or might subject Owner to any liability or responsibility to any person or
for property damage. Tenant shall not keep anything in the demised premises
except as now or hereafter permitted by the Fire Department, Board of Fire
Underwriters, Fire Insurance Rating Organization or other authority having
jurisdiction and then only in such manner and such quantity so as not to
increase the rate for fire insurance applicable to the building, nor use the
premises in any manner which will increase the insurance rate for the building
or any property located therein over that in effect prior to the commencement of
Tenant's occupancy. Tenant shall pay all costs, expenses, fines, penalties, or
damages which may be imposed upon Owner by reason of Tenant's failure to comply
with the provisions of this article and if by reason of such failure the fire
insurance rate shall, at the beginning of this lease or at any time thereafter,
be higher than it otherwise would be, then Tenant shall reimburse Owner, as
additional rent hereunder, for that portion of all fire insurance premiums
thereafter paid by Owner which shall have been charged because of such failure
by Tenant. In any action or proceeding wherein Owner and Tenant are parties, a
schedule or "make-up" of rate for the building or demised premises issued by the
New York Fire Insurance Exchange, or other body making fire insurance rates
applicable to said premises shall be conclusive evidence of the facts therein
stated and of the several items and charges in the fire insurance rates then
applicable to said premises. Tenant shall not place a load upon any floor of the
demised premises exceeding the floor load per square foot area which it was
designed to carry and which is allowed by law. Owner reserves the right to
prescribe the weight and position of all safes, business machines and mechanical
equipment. Such installations shall be placed and maintained by Tenant, at
Tenant's expense, in settings sufficient, in Owner's judgment, to absorb and
prevent vibration, noise and annoyance.
Subordination:
7. This lease is subject and subordinate to all ground or underlying leases and
to all mortgages which may now or hereafter affect such leases or the real
property of which demised premises are a part and to all renewals,
modifications, consolidations, replacements and extensions of any such
underlying leases and mortgages. This clause shall be self-operative and no
further instrument of subordination shall be required by any ground or
underlying lessor or by any mortgagee, affecting any lease or the real property
of which the demised premises are a part. In confirmation of such subordination,
Tenant shall from time to time execute promptly any certificate that Owner may
request.
Property -- Loss, Damage, Reimbursemen, Indemnity:
8: Owner or its agents shall not be liable for any damage to property of Tenant
or of others entrusted to employees of the building, nor for loss of or damage
to any property of Tenant by theft or otherwise, nor for any injury or damage to
persons or property resulting from any cause of whatsoever nature, unless caused
by or due to negligence of Owner, its agents, servants or employees. Owner or
its agents will not be liable for any such damage caused by other tenants or
persons in, upon or about said building or caused by operations in construction
of any private, public or quasi public work.
If at any time any windows of the demised premises are temporarily closed,
darkened or bricked up (or permanently closed, darkened or bricked up, if
required by law) for any reason whatsoever, including, but not limited to,
Owner's own acts, Owner shall not be liable for any damage Tenant may sustain
thereby and Tenant shall not be entitled to any compensation therefor nor
abatement or diminution of rent nor shall the same release Tenant from its
obligations hereunder nor constitute an eviction. Tenant shall indemnify and
save harmless Owner against and from all liabilities, obligations, damages,
penalties, claims, costs and expenses for which Owner shall not be reimbursed by
insurance, including reasonable attorneys fees, paid, suffered, or incurred as a
result of any breach by Tenant, Tenant's agents, contractors, employees,
invitees, or licensees, of any covenant or condition of this lease, or the
carelessness, negligence or improper conduct of the Tenant, Tenant's agents,
contractors, employees, invitees or licensees. Tenant's liability under this
lease extends to the acts and omissions of any sub-tenant, and any agent,
contractor, employee, invitees or licensee of any sub-tenant. In case any action
or proceeding is brought against Owner by reason of any such claim, Tenant, upon
written notice from Owner, will, at Tenant's expense, resist or defend such
action or proceeding by counsel approved by Owner in writing, such approval not
to be unreasonably withheld.
Destruction, Fire and Other Casualty:
9. (a) If the demised premises or any part thereof shall be damaged by fire or
other casualty, Tenant shall give immediate notice thereof to Owner and this
lease shall continue in full force and effect except as hereinafter set forth.
(b) If the demised premises are partially damaged or rendered partially unusable
by fire or other casualty, the damages thereto shall be repaired by and at the
expense of Owner and the rent and other items of additional rent, until such
repair shall be substantially completed, shall be apportioned from the day
following the casualty according to the part of the premise which is usable. (c)
If the demised premises are totally damaged or rendered wholly unusable by fire
or other casualty, then the rent and other items of additional rent as
hereinafter expressly provided shall be proportionately paid up to the time of
the casualty and thenceforth shall cease until the date when the premises shall
have been repaired and restored by Owner, subject to Owner's right to elect not
to restore the same as hereinafter provided. (d) If the demised premises are
rendered wholly unusable or (whether or not the demised premises are damaged in
whole or in part) if the building shall be so damaged that Owner shall decide to
demolish it or to rebuild it, then, in any of such events, Owner may elect to
terminate this lease by written notice to Tenant, given within 90 days after
such fire or casualty, specifying a date for the expiration of the lease, which
date shall not be more than 60 days after the giving of such notice, and upon
the date specified in such notice the term of this lease shall expire as fully
and completely as if such date were the date set forth above for the termination
of this lease and Tenant shall forthwith quit, surrender, and vacate the
premises without prejudice however, to Landlord's rights and remedies against
Tenant under the lease provisions in effect prior to such termination, and any
rent owing shall be paid up to such date and any payments of rent made by Tenant
which were on account of any period subsequent to such date shall be returned to
Tenant. Unless Owner shall serve a termination notice as provided for herein,
Owner shall make the repairs and restorations under the conditions of (b) and
(c) hereof, with all reasonable expedition, subject to delays due to adjustment
of insurance claims, labor troubles and causes beyond Owner's control. After any
such casualty, Tenant shall cooperate with Owner's restoration by removing from
the premises as promptly as reasonably possible, all of Tenant's salvageable
inventory and moveable equipment, furniture, and other property. Tenant's
liability for rent shall resume five (5) days after written notice from Owner
that the premises are substantially ready for Tenant's occupancy. (e) Nothing
contained hereinabove shall relieve Tenant from liability that may exist as a
result of damage from fire or other casualty. Notwithstanding the foregoing,
each party shall look first to any insurance in its favor before making any
claim against the other party for recovery for loss or damage resulting from
fire or other casualty and to the extent that such insurance is in force and
collectible and to the extent permitted by law, Owner and Tenant each hereby
releases and waives all right of recovery against the other or any one claiming
through or under each of them by way of subrogation or otherwise. The foregoing
release and waiver shall be in force only if both releasors' insurance policies
contain a clause providing that such a release or waiver shall not invalidate
the insurance. If, and to the extent, that such waiver can be obtained only by
the payment of additional premiums, then the party benefiting from the waiver
shall pay such premium within ten days after written demand or shall be deemed
to have agreed that the party obtaining insurance coverage shall be free of any
further obligation under the provisions hereof with respect to waiver of
subrogation. Tenant acknowledges that Owner will not carry insurance on Tenant's
furniture and/or furnishings or any fixtures or equipment, improvements, or
appurtenances removable by Tenant and agrees that Owner will not be obligated to
repair any damage thereto or replace the same. (f) Tenant hereby waives the
provisions of Section 227 of the Real Property Law and agrees that the
provisions of this article shall govern and control in lieu thereof.
Eminent Domain:
10. If the whole or any part of the demised premises shall be acquired or
condemned by Eminent Domain for any public or quasi public use or purpose, then
and in that event, the term of this lease shall cease and terminate from the
date of title vesting in such proceeding and Tenant shall have no claim for the
value of any unexpired term of said lease and assigns to Owner, Tenant's entire
interest in any such award.
Assignment, Mortgage, Etc.:
11. Tenant, for itself, its heirs, distributees, executors, administrators,
legal representatives, successor and assigns, expressly covenants that it shall
not assign, mortgage or encumber this agreement, nor underlet, or suffer or
permit the demised premises or any part thereof to be used by others, without
the prior written consent of Owner in each instance. Transfer of the majority of
the stock of a corporate Tenant or the majority partnership interest of a
partnership Tenant shall be deemed an assignment. If this lease be assigned, or
if the demised premises or any part thereof be underlet or occupied by anybody
other than Tenant, Owner may, after default by Tenant, collect rent from the
assignee, under-tenant or occupant and apply the net amount collected to the
rent herein reserved, but no such assignment, underletting, occupancy or
collection shall be deemed a waiver of this covenant, or the acceptance of the
assignee, under-tenant or occupant as tenant, or a release of Tenant from the
further performance by Tenant of covenants on the part of Tenant herein
contained. The consent by Owner to an assignment or underletting shall not in
any wise be construed to relieve Tenant from obtaining the express consent in
writing of Owner to any further assignment or underletting.
Electric Current: [GRAPHIC OF POINTING HAND]
12. Rates and conditions in respect to submetering or rent inclusion, as the
case may be, to be added in RIDER attached hereto. Tenant covenants and agrees
that at all times its use of electric current shall not exceed the capacity of
existing feeders to the building or the risers or wiring installation and Tenant
may not use any electrical equipment which, in Owner's opinion, reasonably
exercised, will overload such installations or interfere with the use thereof by
other tenants of the building. The change at any time of the character of
electric service shall in no wise make Owner liable or responsible to Tenant,
for any loss, damages, or expenses which Tenant may sustain.
Access to Premises:
13. Owner or Owner's agents shall have the right (but shall not be obligated) to
enter the demised premises in any emergency at any time, and at other reasonable
times, to examine the same and to make such repairs, replacements and
improvements as Owner may deem necessary and reasonably desirable to the demised
premises or to any other portion of the building or which Owner may elect to
perform. Tenant shall permit Owner to use and maintain and replace pipes and
conduits in and through the demised premises and to erect new pipes and conduits
therein provided they are concealed within the walls, floor, or ceiling. Owner
may, during the progress of any work in the demised premises, take all necessary
materials and equipment into said premises without the same constituting an
eviction nor shall the tenant be entitled to any abatement of rent while such
work is in progress nor to any damages by reason of loss or interruption of
business or otherwise. Throughout the term hereof Owner shall have the right to
enter the demised premises at reasonable hours for the purpose of showing the
- ----------
[GRAPHIC OF POINTING HAND] Rider to be added if necessary.
<PAGE>
same to prospective purchasers or mortgagees of the building, and during the
last six months of the term for the purpose of showing the same to prospective
tenants. If Tenant is not present to open and permit an entry into the demised
premises, Owner or Owner's agents may enter the same whenever such entry may be
necessary or permissible by master key or forcibly and provided reasonable care
is exercised to safeguard Tenant's property, such entry shall not render Owner
or its agents liable therefor, nor in any event shall the obligations of Tenant
hereunder be affected. If during the last month of the term Tenant shall have
removed all or substantially all of Tenant's property therefrom Owner may
immediately enter, alter, renovate or redecorate the demised premises without
limitation or abatement of rent or incurring liability to Tenant for any
compensation and such act shall have no effect on this lease or Tenant's
obligations hereunder.
Vault, Vault Space, Area:
14. No Vaults, vault space or area, whether or not enclosed or covered, not
within the property line of the building is leased hereunder, anything contained
in or indicated on any sketch, blueprint or plan, or anything contained
elsewhere in this lease to the contrary notwithstanding. Owner makes no
representation as to the location of the property line of the building. All
vaults and vault space and all such areas not within the property line of the
building, which Tenant may be permitted to use and/or occupy, is to be used
and/or occupied under a revocable license, and if any such license be revoked,
or if the amount of such space or area be diminished or required by any federal,
state or municipal authority or public utility, Owner shall not be subject to
any liability nor shall Tenant be entitled to any compensation or diminution or
abatement of rent nor shall such revocation, diminution or requisition be deemed
constructive or actual eviction. Any tax, fee or charge of municipal authorities
for such vault or area shall be paid by Tenant.
Occupancy:
15. Tenant will not at any time use or occupy the demised premises in violation
of the certificate of occupancy issued for the building of which the demised
premises are a part. Tenant has inspected the premises and accepts them as is,
subject to the riders annexed hereto with respect to Owner's work, if any. In
any event, Owner makes no representation as to the condition of the premises and
Tenant agrees to accept the same subject to violations, whether or not of
record.
Bankruptcy:
16. (a) Anything elsewhere in this lease to the contrary notwithstanding, this
lease may be cancelled by Owner by the sending of a written notice to Tenant
within a reasonable time after the happening of any one or more the of the
following events: (1) the commencement of a case in bankruptcy or under the laws
of any state naming Tenant as the debtor; or (2) the making by Tenant of an
assignment or any other arrangement for the benefit of creditors under any state
statute. Neither Tenant nor any person claiming through or under Tenant, or by
reason of any statute or order of court, shall thereafter be entitled to
possession of the premises demised but shall forthwith quit and surrender the
premises. If this lease shall be assigned in accordance with its terms, the
provisions of this Article 16 shall be applicable only to the party then owning
Tenant's interest in this lease.
(b) It is stipulated and agreed that in the event of the termination of
this lease pursuant to (a) hereof, Owner shall forthwith, notwithstanding any
other provisions of this lease to the contrary, be entitled to recover from
Tenant as and for liquidated damages an amount equal to the difference between
the rent reserved hereunder for the unexpired portion of the term demised and
the fair and reasonable rental value of the the demised premises for the same
period. In the computation of such damages the difference between any
installment of rent becoming due hereunder after the date of termination and the
fair and reasonable rental value of the demised premises for the period for
which such installment was payable shall be discounted to the date of
termination at the rate of four percent (4%) per annum. If such premises or any
part thereof be relet by the Owner for the unexpired term of said lease, or any
part thereof, before presentation of proof of such liquidated damages to any
court, commission or tribunal, the amount of rent reserved upon such reletting
shall be deemed to be the fair and reasonable rental value for the part or the
whole of the premises to be so re-let during the term of the re-letting. Nothing
herein contained shall limit or prejudice the right of the Owner to prove for
and obtain as liquidated damages by reason of such termination, an amount equal
to the maximum allowed by any statute or rule of law in effect at the time when,
and governing the proceedings in which, such damages are to be proved, whether
or not such amount be greater, equal to, or less than the amount of the
difference referred to above.
Default:
17. (1) If Tenant defaults in fulfilling any of the covenants of this lease
other than the covenants for the payment of rent or additional rent; or if the
demised premises become vacant or deserted; or if any execution or attachment
shall be issued against Tenant or any of Tenant's property whereupon the demised
premises shall be taken or occupied by someone other than Tenant; or if this
lease be rejected under ss.235 of Title 11 of the U.S. Code (bankruptcy code);
or if Tenant shall fail to move into or take possession of the premises within
fifteen (15) days after the commencement of the term of this lease, then, in any
one or more of such events, upon Owner serving a written five (5) days notice
upon Tenant specifying the nature of said default and upon the expiration of
said five (5) days, if Tenant shall have failed to comply with or remedy such
default, or if the said default or omission complained of shall be of a nature
that the same cannot be completely cured or remedied within said five (5) day
period, and if Tenant shall not have diligently commenced curing such default
within such five (5) day period, and shall not thereafter with reasonable
diligence and in good faith, proceed to remedy or cure such default, then Owner
may serve a written three (3) days' notice of cancellation of this lease upon
Tenant, and upon the expiration of said three (3) days this lease and the terms
thereunder shall end and expire as fully and completely as if the expiration of
such three (3) day period were the day herein definitely fixed for the end and
expiration of this lease and the term thereof and Tenant shall then quit and
surrender the demised premises to Owner but Tenant shall remain liable as
hereinafter provided.
(2) If the notice provided for in (1) hereof shall have been given and the
term shall expire as aforesaid; or if Tenant shall make default in the payment
of the rent reserved herein or any item of additional rent herein mentioned or
any part of either or in making any other payment herein required; then and in
any of such events Owner may without notice, re-enter the demised premises
either by force or otherwise, and dispossess Tenant by summary proceedings or
otherwise, and the legal representative of Tenant or other occupant of demised
premises and remove their effects and hold the premises as if this lease had not
been made, and Tenant hereby waives the service of notice of intention to
re-enter or to institute legal proceedings to that end. If Tenant shall make
default hereunder prior to the date fixed as the commencement of any renewal or
extension of this lease, Owner may cancel and terminate such renewal or
extension agreement by written notice.
Remedies of Owner and Waiver of Redemption:
18. In case of any such default, re-entry, expiration and/or dispossess by
summary proceedings or otherwise, (a) the rent shall become due thereupon and be
paid up to the time of such re-entry, dispossess and/or expiration, (b) Owner
may re-let the premises or any part or parts thereof either in the name of Owner
or otherwise, for a term or terms, which may at Owner's option be less than or
exceed the period which would otherwise have constituted the balance of the term
of this lease and may grant concessions or free rent or charge a higher rental
than that in this lease, and/or (c) Tenant or the legal representatives of
Tenant shall also pay Owner as liquidated damages for the failure of Tenant to
observe and perform said Tenant's covenants herein contained, any deficiency
between the rent hereby reserved and/or covenanted to be paid and the net
amount, if any, of the rents collected on account of the lease or leases of the
demised premises for each month of the period which would otherwise have
constituted the balance of the term of this lease. The failure of Owner to
re-let the premises or any part or parts thereof shall not release or affect
Tenant's liability for damages. In computing such liquidated damages there shall
be added to the said deficiency such expenses as Owner may incur in connection
with re-letting, such as legal expenses, attorneys' fees, brokerage,
advertising, and for keeping the demised premises in good order or for preparing
the same for re-letting. Any such liquidated damages shall be paid in monthly
installments by Tenant on the rent day specified in this lease and any suit
brought to collect the amount of the deficiency for any month shall not
prejudice in any way the rights of Owner to collect the deficiency for any
subsequent month by a similar proceeding. Owner, in putting the demised premises
in good order or preparing the same for re-rental may, at Owner's option, make
such alterations, repairs, replacements and/or decorations in the demised
premises as Owner, in Owner's sole judgment, considers advisable and necessary
for the purpose of re-letting the demised premises, and the making of such
alterations, repairs, replacements, and/or decorations shall not operate or be
construed to release Tenant from liability hereunder as aforesaid. Owner shall
in no event be liable in any way whatsoever for failure to re-let the demised
premises, or in the event that the demised premises are re-let, for failure to
collect the rent thereof under such re-letting, and in no event shall Tenant be
entitled to receive any excess, if any, of such net rents collected over the
sums payable by Tenant to Owner hereunder. In the event of a breach or
threatened breach by Tenant of any of the covenants or provisions hereof, Owner
shall have the right of injunction and the right to invoke any remedy allowed at
law or in equity as if re-entry, summary proceedings and other remedies were not
herein provided for. Mention in this lease of any particular remedy, shall not
preclude Owner from any other remedy, in law or in equity. Tenant hereby
expressly waives any and all rights of redemption granted by or under any
present or future laws in the event of Tenant being evicted or dispossessed for
any cause, or in the event of Owner obtaining possession of demised premises, by
reason of the violation by Tenant of any of the covenants and conditions of this
lease, or otherwise.
Fees and Expenses
19. If Tenant shall default in the observance or performance of any term or
covenant on Tenant's part to be observed or performed under or by virtue of any
of the terms or provisions in any article of this lease, then, unless otherwise
provided elsewhere in this lease, Owner may immediately or at any time
thereafter and without notice perform the obligation of Tenant thereunder. If
Owner, in connection with the foregoing or in connection with any default by
Tenant in the covenant to pay rent hereunder, makes any expenditures or incurs
any obligations for the payment of money, including but not limited to
reasonable attorney's fees, in instituting, prosecuting, or defending any action
or proceeding, then Tenant will reimburse Owner for such sums so paid or
obligations incurred with interest and costs. The foregoing expenses incurred by
reason of Tenant's default shall be deemed to be additional rent hereunder and
shall be paid by Tenant to Owner within ten (10) days of rendition of any bill
or statement to Tenant therefor. If Tenant's lease term shall have expired at
the time of making of such expenditures or incurring of such obligations, such
sums shall be recoverable by Owner, as damages.
Building Alterations and Management:
20. Owner shall have the right at any time without the same constituting an
eviction and without incurring liability to Tenant therefor to change the
arrangement and/or location of public entrances, passageways, doors, doorways,
corridors, elevators, stairs, toilets or other public parts of the building and
to change the name, number or designation by which the building may be known.
There shall be no allowance to Tenant for diminution of rental value and no
liability on the part of Owner by reason of inconvenience, annoyance or injury
to business arising from Owner or other Tenants making any repairs in the
building or any such alterations, additions and improvements. Furthermore,
Tenant shall not have any claim against Owner by reason of Owner's imposition of
such controls of the manner of access to the building by Tenant's social or
business visitors as the Owner may deem necessary for the security of the
building and its occupants.
No Representations by Owner:
21. Neither Owner nor Owner's agents have made any representations or promises
with respect to the physical condition of the building, the land upon which
<PAGE>
it is erected, or the demised premises, the rents, leases, expenses of operation
or any other matter or thing affecting or related to the premises except as
herein expressly set forth and no rights, easements or licenses are acquired by
Tenant by implication or otherwise except as expressly set forth in the
provisions of this lease. Tenant has inspected the building and the demised
premises and is thoroughly acquainted with their condition and agrees to take
the same "as is" and acknowledges that the taking of possession of the demised
premises by Tenant shall be conclusive evidence that the said premises and the
building of which the same form a part were in good and satisfactory condition
at the time such possession was so taken, except as to latent defects. All
understandings and agreements heretofore made between the parties hereto are
merged in this contract, which alone fully and completely expresses the
agreement between Owner and Tenant and any executory agreement hereafter made
shall be ineffective to change, modify, discharge or effect an abandonment of it
in whole or in part, unless such executory agreement is in writing and signed by
the party against whom enforcement of the change, modification, discharge or
abandonment is sought.
End of Term:
22. Upon the expiration or other termination of the term of this lease, Tenant
shall quit and surrender to Owner the demised premises, broom clean, in good
order and condition, ordinary wear and damages which Tenant is not required to
repair as provided elsewhere in this lease excepted and Tenant shall remove all
its property. Tenant's obligation to observe or perform this covenant shall
survive the expiration or other termination of this lease. If the last day of
the term of this Lease or any renewal thereof, falls on Sunday, this lease shall
expire at noon on the preceding Saturday unless it be a legal holiday in which
case it shall expire at noon on the preceding business day.
Quiet Enjoyment:
23. Owner covenants and agrees with Tenant that upon Tenant paying the rent and
additional rent and observing and performing all terms, covenants and
conditions, on Tenant's part to be observed and performed, Tenant may peaceably
and quietly enjoy the premises hereby demised, subject, nevertheless, to the
terms and conditions of this lease including, but not limited to, Article 31
hereof and to the ground leases, underlying leases and mortgages hereinbefore
mentioned.
Failure to Give Possession:
24. If Owner is unable to give possession of the demised premised on the date of
the commencement of the term hereof, because of the holding-over or retention of
possession of any tenant, undertenant or occupants or if the demised premises
are located in a building being constructed, because such building has not been
sufficiently completed to make the premises ready for occupancy or because of
the fact that a certificate of occupancy has not been procured or for any other
reason, Owner shall not be subject to any liability for failure to give
possession on said date and the validity of the lease shall not be impaired
under such circumstances, nor shall the same be construed in any wise to extend
the term of this lease, but the rent payable hereunder shall be abated (provided
Tenant is not responsible for Owner's inability to obtain possession or complete
construction) until after Owner shall have given Tenant written notice that the
premises are substantially ready for Tenant's occupancy. If permission is given
to Tenant to enter into the possession of the demised premises or to occupy
premises other than the demised premises prior to the date specified as the
commencement of the term of this lease, Tenant covenants and agrees that such
possession shall be deemed to be under all the terms, covenants, conditions and
provisions of this lease except as to the covenant to pay rent. The provisions
of this article are intended to constitute "an express provision to the
contrary" within the meaning of Section 223-a of the New York Real Property Law.
No Waiver:
25. The failure of Owner to seek redress for violation of, or to insist upon the
strict performance of any covenant or condition of this lease or of any of the
Rules or Regulations, set forth or hereafter adopted by Owner, shall not prevent
a subsequent act which would have originally constituted a violation from having
all the force and effect of an original violation. The receipt by Owner of rent
and/or additional rent with knowledge of the breach of any covenant of this
lease shall not be deemed a waiver of such breach and no provision of this lease
shall be deemed to have been waived by Owner unless such waiver be in writing
signed by Owner. No payment by Tenant or receipt by Owner of a lesser amount
than the monthly rent herein stipulated shall be deemed to be other than on
account of the earliest stipulated rent, nor shall any endorsement or statement
of any check or any letter accompanying any check or payment as rent be deemed
an accord and satisfaction, and Owner may accept such check or payment without
prejudice to Owner's right to recover the balance of such rent or pursue any
other remedy in this lease provided. No act or thing done by Owner or Owner's
agents during the term hereby demised shall be deemed an acceptance of a
surrender of said premises, and no agreement to accept such surrender shall be
valid unless in writing signed by Owner. No employee of Owner or Owner's agent
shall have any power to accept the keys of said premises prior to the
termination of the lease and the delivery of keys to any such agent or employee
shall not operate as a termination of the lease or a surrender of the premises.
Waiver of Trial by Jury:
26. It is mutually agreed by and between Owner and Tenant that the respective
parties hereto shall and they hereby do waive trial by jury in any action
proceeding or counterclaim brought by either of the parties hereto against the
other (except for personal injury or property damage) on any matters whatsoever
arising out of or in any way connected with this lease, the relationship of
Owner and Tenant, Tenant's use of or occupancy of said premises, and any
emergency statutory or any other statutory remedy. It is further mutually agreed
that in the event Owner commences any summary proceeding for possession of the
premises, Tenant will not interpose any counterclaim of whatever nature or
description in any such proceeding including a counterclaim under Article 4
except for statutory mandatory counterclaims.
Inability to Perform:
27. This Lease and the obligation of Tenant to pay rent hereunder and perform
all of the other covenants and agreements hereunder on part of Tenant to be
performed shall in no wise be affected, impaired or excused because Owner is
unable to fulfill any of its obligations under this lease or to supply or is
delayed in supplying any service expressly or impliedly to be supplied or is
unable to make, or is delayed in making any repair, additions, alterations or
decorations or is unable to supply or is delayed in supplying any equipment,
fixtures, or other materials if Owner is prevented or delayed from so doing by
reason of strike or labor troubles or any cause whatsoever including, but not
limited to, government preemption or restrictions or by reason of any rule,
order or regulation of any department or subdivision thereof of any government
agency or by reason of the conditions which have been or are affected, either
directly or indirectly, by war or other emergency.
Bills and Notices:
28. Except as otherwise in this lease provided, a bill, statement, notice or
communication which Owner may desire or be required to give to Tenant, shall be
deemed sufficiently given or rendered if, in writing, delivered to Tenant
personally or sent by registered or certified mail addressed to Tenant at the
building of which the demised premises form a part or at the last known
residence address or business address of Tenant or left at any of the aforesaid
premises addressed to Tenant, and the time of the rendition of such bill or
statement and of the giving of such notice or communication shall be deemed to
be the time when the same is delivered to Tenant, mailed, or left at the
premises as herein provided. Any notice by Tenant to Owner must be served by
registered or certified mail addressed to Owner at the address first hereinabove
given or at such other address as Owner shall designate by written notice.
Services Provided by Owners
29. As long as Tenant is not in default under any of the covenants of this
lease, Owner shall provide: (a) necessary elevator facilities on business days
from 8 a.m. to 6 p.m. and on Saturdays from 8 a.m. to 1 p.m. and have one
elevator subject to call at all other times; (b) heat to the demised premises
when and as required by law, on business days from 8 a.m. to 6 p.m. and on
Saturdays from 8 a.m. to 1 p.m.; (c) water for ordinary lavatory purposes, but
if Tenant uses or consumes water for any other purposes or in unusual quantities
(of which fact Owner shall be the sole judge), Owner may install a water meter
at Tenant's expense which Tenant shall thereafter maintain at Tenant's expense
in good working order and repair to register such water consumption and Tenant
shall pay for water consumed as shown on said meter as additional rent as and
when bills are rendered; (d) cleaning service for the demised premises on
business days at Owner's expense provided that the same are kept in order by
Tenant. If, however, said premises are to be kept clean by Tenant, it shall be
done at Tenant's sole expense, in a manner satisfactory to Owner and no one
other than persons approved by Owner shall be permitted to enter said premises
of the building of which they are a part for such purpose. Tenant shall pay
Owner the cost of removal of any of Tenant's refuse and rubbish from the
building; (e) If the demised premises is serviced by Owner's air
conditioning/cooling and ventilating system, air conditioning/cooling will be
furnished to tenant from May 15th through September 30th on business days
(Mondays through Fridays, holidays excepted) from 8:00 a.m. to 6:00 p.m., and
ventilation will be furnished on business days during the aforesaid hours except
when air conditioning/cooling is being furnished as aforesaid. If Tenant
requires air conditioning/cooling or ventilation for more extended hours or on
Saturdays, Sundays or on holidays, as defined under Owner's contract with
Operating Engineers Local 94-94A, Owner will furnish the same at Tenant's
expense. RIDER to be added in respect to rates and conditions for such
additional service; [GRAPHIC OF POINTING HAND] (f) Owner reserves the right to
stop services of the heating, elevators, plumbing, air-conditioning, power
systems or cleaning or other services, if any, when necessary by reason of
accident or for repairs, alterations, replacements or improvements necessary or
desirable in the judgment of Owner for as long as may be reasonably required by
reason thereof. If the building of which the demised premises are a part
supplies manually-operated elevator service, Owner at any time may substitute
automatic-control elevator service and upon ten days' written notice to Tenant
proceed with alterations necessary therefor without in any wise affecting this
lease or the obligation of Tenant hereunder. The same shall be done with a
minimum of inconvenience to Tenant and Owner shall pursue the alteration with
due diligence.
Captions:
30. The Captions are inserted only as a matter of convenience and for reference
and in no way define, limit or describe the scope of this lease nor the intent
of any provisions thereof.
Definitions:
31. The term "office", or "offices", wherever used in this lease, shall not be
construed to mean premises used as a store or stores, for the sale or display,
at any time, of goods, wares or merchandise, of any kind, or as a restaurant,
shop, booth, bootblack or other stand, barber shop, or for other similar
purposes or for manufacturing. The term "Owner" means a landlord or lessor, and
as used in this lease means only the owner, or the mortgagee in possession, for
the time being of the land and building (or the owner of a lease of the building
or of the land the building) of which the demised premises form a part, so that
in the event of any sale or sales of said land and building or of said lease, or
in the event of a lease of said building, or of the land and building, the said
Owner shall be and hereby is entirely freed and relieved of all covenants and
obligations of Owner hereunder, and it shall be deemed and construed without
further agreement between the parties or their successors in interest, or
between the parties and the purchaser, at any such sale, or the said lessee of
the building, or of the land and building, that the purchaser or the lessee of
the building has assumed and agreed to carry out any and all covenants and
obligations of Owner, hereunder. The words "re-enter" and "re-entry" as used in
this lease are not restricted to their technical legal meaning. The term
"business days" as used in this lease shall exclude Saturdays (except such
portioon thereof as is covered by specific hours in Article 29 hereof), Sundays
and all days as observed by the State or Federal Government as legal holidays
and those designated as holidays by the applicable building service union
employees service contract or by the applicable Operating Engineers contract
with respect to HVAC service.
<PAGE>
Adjacent Excavation -- Shoring:
32. If any excavation shall be made upon land adjacent to the demised premises,
or shall be authorized to be made, Tenant shall afford to the person causing or
authorized to cause such excavation, license to enter upon the demised premises
for the purpose of doing such work as said person shall deem necessary to
preserve the wall or the building of which demised premises form a part from
injury or damage and to support the same by proper foundations without any claim
for damages or indemnity against Owner, or diminution or abatement of rent.
Rules and Regulations
33. Tenant and Tenant's servants, employees, agents, visitors and licensees
shall observe faithfully, and comply strictly with, the Rules and Regulations
and such other and further reasonable Rules and Regulations as Owner or Owner's
agents may from time to time adopt. Notice of any additional rules or
regulations shall be given in such manner as Owner may elect. In case Tenant
disputes the reasonableness of any additional Rule or Regulation hereafter made
or adopted by Owner or Owner's agents, the parties hereto agree to submit the
question of the reasonableness of such Rule or Regulation for decision to the
New York office of the American Arbitration Association, whose determination
shall be final and conclusive upon the parties hereto. The right to dispute the
reasonableness of any additional Rule or Regulation upon Tenant's part shall be
deemed waived unless the same shall be asserted by service of a notice, in
writing upon owner within ten (10) days after the giving of notice thereof.
Nothing in this lease contained shall be construed to impose upon Owner any duty
or obligation to enforce the Rules and Regulations or terms, covenants or
conditions in any other lease, as against any other tenant and Owner shall not
be liable to Tenant for violation of the same by any other tenant, its servants,
employees, agents, visitors or licensees.
Security:
34. Tenant has deposited with Owner the sum of [GRAPHIC OF POINTING HAND]
[Initialed in margin one month security upon lease and one month security in six
months /s/ JB] $2,800.00 as security for the faithful performance and observance
by Tenant of the terms, provisions and conditions of this lease; it is agreed
that in the event Tenant defaults in respect of any of the terms, provisions and
conditions of this lease, including, but not limited to, the payment of rent and
additional rent, Owner may use, apply or retain the whole or any part of the
security so deposited to the extent required for the payment of any rent and
additional rent or any other sum as to which Tenant is in default or for any sum
which Owner may expend or may be required to expend by reason of Tenant's
default in respect of any of the terms, covenants and conditions of this lease,
including but not limited to, any damages or deficiency in the re-letting of the
premises, whether such damages or deficiency accrued before or after summary
proceedings or other re-entry by Owner. In the event the Tenant shall fully and
faithfuly comply with all of the terms, provisions, covenants and conditions of
this lease, the security shall be returned to Tenant after the date fixed as the
end of the Lease and after delivery of entire possession of the demised premises
to Owner. In the event of a sale of the land and building or leasing of the
building, of which the demised premises form a part, Owner shall have the right
to transfer the security to the vendee or lessee and Owner shall thereupon be
released by Tenant from all liability for the return of such security; and
Tenant agrees to look to the new Owner solely for the return of said security,
and it is agreed that the provisions hereof shall apply to every transfer or
assignment made of the security to a new Owner. Tenant further covenants that it
will not assign or encumber or attempt to assign or encumber the monies
deposited herein as security and that neither Owner nor its successors or
assigns shall be found by any such assignment, encumbrance, attempted assignment
or attempted encumbrance.
Estoppel Certificate
35. Tenant, at any time, and from time to time, upon at least 10 days' prior
notice by Owner, shall execute, acknowledge and deliver to Owner, and/or to any
other person, firm or corporation specified by Owner, a statement certifying
that this Lease is unmodified and in full force and effect (or, if there have
been modifications, that the same is in full force and effect as modified and
stating the modifications), stating the dates to which the rent and additional
rent have been paid, and stating whether or not there exists any default by
Owner under this Lease, and, if so, specifying each such default.
Successors and Assigns:
36. The covenants, conditions and agreements contained in this lease shall bind
and inure to the benefit of Owner and Tenant and their respective heirs,
distributees, executors, administrators, successors, and except as otherwise
provided in this lease, their assigns.
- ----------
[GRAPHIC OF POINTING HAND] Space to be filled in or deleted.
* See Rider to Lease - Paragraph 34B
IN WITNESS WHEREOF, Owner and Tenant have respectively signed and sealed this
lease as of the day and year first above written.
/s/ Vincent Rippa
-----------------------------
Vincent Rippa as Receiver
Witness for Owner:
- --------------------------- ---------------------------
/s/ Jerry Braun C.E.O.
---------------------------
New York Health Care, Inc.
Witness for Tenant:
- --------------------------- ---------------------------
ACKNOWLEDGEMENTS
CORPORATE OWNER
STATE OF NEW YORK, ss:
County of
On this __ day of ______________, 19 , before me personally came
_____________________ to me known, who being by me duly sworn, did depose and
say that he resides in __________ ; that he is the _____________________of
__________________ the corporation described in and which executed the foregoing
instrument, as OWNER; that he knows the seal of said corporation; the seal
affixed to said instrument is such corporate seal; that it was so affixed by
order of the Board of Directors of said corporation, and that he signed his name
thereto by like order.
---------------------------
CORPORATE TENANT
STATE OF NEW YORK, ss:
County of
On this __ day of ______________, 19 , before me personally came
_____________________ to me known, who being my me duly sworn, did depose and
say that he resides in __________ ; that he is the _____________________of
__________________ the corporation described in and which executed the foregoing
instrument, as TENANT; that he knows the seal of said corporation; the seal
affixed to said instrument is such corporate seal; that it was so affixed by
order of the Board of Directors of said corporation, and that he signed his name
thereto by like order.
---------------------------
INDIVIDUAL OWNER
STATE OF NEW YORK, ss:
County of
On this __ day of _____________, 19 , before me personally came ___________
_______ to me known and known to me to be the individual __________________
described in and who, as OWNER, executed the foregoing instrument and
acknowledged to me that ______________________ he executed the same.
---------------------------
INDIVIDUAL TENANT
STATE OF NEW YORK,
County of
On this __ day of _____________, 19 , before me personally came ___________
_______ to me known and known to me to be the individual __________________
described in and who, as TENANT, executed the foregoing instrument and
acknowledged to me that _______________________ he executed the same.
---------------------------
<PAGE>
GUARANTY
FOR VALUE RECEIVED, and in consideration for, and as an inducement to Owner
making the within lease with Tenant, the undersigned guarantees to Owner,
Owner's successors and assigns, the full performance and observance of all the
covenants, conditions and agreements, therein provided to be performed and
observed by Tenant, including the "Rules and Regulations" as therein provided,
without requiring any notice of non-payment, non-performance, or non-observance,
or proof, or notice, or demand, whereby to charge the undersigned therefor, all
of which the undersigned hereby expressly waives and expressly agrees that the
validity of this agreement and the obligations of the guarantor hereunder shall
in no wise be terminated, affected or impaired by reason of the assertion by
Owner against Tenant of any of the rights or remedies reserved to Owner pursuant
to the provisions of the within lease. The undersigned further covenants and
agrees that this guaranty shall remain and continue in full force and effect as
to any renewal, modification or extension of this lease and during any period
when Tenant is occupying the premises as a "statutory tenant." As a further
inducement to Owner to make this lease and in consideration thereof, Owner and
the undersigned covenant and agree that in any action or proceeding brought by
either Owner or the undersigned against the other on any matters whatsoever
arising out of, under, or by virtue of the terms of this lease or of this
guarantee that Owner and the undersigned shall and do hereby waive trial by
jury.
Dated New York City ................................19.....
WITNESS:
.................................................................
STATE OF NEW YORK) ss:
COUNTY OF )
On this __ day of _____________ , 19 __, before me personally came __________ to
me known and known to me to be the individual described in, and who executed the
foregoing Guaranty and acknowledged to me that he executed the same.
------------------------------
Notary
..........................................................................[L.S.]
Residence.......................................................................
Business Address................................................................
Firm Name.......................................................................
[GRAPHIC OF POINTING HAND] IMPORTANT - PLEASE READ [GRAPHIC OF POINTING HAND]
RULES AND REGULATIONS
ATTACHED TO AND
MADE A PART OF THIS LEASE
IN ACCORDANCE WITH ARTICLE 33.
1. The sidewalks, entrances, driveways, passages, courts, elevators, vestibules,
stairways, corridors or halls shall not be obstructed or encumbered by any
Tenant or used for any purpose other than for ingress or egress from the demised
premises and for delivery of merchandise and equipment in a prompt and efficient
manner using elevators and passageways designated for such delivery by Owner.
There shall not be used in any space, or in the public hall of the building,
either by any Tenant or by jobbers or others in the delivery or receipt of
merchandise, any hand trucks, except those equipped with rubber tires and
sideguards. If said premises are situated on the ground floor of the building,
Tenant thereof shall further, at Tenant's expense, keep the sidewalk and curb in
front of said premises clean and free from ice, snow, dirt and rubbish.
2. The water and wash closets and plumbing fixtures shall not be used for any
purposes other than those for which they were designed or constructed and no
sweepings, rubbish, rugs, acids or other substances shall be deposited therein,
and the expense of any breakage, stoppage, or damage resulting from the
violation of this rule shall be borne by the Tenant who, or whose clerks,
agents, employees or visitors, shall have caused it.
3. No carpet, rug or other article shall be hung or shaken out of any window of
the building and no Tenant shall seep or throw or permit to be swept or thrown
from the demised premises any dirt or other substances into any of the corridors
of halls, elevators, or out of the doors or windows or stairways of the building
and Tenant shall not use, keep or permit to be used or kept any foul or noxious
gas or substance in the demised p[remises, or permit or suffer the demised
premises to be occupied or used in a manner offensive or objectionable to Owner
or other occupants of the building by reason of noise, odors, and/or vibrations,
or interfere in any way with other Tenants or those having business therein, nor
shall any animals or birds be kept in or about the building. Smoking or carrying
lighted cigars or cigarettes in the elevators of the building is prohibited.
4. No awnings or other projections shall be attached to the outside walls of the
building without the prior written consent of Owner.
5. No sign, advertisement, notice or other lettering shall be exhibited,
inscribed, painted or affixed by any Tenant on any part of the outside of the
demised premises or the building or on the inside of the demised premise if the
same is visible from the outside of the premises without the prior written
consent of Owner, except that the name of Tenant may appear on the entrance door
of the premises. In the event of the violation of the foregoing by any Tenant,
Owner may remove same without any liability, and may charge the expense incurred
by such removal to Tenant or Tenants violating this rule. Interior signs on
doors and directory tablets shall be inscribed, painted or affixed for each
Tenant by Owner at the expense of such Tenant, and shall be of a size, color and
style acceptable to Owner.
6. No Tenant shall mark, paint, drill into, or in any way deface any part of the
demised premises or the building of which they form a part. No boring, cutting
or stringing of wires shall be permitted, except with the prior written consent
of Owner, and as Owner may direct. No Tenant shall lay linoleum, or other
similar floor covering, so that the same shall come in direct contact with the
floor of the demised premises, and, if linoleum or other similar floor covering
is desired to be used an interlining of builder's deadening felt shall be first
affixed to the floor, by a paste or other material, soluble in water, the use of
cement or other similar adhesive material being expressly prohibited.
7. No additional locks or bolts of any kind shall be placed upon any of the
doors or windows by any Tenant, nor shall any changes be made in existing locks
or mechanism thereof. Each Tenant must, upon the termination of his Tenancy,
restore to Owner all keys of stores, offices and toilet rooms, either furnished
to, or otherwise procured by, such Tenant, and in the event of the loss of any
keys, so furnished, such Tenant shall pay to Owner the cost thereof.
8. Freight, furniture, business equipment, merchandise and bulky matter of any
description shall be delivered to and removed from the premises only on the
freight elevators and through the service entrances and corridors, and only
during hours and in a manner approved by Owner. Owner reserves the right to
inspect all freight to be brought into the building and to exclude from the
building all freight which violates any of these Rules and Regulations of the
lease of which these Rules and Regulations are a part.
9. Canvassing, soliciting and peddling in the building is prohibited and each
Tenant shall cooperate to prevent the same.
10. Owner reserves the right to exclude from the building between the hours of 6
P.M. and 8 A.M. and at all hours on Sunday and legal holidays all persons who do
not present a pass to the building signed by Owner. Owner will furnish passes to
persons for whom any Tenant requests same in writing. Each Tenant shall be
responsible for all persons for whom he requests such pass and shall be liable
to Owner for all acts of such persons.
11. Owner shall have the right to prohibit any advertising by any Tenant which
in Owner's opinion, tends to impair the reputation of the building or its
desirability as a building for offices, and upon written notice from Owner,
Tenant shall refrain from or discontinue such advertising.
12. Tenant shall not bring or permit to be brought or kept in or on the demised
premises, any inflammable, combustible or explosive fluid, material, chemical or
substance, or cause or permit any odors of cooking or other processes, or any
unusual or other objectionable odors to permeate in or emanate from the demised
premises.
13. If the building contains central air conditioning and ventilation, Tenant
agrees to keep all windows closed at all times and to abide by all rules and
regulations issued by Owner with respect to such services. If Tenant requires
air conditioning or ventilation after the usaual hours, Tenant shall give notice
in writing to the building superintendent prior to 3:00 P.M. on the day prior in
the case of services required on week days, and prior to 3:00 P.M. on the day
prior in the case of after hours service required on weekends or on holidays.
14. Tenant shall not move any safe, heavy machinery, heavy equipment, bulky
matter, or fixtures into or out of the building without Owner's prior written
consent. If such safe, machinery, equipment, bulky matter or fixtures requires
special handling, all work in connection therewith shall comply with the
Administrative Code of the City of New York and all other laws and regulations
applicable thereto and shall be done during such hours as Owner may designate.
Address
Premises
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TO
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STANDARD FORM OF
(LOGO) Office (LOGO)
Lease
The Real Estate Board of New York, Inc.
(c) Copyright 1983. All rights Reserved.
Reproduction in whole or in part prohibited
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Dated 19
Rent per Year
Rent per Month
Term
From
To
Drawn by..................................Checked by............................
Entered by................................Approved by...........................
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<PAGE>
RIDER ANNEXED TO AND MADE A PART OF LEASE BETWEEN
Vincent Rippa, Receiver Lessor/Landlord
New York Health Care, Inc. Lessee/Tenant
37. Until such time as electric current is furnished on a submetering
basis, Lessee agrees that Lessor may furnish electricity to Lessee on a "rent
inclusion" basis.
A. If and so long as electric current is supplied by Landlord to the
demised premises to service Tenant's office equipment and the air conditioning
units therein contained, if additional rent for such service, the amount,
(hereinafter collectively called the "Electricity Additional Rent"), as
determined by a meter or submeter (the "Submeter") installed, at Tenant's cost,
for the purpose of measuring such consumption. Each and every month, a
representative from the building management office shall take readings
registered by the Submeter concurrent with the time Con Edison reads the
building's master meter. The readings from the Submeter shall then be used to
compute the Electricity Additional Rent. Such service shall be computed using
the same service classification at which Landlord purchases electric current for
the entire building, plus a fee (the Overhead Charge") equal to five (5%)
percent of such charge to Landlord, representing administrative/overhead costs
to Landlord. The Overhead Charge shall be payable as Electricity Additional Rent
herein provided. Landlord, at its option may from time to time, increase the
Electricity Additional Rent based upon charges occurring subsequent to the date
hereof in the method, rates (including, without limitation, time of day and
seasonal rate differentials) or manner by which Landlord thereafter purchases
electricity for the building. Where more than one meter measures the electric
service to Tenant, the electric service rendered through each meter may be
computed above set forth. Bills for the Electricity Additional Rent (the
"Bills") shall be rendered to Tenant at such time as Landlord nay elect and the
amount, as computed from the meter, together with the Overhead Charge, shall be
the Electricity Additional Rent.
B. After initial installation of lighting fixtures by Landlord, Tenant
shall purchase all replacement lighting tubes, lamps, bulbs and ballasts used in
the demised premises and Tenant shall pay Landlord's reasonable charges for
providing and installing same, on demand, as additional rent.
C. Notwithstanding the foregoing until such time as
<PAGE>
Submeter is installed operative, Tenant shall pay for electric current on a rent
inclusion basis pursuant to paragraph D hereof.
D. Rent Inclusion: If and so long as Landlord shall furnish to Tenant the
electric energy which Tenant requires in the demised premises on a "rent
inclusion" basis, of $2.25 per square foot, the electric energy shall be
provided through the presently installed electrical facilities, for Tenant's
reasonable use in the demised premises for lighting, light office equipment and
the usual small business machines, including Xerox or other copying machines.
Subject to the following provisions of this Article 37, there shall be no charge
to Tenant therefor by way of measuring the same on any meter or otherwise,
electric current being included as an additional service in the fixed annual
rent payable hereunder. Landlord shall not in anyways be liable or responsible
to Tenant for any loss or damage or expense which Tenant may sustain or incur if
either the quantity or character of electric service is changed or is no longer
available or suitable for Tenant's requirements. The Rent inclusion basis of
$2.25 per square foot may be increased if Landlord's electric costs increase and
Tenant agrees to pay to Landlord such increase over the base of $2.25 per square
foot.
38. Supplementing Article 2 hereof, Tenant and any permitted subtenant or
assignee shall use and occupy the demised premises solely as an office and
training site for its home health care agency [INITIALLED /s/ JB] as an office
for the practice of medicine or dentistry by a physician or dentist licensed to
practice in the State of New York and for no other purpose. The foregoing
medical practice shall be high quality private medical practice conducted
predominantly by appointment. In no event shall Tenant use or permit the demised
premises to be used as an abortion center or clinic, a drug or alcohol clinic or
rehabilitation center or for a public assistance welfare agency (public or
private) or for the operation of traditional public clinics, including without
limitation, the operation of clinics for the treatment of pyschiatric disorders
or communicable disease. In addition, Tenant agrees not to (i) use the demised
premises for or engage therein, or in any way permit therein the practice of
diagnostic or therapeutic radiology (including but not limited to cobalt, radium
or isotope); or (ii) install or use any x-ray equipment in the demised premises
other than superficial therapeutic x-ray units. Tenant agrees that the foregoing
provisions of this Article constitute a material obligation under this Lease,
and that Landlord would not have entered into this transaction but for Tenant's
agreement to comply with all of the foregoing. The violation by Tenant of any of
the covenants, agreements, terms, provisions and conditions contained in this
Article shall be deemed a material and substantial default by Tenant under the
terms of this Lease giving Landlord the right to injunctive relief, among any
other remedies Landlord may have.
39. As long as Tenant is not in default under any of the covenants of this
lease, Landlord shall provide the following services, at its own cost and
expense, if and insofar as the existing facilities permit.
<PAGE>
(A) Services furnished by the Landlord are as follows:
(1) Elevator service, on an unattended basis, by self-operated elevators;
(2) Air-conditioning from May 1st to September 30th of each year, as required;
(3) Heat during the heating season of the year; (4) Hot and cold water, and
electrical current throughout the year, and gas and air for dental suites.
(B) Landlord shall also provide the following services:
(1) Light cleaning and janitorial services, including removal of refuse and
rubbish daily, except weekends and holidays, but not including infectious waste
as defined by New York State Law which must be disposed in accordance with
Article 47; at such times as specified by the Landlord in its sole discretion;
(2) Windows shall be cleaned every two months, weather permitting, the date and
hour to be specified by the Landlord in its sole discretion.
Landlord reserves the right to stop the service of the steam sprinkler
system, plumbing and electric systems when necessary, by reason of accident, or
of repairs, alterations or improvements, in the judgment of Landlord desirable
or necessary to be made, until such repairs, alterations or improvements shall
have been completed, and shall further have no responsibility or liability for
failure to supply steam elevator sprinkler, plumbing end electric service, when
prevented from so doing by strikes or accidents or by any cause beyond
Landlord's reasonable control, or by order or regulations of any Federal, State
or Municipal Authority or failure of coal, oil or other suitable fuel supply, or
inability by the exercise of reasonable diligence to obtain coal, oil or other
suitable fuel.
40. Tenant represents and warrants that it neither consulted nor negotiated
with any broker or finder with regard to the demised premises, other than Perbar
Sales Corporation. Tenant agrees to indemnify, defend and save Landlord harmless
from and against any claims for fees or commissions from anyone with whom Tenant
has dealt in connection with the leasing of the demised premises.
41. Tenant expressly acknowledges that it has inspected the demised
premises and is fully familiar with the condition thereof. With the exception of
the work noted in Article 61, annexed hereto and made part hereof, Tenant agrees
to accept the demised premises in their "as is" condition. Tenant acknowledges
that Landlord, with the exception of the work noted in Article 61, shall have no
obligation to do any work in and to the demised premises in order to make them
suitable and ready for occupancy and use by Tenant.
42. Tenant recognized and agrees that the damage to Landlord resulting from
Tenant's failure to timely vacate the demised premises is impossible to
accurately measure. Landlord and
<PAGE>
Tenant therefore agree that in the event Tenant does not vacate the demised
premises in a timely fashion pursuant to the terms of this Lease, Tenant shall
pay to the Landlord an amount equal to two times the amount of rent due under
this Lease. In addition, Tenant agrees that it shall indemnify and save Landlord
harmless against any and all costs, claims, loss or liability resulting from
Tenant's delay in so surrendering the demised premises.
43. Tenant agrees that the liability of Landlord under this lease and all
matters pertaining to or arising out of the tenancy and the use and occupancy of
the demised premises, shall be limited to Landlord's interest in the building
and in no event shall Tenant make any claim against or seek to impose any
personal liability upon any general or limited partner of Landlord, or any
principal of any firm or corporation that may hereafter be or become the
Landlord.
44. (A) Anything herein to the contrary notwithstanding, Tenant may assign
this lease as a whole to a licensed practitioner of medicine or dentistry, or
may sublet a part of the demised premises to no more than one other such
licensed practitioner, provided the Landlord's prior written consent is first
obtained in each and every instance.
(B) For each sub-tenant, the Tenant herein shall pay to the Landlord
monthly, as additional rent hereunder, an increase of 10% of the base monthly
rental for each month during the continuance of said subletting, or $100.00 per
month, whichever sum is greater.
(C) The consent by the Landlord to an assignment or subletting shall not in
any way be construed to relieve the Tenant from obtaining the express consent in
writing by the Landlord to any further assignment or subletting. Any such
assignment or subletting* in no way relieve the tenant from his obligations to
pay rent under this lease.
(D) As a condition of the Landlord's consent to such assignment, such
assignee shall execute and deliver to the Landlord an agreement, duly
acknowledged, wherein such assignee shall expressly assume and agree to abide by
and to specifically observe, keep and perform all and each of the agreements,
terms, conditions and covenants of this lease on the part of the Tenant to be
performed, as if such assignee was originally named as Tenant herein.
45. Intentionally omitted.
46. Tenant agrees not to distribute keys to any common area doors to
patients.
47. Tenant agrees to hire an infectious waste management company approved
by the owner and to provide a copy of a contract with such company to owner
prior to taking possession of the suite listed above, where applicable.
[Initialed /s/ JB]
*shall
<PAGE>
48. Tenant shall pay a rent surcharge of Fifty Dollars ($50.00) if the
monthly rent installment is not received by the managing agent by the tenth day
of each month during the lease term. Tenant shall also be liable for interest on
such late rent payments, such interest to begin on the first day of the month at
a rate of one and one half percent per month, and shall continue until such late
rent is paid. Tenant shall also be liable for all costs of collection of rent
payments, including, but not limited to attorney's fees and court costs.
49. Tenant shall not install a window air conditioning unit without first
obtaining the written approval of Landlord.
50 In the event that the building is submetered for water and gas service,
tenant shall pay for such service in addition to the rent charged under the
terms of this lease, pursuant to meter installed by Landlord, at Tenant's sole
cost and expense.
51. All damage or injury to the Building or the Building Systems outside of
the Demised Premises including damage to Demised Premises of other tenants,
caused by or arising from acts or omissions of Tenant, or Persons Within
Tenant's Control, including those which are structural, extraordinary, and
unforeseen shall be repaired, restored or replaced by Tenant, at its sole cost
and expense. All Repairs shall be in quality and class equal to the original
work or installation and shall be done in good and workmanlike manner, using
prime quality materials.
52. Landlord at its expense, shall make all Repairs, structural and
otherwise, of which it shall have notice, necessary to keep in good order and
repair of the exterior of the Building and the public portions of the Building,
other than those required to be made by Tenant as provided in Article 4. There
shall be no allowance to Tenant for a diminution of rental value or interruption
of business and no liablity on the part of Landlord by reason of inconvenience,
annoyance or injury to business arising from Landlord, Tenant or other making
any Repairs or Alterations in or to any portion of the Building or Building
Systems or the Demised Premises.
53. In any case where Tenant is required to make Repairs or perform any
work pursuant to the terms of this lease and such Repairs or work affects the
Building Systems or areas outside of the Demised Premises, Landlord may at its
option elect to make such Repairs or to perform such work for and on behalf of
Tenant, but at Tenant's sole cost and expense. In such event, Tenant shall
reimburse Landlord for the cost of such Repairs and/or work within ten (10) days
after Landlord shall furnish a statement to Tenant of the amount thereof. In any
case where tenant elects to change in any way, improve, or repair demised
premises, tenant shall only use contractors approved in advance, in writing by
the Owner. All such contractors shall be properly licensed.
<PAGE>
54. Tenant shall not do, and shall not permit Persons Within Tenant's
Control to do, any act or thing in or upon the Demised Premises or the Building
which will invalidate or be in conflict with the Certificate of Occupancy for
the Demised Premises or the Building, or violate any Laws and Ordinances. Tenant
shall, at its expense, comply with all Laws and Ordinances which shall with
respect to the Demised Premises or any abatement of nuisance, impose any
violation, order or duty upon Landlord or Tenant arising from, in, or in
connection with, the Demised Premises or Tenant's occupancy, use or manner of
use thereof or any installations therein, or required by reason of a breach of
any of Tenant's covenants or agreements hereunder, whether or not such Laws and
Ordinances shall be presently in effect or hereafter enacted or issued, and
whether or not any work required shall be ordinary or extraordinary or foreseen
or unforeseen at this time.
55. Tenant shall not do or permit to be done any act or thing in or upon
the Demised Premises which will invalidate or be in conflict with the terms of
the New York State standard form of fire insurance with extended coverage,
rental, liability, boiler, sprinkler, water damage, war risk or other insurance
policies covering the Building and the fixtures and property therein
(hereinafter referred to as Building Insurance); and Tenant, at its own expense,
shall comply with all rules, orders, regulations and requirements of all
Insurance Boards, and shall not do or permit anything to be done in or upon the
Demised Premises or bring or keep anything therein or use the Demised Premises
in a manner which increases the rate of premium for any of the Building
Insurance or any property or equipment located therein over the rate in effect
at the commencement of the Term of this Lease.
56. If, by reason of any failure of Tenant to comply with the provisions of
this Lease, the rate of premium for Building Insurance or other insurance on the
property and equipment of Landlord or any other tenant or subtenant in the
Building shall be higher than it otherwise would be, Tenant shall reimburse
Landlord and/or such other tenants or subtenants in the Building for that part
of the insurance premiums thereafter paid by Landlord or by other tenants or
subtenants in the Building which shall have been charged because of such failure
by Tenant. Tenant shall make the reimbursement on the first day of the month
following such payment by Landlord or such other tenants or subtenants.
In any action or proceeding wherein Landlord and Tenant are parties, a
schedule or "makeup" of any insurance rate for the Building or demised Premises
issued by any Insurance Board establishing insurance premium rates for the
Building, shall be prima facie evidence of the facts therein stated and of the
several items and charges in the insurance premium rates then applicable to the
Building.
57. Tenant, at Tenant's own cost and expense, shall maintain comprehensive
general liability insurance protecting and indemnifying Landlord and Tenant
against any and all claims and
<PAGE>
liabilities for injury or damage to persons or property or for the loss of
premises, and the public portions of the Building, caused by or resulting from
any act or omission of Tenant or Persons Within Tenant's Control, such insurance
to afford minimum protection during the term of this Lease of not less than
combined single limit of S1,000,000 in respect of bodily injury or death for
property damage. Landlord may require increases in such limits from time to time
(not more often than once each 24 months') to reflect the effect of inflation,
based upon increases in the United States Consumer Price Index or similar
recognized index.
Tenant, at Tenant's own cost and expense, shall also maintain insurance
protecting Landlord, the managing agent of the Building and Tenant against any
and all claim for damage to or loss of Tenant's Alterations, equipment,
furnishings, furniture, fixtures and contents in the Demised Premises or the
Building, and all claims and liabilities relating thereto.
All such insurance shall be affected under valid and enforceable policies
(which may cover the Demised Premises and other location), shall be issued by
insurers of recognized responsibility authorized to do business in New York
State and reasonably acceptable to Landlord, and shall contain a provision
whereby the insurer agrees not to cancel the insurance without thirty (30) days'
prior written notice to Landlord.
On or before the Commencement Date, Tenant shall furnish Landlord two (2)
copies of a duplicate policy or appropriate certificate evidencing the aforesaid
insurance coverage, and renewal policies or certificates therefor shall be
furnished to Landlord at least (30) days prior to the expiration date of each
policy for which a certificate was theretofore furnished.
58. Each party hereby releases the other party (which term as used in this
paragraph includes the employees, agents, officers and directors of the other
party) from all liability whether for negligence or otherwise, in connection
with loss covered by any insurance policies which the releasor carries with
respect to the demised premises or any interest or property therein or, thereon
(whether or not such insurance is required to be carried under this lease), but
only to the extent that such loss is collected under said insurance policies.
Such release is also conditioned upon the inclusion in the policy or policies of
a provision whereby any such release shall not adversely affect said policies or
prejudice any right of the releasor to recover thereunder. Each party agrees
that its insurance policies, aforesaid, will include such a provision so long as
the same shall be obtainable without extra cost, or if extra cost shall be
charged therefor, each party shall advise the other thereof of the amount of the
extra cost, and the other party, at its election, may pay the same, but shall
not be obligated to do so.
<PAGE>
59. Security deposit described in Article 34 shall be placed in an interest
bearing account and unless used to cure a default by Tenant hereunder, Tenant
shall receive such interest when said security is returned to tenant, less a fee
equal to one percent per year, as a servicing fee. Security deposit shall
increase annually upon the anniversary of this lease so that Landlord shall
always possess security in the amount of one month's rent.
60. In the event that the building in which the leased premises is located
is converted to condominium ownership, then and in the event, Landlord, at its
sole discretion, may elect to cancel this lease upon 6 months written notice to
tenant. In the event of such cancellation by Landlord, tenant may within 90 days
subsequent to receipt of the notification of cancellation purchase the leased
premises for the "black book insider price". If tenant fails to purchase within
90 day period, this lease shall be deemed null and void and tenant shall vacate
the premises.
61. Subsequent to the signing of this lease by both parties, Landlord
agrees to perform the following work within the leased premises:
A. Strip and Wax Vinyl Tile floors.
B. Clean Bathroom and Kitchen.
62. Landlord shall provide to tenant three (3) outside parking spaces at no
additional charge.
63. Landlord will give a 300.00 credit for painting.
Agreed this 30 day of October, 1992 by;
/s/ Vincent Rippa /s/ Jerry Braun CEO
- ------------------------------------- ---------------------------------------
Vincent Rippa, as Receiver New York Health Care, Inc.
as Landlord as tenant
<PAGE>
(FLOOR PLAN)
105 STEVENS PLAZA CONDOMINIUMS, MT. VERNON
SUITES 501 & 502
AREA: 1686.6 SQ.FT
SCALE: 1/8. = 1'0-"
- --------------------------------------------------------------------------------
LEASE
between
Hempstead Associates Limited Partnership
as Lessor,
and
New York Health Care
as Lessee
This Lease includes:
Exhibit A: Space Plan of Demised Premises
EXhibit B: Cleaning Schedule
Exhibit C: Air Conditioning Standards
EXhibit D: Work Letter
Exhibit E: Rules and Regulations
- --------------------------------------------------------------------------------
<PAGE>
LEASE
LEASE, made the 22nd day of July ___, 1993, between Hempstead Associates
Limited Partnership, a Michigan (hereinafter referred to as "Lessor"), having an
office at 175 Fulton Avenue, Suite 301A, Hempstead, New York 11550 and New York
Healthcare, a New York Corporation (hereinafter referred to as "Lessee"), having
an office at 175 Fulton Avenue, Hempstead, New York 11550.
W I T N E S S E T H:
For and in consideration of the covenants herein contained, and upon the
terms and conditions herein set forth, Lessor and Lessee agree as follows:
1. DESCRIPTION. Lessor hereby leases to Lessee, and Lessee hereby hires
from Lessor, the space (hereinafter, together with all improvements, fixtures
and equipment which are or shall become attached thereto, called the "Demised
Premises" or "Premises") located on the Fifth (5th.) floor of the building
located at 175 Fulton Avenue, Hempstead, New York (hereinafter called the
"Building"), which shall include the Common Facilities, as defined in Section 41
(B) hereof), as shown on the plan annexed hereto as Exhibit A which has been
accepted by Lessor and Lessee. Lessor and Lessee agree that the Demised Premises
shall be deemed to comprise, in accordance with Exhibit A, 1,615 gross rentable
square feet for all purposes of this Lease.
2. TERM. The Premises are leased for a term of Five(5) years to commence on
September 1, 1993 and to end at 12:00 midnight on October 31, 1998. The Lessee
may occupy the Premises earlier than the commencement date provided by this
Lease, but otherwise subject to all the terms and conditions of this Lease,
including the payment of basic rent and additional rent, provided that the
Premises are ready for occupancy and are covered by a certificate of occupancy.
Notwithstanding the commencement and termination dates stated in this Section 2,
the provisions of Section 42 shall be determinative of such dates to the extent
that the provisions of such section are applicable.
3. BASIC RENT. The Lessee shall pay to the Lessor during the term of this
Lease basic rent (herein "rent" or "basic rent") as follows: for the first 12
months of the Lease Term at the yearly rate of $15,000 in equal monthly
installments (except for fractional months) of $1,250; and for months 13 up to
and including 60 at the yearly rate of $20,187.5 in equal monthly installments
(except for fractional months) of $1,682.29. The basic rent shall be payable in
advance on the first day of each calendar month during the term. If either the
first or last month of the term of this Lease should commence or end on a day
other than the first day or last day, respectively, of the month, a
proportionately lesser sum of basic rent and additional rent shall be paid in
accordance with the provisions of the Lease herein set forth. Lessor
<PAGE>
acknowledges receipt from Lessee of the sum of $1,250 by check, subject to
collection, for basic rent for the first month of the lease term for which basic
rent is payable. Lessee shall pay basic rent, and any additional rent as
hereinafter provided, to Lessor at Lessor's above stated address, or at such
other place as Lessor may designate in writing, without demand and without
counterclaim, deduction or setoff (except to the extent of permitted abatements
provided in this Lease).
4. USE AND OCCUPANCY. Lessee shall use and occupy the Premises as general
executive offices and shall not use or occupy the Premises for any other purpose
without the prior written consent of Lessor, which consent shall not be
unreasonably withheld by Lessor in the case of a use in keeping with the
character and quality of the building.
5. CARE AND REPAIR OF PREMISES. Lessee shall commit no act of waste and
shall take good care of the Premises and the improvements, fixtures and
equipment therein, and shall, in the use and occupancy of the Premises, conform
to all laws, orders and regulations of the federal, state and municipal
governments or any of their departments; Lessor, at Lessee's expense, shall
maintain and make all necessary interior repairs to the Premises, including
repairs to electrical fixtures at Lessee's expense if caused by Lessee through
its negligence, faulty operation or otherwise; Lessor, at its own expense, shall
maintain and make all necessary repairs to the Building and its structure, the
roof, the HVAC system and the exterior portions of the plumbing and electrical
systems, and the exterior of the Premises, including the Common Facilities,
except where the repair has been made necessary by misuse or neglect by Lessee
or Lessee's agents, servants, visitors or licensees, in which event Lessor shall
nevertheless make the repair but Lessee shall pay to Lessor, as additional rent,
immediately upon demand, the reasonable costs therefor (net of any insurance
reimbursements actually received). All improvements made by Lessee to the
Premises, which are permanently attached to the Premises, shall become the
property of Lessor, including trade fixtures, cabinetwork, moveable paneling and
partitions and the like; Lessee shall repair all injury done by or in connection
with the installation or removal of said property and improvements; and
surrender the Premises in as good condition as they were at the beginning of the
term, reasonable wear and damage by fire, the elements, casualty, or other cause
not due to the misuse or neglect by Lessee, Lessee's agents, servants, visitors,
or licensees excepted. All other property of Lessee remaining on the Premises
after the last day of the term of this Lease shall be conclusively deemed
abandoned and may be removed by Lessor, and Lessee shall reimburse Lessor for
the reasonable cost of such removal. Lessor may have any such property stored at
Lessee's risk and expense.
6. ALTERATIONS, ADDITIONS OR IMPROVEMENTS. Lessee shall not, without
obtaining the prior written consent of Lessor, which shall not be unreasonably
withheld, make any alterations, additions or improvements in, to or about the
Premises, and in no event shall Lessor be required to consent to any
alterations, additions or improvements which effect the Common Facilities or any
other portion of the Building which is not included within the Premises. Lessor
may require that any such alterations, additions or improvements be
architecturally or decoratively consistent, as determined by Lessor, with the
remainder of the Building and the common Facilities thereof.
<PAGE>
7. ACTIVITIES INCREAASING FIRE INSURANCE RATES. Lessee shall not do or
suffer anything to be done on the Premises which will increase the rate of fire
insurance on the building.
8. ABANDONMENT. Lessee shall not, without first obtaining the written
consent of Lessor (which consent shall not be required if, and for only so long
as, Lessee is in full compliance with all its obligations under this Lease
appertaining to rent and insurance), abandon the Premises, or allow the Premises
to become vacant or deserted.
9. ASSIGNMENT AND SUBLEASE. Lessee may assign or sublease the within Lease
to any party subject to the following:
(A) In the event that Lessee desires to sublease the whole or any
portion of the Premises or assign the within Lease to any other party, the
terms and conditions of any such sublease or assignment, and, prior to such
effective date, Lessor shall have the option, exercisable in writing to
Lessee, to recapture the within Lease so that such prospective sublessee or
assignee shall then become the sole Lessee or Lessor hereunder, or
alternatively to recapture said space, and thereafter the within Lessee
shall be fully released from any and all obligations hereunder; provided,
however, that in the event of a proposed sublease, if Lessor elects to
recapture, the recapture shall only be with respect to that portion of the
Premises so proposed to be sublet, and only for the duration of the
proposed sublease. In the event Lessor recaptures the space to effect a
lease with the prospective sublessee or assignee produced by Lessee, Lessee
shall assume any brokerage in connection therewith, to the extent of the
remaining portion of term, which it would have had to pay to said broker(s)
in connection with said assignment or subletting had Lessor not elected to
recapture the Premises.
(B) In the event that the Lessor elects not to recapture the Lease or
space as hereinabove provided, the Lessee may nevertheless assign this
Lease or sublet the whole or any portion of the Premises, subject to the
Lessor's prior written consent, which consent shall not be unreasonably
withheld, on the basis of the following terms and conditions:
(1) The Lessee shall provide to the Lessor the name and address
of the assignee or sublessee.
(2) An assignee shall assume, by written instrument in form and
substance acceptable to Lessor, all of the obligations of this Lease,
and an executed and acknowledged counterpart copy of such assumption
agreement shall be furnished to the Lessor within ten (10) days of its
execution.
(3) The Lessee and each assignee shall be and remain jointly and
severally liable for the observance of all the covenants and
provisions of this Lease, including, but not
<PAGE>
limited to, the payment of the entire rent reserved herein for the
entire Premises, through the entire term of this Lease. Lessee shall
give Lessor a full copy of the sublease agreement prior to its
effective date, and as a condition of Lessor's prior consent to the
sublease, such agreement shall require that the sublessee adhere to
the rules and regulations in force from time to time as provided in
Section 10.
(4) The Lessee and any assignee or sublessee shall promptly pay
to Lessor one-half of any consideration (net of actual expenses)
received for any assignment; or in the event of a subletting, one-half
of all of the rent (net of actual expenses amortized over the term of
the sublease), as and when received, in excess of the rent required to
be paid by Lessee for the area sublet, computed on the basis of an
average square foot rent for the gross rentable square footage of the
Premises or proportionate portion thereof, as determined by Lessor.
(5) In any event, the acceptance by the Lessor of any rent from
any assignee or sublessee or the failure of the Lessor to insist upon
a strict performance of any of the terms, conditions and covenants
herein shall not release the Lessee herein, nor any assignee assuming
this Lease, from any and all obligations herein during and for the
entire term of this Lease.
(C) Any sublet or assignment to an affiliated company shall not be
subject to the provisions of subsections (A) or (B)(4) hereof and shall not
require Lessor's prior written consent, but all other provisions of this
section shall apply. "Affiliated company" shall mean any corporation
related to Lessee as a parent, subsidiary or brother-sister corporation so
that such corporation and Lessee, or such corporation and Lessee and other
corporations, constitute a controlled group as determined under Section
1563 of the Internal Revenue Code of 1954, as amended, and as elaborated by
the Treasury Regulations promulgated thereunder.
10. COMPLIANCE WITH RULES AND REGULATIONS. Lessee shall observe and comply
with such reasonable rules and regulations, which Lessor shall apply and enforce
uniformly with respect to all tenants in the Building, as Lessor may prescribe
from time to time, on written notice to the Lessee, for the safety, care and
cleanliness of the Building and the comfort, quiet and convenience of other
occupants of the Building. Lessee shall not place a load upon any floor area of
the Demised Premises exceeding the floor load per square foot which it may carry
and which is allowed by law. Lessor reserves the right to prescribe reasonably
the weight and position of all safes, business machines and mechanical
equipment. Such installations shall be placed and maintained by Lessee, at
Lessee's expense, in settings sufficient, in Lessor's judgment, to absorb and
prevent vibration, noise and annoyance. Lessee may, subject to applicable
governmental requirements, maintain in the premises a small safe, provided that
any damage done to the building or premises in connection with
<PAGE>
the moving of the safe shall be immediately repaired at the expense of the
Lessee.
11. DAMAGES TO BUILDING/WAIVER OF SUBROGATION. If the Building is damaged
by fire or any other cause to such extent that the cost of restoration, as
reasonably estimated by Lessor, will equal or exceed twenty-five (25%) percent
of the replacement value of the Building (exclusive of foundations) just prior
to the occurrence of the damage, then Lessor may, no later than the sixtieth
(60th) day following the damage, give Lessee a notice of election to terminate
this Lease, or if the cost of restoration will equal or exceed fifty (50%)
percent of such replacement value and if the premises shall not be reasonably
usable for the purpose for which they are leased hereunder, then Lessee may, no
later than the sixtieth (60th) day following the damage, give Lessor a notice of
election to terminate this Lease. In either said event of election, this Lease
shall be deemed to terminate on the thirtieth (30th) day after the giving of
such notice, and Lessee shall surrender possession of the Premises within a
reasonable time thereafter, and the basic rent, and any additional rent, shall
be apportioned as of the date of casualty and any basic or additional rent paid
for any period beyond said date shall be repaid to Lessee. If the cost of
restoration as estimated by Lessor shall amount to less than twenty-five (25%)
percent of said replacement value of the Building, or if, despite the cost,
Lessor does not elect to terminate this Lease, Lessor shall restore the Building
and the Premises with reasonable promptness, subject to force majeure (to the
extent not reasonably remediable), and Lessee shall have no right to terminate
this Lease. Lessor need not restore fixtures and improvements owned by Lessee.
Notwithstanding anything else herein contained and notwithstanding force
majeure, if following any damage referred to in the first sentence of this
section the Premises shall as a result thereof not be tenantable after 180 days
following such damage, Lessee may, upon 10 days prior written notice to Lessor,
terminate this Lease, and upon the 10th day after such notice is given this
Lease shall terminate, Lessee shall surrender possession of the Premises, and
Lessee and Lessor shall have thereafter no further obligation to the other
(except obligations arising prior to such termination).
In any case, not involving a termination of this Lease as provided
hereinabove, in which use of the Premises is affected by any damage to the
Building, provided Lessor receives the proceeds of rent insurance maintained in
force by Lessor covering the basic and all additional rent due hereunder,
calculated on a daily basis, no rent shall be payable by Lessee for each
standard building operating day for the period for which and the extent to which
the Premises are not reasonably usable and are not used for the purpose for
which they are leased hereunder. The words "restoration" and "restore" as used
in this Section 11 shall include repairs. If the damage results from the fault
of the Lessee, or Lessee's agents, servants, visitors or licensees, Lessee shall
not be entitled to any abatement or reduction in basic rent. Lessor agrees,
subject to the provisions of Section 22 hereof, to maintain full replacement
value fire and extended coverage insurance and one year's rent on the Building.
<PAGE>
Notwithstanding the provisions of this Section 11 of the Lease, in any
event of loss or damage to the Building, the Premises and/or any contents, each
party shall look first to any insurance in its favor for reimbursement of
property or casualty loss before making any claim against the other party, and
each party shall obtain, for each policy of insurance, provisions permitting
waiver of any claim against the other party for property or casualty loss or
damage within the scope of such insurance, and each party, to such extent
permitted, for itself and its insurers waives all such insured claims against
the other party.
12. EMINENT DOMAIN. If Lessee's use of the Premises is materially affected
due to the taking by eminent domain of (a) the Premises or any part thereof or
any estate therein; or (b) any other part of the Building, then, in either
event, this Lease shall terminate on the date when title vests pursuant to such
taking. The rent, and any additional rent, shall be apportioned as of said
termination date and any basic and additional rent paid for any period beyond
said date shall be repaid to Lessee. Lessee shall not be entitled to any part of
the award for such taking or any payment in lieu thereof, but Lessee may file a
separate claim for any taking of fixtures and improvements owned by Lessee which
have not become the Lessor's property, and for moving expenses, provided the
same shall in no way affect or diminish Lessor's award. In the event of a
partial taking which does not effect a termination of this Lease but does
deprive Lessee of the use of a portion of the Demised Premises, there shall be
an abatement or an equitable reduction of the basic rent and additional rent,
depending on the period for which and the extent to which the Premises so taken
are not reasonably usable for the purpose for which they are leased hereunder.
13. INS0LVENCY OF LESSEE. Either (a) the appointment of a receiver to take
possession of all or substantially all of the assets of Lessee, or (b) a general
assignment by Lessee for the benefit of creditors, or (c) any action taken or
suffered by Lessee under any insolvency or bankruptcy act, shall constitute a
default of this Lease by Lessee (provided that in the case of an involuntary
proceeding against Lessee, such proceeding shall not constitute a default if
dismissed by a court of competent jurisdiction within 90 days of inception), and
Lessor may terminate this Lease forthwith and upon notice of such termination
Lessee's right to possession of the Demised Premises shall cease, and Lessee
shall then quit and surrender the Premises to Lessor but Lessee shall remain
liable as hereinafter provided in Section 15 hereof.
14. LESSOR'S REMEDIES ON DEFAULT. If Lessee defaults in the payment of
basic rent or any additional rent, or defaults in the performance of any of the
other covenants and conditions hereof, Lessor may give Lessee notice of such
default, and if Lessee does not cure any default in the payment of basic rent or
additional rent within five (5) days, or does not cure any other default within
fifteen (15) days, after the giving of such notice (or if such default, not
relating to the payment of money, is of such nature that it cannot be completely
cured within such period, if Lessee does not commence such curing within such
fifteen (15) days and thereafter proceed with reasonable diligence and in good
faith, subject to force majeure, to cure such default), then Lessor may
terminate this Lease on not less than ten (10) days' notice to Lessee, and on
the date specified in said notice, Lessee's right to possession of the
<PAGE>
Demised Premises shall cease, and Lessee shall then quit and surrender the
Premises to Lessor, but Lessee shall remain liable as hereinafter provided. If
this Lease shall have been so terminated by Lessor pursuant to Sections 13 or 14
hereof, Lessor may at any time thereafter resume possession of the Premises by
any lawful means and remove Lessee or other occupants and their effects.
15. DEFICIENCY. In any case where Lessor has recovered possession of the
Premises by reason of Lessee's default, Lessor may, at Lessor's option, occupy
the Premises or cause the Premises to be redecorated reasonably, altered,
divided, consolidated with other adjoining premises, or otherwise changed or
prepared for reletting, and may relet the Premises or any part thereof as agent
of Lessee or otherwise, for a term or terms to expire prior to, at the same time
as, or subsequent to, the original expiration of this Lease, at Lessor's option,
and receive the rent therefor. Rent so received shall be applied first to the
payment of such expenses as Lessor may have incurred in connection with the
recovery of possession, redecorating, altering, dividing, consolidating with
other adjoining premises, or otherwise changing or preparing for reletting, and
the reletting, including brokerage and reasonable attorney's fees, and then to
the payment of damages in amounts equal to the rent hereunder and to the costs
and expenses of performance of the other covenants of Lessee as herein provided.
Lessee agrees, in any such case, whether or not Lessor has relet the Premises,
to pay to Lessor damages equal to the basic and additional rent and other sums
herein agreed to be paid by Lessee, less the net proceeds of the reletting, if
any, as ascertained from time to time, and the same shall be payable by Lessee
on the several rent days above specified. Lessee shall not be entitled to any
surplus accruing as a result of any such reletting. In reletting the Premises as
aforesaid, Lessor may grant reasonable rent concessions, and Lessee shall not be
credited therewith. No such reletting shall constitute a surrender and
acceptance or be deemed evidence thereof but to the extent of rents actually
collected by Lessor same shall be deemed in mitigation of Lessor's damages
hereunder. If Lessor elects, pursuant hereto, actually to occupy and use the
Premises or any part thereof during any part of the balance of the term as
originally fixed or since extended, there shall be allowed against Lessee's
obligation for rent or damages as herein defined, during the period of Lessor's
occupancy, the reasonable value of such occupancy, not to exceed in any event
the basic and additional rent herein reserved and such occupancy shall not be
construed as a release of Lessee's liability hereunder. Any action taken by
Lessor hereunder shall be commercially reasonable, and Lessor shall use its best
efforts to relet the Premises.
Lessee hereby waives all right of redemption to which Lessee or any person
under Lessee might be entitled by any law now or hereafter in force.
Lessor's remedies hereunder are in addition to any remedy allowed by law.
16. SUBORDINATION OF LEASE. This Lease shall, at Lessor's option, or at the
option of any holder of any underlying lease or any mortgage or deed of trust
affect the real property of which the Building is a part ("Underlying
Mortgage"), be subject and subordinate to any such Underlying Mortgage which may
now or hereafter affect the real property of which the
<PAGE>
Premises form a part, and also to all renewals, modifications, consolidations
and replacements of any such Underlying Mortgage. Although no instrument or act
on the part of Lessee shall be necessary to effectuate such subordination,
Lessee will, nevertheless, execute and deliver such further instruments
confirming such subordination of this Lease as may be desired by the holder of
any Underlying Mortgage. Upon request of Lessee, Lessor agrees to use its best
efforts to obtain for Lessee a nondisturbance agreement from the holder of any
Underlying Mortgage. If any underlying lease to which this Lease is subject
terminates, Lessee shall, on timely request, attorn to the owner of the
reversion. In addition, Lessee shall attorn to the holder of any Underlying
Mortgage if such holder succeeds to the interest of Lessor in the Building, the
Demised Premises or any part or parts thereof by foreclosure proceedings or as a
result of any conveyance in lieu of foreclosure proceedings.
17. RIGHT TO CURE LESSEE'S BREACH. If Lessee breaches any covenant or
condition of this Lease, Lessor may, on reasonable notice to Lessee (except that
no notice need be given in case of emergency), cure such breach at the expense
of Lessee; and the reasonable amount of all expenses, including reasonable
attorney's fees, incurred by Lessor in so doing (whether paid by Lessor or not)
shall be deemed additional rent payable on demand.
18. MECHANIC'S LIENS. Lessee shall, within fifteen (15) days after notice
from Lessor, discharge or satisfy by bonding or otherwise any mechanic's liens
for materials or labor claimed to have been furnished to the Premises on
Lessee's behalf.
19. RIGHT TO INSPECT AND REPAIR. Lessor may enter the Premises but shall
not be obligated to do so (except as required by any specific provision of this
Lease) at any reasonable time on reasonable notice to Lessee (except that after
notice given by Lessor Lessee may request a different time, within the
discretion of Lessor, and except that no notice need be given in case of
emergency) for the purpose of inspection or the making of such repairs,
replacement or additions, in, to, on and about the Premises or the Building, as
Lessor deems necessary or desirable. Lessee shall have no claims or cause of
action against Lessor by reason thereof. In no event shall Lessee have any claim
against Lessor for interruption to Lessee's business, however occurring, except
as specifically provided in this Lease.
20. SERVICES TO BE PROVIDED BY LESSOR; LESSOR'S EXCULPATION. While Lessee
is not in default under any of the provisions of this Lease, Lessor agrees to
furnish, except on Holidays as defined in Section 41(E):
(A) Cleaning services appropriate to a Class A office building of the
same type and in the same vicinity as the Building. Lessee shall pay the
cost of all specially requested cleaning services required by Lessee.
(B) Heating, ventilating and air conditioning (herein "HVAC"), as
appropriate for the season and as appropriate to a Class A office building
of the same type and in the same vicinity as the Building, together with
common facilities lighting and electric energy, all during "Building
Hours," as defined in Section 41(D).
<PAGE>
(C) Should Lessee require HVAC at any time other than during Building
Hours, it shall notify lessor at least 6 hours in advance. Any such
additional HVAC usage shall be at Lessee's sole cost at hourly rates to be
fixed by Lessor from time to time, to reflect reasonably any increase in
Lessor's cost thereof subsequent to the first Lease Year. During the first
Lease Year the hourly rates for overtime HVAC usage shall be: Heat, $25.00
per hour; air conditioning, $35.00 per hour; such charges to be equitably
prorated among Lessee and any other tenants simultaneously requiring such
usage.
(D) In the event of any interruption or curtailment of any of the
aforesaid services which Lessor is obligated to provide, Lessor shall take
measures within its control as may be reasonable under the circumstances to
restore the service without undue delay. Notwithstanding the requirements
of this section or any other provision of this Lease, Lessor shall not be
liable for failure to furnish any of the aforesaid services when such
failure is due to force majeure, as defined in Section 41(C). Lessor shall
not be liable, under any circumstances, including its negligence, for any
loss of or injury to Lessee or to any property however occurring, through
or in connection with or incidental to the furnishing of, or failure to
furnish, any of the aforesaid services or for any interruption to Lessee's
business however occurring, including, but not limited to, that arising
from Lessor's negligence.
21. ELECTRICITY. The cost of electric current which is supplied by the
Lessor for use by the Lessee in the Demised Premises, other than for heating or
air-conditioning purposes, shall be reimbursed to the Lessor at the actual
terms, classification and rates charged to the Building as individually metered
to Lessee.
22. ADDITIONAL RENT. Lessee agrees to pay, and shall pay as hereinbelow
provided, in addition to the basic rent provided in Section 3 above, an
additional rental to cover Lessee's proportionate share, as defined in Section
41(A), of the increased cost to Lessor for each of the categories of costs
enumerated in this paragraph (i.e., Operating Costs, Utility and Energy Costs
and Real Estate Taxes) over the "Base Period Costs" (as hereinafter defined) for
said categories.
(A) Operating Cost Escalation. If the Operating Costs incurred for the
Building for any calendar year or proportionate part thereof during the
Lease Term shall be greater than the Base Operating Costs (adjusted
proportionately for periods less than a lease year), then Lessee shall pay
to Lessor, as additional rent, its proportionate share, as hereinafter
defined, of all of such excess Operating Costs. Operating Costs shall
include, by way of illustration and not of limitation, all costs of labor,
including all wages and salaries, social security taxes, and other taxes
which may be levied against Lessor upon such wages and salaries; supplies;
interior and exterior cleaning; repairs (net of insurance
<PAGE>
or other reimbursements) and maintenance; maintenance and service
contracts; property management and administrative contracts; painting; wall
and window washing; laundry and towel service; tools and equipment (which
are not required to be capitalized for Federal income tax purposes); fire,
rent interruption, liability and other insurance; extermination services;
trash removal; plant and lawn care; snow removal; security services; and
all other items properly constituting direct operating costs according to
standard accounting practices (hereinafter collectively referred to as the
"Operating Costs"), but not including depreciation of Building or
equipment; interest or principal payments; finance or mortgage charges;
ground rent; bad debts owed to Lessor; income or excess profits taxes;
costs of maintaining the Lessor's legal form of organization; franchise
taxes; electric survey costs, leasing commissions; legal expenses; any
amounts referred to in subparagraphs (B) and (C) below; or any expenditures
required to be capitalized for Federal income tax purposes, unless said
expenditures are for the purpose of reducing operating costs within the
Building, in which event the costs thereof shall be included. As used in
this Section 22(A), the Base Operating Costs shall be those costs incurred
during calendar year 1993.
(B) Fuel Utilities and Electric Cost Escalation. If the fuel,
utilities and energy costs (hereinafter "Utility and Energy Costs"),
including any fuel surcharges or adjustments with respect thereto, incurred
for electric, water, sewer, or other utilities and for lighting, water,
heating, ventilating and air conditioning for the Common Facilities of the
Building, for any Lease Year or proportionate part thereof during the lease
term shall be greater than the Base Utility and Energy Costs (adjusted
proportionately for periods less than a Lease Year), then Lessee shall pay
to Lessor as additional rent its proportionate share, as hereinafter
defined, of all such excess Utility and Energy Costs. As used in this
Section 22(B), the Base Utility and Energy Costs shall be those costs
incurred during Calendar Year 1993 (including surcharges and/or
adjustments). Utility and Energy Costs shall not include any costs referred
to in Sections 21 or 22 (A).
(C) Tax Escalation. If the Real Estate Taxes for the Building for any
lease year or proportionate part thereof during the Lease Term shall be
greater than the Base Real Estate Taxes (adjusted proportionately for
periods less than a lease year), then Lessee. shall pay to Lessor as
additional rent its proportionate share, as hereinafter defined, of all
such excess Real Estate Taxes.
As used in this Section 22 (C) the words and terms which follow mean
and include the following:
(i) "Base Real Estate Taxes" shall mean those real estate taxes
imposed on the Building for calendar year 1993.
<PAGE>
(ii) "Real Estate Taxes" shall mean the property taxes and assessments
(not including any penalty payments) imposed upon the Building or upon the
rent, as such, payable to the Lessor. If due to a future change in the
method of taxation any franchise, income or profit tax shall be levied
against Lessor in substitution for, or in lieu of, or in addition to, any
tax which would otherwise constitute a Real Estate Tax, such franchise,
income or profit tax shall be deemed to be a Real Estate Tax for the
purposes hereof; conversely, any additional real estate tax hereinafter
imposed in substitution for, or in lieu of, any franchise, income or profit
tax (which is not in substitution, for, or in lieu of, or in addition to, a
Real Estate Tax as hereinbefore provided) shall not be deemed a Real Estate
Tax for the purposes hereof.
(D) Lease Year. As used in this Section 22, Lease Year shall mean the
twelve (12) month period commencing when possession is delivered, and each
twelve (12) month period thereafter. If any lease period for which excess
costs may be calculated as provided in this paragraph shall be less than
twelve (12) months, then the Base Period Costs for the categories listed
above shall be adjusted to equal the proportion that such lease period
bears to twelve (12) months, and Lessee shall pay to Lessor as additional
rent for such period, an amount equal to Lessee's proportionate share, as
hereinafter defined, of the excess for such period over the adjusted Base
Period Costs with respect to each of the aforesaid categories of costs.
(E) Payment. At any time and from time to time after the establishment
of the Base Period Costs for each of the categories referred to above,
Lessor may advise the Lessee in writing of Lessee's proportionate share
with respect to each of the categories of costs as provided in this
paragraph, both as already incurred and as estimated for the unexpired
portion of the current twelve (12) month period (and for each succeeding
twelve (12) month period or proportionate part thereof if the last period
prior to the Lease's termination is less than twelve (12) months) and then
known to the Lessor, and thereafter the Lessee shall pay as additional rent
its proportionate share, as hereinafter defined, of such costs already
incurred in a single lump sum and of such costs for the unexpired portion
of the then current period (as the same may be periodically revised by
Lessor as additional costs are incurred) in equal monthly installments.
Lessee agrees that Lessor may adjust from time to time the additional rent
payable with respect to any months for which the rental shall have already
been paid which are affected by the Operating Cost Escalation and/or
Utility and Energy Cost Escalation and/or Real Estate Tax Escalation Costs
above referred to, as well as with respect to the unexpired months of the
current period and any subsequent periods. In addition, Lessor shall be
reimbursed by Lessee monthly during the first year of the Lease Term for
additional Utility and Energy Cost Escalations resulting from any increase
during such year in the applicable monthly utility rates.
<PAGE>
Notwithstanding anything herein captained to the contrary, in the
event the last period prior to the termination of this Tease is less than
twelve (12) months, the Base Period Costs shall be proportionately reduced
to correspond to the duration of the final period.
(F) Books and Records. For the protection of Lessee, Lessor shall
maintain books of account which shall be open to Lessee and its
representatives at all reasonable times so that Lessee can determine that
such Operating, Utility and Energy and Tax Costs have, in fact, been paid
or incurred. Any disagreement, with respect to any one or more of said
charges if not satisfactorily settled between Lessor and Lessee shall be
referred by either party to an independent certified public accountant to
be mutually agreed upon, and if such an accountant cannot be agreed upon,
the American Arbitration Association may be asked by either party to select
an arbitrator, whose decision on the dispute will be final and binding upon
both parties, who shall jointly share any cost of such arbitration. Pending
resolution of the issue, Lessee shall pay the amount established and billed
by Lessor, all subject to final adjustment once the issue is resolved as
provided for above.
23. INTERRUPTION OF SERVICES OR USE. Interruption or curtailment of any
service maintained in the Building or Premises as a result of an event beyond
the reasonable control of Lessor shall not entitle Lessee to any claim against
Lessor or to any abatement in rent, and shall not constitute a constructive or
partial eviction, unless if Lessor is responsible to provide the service, it
fails to take such measures as may be reasonable under the circumstances to
restore the service without undue delay. If the Premises are rendered
untenantable in whole or in part, for a period of ten (10) consecutive business
days, by the making of repairs, replacements or additions, other than those made
with Lessee's consent or caused by misuse or neglect by Lessee, or Lessee's
agents, servants, visitors or licensees, there shall be a proportionate
abatement of rent from and after said tenth (10th) consecutive business day and
continuing for the period of such untenantability. In no event shall Lessee be
entitled to claim a constructive eviction from the Premises unless Lessee shall
first have notified Lessor in writing of the condition or conditions giving rise
thereto, and, if the complaints be justified, unless Lessor shall have failed
within a reasonable time, after receipt of such notice to remedy, or commence
and proceed with due diligence to remedy, such condition or conditions, all
subject to force majeure, as hereinafter defined.
24. LESSEE'S ESTOPPEL. Each of Lessor and Lessee shall, from time to time,
on not less than ten (10) days' prior written request by the other party,
execute, acknowledge, and deliver to the other party a written statement
certifying that the Lease is unmodified and in full force and effect, or that
the Lease is in full force and effect as modified and listing the instruments or
modification; the dates to which the rents and charges have been paid; whether
or not to the best of the certifying party's knowledge the other party is in
default hereunder, and if so, specifying the nature of the default;
<PAGE>
and any other matters which may reasonably and customarily be covered in a
landlord's or tenant's estoppel certificate. It is intended that any such
statement required by Lessor to be delivered by Lessee pursuant to this Section
24 may be relied an by a prospective purchaser of Lessor's interest or mortgagee
of Lessor's interest or assignee of any mortgage of Lessor's interest.
25. HOLDOVER TENANCY. Unless, otherwise agreed between Lessor and Lessee,
if Lessee holds possession of the Premises after the term of this Lease, Lessee
shall become a tenant from month to month under the provisions herein provided,
but at a monthly basic rental of one hundred twenty-five (125%) percent of the
basic rent for the last month of the term or any renewal term, payable in
advance on the first day of each month, and such tenancy shall continue until
terminated by Lessor, or until Lessee shall have given to Lessor a written
notice at least sixty (60) days prior to the intended date of termination, of
intent to terminate such tenancy.
26. SECURITY DEPOSIT. Lessee shall deposit with Lessor simultaneously
herewith cash in the amount of $2,500 as security for the performance of
Lessee's obligations under this Lease, including without limitation, the
surrender of possession of the Premises to Lessor as herein provided. If Lessor
applies any part of such deposit to cure any default of Lessee, Lessee shall on
demand deposit with Lessor the amount so applied so that Lessor shall have the
full deposit on hand at all times during the term of this Lease. Lessor, in the
event that the Demised Premises are sold, shall transfer and deliver the
security, as such, to the purchaser of the Demised Premises and shall notify
Lessee thereof, and thereupon Lessor shall be discharged from any further
liability in reference thereto. Lessor may co-mingle said deposit with its own
funds and need not pay interest thereon to the Lessee.
27. LEASEHOLD IMPROVEMENTS. (A) Lessor agrees that, prior to the
commencement of the term of this Lease, Lessor will do all of the work in the
Demised Premises in accordance with Exhibits A and D attached hereto and made a
part hereof. All work as therein described will be at Lessor's expense. Any
extra work requested by Lessee which is not described in Exhibits A and D and
the requirements and specifications constituting part thereof shall be performed
by Lessor at Lessee's expense. Lessee shall pay Lessor for such extra work at
the time that Lessor agrees to such request, but in any event Lessee shall pay
Lessor not less than the aggregate payments billed to Lessor by Lessor's
contractors.
(B) Lessee will work with Lessor's architects to design and lay out the
Premises and establish the Leasehold Improvements to be built therein. Lessee
shall submit its complete requirements and specifications to Lessor within 20
days after the execution and delivery of this Lease. Any delay occasioned by
Lessee's failure to cooperate with Lessor in developing plans from such
requirements and specifications or any changes authorized by Lessee after the
plans have been prepared, shall not delay the commencement date of the term and
Lessee's obligations hereunder and the same shall commence on the date the
Premises would have been delivered to Lessee pursuant to Section 2, but for
Lessee's delay.
<PAGE>
28. RIGHT TO SHOW PREMISES. Lessor may show the Premises to prospective
purchasers and mortgagees; and, during the nine (9) months prior to termination
of this Lease, to prospective tenants, during business hours on reasonable
notice to Lessee.
29. WAIVER OF TRIAL BY JURY. To the extent such waiver is permitted by law,
the parties waive trial by jury in any action or proceeding brought in
connection with this Lease or the Premises.
30. LATE CHARGE. Anything in this Lease to the contrary notwithstanding at
Lessor's option, Lessee shall pay a "Late Charge" of five (5%) percent of any
installment of rent or additional rent paid more than seven (7) days after the
due date thereof, to cover the extra expense involved in handling delinquent
payments. Notwithstanding the foregoing, in the case of the first two
occurrences of such an overdue installment during the term of this Lease, such
late charge shall not be imposed if Lessee pays such installment within two
business days after notice thereof given to Lessee by Lessor.
31. NO OTHER REPRESENTATIONS. No representations or promises shall be
binding on the parties hereto except those representations and promises
contained herein or in some future writing signed by the party making such
representation(s) or promise(s).
32. QUIET ENJOYMENT. Lessor covenants that if, and as long as, Lessee pays
the rent, and any additional rent as herein provided, and performs the covenants
hereof, Lessor shall do nothing to affect Lessee's right to peaceably and
quietly have, hold and enjoy the Premises for the term herein mentioned, subject
to the provisions of this Lease.
33. LESSEE'S INSURANCE. Lessee covenants to provide to Lessor on or before
the Commencement Date a certificate of Lessee's comprehensive policy of general
liability insurance naming the Lessor as an additional named insured with
respect to Lessee's operations and activities, insuring Lessee and Lessor
against any liability commonly insured against and occasioned by accident
resulting from any act or omission on or about the Premises and any
appurtenances thereto. Such policy is to be written by an insurance company
qualified to do business in the State of New York reasonably satisfactory to
Lessor. The policy shall be with limits not less than two million dollars
($2,000,000.00) in respect of any one person, in respect of any one accident,
and in respect of property damage. Such limits shall be subject to periodic
review, and Lessor reserves the right to require Lessee to increase such
coverage limits, if in the reasonable opinion of Lessor such coverage becomes
inadequate and is less than that commonly maintained by tenants in similar
buildings in the area by tenants making similar uses. At least fifteen (15) days
prior to the expiration or termination date of any policy, the Lessee shall
deliver a renewal or replacement policy or certificate of insurance thereunder
with proof of the payment of the premium therefor. Lessee also agrees to obtain
comprehensive fire and full extended coverage insurance on its contents.
<PAGE>
34. PARAGRAPH HEADINGS. The paragraph headings in this Lease and position
of its provisions are intended for convenience only and shall not be taken into
consideration in any construction or interpretation of this Lease or any of its
provisions.
35. APPLICABILITY TO HEIRS AND ASSIGNS. The provisions of this Lease shall
apply to, bind and inure to the benefit of Lessor and Lessee, and their
respective heirs, successors, legal representatives and assigns. It is
understood that the term "Lessor" as used in this Lease means only the owner, a
mortgagee in possession or a term lessee of the Building, so that in the event
of any sale of the Building or of the Premises, the lessor named herein shall be
and hereby is entirely freed and relieved of all covenants and obligations of
Lessor hereunder accruing thereafter, and it shall be deemed without further
agreement that the purchaser, the term lessee of the Building, or the mortgagee
in possession has assumed and agreed to carry out any and all covenants and
obligations of Lessor hereunder.
36. PARKING SPACES. Lessee's occupancy of the Demised Premises shall
include the use of Four (4) parking spaces. Lessee shall observe such rules and
regulations relating to assigned parking.
37. BROKER. None.
38. PERSONAL LIABILITY. Notwithstanding anything to the contrary provided
in this Lease, it is specifically understood and agreed, such agreement being a
primary consideration for the execution of this Lease by Lessor, that there
shall be absolutely no personal liability on the part of Lessor or any of its
partners, or its or their successors, assigns or any mortgagee in possession
(for the purposes of this paragraph, collectively referred to as "Lessor"), with
respect to any of the terms, covenants and conditions of this Lease, and that
Lessee shall look solely to the equity and income of Lessor in the real property
which includes the Building for the satisfaction of each and every remedy of
Lessee in the event of any breach by Lessor of any of the terms, covenants and
conditions of this Lease to be performed by Lessor, such exculpation of
liability to be absolute and without any exceptions whatsoever.
39. NO OPTION. The submission of this Lease Agreement for examination does
not constitute a reservation of, or option for, the Premises, and this Lease
Agreement becomes effective as a Lease Agreement only upon execution and
delivery thereof by Lessor and Lessee.
40. NON-LIABILITY OF LESSOR. It is expressly understood and agreed by and
between the parties to this agreement that, except as hereinafter set forth,
Lessee shall assume all risk of damage and casualty to its property, equipment
and fixtures occurring in or about the Premises, whatever the cause of such
damage or casualty. It is further understood and agreed that, in any event,
Lessor in its capacity as Lessor and, if applicable, as builder or general
contractor of the Building or Premises and Lessor's agents, servants and
employees shall not be liable to Lessee, Lessee's agents, employees,
contractors, invitees or any other occupant of the Premises for any damage or
injury to person or property or for any inconvenience or annoyance to Lessee or
any other occupant of the Premises or injury to or interruption of Lessee's or
<PAGE>
such other occupant's business, arising out of or attributable to (i) the design
and construction of the Premises or the Building, (ii) any maintenance, repairs,
replacements, additions, alterations, substitutions and installations made to
the Premises or the Building, (iii) the failure of Lessor or others to perform
any such maintenance or to make any such repairs, replacements, additions,
alterations, substitutions and installations to the Premises and the Building or
to provide any utilities or services, (iv) the acts or omissions of any tenant
or other occupants of any space adjacent to or adjoining the Premises, (v)
steam, electricity, gas, water, rain, ice or snow, or any leak or flow from or
into the Premises or Building and (vi) any other cause or happening whatsoever,
except the negligence of Lessor and/or Lessor's agents, servants and employees
with respect to any of the events or occurrences referred to in subdivisions (i)
through (vi) hereof to the extent in connection with any affirmative duty of
Lessor provided by this Lease. Notwithstanding anything to the contrary provided
herein, the terms of this section are hereby made specifically subject to the
waiver of subrogation provisions of Section 11; and Lessor shall not be
indemnified by Lessee for injuries or damages occurring in the common areas and
facilities of the Building, if occasioned by the negligence of Lessor, its
employees, agents, or servants.
41. DEFINITIONS. (A) Proportionate Share. Lessee's Proportionate Share,
wherever that phrase is used, shall be .78%, which the parties agree reflects
and will be continually adjusted to reflect the ratio of the gross rentable
square feet of the area rented to Lessee as compared with the total number of
gross rentable square feet of the entire Building.
(B) Common Facilities. Common facilities shall mean the lawns, planted
areas, walkways, parking areas, lobbies, corridors, lavatories, elevators and
all other general interior or exterior Building facilities that service all
Building tenants.
(C) Force Majeure. Force majeure shall mean and include those situations
beyond Lessor's control, including by way of example and not by way of
limitation, acts of God; accidents; repairs outside Lessor's control; strikes;
shortages of labor, supplies or materials; inclement weather; or where
applicable, the passage of time while waiting for an adjustment of insurance
proceeds.
(D) Building Hours. As used in this Lease the "Building Hours" shall be
Monday through Friday, 8:00 a.m. to 6:00 p.m. and Saturday, 8:00 a.m. to 1:00
p.m., excluding Holidays as defined in subparagraph (E) below, except that
lighting of Common Facilities in the Building shall be maintained for such
additional hours as, in Lessor's sole judgment, is necessary or desirable to
insure proper operation of the Building. Notwithstanding the foregoing, Lessee
shall have access to the Premises at all times.
(E) Holidays. "Holidays," for the purposes of this Lease, shall mean New
Year's Day, Observance of Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day.
<PAGE>
42. LEASE COMMENCEMENT. Notwithstanding anything contained herein to the
contrary, if Lessor, for any reason whatsoever, except as provided in Section
27(B), cannot deliver possession of the Premises to Lessee at the commencement
of the agreed term as set forth in Section 2, this Lease shall not be void or
voidable, nor shall Lessor be liable to Lessee for any loss or damage resulting
therefrom, but in that event, the lease term shall be for the full term as
specified above to commence from and after the date Lessor shall have delivered
possession of the Premises to Lessee or from the date Lessor would have
delivered possession of the Premises to Lessee but for Lessee's failure to
cooperate with Lessor as to the information required by Exhibit B (herein the
"Commencement Date") and to terminate midnight of the day immediately preceding
the first day of the first month following the Fifth (5th) anniversary of the
Commencement Date, and if requested by Lessor, Lessor and Lessee shall, by a
writing signed by the parties, ratify and confirm said commencement and
termination dates.
43. NOTICES. Any notice by either party to the other shall be in writing
and shall be deemed to have been duly given only if delivered personally or sent
registered mail or certified mail in a postpaid envelope addressed, if to
Lessee, at the above described Building (with a copy, by regular first class
mail, to ________________________); if to Lessor, at Lessor's address as first
set forth above in this Lease; or, to either at such other address as Lessee or
Lessor, respectively, may designate in writing. Notice shall be deemed to have
been duly given, if delivered personally, on delivery thereof and if mailed,
upon receipt thereof.
[PARAGRAPH 44 DELETED AND INITIALED}
45. RENEWAL OPTION. Lessee is hereby granted one option to renew this Lease
upon the following terms and conditions:
(A) At the time of the exercise of the option to renew and at the
commencement date of such renewal, Lessee shall not be in default in
accordance with the terms and provisions of this Lease, and shall be in
possession of the Premises pursuant to this Lease.
(B) Tentative notice of the exercise of the option shall be sent to the
Lessor, in writing, at least nine (9) months before the expiration of the
term of this Lease.
(C) The renewal term shall be for the single term of Five (5) years, to
commence on the day following the expiration of the term of this Lease, and
all of the terms and conditions of this Lease, other than the basic rent,
shall apply during any such renewal term.
(D) In the event Lessee duly sends a notice of the tentative exercise of
the option to renew, Lessor shall, within 30 days following such exercise,
notify Lessee in writing of the annual
<PAGE>
basic rent to be paid during the said renewal term, which rental shall be
the fair rental value as of the commencement of the renewal term, as
established by Lessor. Lessee shall then have the option, exercisable only
within the 30 day period following the giving of such notification by
Lessor, either to rescind its election to renew the Lease or to dispute
Lessor's determination. If Lessee elects to dispute Lessor's determination,
then Lessee shall be free, at the Lessee's sole cost and expense, to employ
the services of an appraiser familiar with office buildings located within
the Hempstead, New York area comparable to the Building, who shall also be
a member of MAI, to render an appraisal. The election to dispute Lessor's
determination shall be deemed to have been duly exercised only if an
appraiser selected in accordance with the terms and conditions of the
immediately preceding sentence submits his determination of fair rental
value to Lessor, in writing, within the aforementioned 30 day period
allowed lessee. If Lessor and Lessee's appraiser cannot agree on the fair
rental value, or in such case, on an independent appraiser acceptable to
both, either party may request the local branch of the American Arbitration
Association into appoint such independent appraiser, who shall be a member
of MAI familiar with office buildings in the area of the Building and in
such event the judgment of majority of the two appraisers and Lessor shall
be final and binding upon the parties. The parties shall share equally in
the cost of any such independent appraiser. Pending resolution of the issue
of fair rental value Lessee shall pay Lessor as of commencement of the
renewal term in question, the basic rent as established by Lessor, subject
to adjustment upon final determination of this issue. Notwithstanding
anything to the contrary, the annual basic rent to be paid during the
renewal term shall not be less than that paid for the Premises during the
original term of the Lease.
46. REASONABLENESS. In every instance in this Lease where any costs,
expenses, or fees may be provided to be payable by Lessee or where rules or
regulations may be provided which are enforceable against Lessee, each provision
in such instance shall be applied reasonably. In addition, whenever in this
Lease the consent or approval of Lessor is required, such consent shall not be
unreasonably withheld or delayed, except where Lessor's discretion is expressly
not limited.
47. DUE AUTHORIZATION. Each of Lessor and Lessee hereby represents and
warrants to the other that the person executing this Lease on its behalf is duly
authorized to do so and that when fully executed and delivered by both Lessor
and Lessee this lease shall be an obligation fully binding on it, enforceable in
accordance with all the terms and provisions hereof.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands and
seals the day and year first above written.
HEMPSTEAD ASSOCIATES LIMITED PARTNERSHIP
BY: Hempstead Interests Corporation
General Partner As Lessor
As Lessor
BY: /s/ Signature on File
Partner
As Lessee
BY: /s/ Jerry Braun, CEO
<PAGE>
EXHIBIT A
[FLOOR PLAN]
<PAGE>
EXHIBIT "B"
CLEANING SCHEDULE
AREAS TO BE SERVICED: General, and private offices, lavatories, hallways,
lobby and public areas.
SERVICES TO BE RENDERED: Daily
Daily General Cleaning, Five Days Weekly (Saturdays, Sundays,
Legal Holidays Excluded)
1. Empty and clean all wastepaper baskets, ashtrays, receptacles, etc.
2. Sweep all tile flooring.
3. Vacuum carpeted areas.
4. Hand dust office furniture and window sills.
5. Wipe clean all fountains and coolers.
6. Dust all open closet shelving (low dusting only).
7. Remove wastepaper and refuse to designated area for removal by others.
8. All stone, ceramic tile marble, terrazo and other unwaxed floors to be
swept.
9. Keep slop sink rooms clean, neat and in an orderly condition at all times.
10. After cleaning, all lights shall be turned off, windows closed, doors
locked and offices left in orderly condition.
Lavatories
1. Sweep and wash all lavoratory floors nightly, using proper disinfectant.
2. Wash all mirror, powder shelves and enamel surfaces and all lavatories
nightly.
3. Wash and disinfect all basins, bowls and urinals nightly.
4. Wash all toilet seats nightly.
5. Hand dust and clean partitions, tile walls, dispensers and receptacles.
6. Empty paper towel receptacles and transport wastepaper to designated areas
nightly.
7. Fill toilet tissue holders, soap dispensers, hand towel and sanitary napkin
dispensers nightly.
8. Clean sanitary disposal receptacles nightly,
9. Wash all wall tile and stall surfacees as often as necessary, but at least
weekly.
Exhibit "B"
page 1 of 2
<PAGE>
Entrance, Lobbies, Elevators and Public Areas:
1. Lobby walls, glass, to be wiped clean.
2. Lobby entrance doors, windows to be washed (weekly).
3. Wipe and wash all floors in Main Lobby nightly.
4. Vacuum elevator floors nightly.
5. All Corridors and hallways to be vacuumed nightly and spot cleaned where
necessary.
6. Sweep sidewalk in front of entrance.
7. All Stairwells swept.
Window Cleaning:
1. Wash all exterior windows two (2) times a year.
Exhibit "B"
page 2 of 2
<PAGE>
EXHIBIT "C"
AIR CONDITIONING STANDARDS
A year-round variable volume air conditioning system capable of maintaining
a temperature of 78 degrees F (plus or minus 2 degrees) and maximum relative
humidity of 50% when outside conditions are 95 degrees F DB, 76 degrees F WB
shall be furnished and installed. The foregoing standards of air conditioning
are based upon a population of no more than one occupant for each 140 square
feet of rentable area and one ceiling diffuser for each 200 square feet of
rental area.
The system will provide air conditioning as aforesaid from 8 A.M. to 6 P.M.
on business days, 8 A.M. to 1 P.M. Saturdays (holidays and Sundays excluded).
All heating will be provided by perimeter electric baseboard radiation with
heat output controlled by outside air temperature sensors for each exposure.
An exhaust fan shall be provided in toilets plus 1 additional for every
15,000 square feet of rentable area.
Additional air conditioning equipment for Tenant's layout or special
requirements shall be provided at Tenant's expense.
<PAGE>
EXHIBIT "D"
WORK LETTER
Lessor shall provide and install the following material and complete the
following work in accordance with Lessee's plans submitted to and approved by
Lessor:
Ceiling Tiles 2' x 4' exposed spline and
ceiling tile furnished and
installed throughout.
Paint Prime coat and a finish coat selected from
Building Standard color selections throughout
space.
Carpet & Vinyl Base Lessor to provide
Building Standard commercial
carpet and vinyl base furnished
and installed. Carpet to be
selected from Lessor's standard
samples and from Building Standard
colors.
Entrance Door Fire rated solid core door
.
Sprinkler System Sprinkler heads furnished and installed
throughout.
Interior Partitions 1/2" drywall and metal
stud partitions to ceiling height
each side with seams taped and
finished with three (3) coats of
joint compound ready for wall
finish.
Demising Partitions Partitions between tenants shall be of sound
attenuating construction, to the underside of
the roof or deck above, 3 1/2" metal studs,
fire code insulated drywall construction, 5/8"
sheetrock on each side with seams taped and
finished with three (3) coats of joint compound
ready for wall finish.
Lighting 2' x 4' Building Standard lighting
fixtures furnished and installed
throughout.
Electrical One duplex electrical receptacle
(110 volt, 20 ampere) or one
switch for each 150 square feet
(net).
<PAGE>
EXHIBIT D (CONTINUED) Pg 2.
Venetian Blinds Building Standard blinds shall
be provided in the Building
Standard color already selected by
Lessor.
Hardware Lessor to provide Building
Standard hardware for entry door
and Building Standard passage
hardware for office doors.
Other Work; Exclusions
Lessee may request that Lessor substitute alternate materials, equipment
and fixtures for those specified above, provided that such substitute items are
new and are of quality at least comparable to those replaced. In addition,
Lessee may request that Lessor omit the installation of any item or items not
theretofore installed, in which event Lessor shall thereupon be released from
any obligation to install the same at any time thereafter. If, upon Lessee's
request, Lessor shall utilize materials, or install equipment or fixtures, other
than those described above, Lessee shall pay to Lessor, on demand as additional
rent under the Lease, an amount equal to Lessor's cost for the substitute item.
Notwithstanding such payment by Lessee, the substitute item shall be and remain
the property of Lessor and shall not be removed by Lessee either before or after
the expiration date of the Lease.
<PAGE>
EXHIBIT E
RULES AND REGULATIONS
1. The rights of tenants in the entrances, corridors, elevators and
escalators of the Building are limited to ingress to and egress from the
tenant's premises for the tenants and their employees, licensees and invitees,
and no tenant shall use, or permit the use of, the entrances, corridors,
escalators or elevators for any other purpose. No tenant shall invite to the
tenant's premises, or permit the visit of, persons in such numbers or under such
conditions as to interfere with the use and enjoyment of any of the plazas,
entrances, corridors, escalators, elevators and other facilities of the Building
by other tenants. Fire exits are for emergency use only, and they shall not be
used for any other purpose by the tenants, their employees, Licensees or
invitees. No tenant shall encumber or obstruct, or permit the encumbrance or
obstruction of any of the sidewalks, plazas, entrances, corridors, escalators,
elevators, fire exits or stairways of the Building. The landlord reserves the
right to control and operate the public portions of the Building and the public
facilities, as well as facilities furnished for the common use of the tenants,
in such manner as it deems best for the benefit of the tenants generally.
2. The Landlord may refuse admission to the Building outside of ordinary
business hours to any person not having a pass issued by the Landlord or the
tenant whose premises are to be entered or not otherwise properly identified,
and may require all persons admitted to or leaving the Building outside of
ordinary business hours to register. Any person whose presence in the Building
at any time shall, in the judgment of the Landlord, be prejudicial to the
safety, character, reputation and interests of the Building or of its tenants
may be denied access to the Building or may be ejected therefrom. In case of
invasion, riot, public excitement or other commotion the Landlord may prevent
all access to the Building during the continuance of the same, by closing the
doors or otherwise, for the safety of the tenants and protection of property of
the Building. The landlord may require any person leaving the Building with any
package or other object to exhibit a pass from the tenant from whose
EXHIBIT E
Page 1 of 5
<PAGE>
EXHIBIT E -- (continued)
premises the package or object is being removed, but the establishment and
enforcement of such requirement shall not impose any responsibility on the
Landlord for the protection of any tenant against the removal of property from
the premises of the tenant. The Landlord shall in no way be liable to any
tenant. The Landlord shall in no way be liable to any tenant for damages or loss
arising from the admission exclusion or ejection or any person to or from the
tenant's premises or the Building under the provisions of this rule. Canvassing,
soliciting or peddling in the Building is prohibited and every tenant shall
cooperate to prevent the same.
3. No tenant shall obtain or accept for use in its premises ice, drinking
water, food, beverage, towel, barbering, boot blacking, floor polishing,
lighting maintenance, cleaning or other similar services from any persons not
authorized by the Landlord in writing to furnish such services, provided that
the charges for such services by persons authorized by the Landlord are not
excessive and where appropriate and consonant with the security and proper
operation of the Building, sufficient persons are so authorized for the same
service to provide tenants with a reasonably competitive selection. Such
services shall be furnished only at such hours in such places within the
tenant's premises and under such reasonable regulations as may be fixed by the
Landlord.
4. The cost of repairing any damage to the public portions of the Building
or the public facilities or to any facilities used in common with other tenants,
caused by the negligence of tenant or the employees, licensees or invitees of
the tenant, shall be paid by such tenant.
5. No lettering, sign, advertisement, notice or object shall be displayed
in or on the windows or doors, or on the outside of any tenant's premises, or at
any point inside any tenant's premises where the same might be visible outside
of such premises, except that the name of the tenant may be displayed on the
entrance door of the tenant's premises, and in the elevator lobbies of the
floors which are occupied entirely by any tenant, subject to the approval of the
Landlord as to the size, color and style of such display. The inscription of the
name of the tenant on the door of the tenant's premises shall be done by the
Landlord at the expense of the tenant. Listing of the name of the tenant on the
directory boards in the Building shall be done by the Landlord at its expense;
any other listings shall be in the discretion of the Landlord.
EXHIBIT E
Page 2 of 5
<PAGE>
EXHIBIT E -- (continued)
6. No awning or other projections over or around the windows shall be
installed by any tenant, and only such window blinds as are supplied or
permitted by the Landlord shall be used in a tenant's premises. Linoleum, tile
or other floor covering shall be laid in a tenant's premises only in a manner
approved by the Landlord.
7. The Landlord shall have the right to prescribe the weight and position
of safe and other objects of excessive weight, and no safe or other object whose
weight exceeds the lawful load for the area upon which it would stand shall be
brought into or kept upon a tenant's premises. If, in the judgment of the
Landlord, it is necessary to distribute the concentrated weight of any heavy
object, the work involved in such distribution shall be done at the expense of
the tenant and in such manner as the Landlord shall determine. The moving of
safe and other heavy objects shall take place only outside of ordinary business
hours upon previous notice to the Landlord, and the persons employed to move the
same in and out of the Building shall be reasonably acceptable to the Landlord
and, if so require by law, shall hold a Master Rigger's license. Freight,
furniture, business equipment, merchandise and bulky matter of any description
shall be delivered to and removed from the premises only in the freight
elevators and through the service entrances and corridors, and only during hours
and in a manner approved by the Landlord. Arrangements will be made by the
Landlord with any tenant for moving large quantities of furniture and equipment
into or out of the building.
8. No machines or mechanical equipment of any kind other than typewriters
and other ordinary portable business machines, may be installed or operated in
any tenant's premises without Landlord's prior written consent, and in no case
(even where the same are of a type so excepted or as so consented to by
Landlord) shall any machines or mechanical equipment be so placed or operated as
to disturb other tenants; but machines and mechanical equipment which may be
permitted to be installed and used in a tenant's premises shall be so equipped,
installed and maintained by such tenant as to prevent any disturbing noise,
vibration or electrical or other interference from being transmitted from such
premises to any other area of the Building.
EXHIBIT E
Page 3 of 5
<PAGE>
EXHIBIT E -- (continued)
9. No noise, including the playing of any musical instruments, radio or
television, which, in the judgement of the landlord, might disturb other tenants
in the Building, shall be made or permitted by any tenant, and no cooking shall
be done in the tenant's premises, except as expressly approved by the Landlord.
Nothing shall be done or permitted in any tenant's premises, which would impair
or interfere with any of the Building Services or the proper and economic
heating, cleaning or other servicing of the Building or the premises, or the use
or enjoyment by any other tenant of any other premises, nor shall there be
installed by any tenant any ventilating, air conditioning, electrical or other
equipment of any kind which, in the judgment of the landlord, might cause any
such impairment or interference. No dangerous, inflammable, combustible or
explosive object of material shall be brought into the Building by any tenant or
with the permission of any tenant. Any cuspidors or similar containers or
receptacles used in any tenant's premises shall be cared for and cleaned by and
at the expense of the tenant.
10. No acids, vapors or other materials shall be discharged or permitted to
be discharged into the waste lines, vents or flues of the Building which may
damage them. The water and wash closets and other plumbing fixtures in or
serving any tenant's premises shall not be used for any purpose other than the
purpose for which they were designed or constructed, and no sweepings, rubbish,
rags, acids or other foreign substances shall be deposited therein.
11. No additional locks or bolts of any kind shall be placed upon any of
the doors or windows in any tenant's premises and no lock an any door therein
shall be changed or altered in any respect without the landlord's prior written
consent. Additional keys for a tenant's premises and toilet rooms shall be
procured only from the landlord, which may make a reasonable charge therefor.
Upon the termination of a tenant's lease, all keys of the tenant's premises and
toilet rooms shall be delivered to the landlord.
12. All entrance doors in each tenant's premises shall be left locked and
all windows shall be left closed by the tenant when the tenant's premises are
not in use. Entrance doors shall not be left open at any time.
EXHIBIT E
Page 4 of 5
<PAGE>
EXHIBIT E -- (continued)
13. Hand trucks not equipped with rubber tires and side guards shall not be
used within the Building.
14. All windows in each tenant's premises shall be kept closed and all
blinds therein above the ground floor shall be lowered when and as reasonably
required because of the position of the sun, during the operation of the
Building air conditioning system to cool or ventilate the tenant's premises.
15. The Landlord reserves the right to rescind, alter or waive any rule or
regulation at any time prescribed for the Building when, in its judgment, it
deems it necessary, desirable or proper for its best interest and for the best
interests of the tenants, and no alteration or waiver of any rule or regulation
in favor of one tenant shall operate as an alteration or waiver in favor of any
other tenant. The Landlord shall not be responsible to any tenant for the
non-observance or violation by any other tenant of any of the rules and
regulations at any time prescribed by the Building.
EXHIBIT E
Page 5 of 5
Form 3264
Standard N.Y.B.T.U. Form 8001-8-63-Bargain and Sale Deed, without Covenants
against Grantor's Acts-Individual or Corporation (single sheet)
CONSULT YOUR LAWYER BEFORE SIGNING THIS INSTRUMENT--THIS INSTRUMENT SHOULD BE
USED BY LAWYERS ONLY.
THIS INDENTURE, made the 22nd day of April, nineteen hundred and ninety-four
BETWEEN Tiara Realty Co., a New York partnership with offices at 4819
13th Avenue, Brooklyn, New York 11219
party of the first part, and New York Health Care, Inc., a New York corporation
with offices at 1667 Flatbush Avenue, Brooklyn, New York
party of the second part,
WITNESSETH, that the party of the first part, in consideration of Ten Dollars
and other valuable consideration paid by the party of the second part, does
hereby grant and release unto the party of the second part, the heirs or
successors and assigns of the party of the second part forever,
ALL that certain plot, piece or parcel of land, with the buildings and
improvements thereon erected, situate, lying and being in the State and City of
New York, County of Kings as more particularly described on Schedule "A" annexed
hereto and known by the street address 1667 Flatbush Avenue, Brooklyn, New York
TOGETHER with all right, title and interest, if any, of the party of the first
part of, in and to any streets and roads abutting the above-described premises
to the center lines thereof; TOGETHER with the appurtenances and all the estate
and rights of the party of the first part in and to said premises; TO HAVE AND
TO HOLD the premises herein granted unto the party of the second part, the heirs
or successors and assigns of the party of the second part forever.
AND the party of the first part, in compliance with Section 13 of the Lien Law,
covenants that the party of the first part will receive the consideration for
this conveyance and will hold the right to receive such consideration as a trust
fund to be applied first for the purpose of paying the cost of the improvement
and will apply the same first to the payment of the cost of the improvement
before using any part of the total of the same for any other purpose.
The word "party" shall be construed as if it read "parties" whenever the sense
of this indenture so requires.
IN WITNESS WHEREOF, the party of the first part has duly executed this deed the
day and year first above written.
IN PRESENCE OF:
TIARA REALTY CO.
By: /s/ Isaac Rokowsky
------------------------------
Partner
<PAGE>
STATE OF NEW YORK, COUNTY OF New York SS:
On the 22 day of April 1994, before me personally came Isaac Rokowsky to me
known to be the individual described in and who executed the foregoing
instrument, and acknowledged that he executed the same as partner
/s/ Martin Silverstein
MARTIN SILVERSTEIN
Notary Public, State of New York
No. 4696011
Qualified in Nassau County
Commission Expires Nov. 30, 1995
STATE OF NEW YORK, COUNTY OF ___________ SS:
On the ____ day of ____ 19___, before me personally came _________________ to me
known, who, being by me duly sworn, did depose and say that he resides at No.
________; that he is the _________________ of ______________, the corporation
described in and which executed the foregoing instrument; that he knows the seal
of said corporation; that the seal affixed to said instrument is such corporate
seal; that is was so affixed by order to the board of directors of said
corporation, and that he signed h___ name thereto by like order.
STATE OF NEW YORK, COUNTY OF ___________ SS: On the _____day of _____ 19___,
before me personally came _________________ to me known to be the individual
described in and who executed the foregoing instrument, and acknowledged that
_________ executed the same.
STATE OF NEW YORK, COUNTY OF ___________ SS: On the ____ day of ____ 19___,
before me personally came _________________ the subscribing witness to the
foregoing instrument, with whom I am personally acquainted, who, being by me
duly sworn, did depose and say that he resides at No. __________; that he knows
______________ to be the individual described in and who executed the foregoing
instrument; that he, said subscribing witness, was present and saw _______
execute the same; and that he, said witness, at the same time subscribed h___
name as witness thereto.
Bargain and Sale Deed
WITHOUT COVENANT AGAINST GRANTOR'S ACTS
TITLE NO.
================================================================================
TIARA REALTY CO.
TO
NEW YORK HEALTH CARE, INC.
================================================================================
STANDARD FORM OF NEW YORK BOARD OF TITLE UNDERWRITERS
DISTRIBUTED BY
[LOGO] COMMONWEALTH LAND
TITLE INSURANCE COMPANY
SECTION
BLOCK 75
LOT 9
COUNTY OF KINGS
Recorded at Request of COMMONWEALTH LAND TITLE INSURANCE COMPANY
RETURN BY MAIL TO:
- --------------------------------------------------------------------------------
Aaron Stein, Esq.
1499 Coney Island Avenue
Brooklyn, New York
Zip No. 11230
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
RESERVE THIS SPACE FOR USE OF RECORDING OFFICE
- --------------------------------------------------------------------------------
Form B-3264
<PAGE>
Village Abstract of N.Y. Inc.
as agent for
American Title Insurance Company
Northeast Region
SCHEDULE A
ALL that certain plot, piece or parcel of land with the buildings and
improvements thereon erected, situate, lying and being in the Borough of
Brooklyn, County of Kings, City and State of New York, bounded and described as
follows:
BEGINNING at a point on the northeasterly side of Flatbush Avenue, distant 5
feet northwesterly from the corner formed by the intersection of the
northeasterly side of Flatbush Avenue and the northerly side of Avenue I;
Running thence northeasterly, at right angles to Flatbush Avenue and part of the
distance through a party wall, 95 feet 5-1/2 inches;
Thence westerly, parallel with Avenue I, 5 feet 1-1/2 inches;
Thence northerly, parallel with East 34th Street, 20 feet 8-1/2 inches;
Thence southwesterly, at right angles to Flatbush Avenue and part of the
distance through a party wall, 102 feet 10 inches to the northeasterly side of
Flatbush Avenue;
Thence southeasterly along the northeasterly side of Flatbush Avenue, 20 feet to
the point or place of BEGINNING.
For Conveyancing Only
Together with all right title and interest of, in and to any streets and roads
abutting the above described premises.
Our policies of title insurance include such buildings and improvements thereon
which by law constitute real property, unless specifically excepted therein. Now
is the time to determine whether we have examined all of the property and
easements which you desire to be insured. If there are appurtenant easements to
be insured, please request such insurance. In some cases, our rate manual
provides for an additional charge for such insurance.
NEW YORK HEALTH CARE INC. AGREEMENT
AGREEMENT made as of the 31st day of March, 1988 by and among JERRY BRAUN
("Braun"), residing at 929 East 28th Street, Brooklyn, New York 11210, SAMSON
SOROKA ("Soroka"), residing at 1228 East 22nd Street, Brooklyn, New York 11210,
JACOB ROSENBERG ("Rosenberg"), residing at 932 East 29th Street, Brooklyn, New
York 11210, (hereinafter referred to collectively as the "Group A Shareholders")
and HERSH CHITRIK ("Chitrik") residing at 1401 President Street, Brooklyn, New
York 11213 and SID BORENSTEIN ("Borenstein") residing at 1246 East 10th Street,
Brooklyn, New York 11230, each natural person, firm or entity which subsequently
becomes a shareholder of the Company and a signatory to this Agreement
(hereinafter, together with the Group A Shareholders, collectively called the
"Equityholders"), and NEW YORK HEALTH CARE, INC., a New York corporation having
an address at 4211 13th Avenue, Brooklyn, New York 11219 (the "Company").
W I T N E S S E T H :
WHEREAS, the Company has been duly organized and is presently existing
under the laws of the State of New York and is presently authorized to issue 200
shares of voting common stock, without par value ("Common Stock");
<PAGE>
WHEREAS, the Group A Shareholders have formed and operated the Company;
WHEREAS, Chitrik and Borenstein are desirous of becoming shareholders of
the Company;
WHEREAS, it is deemed in the best interests of the Company and the Group A
Shareholders that provision be made for continuity and stability of the business
and policies of the Company, and, to that end, to provide for certain rights and
obligations upon the occurrence of certain events, all to the extent and upon
the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
hereinafter set forth, the parties hereto agree as follows:
1. Equity Interest.
(a) Each Group A Shareholder presently owns the number of shares of
Common Stock set forth opposite his name below, which Common Stock in the
aggregate constitutes all the Company's outstanding Common Stock as of the
date of this Agreement:
Number of shares of
Name of Group A Shareholder Common Stock
--------------------------- -------------------
Braun 20
Soroka 10
Rosenberg 10
2
<PAGE>
(b) Subject to the terms and provisions of this Agreement and upon
fulfillment by Chitrik and Borenstein of their obligations as set forth in
this Agreement, the Group A Shareholders jointly agree to sell and transfer
to Chitrik and Borenstein, and Chitrik and Borenstein jointly agree to
purchase the number of shares of common stock set forth below at opposite
their respective names provided, however, that the Company first applies
for and receives permission for the proposed transfer of shares from the
New York State Department of Health;
Name of Shareholder Number of Shares to be Issued
------------------- -----------------------------
Chitrik 8
Borenstein 2
(c) From and after the date of this Agreement, and provided that
Chitrik and Borenstein have fully complied with their obligations as set
forth in this Agreement, they will each be entitled to receive their
respective distribution, as set forth in the table immediately below, of
distributable earnings from the Company ("Equity Interest"), but shall have
no right to vote in any matter in which shareholders of the Company may
vote until such time as an appropriate application to the New York State
Department of Health for the sale and transfer of shares of common stock of
the Company has been approved:
3
<PAGE>
Name Equity Interest
---- ---------------
Braun 37.50%
Soroka 18.75%
Rosenberg 18.75%
Chitrik 20%
Borenstein 5%
2. Directors and Officers.
(a) The Directors of the Company shall be Braun, Soroka and Rosenberg
until their successors are elected by the Company's shareholders.
(b) The officers of the Corporation shall be as follows: President
Braun Vice President and Secretary Rosenberg Treasurer Soroka
3. Chitrik's Obligation to Obtain Credit Line. The provision of an Equity
Interest in the Company to Chitrik and Borenstein as provided in this Agreement
is contingent upon Chitrik obtaining for the Corporation a revolving credit line
with a reputable lending institution in an amount not less than Eight Hundred
Thousand ($800,000.00) Dollars. The Credit Line (the "Credit Line") shall be
available at the date of closing of this Agreement. The Credit Line shall bear
interest in an amount not greater than two points above the Citibank prime rate.
It is
4
<PAGE>
agreed to and understood by the shareholders that Braun,, Chitrik, Borenstein,
Rosenberg and Soroka will personally guarantee the Credit Line.
4. Priority Rights of Group A Shareholders to Withdraw.
(a) The parties acknowledge and agree that as of the date hereof the
Corporation has retained and not yet distributed profits of approximately
$365,000 (referred to herein as "Net Accounts Receivable").
(b) It is understood that the Net Accounts Receivable are subject to
verification by the review thereof by a Certified Public Accountant and are
subject to collection by the Company.
(c) The Group A Shareholders are to exclusively receive and have the
right to exclusively withdraw one hundred (100%) percent of any
distributions of the Company until such time as they recover the Net
Account Receivable referred to in subparagraph (a) of this Paragraph 4.
Said distributions are subject to the provisions of subparagraph (b) of
Paragraph 10 herein.
(d) After the Group A Shareholders have been fully paid pursuant to
subparagraph (c) of this Paragraph 4, all
5
<PAGE>
distributions of the Company are to be made on a pro-rata basis based on the
Equity Interest set forth in paragraph 1(b) above.
(e) In the event the Company is dissolved and the Group A Shareholders
have not received the full Net Account Receivable, then, after the Credit
Line is paid back in full, the Group A Shareholders shall be entitled to
the remaining dissolution proceeds to the extent of the balance of the Net
Account Receivable. Any excess remaining thereafter shall be divided on a
pro-rata basis in accordance with the Equity Interests.
5. Business of Company. The Company shall, directly or through its
subsidiaries or affiliates, continue to engage in the businesses of operating
nursing and/or home care agencies and related activities for its own account or
the account of others and such other activities as may be necessary or
appropriate to promote the businesses of the Company.
6. Legend on Certificates. The following statements shall be inscribed on
all certificates representing Shares (or any certificate received with respect
thereto) so long as this Agreement is in effect:
"The shares represented by this certificate are subject to a certain
Equityholders Agreement dated as of March 31, 1988, and any amendments
thereto, a copy of which is on file at the principal office of the
Corporation, and any sale,
6
<PAGE>
pledge, gift, bequest, transfer, assignment, encumbrance or other
disposition of this certificate in violation of said Agreement shall be
invalid".
"The shares represented by this certificate have not been registered under
the Securities Act of 1933, as amended. The shares have been acquired f or
investment and may not be offered for sale, sold, or otherwise distributed
within the meaning of said Act in the absence of any effective registration
statement f or such shares under said Act or an opinion of counsel that
Registration is not required thereunder."
7. Term of Agreement. This Agreement shall continue in full force and
effect until the earlier of (i) termination by the mutual consent of the
Equityholders, (ii) with respect to a Group A Shareholder who transfers his
shares in accordance with the provisions of Paragraph 7 of this Agreement, upon
the transfer of all such shares, (iii) the dissolution of the corporation, (iv)
an uncured event of default on the part of Chitrik or Borenstein or (v) pursuant
to other provisions of this Agreement.
8. Voluntary Disposition.
(a) Each Group A Shareholder hereby agrees that he shall not sell, or
directly or indirectly transfer, assign, distribute, encumber, pledge or
otherwise dispose of (herein referred to as a "Disposition") any Common
Stock, whether now owned or hereafter acquired, except in compliance with
the provisions of
7
<PAGE>
this Agreement and after the Company has first applied for and then
received permission for the proposed transfer of shares from the New York
State Department of Health. In addition, the Company agrees that it shall
not issue or transfer any Common Stock, unless such Common Stock is
acquired subject to the provisions of this Agreement and after the Company
has first applied for and then received permission for the proposed
transfer of shares from the New York State Department of Health.
(b) In the event a Group A Shareholder proposes to make a Disposition
of any or all of his Common Stock, such Group A Shareholder (hereinafter
called a "Selling Shareholder") shall deliver to the Company and each
Equityholder written notice of his intention to make such Disposition sent
by registered mail, return receipt requested. Such notice shall constitute
an irrevocable offer to sell said Common Stock to the Company for a period
of 30 calendar days and shall set forth the proposed terms of such
Disposition, including the offering price per share of the Common Stock and
the terms of payment. Each non selling Equityholder of the Company shall
have the right for said 30 day period to accept, in proportion to such
Equityholders' Equity Interest, the offer made by the Selling Shareholder
and not purchased by the Company.
8
<PAGE>
(c) In the event that none of the Equityholders accept said offer,
then the Company shall have the right, for a period of 30 calendar days
after the expiration of the 30 day period referred to in subparagraph (b)
of this Paragraph 8, to accept the offer made by the Selling Shareholder
and not purchased by the Shareholders.
(d) If the Company and the non-selling Equityholders do not accept the
Selling Shareholder's offer, the Selling Shareholder may, after the
expiration of the two consecutive 30-day periods referred to in
subparagraphs (b) and (c) of this Paragraph 8, effect a Disposition to any
third party of Common Stock offered to the Company and the other
Equityholders and not purchased hereunder; provided that the Selling
Shareholder may not effect such Disposition on terms which are more
favorable to such a third party than those contained in the original offer
delivered pursuant to subparagraph (c) of this Paragraph 8 without once
again offering said stock for sale pursuant to this Paragraph 6, and
provided, further, that the proposed purchaser of the Common Stock agrees
to become a signatory to this Agreement and be bound by its terms and that
the Company has applied for and received permission for the proposed
transfer of said stock from the New York State Department of Health.
9
<PAGE>
(e) Any transferee of Common Stock hereunder shall, as a condition to
transfer, agree to be bound by the provisions of this Agreement.
(f) The shares of stock issued to the remaining Group A Stockholders
or a third party pursuant to the provisions of this paragraph shall bear a
restrictive endorsement similar to that contained in Paragraph 6
hereinabove.
(g) In the event the Selling Shareholder sells all of his shares in
the Company, such Selling Shareholder shall resign as an officer and
director of the Company, whether such sale be to a remaining Equityholder,
the Company, or a third party. If such sale be of all the shares of such
Group A Shareholder and to a third party, the third party shall have the
right to become a director, and an officer of the Company, and a signatory
on the Company bank account. If the sale be of less than all of the shares
of the Selling Shareholder, then a determination as to whether such Selling
Shareholder shall remain either or both of an officer or directors shall be
part of the terms and conditions of the offer to sell, and decided in
accordance therewith.
(h) Notwithstanding anything to the contrary contained hereinabove,
neither Chitrik and Borenstein may not sell
10
<PAGE>
their respective Equity Interests in the Company without the unanimous consent
of all the Group A Shareholders of the Company.
11. Arbitration. All disputes, differences and controversies arising under
or in connection with this Agreement and not resolved within 120 days of notice
that said dispute, difference or controversy exists, shall be settled and
finally determined by binding arbitration under the then existing rules of the
American Arbitration Association (or such other mechanism as agreed to in
writing by all parties hereto).
13. Professional Review. The Shareholders shall have a right to retain at
their own cost and expense any professional they desire to review any
professional work done for the Company.
14. Bankruptcy In the event that any Equityholder becomes the subject of
any bankruptcy or reorganization, or other proceeding analogous in purpose or
effect, including the employment of a receiver, trustee or liquidator for any
such purpose, the remaining Group A Shareholders shall have the right to
purchase the shares of the Company held by the bankrupt party upon the tender of
the purchase price thereof. Said purchase price shall be the fair market value
of said stock. Said fair market value shall be determined by an expert appraiser
chosen by the Board of Directors, excluding said bankrupt party. A second expert
appraiser shall be
11
<PAGE>
chosen by the bankrupt party and a third expert appraiser shall be chosen by the
two expert appraisers.
15. Broker. The Shareholders jointly and severally represent that they have
not employed any broker, or finder or incurred any liability for any brokerage
fees, commissions,, or finder's fees in connection with the transaction
contemplated by this Agreement.
16. Notices. All notices, requests, demands and other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given if delivered by hand or mailed, certified, registered or express
mail, with postage prepaid to the parties at their respective addresses set
forth on the first page of this Agreement or such other place as indicated by
any of the Equityholders, in writing.
17. Severability, Governing Law. If any provision of this Agreement is
determined to be illegal or unenforceable by a court of law having jurisdiction
over the parties, the remaining provisions shall be severed and constitute the
entire agreement of the parties. The Agreement shall be governed by the laws of
the State of New York for agreements made and performed in New York by parties
which are resident in New York.
12
<PAGE>
19. Modification. This Agreement may not be modified or amended except by a
subsequent writing signed b each of the parties. This Agreement, together with
riders, if any, attached hereto and initialled by the Equityholder and the
Company, is the entire agreement of the parties and supersedes all prior
agreements and understandings among the parties concerning the subject matter
hereof.
20. Benefits of Agreement.
Except as otherwise expressly provided herein, this Agreement shall be
binding upon and inure to the benefit of the Company, each of the Equityholders
and their respective heirs, personal representatives, successors and assigns;
provided,, however, that nothing contained herein shall be construed as granting
any Equityholder the right to transfer his Equity Interest, except as expressly
provided in this Agreement.
21. Headings. The section headings contained herein are for the purposes of
conveniences only and are not intended to define or limit the contents of said
sections.
22. Additional Documents. Each party hereto shall cooperate and shall take
such further action and shall execute and deliver such further documents as may
be reasonably requested by
13
<PAGE>
any other party in order to carry out the provisions and purposes of this
Agreement.
23. Counterparts. This Agreement may be executed in one or more
counterparts all of which taken together shall be deemed one original.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
NEW YORK HEALTH CARE, INC.
By: /s/ Jerry Braun /s/ Jerry Braun
----------------------------- ------------------------------------
Jerry Braun, Pres. JERRY BRAUN
/s/ Jacob Rosenberg /s/ Samson Soroka
- -------------------------------- ------------------------------------
JACOB ROSENBERG SAMSON SOROKA
/s/ Hirsch Chitrik /s/ Sid Borenstein
- -------------------------------- ------------------------------------
HIRSCH CHITRIK SID BORENSTEIN
14
NOTE: THIS LEASE PROVIDES, IN ARTICLE 6, FOR THE FURNISHING
BY THE LANDLORD TO THE TENANT OF ELECTRICITY AND AIR
CONDITIONING. IF THE TENANT IS TO OBTAIN ITS OWN ELECTRICITY
BY SEPARATE METER, SUBDIVISION (e) SHOULD BE DELETED FROM
ARTICLE 6; IF THE LANDLORD IS NOT TO SUPPLY AIR
CONDITIONING, SUBDIVISION (f) SHOULD BE DELETED THEREFROM.
Lease, made the 1 day of NOVEMBER 1994 between JOFFE MANAGEMENT whose address is
POB 853 Monsey, NY 10952 (hereinafter called Landlord) and NEW YORK HEALTH CARE
INC. whose address is 49 S. MAIN ST. SPRING VALLEY, NY 10977 (hereinafter called
Tenant)
DESCRIPTION WITNESSETH: Landlord hereby leases to Tenant and Tenant hereby hires
from Landlord, the space as presently constituted (hereinafter called the
Premises) known as 104 on the MIDDLE floor in the building known as THE ROCKLAND
EMPIRE BLDG. in 49 S. MAIN ST., SPRING VALLEY New York (hereinafter called the
Building),
TERM
FOR A TERM to commence on OCTOBER 1, 1994 and end at 12 o'clock noon on
SEPTEMBER 30, 1999 or on such earlier date as this Lease may terminate as
hereinafter provided, except that, if any such date falls on a Sunday or a
holiday, then this Lease shall end at 12 o'clock noon on the business day next
preceding the aforementioned date, AT THE ANNUAL RENTAL RATE OF $10,800.00
$900.00 MONTH
RENTAL
THERE IS NO RENT DUE THE FIRST YEAR UNTIL SEPTEMBER 30, 1995 RENT IS PAYABLE
STARTING OCTOBER 1, 1995 AT THE RATE OF $900.00 MONTHLY.
payable in equal monthly instalments, in advance, on the first day of each
calendar month during the term. Landlord acknowledges receipt from Tenant of the
sum of $ __________ by check, for rent to and including the __________ day of
__________ 19__. If Landlord is unable to give possession of the Premises on the
date of commencement of the term of this Lease by reason of the holding over of
any tenant or occupant, or because construction, repairs or improvements are not
completed, rent shall abate for the period that possession by Tenant is delayed.
If such delay shall continue for more than 45 days, then Tenant may, within 10
days after the expiration of said 45 day period, give Landlord a notice of
election to terminate this Lease. Unless possession of the Premises shall sooner
be made available to Tenant, this Lease shall terminate on the 10th day after
the giving of said notice and Landlord shall return to Tenant the consideration
paid. Landlord shall have no obligation to Tenant for failure to give possession
except as above provided.
The parties further agree as follows:
PURPOSE
1. Tenant shall use and occupy the Premises as
A BUSINESS OFFICE
and for no other purpose. Landlord represents that the Premises may lawfully be
used for said purpose.
COVENANT TO PAY RENT
2. Tenant shall pay rent and additional rent to Landlord at Landlord's said
address or at such other place as Landlord may designate in writing, without
demand and without counterclaim, deduction or set-off.
CARE AND REPAIR OF PREMISES
3. Tenant shall commit no act of waste and shall take good care of the Premises
and the fixtures and appurtenances therein, and shall, in the use and occupancy
of the Premises, conform, to all laws, orders and regulations of the Federal,
State and Municipal governments, or any of their departments, and regulations of
the New York Board of Fire Underwriters, applicable to the Premises, except
where the repair has been made necessary by misuse or neglect by Tenant or
Tenant's agents, servants, visitors or licensees. All improvements made by
Tenant to the Premises which are so attached to the Premises that they cannot be
removed without material injury to the Premises, shall become the property of
Landlord upon installation. Not later than the last day of the term Tenant,
shall, at Tenant's expense, remove all of Tenant's personal property and those
improvements made by Tenant which have not become the property of Landlord,
including trade fixtures, cabinet work, movable paneling, partitions and the
like, repair all injury done by or in connection with the installation or
removal of said property and improvements, and surrender the Premises in as good
condition as they were at the beginning of the term, reasonable wear, and damage
by fire, the elements, casualty, or other cause not due to the misuse or neglect
by Tenant or Tenant's agents, servants, visitors or licensees, excepted. All
property of Tenant remaining on the Premises after the last day of the term of
this Lease shall conclusively be deemed abandoned and may be removed by
Landlord, and Tenant shall reimburse Landlord for the cost of such removal.
Landlord may have any such property stored at Tenant's risk and expense.
NEGATIVE COVENANTS
NO ASSIGNMENT NO SUBLETTING
4. Tenant shall not, without Landlord's written consent (a) make any
alterations, additions or improvements in, to or about the Premises; (b) do or
suffer anything to be done on the Premises which will increase the rate of fire
insurance on the Building; (c) permit the accumulation of waste or refuse
matter; (d) abandon the Premises or suffer the Premises to become vacant or
deserted; or (e) assign, mortgage, pledge or encumber this Lease, in whole or in
part, or underlet the Premises or any part thereof. Covenant (e) above shall be
binding upon the legal representatives of Tenant, and upon every person to whom
Tenant's interest under this Lease passes by operation of law, but shall not
apply to assignment or subletting to the parent or subsidiary of a corporate
Tenant or to consolidation or merger of such Tenant.
<PAGE>
RULES AND REGULATIONS
5. Tenant shall observe and comply with the rules and regulations hereinafter
set forth, which are made part hereof, and with such further reasonable rules
and regulations as Landlord may prescribe, on written notice to Tenant, for the
safety, care and cleanliness of the Building and the comfort, quiet and
convenience of other occupants of the Building.
SERVICES
ELEVATOR, HEAT, WATER, CLEANING
ELECTRICITY AND AIR CONDITIONING
6. Landlord shall furnish the following services:
(a) [Deletion initialed: /s/JB];
(b) heat when and as required by law, on business days; (c) hot and cold water
for lavatory purposes without charge, but if a further supply of water is
required by Tenant, Tenant shall, at Tenant's expense, install (and shall
thereafter maintain at Tenant's expense) a water meter to register such
consumption, and Tenant shall pay as additional rent, when and as bills are
rendered, for water consumed, at the cost to Landlord, and for sewer rents and
all other rents and charges based upon such consumption of water;
(d) [Deletion initialed: /s/JB];
(e) subject to the provisions of Article 7, electricity for usual office
requirements; and (f) air cooling, during the appropriate season, on business
days, except Saturdays, from 8:30 A.M. to 6:00 P.M.
ELECTRIC LOAD
7. Tenant shall not use electrical equipment which in Landlord's reasonable
opinion will overload the writing installations or interfere with the reasonable
use thereof by Landlord or other tenants in the Building.
DAMAGE BY FIRE
8. If the Building is damaged by fire or any other cause to such extent that the
cost of restoration, as reasonably estimated by Landlord, will equal or exceed
30% of the replacement value of the Building (exclusive of foundation) just
prior to the occurrence of the damage, then Landlord may, no later than the 60th
day following the damage, give Tenant a notice of election to terminate this
Lease, or if said cost of restoration will equal or exceed 50% of said
replacement and if the Premises shall not be reasonably usable for the purposes
for which they are leased hereunder, then Tenant may, no later than the 60th day
following the damage, give Landlord a notice of election to terminate this
Lease. In the event of either of said elections this Lease shall be deemed to
terminate on the 3rd day after the giving of said notice, and Tenant shall
surrender possession of the Premises within a reasonable time thereafter, and
the rent and additional rent shall be apportioned as of the date of said
surrender and any rent paid for any period beyond said date shall be repaid to
Tenant. If the cost of restoration as estimated by Landlord shall amount to less
than 30% of said replacement value of the Building, or if despite the cost
Landlord does not elect to terminate this Lease, Landlord shall restore the
Building and the Premises with reasonable promptness, subject to delays beyond
Landlord's control and delays in the making of insurance adjustments by
Landlord, and Tenant shall have no right to terminate this Lease except as
herein provided. Landlord need not restore fixtures and improvements owned by
Tenant.
In any case in which use of the Premises is affected by any damage to the
Building, there shall be either an abatement or an equitable reduction in rent
depending on the period for which and the extent to which the Premises are not
reasonably usable for the purposes for which they are leased hereunder. The
words "restoration" and "restore" as used in this Article shall include repairs.
If the damage results from the fault of Tenant, or Tenant's agents, servants,
visitors or licensees, Tenant shall not be entitled to any abatement or
reduction of rent, except to the extent, if any, that Landlord received the
proceeds of rent insurance in lieu of such rent.
WAIVERS OF SUBROGATION
Notwithstanding the provisions of Article 3 hereof: In any event of loss or
damage to the Building, the Premises and/or any contents, each party shall look
first to any insurance in its favor before making any claim against the other
party; and TO THE EXTENT POSSIBLE WITHOUT ADDITIONAL COST, EACH PARTY SHALL
OBTAIN, FOR EACH POLICY OF SUCH INSURANCE, PROVISIONS PERMITTING WAIVER OF ANY
CLAIM AGAINST THE OTHER PARTY FOR LOSS OR DAMAGE WITHIN THE SCOPE OF THE
INSURANCE, and each party, to such extent permitted, for itself and its insurers
waives all such insured claims against the other party.
EMINENT DOMAIN
9. If the Premises or any part thereof or any estate therein, or any other part
of the Building materially affecting Tenant's use of the Premises, be taken by
virtue of eminent domain, this Lease shall terminate on the date when title
vests pursuant to such taking, the rent and additional rent shall be apportioned
as of said date and any rent paid for any period beyond said date shall be
repaid to Tenant. Tenant shall not be entitled to any part of the award or any
payment in lieu thereof; but Tenant may file a claim for any taking of fixtures
and improvements owned by Tenant, and for moving expenses.
DEFAULT REMEDIES
10. If Tenant defaults in the payment of rent or additional rent or defaults in
the performance of any of the covenants or conditions hereof, Landlord may give
to Tenant notice of such default and if Tenant does not cure any rent or
additional rent default within 5 days, or other default within 10 days, after
the giving of such notice (or, if such other default is of such nature that it
cannot be completely cured within such 10 days, if Tenant does not commence such
curing within such 10 days and thereafter proceed with reasonable diligence and
in good faith to cure such default), then Landlord may terminate this Lease on
not less than 3 days' notice to Tenant, and on the date specified in said notice
the term of this Lease shall terminate, and Tenant shall then quit and surrender
the Premises to Landlord, but Tenant shall remain liable as hereinafter
provided. If the Lease shall have been so terminated by Landlord, Landlord may
at any time thereafter resume possession of the Premises by any lawful means and
remove Tenant or other occupants and their effects.
DEFICIENCY
In any case where Landlord had recovered possession of the Premises by reason of
Tenant's default Landlord may at Landlord's option occupy the Premises or cause
the Premises to be redecorated, altered, divided, consolidated with other
adjoining premises, or otherwise changed or prepared for reletting, and may
relet the Premises or any part thereof as agent of Tenant or otherwise, for a
term or terms to expire prior to, at the same time as, or subsequent to, the
original expiration date of this Lease, at Landlord's option, and receive the
rent therefor, applying the same first to the payment of such expenses as
Landlord may have incurred in connection with the recovery of possession,
redecorating, altering, dividing, consolidating with other adjoining premises,
or otherwise changing or preparing for reletting, and the reletting, including
brokerage and reasonable attorneys' fees, and then to the payment of damages in
amounts equal to the rent and other sums herein provided; and Tenant agrees,
whether or not Landlord has relet, to pay to Landlord damages equal to the rent
and other sums herein agreed to be paid by Tenant, less the net proceeds of the
reletting, if any, as ascertained from time to time, and the same shall be
payable by Tenant on the several rent days above specified. In reletting the
Premises as aforesaid, Landlord may grant rent concessions, and Tenant shall not
be credited therewith. No such reletting shall constitute a surrender and
acceptance or be deemed evidence thereof. If Landlord elects, pursuant hereto,
actually to occupy and use the Premises or any part thereof during any part of
the balance of the term as originally fixed or since extended, there shall be
allowed against Tenant's obligation for rent or damages as herein defined,
during the period of Landlord's occupancy, the reasonable value of such
occupancy, not to exceed in any event the rent herein reserved and such
occupancy shall not be construed as a release of Tenant's liability hereunder.
Tenant hereby waives all right of redemption to which Tenant or any person
claiming under Tenant might be entitled by any law not or hereafter in force.
Landlord's remedies hereunder are in addition to any remedy allowed by law.
NO WAIVER OR CHANGES
11. The failure of either part to insist on strict performances of any covenant
or condition hereof, or to exercise any option herein contained shall not be
construed as a waiver of such covenant, condition or option in any other
instance. This Lease cannot be changed or terminated orally.
LANDLORD'S RIGHT TO COLLECT RENT FROM ANY OCCUPANT
12. If (a) the Premises are underlet or occupied by anybody other than Tenant
and Tenant is in default hereunder, or (b) this Lease is assigned by Tenant,
then, Landlord may collect rent from the assignee, under-tenant or occupant, and
apply the net amount collected to the rent herein reserved; but no such
collection shall be deemed a waiver of the covenant of such assignee, under-
tenant or occupant as Tenant, or a release of Tenant from further performance of
the covenants herein contained.
SUBORDINATION
13. This Lease shall be subject and subordinate to all underlying leases and to
mortgages which may now or hereafter affect such leases or the real property of
which the Premises form a part, and also to all renewals, modifications,
consolidations and replacement of said underlying leases and said mortgages.
Although no instrument or act on the part of Tenant shall be necessary to
effectuate such subordination, Tenant will, nevertheless, execute and deliver
such further instruments confirming such subordination of this Lease as may be
desired by the holders of said mortgages or by any of the lessors under such
underlying leases. Tenant hereby appoints Landlord attorney in fact,
irrevocably, to execute and deliver any such instrument for tenant. If any
underlying lease to which this Lease is subject terminates, Tenant shall on
timely request attorn to the owner of the reversion.
SECURITY DEPOSIT
14. Tenant shall deposit with Landlord on the signing of this Lease the sum of
$900.00 as security for the performance of Tenant's obligations under this
Lease, including without limitation the surrender of possession of the Premises
to Landlord as herein provided. If Landlord applies any part of said deposit to
cure any default of Tenant, Tenant shall upon demand deposit with Landlord the
amount so applied so that Landlord shall have the full deposit on hand at all
times during the term of this Lease.
LANDLORD'S RIGHT TO CURE TENANT'S BREACH
15. If Tenant breaches any covenant or condition of this Lease, Landlord may, on
reasonable notice to Tenant (except that no notice need be given in case of
emergency), cure such breach at the expense of Tenant and the reasonable amount
of all expenses, including attorneys' fees, incurred by Landlord in doing so
(whether paid by Landlord or not) shall be deemed additional rent payable on
demand.
MECHANIC'S LIEN
16. Tenant shall within 10 days after notice from Landlord discharge any
mechanic's lien for materials or labor claimed to have been furnished to the
Premises on Tenant's behalf.
NOTICES
17. Any notice by either party to the other shall be in writing and shall be
deemed to be duly given only if delivered personally or mailed by registered or
certified mail in a postpaid envelope addressed (a) if to Tenant, at the
Building and (b) if to Landlord, at Landlord's address first above set forth, or
at such other addresses as Tenant or Landlord, respectively, may designate in
writing. Notice shall be deemed to have been duly given, if delivered
personally, upon delivery thereof, and if mailed, upon the 3rd day after the
mailing thereof.
<PAGE>
LANDLORD'S RIGHT TO INSPECT AND REPAIR
18. Landlord may, but shall not be obligated to, enter the Premises at any
reasonable time, on reasonable notice to Tenant (except that no notice need be
given in case of emergency) for the purposes of inspection or the making of such
repairs, replacements and additions in, to, on and about the Premises or the
Building, as Landlord deems necessary or desirable. Tenant shall have no claim
of cause of action against Landlord by reason thereof except as provided in
Article 19 hereof.
INTERRUPTION OF SERVICES OR USE
19. Interruption or curtailment of any service maintained in the Building if
caused by strikes, mechanical difficulties, or any causes beyond Landlord's
control whether similar or dissimilar to those enumerated, shall not entitle
Tenant to any claim against Landlord or to any abatement in rent, nor shall the
same constitute constructive or partial eviction, unless Landlord fails to take
such measures as may be reasonable in the circumstances to restore the service
without undue delay. If the Premises are rendered untenantable in whole or in
part, for a period of over 3 business days, by making of repairs, replacements
or additions, other than those made with Tenant's consent or caused by misuse or
neglect by Tenant or Tenant's agents, servants, visitors or licensees, there
shall be a proportionate abatement of rent during the period of such
untenantability.
CONDITIONS OF LANDLORD'S LIABILITY
20. Tenant shall not be entitled to claim a constructive eviction from the
Premises unless Tenant shall have first notified Landlord IN WRITING of the
condition or conditions giving rise thereto, and, if the complaints be
justified, unless Landlord shall have failed within a reasonable time after
receipts of said notice to remedy such conditions.
LANDLORD'S RIGHT TO SHOW PREMISES
21. Landlord may show the Premises to prospective purchasers and mortgagees and,
during the 4 months prior to termination of this Lease, to prospective tenants,
during business hours upon reasonable notice to Tenant.
NO REPRESENTATIONS
22. Neither party has made any representations or promises, except as contained
herein, or in some further writing signed by the party making such
representation or promise.
QUIET ENJOYMENT
23. Landlord covenants that if and so long as Tenant pays the rent and
additional rent and performs the covenants hereof, Tenant shall peaceably and
quietly have, hold and enjoy the Premises for the term herein mentioned, subject
to the provisions of this Lease.
TENANT'S ESTOPPEL
24. Tenant shall from time to time, upon not less than 10 days' prior written
request by Landlord, execute, acknowledge and deliver to Landlord a written
statement certifying that this Lease is unmodified and in full force and effect
(or that the same is in full force and effect as modified, listing the
instruments of modification), the dates to which the rent and other charges have
been paid, and whether or not to the best of Tenant's knowledge Landlord is in
default hereunder (and if so, specifying the nature of the default), it being
intended that any such statement delivered pursuant to this Article may be
relied upon by a prospective purchaser of Landlord's interest or mortgagee of
Landlord's interest or assignee of any mortgage upon Landlord's interest in the
Building.
WAIVER OF JURY TRIAL
25. To the extent such waiver is permitted by law the parties waive trial by
jury in any action or proceeding brought in connection with this Lease or the
Premises.
MARGINAL NOTATIONS
26. The marginal notations in this Lease are included for convenience only and
shall not be taken into consideration in any construction or interpretation of
this Lease or any of its provisions.
HEIRS, ASSIGNS
27. The provisions of this Lease shall apply to, bind and enure to the benefit
of Landlord and Tenant, and their respective successors, legal representatives
and assigns; it being understood that the term "Landlord" as used in this Lease
means only the owner, or the mortgagee in possession, or the lessee for the time
being of the Building, so that in the event of any sale or sales of the Building
or any lease thereof, or if the mortgagee shall take possession of the Premises,
the Landlord named herein shall be and hereby is entirely freed and relieved of
all covenants and obligations of Landlord hereunder accruing thereafter, and it
shall be deemed without further agreement that the purchaser, the lessee or the
mortgagee in possession has assumed and agreed to carry out any and all
covenants and obligations of Landlord hereunder.
IN WITNESS WHEREOF, the parties hereto have duly executed this Lease as of the
day and year first written.
In the presence of:
/s/ Signature on File
- --------------------------------- ------------------------------
Landlord
/s/ Jerry Braun
- --------------------------------- ------------------------------
Tenant
<PAGE>
STATE OF NEW YORK, COUNTY OF ____________________ ss.:
On the _____day of _________________ 19__ before me personally came
_________________________________ to me known, who being by me duly sworn, did
depose and say that __he resides at that __he is the_________________________
____________ of ___________________________ the corporation described in and
which executed the foregoing instrument; that __he knows the seal of said
corporation; that the seal of said corporation; that the seal affixed by to said
instrument is such corporate seal; that it was so affixed by Order of the Board
of Directors of said corporation; and that __he signed ______ name thereto by
like order. -----------------------------------
STATE OF NEW YORK, COUNTY OF ____________________ ss.:
On the _____day of _________________ 19__ before me personally came to me
known and known to me to be the individual described in and who executed the
foregoing instrument, and duly acknowledged to me that __he
_________________________ executed the same.
-----------------------------------
STATE OF NEW YORK, COUNTY OF ____________________ ss.:
On the _____day of _________________ 19__ before me personally came
_________________________________ to me known, who being by me duly sworn, did
depose and say that __he resides at that __he is the ____________ of
___________________________ the corporation described in and which executed the
foregoing instrument; that _______ he knows the seal of said corporation; that
the seal of said corporation; that the seal affixed by to said instrument is
such corporate seal; that it was so affixed by Order of the Board of Directors
of said corporation; and that __he signed _______ name thereto by like order.
-----------------------------------
STATE OF NEW YORK, COUNTY OF ____________________ ss.:
On the _____day of _________________ 19__ before me personally came to me
known and known to me to be the individual described in and who executed the
foregoing instrument, and duly acknowledged to me that __he
_________________________ executed the same.
-----------------------------------
RULES AND REGULATIONS REFERRED TO IN THE FOREGOING LEASE
1. The sidewalks, entrances, passages, courts, elevators, vestibules,
stairways, corridors and public parts of the Building shall not be obstructed or
encumbered by Tenant or used by Tenant for any purpose other than ingress and
egress to and from the Premises. If the Premises are situated on the ground
floor with direct access to the street, then Tenant shall, at Tenant's expense,
keep the sidewalks and curbs directly in front of the Premises clean and free
from ice, snow and refuse.
2. No awnings, air conditioning units or other projections shall be
attached to the outside walls or windowsills of the Building or otherwise
project from the Building, without the prior written consent of Landlord.
3. No sign or lettering shall be affixed by Tenant on any part of the
outside of the Premises, or any part of the inside of the Premises so as to be
clearly visible from the outside of the Premises, without the prior written
consent of the Landlord. However, Tenant shall have the right to place its name
on any door leading into the Premises, the size, color and style thereof to be
subject to Landlord's approval, which approval shall not be unreasonably
withheld. Landlord shall place Tenant's name on the directory in the lobby of
the Building. Tenant shall not have the right to have additional names placed on
the directory without Landlord's prior written consent, which consent shall not
be unreasonably withheld.
4. The windows in the Premises shall not be covered or obstructed by
Tenant, nor shall any bottles, parcels or other articles be placed on the
windowsills or in the halls or in any other part of the Building, nor shall any
article be thrown out of the doors or windows of the Premises.
5. Tenant shall not lay linoleum or other similar floor covering so that
the same shall come in direct contact with the floor of the Premises, and if
linoleum or other similar floor covering is desired to be used, an interlining
of builder's deadening felt shall be first fixed to the floor by a paste or
other material that may easily be removed with water, the use of cement or other
similar adhesive materials being expressly prohibited.
6. Tenant shall not make, or permit to be made, any unseemly or disturbing
noises or interfere with other tenants or those having business with them.
7. No additional locks or bolts of nay kind shall be placed upon any of the
doors or windows by Tenant, and Tenant shall, upon the termination of this
tenancy, deliver to Landlord all keys to any space within the Building, either
furnished to, or otherwise procured by Tenant, and in the event of the loss of
any keys so furnished, Tenant shall pay to Landlord the cost thereof.
8. The carrying in or out of freight, furniture or bulky matter of any
description must take place during such hours as Landlord may from time to time
reasonably determine. The installation and moving of such freight, furniture or
bulky matter shall be made upon previous notice to the superintendent of the
Building and the persons employed by Tenant for such work must be reasonably
acceptable to Landlord. Tenant may, subject to the provisions of the immediately
preceding sentence, move freight, furniture, bulky matter and other material
into or out of the Premises on Saturday between the hours of 8:30 A.M. and 6:00
P.M. provided Tenant pays the additional costs, if any, incurred by Landlord for
elevator operators, security guards and other expenses arising by reason of such
move by Tenant and if, at least 2 days prior to such move, Landlord requests
that Tenant deposit with Landlord, as security for Tenant's obligation to pay
such additional costs incurred which Landlord reasonably estimates to be the
amount of such additional costs, then Tenant shall deposit such sum with
Landlord as security for such costs.
9. Landlord reserves the right to prescribe the weight and position of all
safes and other heavy equipment so as to distribute properly the weight thereof
and to prevent any unsafe condition from arising. Business machines and other
equipment shall be placed and maintained by Tenant at Tenant's expense in
settings sufficient in Landlord's reasonable judgment to absorb and prevent
unreasonable vibration, noise and annoyance.
10. Tenant shall not clean or permit the cleaning of any window in the
Premises from the outside, except in strict conformity with ss.202 of the Labor
Law and the rules of the Board of Standards and Appeals and any other body
having jurisdiction thereof.
11. Landlord shall not be responsible to Tenant for the non-observance or
violation of any of these Rules and Regulations by any other Tenants.
BUILDING____________________________________________________________________
PREMISES ___________________________________________________________________
================================================================================
Landlord
to
Tenant
================================================================================
LEASE
Form of Office Lease Approved by the
Committee on Real Property Law of
The Association of the Bar of the
City of New York
================================================================================
================================================================================
<PAGE>
RIDER TO LEASE
BETWEEN
JOFFE MANAGEMENT
AND
N.Y. HEALTH CARE, INC.
1. THE TENANT SHALL AT HIS OWN COST AND EXPENSE, PRIOR TO ENTERING INTO
OCCUPANCY AND POSSESSION OF THE PREMISES, TAKE OUT THE USUAL FORM OF
OWNER'S LANDLORDS AND TENANTS LIABILITY POLICY COVERING THE DEMISED
PREMISES IN THE AMOUNT OF NOT LESS THAN $300,000.00/500,000.00 AND
$15,000.00 PROPERTY DAMAGE, AND SHALL MAINTAIN THE SAME IN FULL FORCE AND
EFFECT THROUGHOUT THE ENTIRE TERM OF THIS LEASE AND/OR ANY RENEWAL THEREOF.
SAID POLICY SHALL DESIGNATE THE LANDLORDS AS PARTIES INSURED THEREUNDER,
AND A CERTIFICATE OF MEMORANDUM COPY OF THE POLICY SHALL BE DELIVERED TO
THE LANDLORD PRIOR TO THE TENANT'S ENTERING INTO OCCUPANCY AND POSSESSION.
FAILURE TO PROVIDE SUCH PROOF OF INSURANCE SHALL CONSTITUTE A BREACH UNDER
ARTICLE 15 OF THE LEASE.
2. AT LEAST TEN DAYS PRIOR TO THE PROPOSED COMMENCEMENT OF ANY WORK TO BE DONE
BY ANY CONTRACTOR WITHIN THE DEMISED PREMISES, THE TENANT SHALL SUBMIT TO
THE LANDLORD A PLAN OF SUCH WORK, AND BOTH SHALL BE SUBJECT TO THE
LANDLORD'S APPROVAL IN WRITING BEFORE ANY WORK MAY BE COMMENCED. SUCH
APPROVAL SHALL NOT BE UNREASONABLY WITHHELD.
3. THE LANDLORD WILL FURNISH AND INSTALL A SEPARATE METER PANEL FOR
ELECTRICITY AND THE TENANT SHALL BE RESPONSIBLE FOR AND SHALL PAY FOR THE
ELECTRICITY REQUIRED BY THE TENANT FOR THE PREMISES, DIRECTLY TO THE
UTILITY PROVIDING SAME. THE TENANT SHALL PAY THE DEPOSIT REQUIRED BY THE
UTILITY DIRECTLY TO THE UTILITY. THE LANDLORD REPRESENTS THAT THE
ELECTRICITY USED FOR HEATING AND AIR CONDITIONING IS METERED THROUGH THE
LANDLORD'S METER AND IS PAID FOR BY THE LANDLORD.
RENT INCREASE
4. COMMENCING OCTOBER 1, 1996, AND ANNUALLY THEREAFTER, THE ANNUAL RENT SHALL
BE INCREASED BY ADDING TO IT A PERCENTAGE TO BE A DIFFERENCE BETWEEN
INDICES OF THE "CONSUMER PRICE INDEX FOR ALL URBAN CONSUMERS: SELECTED
AREAS, ALL ITEM INDEX. [Change initialed /s/ JB] 1995 100 BASE. NY, NY -
NORTHEASTERN NJ" AS PUBLISHED BY THE UNITED STATES DEPT. OF LABOR, FOR THE
ONE CALENDAR YEAR PERIOD IMMEDIATELY PRECEDING THE RENEWAL TERM OVER THE
PREVIOUS YEAR. THE INTENTION OF THIS PROVISION IS TO ADJUST THE RENT IN
ACCORDANCE WITH THE COST OF LIVING INDEX ON AN ANNUAL BASIS FOR EACH YEAR
OF TENANT'S OCCUPANCY AND POSSESSION. HOWEVER, IN NO EVENT SHALL THE ANNUAL
RENT BE LESS THAN THE RENT FOR THE PREVIOUS TERM'S ANNUAL RENT. THE
ADJUSTMENT FOR THE OCTOBER 1, 1996, SHALL REFLECT THE COLA FROM 10/1/94 TO
9/30/96.
<PAGE>
TAX STOP
5. COMMENCING OCTOBER 1, 1995 THE TENANT SHALL PAY TO THE LANDLORD 4.20% OF
ANY INCREASE IN REAL ESTATE TAXES OVER THE BASE YEAR, WHICH FOR THE
PURPOSES OF THIS LEASE SHALL BE 1993 FOR VILLAGE AND SCHOOL AND 1994 FOR
STATE, COUNTRY AND TOWN TAXES. THIS PROVISION SHALL APPLY TO EACH RENEWAL
TERM FOR EACH YEAR OF TENANT'S OCCUPANCY AND POSSESSION.
LATE CHARGES
6. THE FOLLOWING LATE CHARGES SHALL BE ASSESSED AND BECOME ADDITIONAL RENT:
FOR PAYMENTS MADE ON OR AFTER THE 10TH OF THE MONTH = 5% ADDITIONAL RENT.
[Deletion initialed /s/ JB]
/s/ Jerry Braun NYHC
------------------------------------
-----------------------------------
KINGSBRIDGE HEIGHTS HEALTH FACILITIES
LONG TERM HOME HEALTH CARE PROGRAM
and
NEW YORK HEALTH CARE
100 Stevens Avenue
Mt. Vernon, NY 10550
AGREEMENT FOR PROVISIONS OF
HOME HEALTH AIDE AND PERSONAL CARE WORKER SERVICES
This Agreement, made and entered into this 2nd day of NOVEMBER 1994 by and
between Kingsbridge Heights Health Facilities, hereinafter referred to as "the
program agency" and New York Health Care , hereinafter referred to as "the
service agency".
In consideration of the mutual promises herein contained, it is understood and
agreed by the parties hereto as follows:
FIRST: The Program Agency will call upon the service agency to provide home
health aides, personal care workers, or homemakers (hereinafter referred to as
aide or aides), for assignments to provide aide services. Once the assignment
is made by the Service Agency, no changes in assignment will be made without
notification of the program agency. At the time of assignment the Service Agency
will send an aide profile summarizing the contents of the personnel record to
the Program Agency. The Service Agency shall contact the Program Agency between
9:00am-12:00pm with each client that has morning or full coverage and between
1:00pm-5:00pm for afternoon coverage and shall report all cases which do not
have coverage by the routinely assigned aide. Said notification shall be both
verbal and by FAX (if possible).
SECOND: The patient is to be accepted for home health aide services only by the
program agency which will be responsible for the development and revision of the
plan of care in accordance with applicable federal, state and local statutes and
regulations.
THIRD: It will be the sole responsibility of the program agency to assess the
need for home aide service and the resources of the patient and the patient's
family. A Client Bill of Rights will be furnished to each patient by the program
agency in accordance with Department of Health rules and regulations.
FOURTH: The service agency shall provide only such aide personnel as meet the
federal, state and local regulations and requirements specified in the New York
Hospital Code, other directives of the New York State Department of Health and
New York State Department of Social Services.
<PAGE>
page 2
FIFTH: The Program Agency will determine the scope and duration of the aide's
activities on each assignment and professionally supervise the performance of
these personnel during the hours of assignment to the program agency patient.
SIXTH: Professional supervision shall mean Registered Nurse supervision provided
by the Program Agency.
SEVENTH: Orientation with regard to the particular patient, on-the-job
instruction, and instruction in keeping the necessary records will be provided
by the service agency and/or the agency providing Registered Nurse supervision
through a contractual agreement with the service agency.
EIGHTH: If required by law or requested by the service agency, the Program
Agency will prepare/submit a performance evaluation at least once a year to the
service agency.
NINTH: The service agency shall conduct and administer a program for employment
of aides to serve on assignments of the Program Agency. Such personnel shall
meet the federal, State and local requirements specified in the New York State
Hospital Code and/or other directives of the New York State Department of Health
and New York State Department of Social Services. These shall include, but not
be restricted to the wearing of a uniform if acceptable to the patient, and
assurance by the service agency that the personnel are in good health, have
completed the medical examinations and immunizations specified in the State
Hospital Code in accordance with the service agency's policies, have completed a
basic training program acceptable to the New York State Department of Health and
New York State Department of Social Services and have character references
and/or appropriate proofs of satisfactory performance on file at the offices of
the service agency. The authorized Program Agency may obtain this information by
an on-site visit to the service agency.
TENTH: The service agency shall provide annual inservice education to its
personnel in accordance with a yearly plan which is to be based on needs
identified by the service agency and the Program Agency.
ELEVENTH: The service agency shall maintain a record of assignments for each
aide; complete personnel records which shall include verification of
qualifications, references, reports of medical examinations and tests including
immunizations hereinabove referred to; performance evaluations; and
documentation of inservice training. These records shall be subject to
inspection by the New York State Department of Health, other governmental
agencies, and the Program Agency. The Program Agency will have the right to
audit these records twice a year with the service agency's cooperation.
<PAGE>
page 3
TWELFTH: Aides are not and shall not be deemed to be employees of the Program
Agency and shall not hold themselves out as employees of the Program Agency. The
service agency shall have the direct responsibility for payment of wages and
other compensation, reimbursement of expenses, and compliance with federal,
state and local tax withholding requirements pertaining to workers compensation,
social security, unemployment and other insurance requirements and obligations
imposed on the employer of personnel with regard to the aides. The Program
Agency shall idemnify and hold harmless the service agency, its governing
authority, officers, agents, and employees from and against all liabilities,
claims, losses, law suits, judgements and expenses, including attorney fees
caused by any act or failure to act by the Program Agency.
THIRTEENTH: The service agency shall, at its own costs and expense, procure and
maintain insurance to cover the personnel assigned under the terms of this
agreement in amounts and types usually maintained, which are to include worker's
compensation, unemployment insurance, professional liability insurance and
comprehensive general liability insurance relative to the activities resulting
from assignments under this agreement, and any other employee's liability
insurance required by law for an employer to carry on its employees. Such
liability insurance shall include personal injury coverage with a minimum of $1
million per occurence/$l million aggregate until ____________________. Such
liability insurance coverage effective ________________ will be $1 million per
occurrence.
FOURTEENTH: The service agency shall file a rider to this Agreement which shall
have the same force and effect as if included in this Agreement, providing a
copy of the certificate of insurance to demonstrate that it has obtained the
required insurance, specifying the types and amounts of insurance coverage for
each aide or group of aides provided under the terms of this agreement and the
name of the insurance company. Said document shall provide for at least thirty
(30) days notice to the Program Agency of cancellation of any of the insurance.
FIFTEENTH: The service agency shall make aides and nurses available to the
Program Agency for only the hours per day, and days per week specified in the
plan of care.
SIXTEENTH: The service agency shall submit an invoice weekly within 10 days
after week of service to the Program Agency setting forth the aide services
performed, and the amounts due the service agency therefore from Program Agency.
The Program Agency will pay the service agency a fee of $9.50/hour for HHA;
$9.50/hour for PCW, $8.50/hour for Housekeeper, and $8.50/hour for Homemaker
Services. In the event that an aide who has been assigned in good faith by the
service program is unable to gain entry to the patient's home because of
circumstances not within the service agency's control (i.e. hospital discharge
is delayed), the Program Agency will be liable for the cost of one hour of
service. In computing the hours worked, only the time the aide was actually
present in the patient's home shall be considered.
<PAGE>
page 4
The service agency's invoice will include at least the service rendered, dates
of service, total number of visits and total number of hours rendered during the
period and total charge for each patient serviced. Payment shall be made within
thirty days after submission of such properly documented invoices.
SEVENTEENTH: Neither the service agency nor the aide shall charge or accept any
fee from the patient or patient's family for services provided under the service
agency's plan of treatment or payment of any kind, directly or indirectly, or
any gifts.
EIGHTEENTH: The service agency shall, for the purpose of implementing Section
1861 (v) (1) (I) of the Social Security Act, as amended, and the written
regulations thereto, the parties agree to comply with the following statutory
requirements governing the maintenance and disclosure of documentation to verify
the cost of services rendered under this agreement:
(a) until the expiration of eight (8) years after the furnishing of
services pursuant to this Agreement, the party furnishing such services shall
make available, upon written request to the Secretary of Health and Human
Services, or upon request to the Comptroller General of the United States, or
any of their duly authorized representatives, the Agreement, and books,
documents and records of such party that are necessary to verify the nature and
extent of such costs, and
(b) if the party furnishing services carries out any of the duties of the
Agreement through a subcontract with a related organization (as that term is
defined in 42 C.F.R. Sec. 405.427 (b), such subcontract shall contain a clause
to the effect that until pursuant to such subcontract, the related organization
shall make available upon written request to such Secretary, or upon request to
the Comptroller General, or any of their duly authorized representatives, the
subcontract, and books, and documents, and records of such organization that are
necessary to verify the nature and extent of such costs. Agreement through a
subcontract which said subcontracts must have received prior written approval
from the home health agency, with a related organization involving a value or
cost of $10,000 or more over a twelve (12) month period, the service agency will
cause such subcontract to contain a clause to the effect that, until the
expiration of four (4) years after the furnishing of any goods or services
pursuant to said subcontract, the related organization will make available upon
written request of the Secretary of Health and Human Services or the Comptroller
General of the United States or any of their duly authorized representatives,
copies of said subcontract and any books, documents, records, and other data of
said related organization that are necessary to verify the nature and extent of
such costs.
<PAGE>
page 5
NINETEENTH: Both the Program Agency and the service agency shall:
A. Designate a person within their respective organization who shall have
the responsibility for coordinating the assignments of the aides.
B. Consult and cooperate with each other in establishing mutually
acceptable standards and procedures for selection and assignment of aides,
handling of requests including requests for emergency aide service, billing
procedures and any other matters incidental to carrying out the provision and
purposes of the Agreement.
C. Make available home health services to all persons without regard to
race, color, sex, creed, national origin, or source of payment, except for
fiscal capability thereof.
D. Not discriminate against any aide because of race, color, sex, creed or
national origin.
E. Attend and participate in patient case conferences and in addition the
Program Agency shall assign a representative to serve on the Quality Assurance
Committee of the service agency.
TWENTIETH: This Agreement shall be reviewed annually. The Agreement shall remain
in force during review and renegotiation.
TWENTY-FIRST: This Agreement may be modified or amended by mutual consent of the
parties. Any such modification or amendment must be in writing duly executed by
all parties and shall be attached and become part of this agreement.
TWENTY-SECOND: This Agreement may be terminated on at least thirty (30) days
written notice by either party.
TWENTY-THIRD: All written notices affecting agreement termination must be
delivered by certified or registered mail. The date of deposit of any notice in
a United States Post Office or Post Office Box with all postage prepaid, shall
be deemed the date of delivery thereof.
TWENTY-FOURTH: The Program Agency will be responsible to conduct and document
the patient assessment, plan of care, clinical record entries, supervision of
such services, and obtaining medical orders. The Program Agency will furnish
such written documentation and information, and access to its staff, as required
by the service agency, to permit the service agency to assure compliance by its
employees with applicable statutes, rules, and regulations.
<PAGE>
page 6
The Program Agency will determine the scope and duration of the aide's
activities on each assignment and in addition, will have the right, at any time,
to shorten, terminate, lengthen, or change the assignment of the aide on written
faxed notice to the service agency.
TWENTY-FIFTH: Notwithstanding any other provisions in this contract, the service
agency remains responsible for: (a) assuring that any service provided pursuant
to this contract complies with all pertinent provisions of federal, state and
local statutes, rules and regulations; (b) ensuring the quality of all services
provided; and (c) ensuring adherence by service program staff to the agency plan
of care established for patients.
TWENTY-SIXTH: Notwithstanding any other provision in this contract, the Program
Agency remains responsible for: (a) assuring that any service provided pursuant
to this contract complies with all pertinent provisions of federal, state, and
local statutes, rules and regulations; (b) planning, coordination, and assuring
the quality of all services provided, and the necessary supervision of same; (c)
assuring adherence to the plan of care established for patients; and (d)
assuming the ultimate and final legal responsibility for the quality of
services.
TWENTY-SEVENTH: The service agency agrees to ensure to its best ability, the
availability of home health aide services twenty-four (24) hours a day, seven
(7) days a week. The service agency shall document care rendered in accordance
with the plan of care set up by the Program Agency nurse. Such documentation
shall be submitted within seven (7) days with weekly invoices and shall consist
of a minimum of a checklist reflective of the care provided. In addition, any
unusual situation or circumstance which impacts on the safe care of the patient,
shall be transmitted verbally to the Program Agency's nurse coordinator or
on-call administrator by the aide or service agency's administrative personnel
as soon as is practical.
TWENTY-EIGHTH: The service agency agrees to hold free and harmless and to
indemnify the Program Agency, its officers, directors, employees, agents, and
affiliates against any and all loss, damage, and/or liability by reason for any
act or acts of commission or omission by any agent or employee of the service
agency.
TWENTY-NINTH: The service agency shall preserve and protect the confidentiality
of all client related information and shall not disclose such information to any
third parties except with appropriate consent or in accordance with applicable
law.
THIRTIETH: This is not an exclusive contract and the LTHHCP preserves the right
to enter into contract with other organizations.
<PAGE>
page 7
THIRTY-FIRST: This Agreement shall be governed by and construed in accordance
with the laws of the State of New York.
All clients serviced are provided with their Bill of Rights by the Long Term
Home Health Care Program per State Department of Health regulations.
IN WITNESS WHEREOF, this agreement has been duly executed and signed by:
KINGSBRIDGE HEIGHTS HEALTH FACILITIES
SERVICE AGENCY LONG TERM HEALTH CARE PROGRAM
BY: BY: /s/ Signature on File
-------------------------- -------------------------------
DATE: DATE: 11/10/94
-------------------------- -------------------------------
<PAGE>
ADDENDUM TO AGREEMENT
between
KINGSBRIDGE HEIGHTS LTHHCP
----------
and
NEW YORK HEALTH CARE
The KINGSBRIDGE HEIGHTS LTHHCP will be responsible for providing education and
information to all patients admitted to the KINGSBRIDGE HEIGHTS LTHHCP program
regarding Advanced Directives, Health Care Proxies, Patients Rights, and D.N.R.
orders.
KINGSBRIDGE HEIGHTS LTHHCP
BY: /s/ Wanda Figueroa
----------------------------
TITLE: Director of Patient Services
----------------------------
DATE: 9/29/95
----------------------------
NEW YORK HEALTH CARE
BY: /s/ Jerry Braun
----------------------------
TITLE: CEO
----------------------------
DATE: 10/11/95
----------------------------
License No. 9632L002 Effective Date 05/08/95
State of New York
Department of Health
Office of Health Systems Management
HOME CARE SERVICE AGENCY
LICENSE
(SEAL)
New York Health Care, Inc.
105 Stevens Avenue
Mount Vernon, NY 10552
Westchester County
HAS BEEN GRANTED THIS LICENSE TO OPERATE PURSUANT TO ARTICLE 36 OF THE PUBLIC
HEALTH LAW FOR THE HEALTH SERVICES SPECIFIED:
SERVICE
NURSING
HOME HEALTH AIDE
PERSONAL CARE
PHYSICAL THERAPY
Operator:
PROPRIETARY CORPORATION
NEW YORK HEALTH CARE, INC.
1667 FLATBUSH AVENUE
BROOKLYN, NY 11210
COUNTY(S) SERVED
Rockland
Westchester
Bronx
THIS CERTIFICATE MUST BE CONSPICUOUSLY DISPLAYED ON THE PREMISES
/s/ Signature on File /s/ Signature on File
- ------------------------------ -------------------------
AREA ADMINISTRATOR COMMISSIONER
DOH 502(K)3-95
License No. 9632L004 Effective Date 05/08/95
State of New York
Department of Health
Office of Health Systems Management
HOME CARE SERVICE AGENCY
LICENSE
(SEAL)
New York Health Care, Inc.
45 Grand Street
Newburgh, NY 12550
Orange County
HAS BEEN GRANTED THIS LICENSE TO OPERATE PURSUANT TO ARTICLE 36 OF THE PUBLIC
HEALTH LAW FOR THE HEALTH SERVICES SPECIFIED:
SERVICE
NURSING
HOME HEALTH AIDE
PERSONAL CARE
PHYSICAL THERAPY
Operator:
PROPRIETARY CORPORATION
NEW YORK HEALTH CARE, INC.
1667 FLATBUSH AVENUE
BROOKLYN, NY 11210
COUNTY(S) SERVED
Dutchess
Orange
Putnam
Sullivan
Ulster
THIS CERTIFICATE MUST BE CONSPICUOUSLY DISPLAYED ON THE PREMISES
/s/ Signature on File /s/ Signature on File
- ------------------------------ -------------------------
AREA ADMINISTRATOR COMMISSIONER
DOH 502(K) 3-95
License No. 9632L001 Effective Date 05/08/95
State of New York
Department of Health
Office of Health Systems Management
HOME CARE SERVICE AGENCY
LICENSE
(SEAL)
New York Health Care, Inc.
175 Fulton Avenue
Hempstead, NY 11550
Nassau County
HAS BEEN GRANTED THIS LICENSE TO OPERATE PURSUANT TO ARTICLE 36 OF THE PUBLIC
HEALTH LAW FOR THE HEALTH SERVICES SPECIFIED:
SERVICE
NURSING
HOME HEALTH AIDE
PERSONAL CARE
PHYSICAL THERAPY
Operator:
PROPRIETARY CORPORATION
NEW YORK HEALTH CARE, INC.
1667 FLATBUSH AVENUE
BROOKLYN, NY 11210
COUNTY(S) SERVED
Nassau
Suffolk
Queens
THIS CERTIFICATE MUST BE CONSPICUOUSLY DISPLAYED ON THE PREMISES
/s/ Signature on File /s/ Signature on File
- ------------------------------ -------------------------
AREA ADMINISTRATOR COMMISSIONER
DOH 502(K)3-95
License No. 0453L004 Effective Date 07/01/95
State of New York
Department of Health
Office of Health Systems Management
HOME CARE SERVICE AGENCY
LICENSE
(SEAL)
New York Health Care, Inc.
49 South Main Street
Spring Valley, NY 10977
Rockland County
HAS BEEN GRANTED THIS LICENSE TO OPERATE PURSUANT TO ARTICLE 36 OF THE PUBLIC
HEALTH LAW FOR THE HEALTH SERVICES SPECIFIED:
SERVICE
NURSING
HOME HEALTH AIDE
PERSONAL CARE
PHYSICAL THERAPY
Operator:
PROPRIETARY CORPORATION
NEW YORK HEALTH CARE, INC.
1667 FLATBUSH AVENUE
BROOKLYN, NY 11210
COUNTY(S) SERVED
Orange
Rockland
THIS CERTIFICATE MUST BE CONSPICUOUSLY DISPLAYED ON THE PREMISES
/s/ Signature on File /s/ Signature on File
- ------------------------------ -------------------------
AREA ADMINISTRATOR COMMISSIONER
DOH 502(K)3-95
[The Chamber of Commerce Letterhead]
July 12, 1995
Mr. Jerry Braun
New York Health Care
1498 Flatbush Avenue
Brooklyn, New York 11210
Dear Mr. Braun:
Please be advised that the rent for the first floor of 45 Grand Street in
Newburgh will be $900, effective September 1, 1995 through August 31, 1996.
Under the provisions of your lease, you had an option to renew your lease
when it expired on August 31, 1994, which you did not do. Had you renewed your
lease at that point, your rent for the following year would have been $900.
Since we did not notify you of the rent increase for the period 9/1/94 -
8/31/95. your rent will not be $1,000 a month for the period 9/1/95 - 8/31/96,
but will be $900 a month.
To confirm your lease for 9/1/95 - 8/31/96, please sign below and date this
document and return it to us as soon as possible. If you have any questions,
please call Ercel Barnes at (914) 562-5100. Thank you.
Sincerely yours,
/s/ John J. McDermott
----------------------------------
John J. McDermott
Facilities Task Force Chairman
/s/ Jerry Braun
----------------------------------
Jerry Braun
7/18/95
----------------------------------
Date
<PAGE>
A 35-Lease, Business Premises JULIUS BLUMBERG, INC., LAW BLANK PUBLISHERS
Loft, Office or Store. 2-65
THIS LEASE made the_____ day_____ of 1992 between EDUCATIONAL
AND CHARITABLE FOUNDATION OF EASTERN ORANGE COUNTY, INC. a not-for-profit
corporation organized and existing under and by virtue of the Laws of the State
of New York with Offices at 47 Grand St., Newburgh, New York, hereinafter
referred to as LANDLORD, and NEW YORK HEALTH CARE, INC., a corporation organized
and existing under and by virtue of the Laws of the State of New York with
offices at 1498 Flatbush Avenue, Brooklyn, New York 11210 hereinafter jointly,
severally and collectively referred to as Tenant.
WITNESSETH, that the Landlord hereby leases to the Tenant, and the Tenant
hereby hires and takes from the Landlord first floor of 45 Grand Street, City of
Newburgh, Orange County, New York to be used and occupied by the Tenant to
provide administrative offices for Tenant's home health care agency and for no
other purpose, for a term to commence on September 1, 1992, and to end on August
31,1994, unless sooner terminated as hereinafter provided, at the ANNUAL RENT OF
NINE THOUSAND SIX HUNDRED AND 00/100 ($9,600.00) DOLLARS all payable in equal
monthly installments in amount $800.00 in advance on the first day of each and
every calendar month during said term, except the first instalment, which shall
be paid upon the execution hereof.
THIS TENANT JOINTLY AND SEVERALLY COVENANTS:
FIRST.--That the Tenant will pay the rent as above provided.
REPAIRS
ORDINANCES AND VIOLATIONS ENTRY
INDEMNIFY LANDLORD
SECOND.--That throughout said term the Tenant will take good care of the
demised premises, fixtures and appurtenances and all alterations, additions and
Improvements to either; make all repairs in and about the same necessary to
preserve them in good order and condition, which repairs shall be in quality and
class, equal to the original work, promptly pay the expense of such repairs;
suffer no waste or injury; give prompt notice to the Landlord of any fire that
may occur; execute and comply with all laws, rules, orders, ordinances and
regulations at any time issued or in force (except those requiring structural
alterations), applicable to the demised premises or to the Tenant's occupation
thereof of the Federal, State and Local Governments and of each and every
department, bureau and official thereof, and of the New York Board of Fire
Underwriters; permit at all times during usual business hours the Landlord and
representatives of the Landlord to enter the demised premises for the purpose of
inspection and to exhibit them for purposes of sale or rental; suffer the
Landlord to make repairs and improvements to all parts of the building, and to
comply with all orders and requirements of governmental authority applicable to
said building or to any occupation thereof; suffer the Landlord to erect, use,
maintain, repair and replace pipes and conduits in the demised premises and to
the floors above and below; forever indemnify and save harmless the Landlord for
and against any and all liability, penalties, damages, expenses and judgments
arising from injury during said term to person or property of any nature,
occasioned wholly or in part by any acts or actions or omissions of the Tenant
or of the employees, guests, agents, assigns or undertenants of the Tenant and
also for any matter or thing growing out of the occupation of the demised
premises or of the streets, sidewalks or vaults adjacent thereto; permit during
the six months next prior to the expiration of the term the usual notice "To
Let" to be placed and to remain unmolested in a conspicuous place upon the
exterior of the demised premises; repair, at or before the end of the term, all
injury done by the installation or removal of furniture and property; and at the
end of the term, to quit and surrender the demised premises with all
alterations, additions and improvements in good order and good condition.
MOVING INJURY SURRENDER
NEGATIVE COVENANTS
OBSTRUCTION SIGNS
AIR CONDITIONING
THIRD.--That the Tenant will not disfigure or deface any part of the
building or suffer the same to be done, except so far as may be necessary to
affix such trade fixtures as are herein consented to by the Landlord; the Tenant
will not obstruct or permit the obstruction of the street or the sidewalk
adjacent thereto; will not do anything, or suffer anything to be done upon the
demised premises which will increase the rate of the fire insurance upon the
building or any of its contents or be liable to cause structural injury to said
building; will not permit the accumulation of waste or refuse matter, and will
not, without the written consent of the Landlord first obtained in each case,
either sell, assign, mortgage or transfer this lease, underlet the demised
premises or any part thereof, permit the same or any part thereof to be occupied
by anybody other than the Tenant and the Tenant's employees, make any alteration
in the demised premises, use the demised premises or any part thereof for any
purpose other than the one first stipulated, or for any purpose deemed hazardous
on account of fire risk, nor in violation of any law or ordinance. That the
Tenant will not obstruct or permit the obstruction of the light, halls, stairway
or entrances to the building, and will not erect or inscribe any sign, signals
or advertisements unless and until the style and location thereof have been
approved by the Landlord; and if any be erected or inscribed without such
approval, the Landlord may remove the same. No water cooler, air conditioning
unit or system or other apparatus shall be installed or used without the prior
written consent of the Landlord.
IT IS MUTUALLY COVENANTED AND AGREED, THAT
FIRE CLAUSE
FOURTH.--If the demised premises shall be partially damaged by fire or
other cause without the fault or neglect of Tenant, Tenant's servants,
employees, agents visitors or licensees, the damages shall be repaired by and at
the expense of Landlord and the rent until such repairs shall be made shall be
apportioned according to the part of the demised premises which is usable by
Tenant. But if such partial damage is due to the fault or neglect of Tenant,
Tenant's servants, employees, agents, visitors or licensees, without prejudice
to any other rights and remedies of Landlord and without prejudice to the rights
of subrogation to Landlord's/Insurer, the damages shall be repaired by Landlord
but there shall be no apportionment or abatement of rent. No penalty shall
accrue for reasonable delay which may arise by reason of adjustment of insurance
on the part of Landlord and/or Tenant, and for reasonable delay on account of
"labor troubles", or any other cause beyond Landlord's control. If the demised
premises are totally damaged or are rendered wholly untenantable by fire or
same, or if the building shall be so damaged that Landlord shall decide to
demolish it or to rebuild it then or in any of such events Landlord may, within
ninety (90) days after such fire or other cause, give Tenant a notice in writing
of such decision which notice shall be given as in Paragraph Twelve hereof
provided, and thereupon the term of this lease shall expire by lapse of time
upon the third day after such notice is given, and Tenant shall vacate the
demised premises and surrender the same to Landlord. If Tenant shall not be in
default under this lease, then, upon the termination of this lease under the
conditions provided for in the sentence immediately preceding, Tenant's
liability for rent shall cease as of the day following the casualty. Tenant
hereby expressly waives the provisions of Section 227 of the Real Property Law
and agrees that the foregoing provisions of this Article shall govern and
control in lieu thereof. If the damage or destruction be due to the fault or
neglect of Tenant, the debris shall be removed by, and at the expense of,
Tenant.
EMINENT DOMAIN
FIFTH.--If the whole or any part of the premises hereby demised shall be
taken or condemned by any competent authority for any public use or purpose then
the term granted shall cease from the time when possession of the part so taken
shall be required for such public purpose and without apportionment of award,
the Tenant hereby assigning to the Landlord all right and claim to any such
award, the current rent, however, in such case to be apportioned.
LEASE NOT IN EFFECT
DEFAULTS
TEN DAY NOTICE
SIXTH.--If before the commencement of the term, the Tenant be adjudicated a
bankrupt, or make a "general assignment," or take the benefit of any insolvent
act, or if a receiver or Trustee be appointed for the Tenant's property, or if
this Lease or the estate of the Tenant hereunder be transferred or pass to or
devolve upon any other person or corporation, or if the Tenant shall default in
the performance of any agreement by the Tenant contained in any other lease to
the Tenant by the Landlord or by any corporation of which an officer of the
Landlord is a Director, this lease shall thereby, at the option of the Landlord,
be terminated and in that case, neither the Tenant nor anybody claiming under
the Tenant shall be entitled to go into possession of the demised premises. If
after the commencement of the term, any of the events mentioned above in this
subdivision shall occur, or if Tenant shall make default in fulfilling any of
the covenants of this lease, other than the covenants for the payment of rent or
"additional rent" or if the demised premises become vacant or deserted, the
Landlord may give to the Tenant ten days' notice of intention to end the term of
this lease, and thereupon at the expiration of said ten days' (If said condition
which was the basis of said notice shall continue to exist) the term under this
lease shall expire as fully and completely as if that day were the date herein
definitely fixed for the expiration of the term and the Tenant will then quit
and surrender the demised premised to the Landlord, but the Tenant shall remain
liable as hereinafter provided.
<PAGE>
RE-POSSESSION BY LANDLORD
RE-LETTING
WAIVER BY TENANT
If the Tenant shall make default in the payment of the rent reserved
hereunder, or any item of "additional rent" herein mentioned, or any part of
either or in making any other payment herein provided for, or if the notice last
above provided for shall have been given and if the condition which was the
basis of said notice shall exist at the expiration of said ten days' period, the
Landlord may immediately, or at any time thereafter re-enter the demised
premises and remove all persons and all or any property therefrom, either by
summary dispossess proceedings, or by any suitable action or proceedings at law,
or by force or otherwise, without being liable to indictment, prosecution or
damages therefor, and re-possess and enjoy said premises together with all
additions, alterations and improvements. In any such case or in the event that
this lease be "terminated" before the commencement of the term, as above
provided, the Landlord may either re-let the demised premises or any part or
parts thereof for the Landlord's own account, or may, at the Landlord's option,
re-let the demised premises or any part or parts thereof as the agent of the
Tenant, and receive the rents therefor, applying the same first to the payment
of such expenses as the Landlord may have incurred, and then to the fulfillment
of the covenants of the Tenant herein, and the balance, if any, at the
expiration of the term first above provided for, shall be paid to the Tenant.
Landlord may rent the premises for a term extending beyond the term hereby
granted without releasing Tenant from any liability. In the event that the term
of this lease shall expire as above in this subdivision "Sixth" provided, or
terminate by summary proceedings or otherwise, and if the Landlord shall not
re-let the demised premises for the Landlord's own account, then, whether or not
the premises be re-let, the Tenant shall remain liable for, and the Tenant
hereby agrees to pay to the Landlord, until the time when this lease would have
expired but for such termination or expiration, the equivalent of the amount of
all of the rent and "additional rent" reserved herein, less the avails of
reletting, if any, and the same shall be due and payable by the Tenant to the
Landlord on the several rent days above specified, that is, upon each of such
rent days the Tenant shall pay to the Landlord the amount of deficiency then
existing. The Tenant hereby expressly waives any and all right of redemption in
case the Tenant shall be dispossessed by judgment or warrant of any court or
judge, and the Tenant waives and will waive all right to trial by jury in any
summary proceedings hereafter instituted by the Landlord against the Tenant in
respect to the demised premises. The words "re-enter" and "re-entry" as used in
this lease are not restricted to their technical legal meaning.
REMEDIES ARE CUMULATIVE
In the event of a breach or threatened breach by the Tenant of any of the
covenants or provisions hereof, the Landlord shall have the right of injunction
and the right to invoke any remedy allowed at law or in equity, as if re-entry,
summary proceedings and other remedies were not herein provided for.
LANDLORD MAY PERFORM
ADDITIONAL RENT
SEVENTH.--If the Tenant shall make default in the performance of any
covenant herein contained, the Landlord may immediately, or at any time
thereafter, without notice, perform the same for the account of the Tenant. If a
notice of mechanic's lien be filed against the demised premises or against
premises of which the demised premises are part, for, or purporting to be for,
labor or material alleged to have been furnished, or to be furnished to or for
the Tenant at the demised premises, and if the Tenant shall fail to take such
action as shall cause such lien to be discharged within fifteen days after the
filing of such notice, the Landlord may pay the amount of such lien or discharge
the same by deposit or by bonding proceedings, and in the event of such deposit
or bonding proceedings, the Landlord may require the lienor to prosecute an
appropriate action to enforce the lienor's claim. In such case, the Landlord may
pay any judgment recovered on such claim. Any amount paid or expense incurred by
the Landlord as in this subdivision of this lease provided, and any amount as to
which the Tenant shall at any time be in default for or in respect to the use of
water, electric current or sprinkler supervisory service, and any expense
incurred or sum of money paid by the Landlord by reason of the failure of the
Tenant to comply with any provision hereof, or in defending any such action,
shall be deemed to be "additional rent" for the demised premises, and shall be
due and payable by the Tenant to the Landlord on the first day of the next
following month, or, at the option of the Landlord, on the first day of any
succeeding month. The receipt by the Landlord of any instalment of the regular
stipulated rent hereunder or any of said "additional rent" shall not be a waiver
of any other "additional rent" then due.
AS TO WAIVERS
EIGHTH.--The failure of the Landlord to insist, in any one or more
instances upon a strict performance of any of the covenants of this lease, or to
exercise any option herein contained, shall not be construed as a waiver or a
relinquishment for this future of such covenant or option, but the same shall
continue and remain in full force and effect. The receipt by the Landlord of
rent, with knowledge of the breach of any covenant hereof, shall not be deemed a
waiver of such breach and no waiver by the Landlord of any provision hereof
shall be deemed to have been made unless expressed in writing and signed by the
Landlord. Even though the Landlord shall consent to an assignment hereof no
further assignment shall be made without express consent in writing by the
Landlord.
COLLECTION OF RENT FROM OTHERS
NINTH.--If this lease be assigned, or if the demised premises or any part
thereof be underlet or occupied by anybody other than the Tenant the Landlord
may collect rent from the assignee, under-tenant or occupant, and apply the net
amount collected to the rent herein reserved, and no such collection shall be
deemed a waiver of the covenant herein against assignment and underletting, or
the acceptance of the assignee, under-tenant or occupant as tenant, or a release
of the Tenant from the further performance by the Tenant of the covenants herein
contained on the part of the Tenant.
MORTGAGES
TENTH.--This lease shall be subject and subordinate at all time, to the
lien of the mortgages now on the demised premises, and to all advances made or
hereafter to be made upon the security thereof, and subject and subordinate to
the lien of any mortgage or mortgages which at any time may be made a lien upon
the premises. The Tenant will execute and deliver such further instrument or
instruments subordinating this lease to the lien of any such mortgage or
mortgages as shall be desired by any mortgagee or proposed mortgagee. The Tenant
hereby appoints the Landlord the attorney-in-fact of the Tenant, irrevocable, to
execute and deliver any such instrument or instruments for the Tenant.
IMPROVEMENTS
ELEVENTH.--All improvement made by the Tenant to or upon the demised
premises, except said trade fixtures, shall when made, at once be deemed to be
attached to the freehold, and become the property of the Landlord, and at the
end or other expiration of the term, shall be surrendered to the Landlord in as
good order and condition as they were when installed, reasonable wear and
damages by the elements excepted.
NOTICES
TWELFTH.--Any notice or demand which under the terms of this lease or under
any statute must or may be given or made by the parties hereto shall be in
writing and shall be given or made by mailing the same by certified or
registered mail addressed to the respective parties at the addresses set forth
in this lease.
NO LIABILITY
THIRTEENTH.--The Landlord shall not be liable for any failure of water
supply or electrical current, sprinkler damage, or failure of sprinkler service,
nor for injury or damage to person or property caused by the elements or by
other tenants or persons in said building, or resulting from steam, gas,
electricity, water, rain or snow, which may leak or flow from any part of said
buildings, or from the pipes, appliances or plumbing works of the same, or from
the street or sub-surface, or from any other place, nor for interference with
light or other incorporeal hereditaments by anybody other than the Landlord, or
caused by operations by or for a governmental authority in construction of any
public or quasi-public work, neither shall the Landlord be liable for any latent
defect in the building.
NO ABATEMENT
FOURTEENTH.--No diminution or abatement of rent, or other compensation
shall be claimed or allowed for inconvenience or discomfort arising from the
making of repairs or improvements to the building or to its appliances, nor for
any space taken to comply with any law, ordinance or order of a governmental
authority. In respect to the various "services," if any, herein expressly or
impliedly agreed to be furnished by the Landlord to the Tenant, it is agreed
that there shall be no diminution or abatement of the rent, or any other
compensation, for interruption or curtailment of such "service" when such
interruption or curtailment shall be due to accident, alterations or repairs
desirable or necessary for the maintenance of such "service" or to some other
cause, not gross negligence on the part of the Landlord. No such interruption to
be made or to inability or difficulty in securing supplies or labor or
curtailment of any such "service" shall be deemed a constructive eviction. The
Landlord shall not be required to furnish, and the Tenant shall not be entitled
to receive, any of such "services" during any period wherein the Tenant shall be
in default in respect to the payment of rent. Neither shall there be any
abatement or diminution of rent because of making of repairs, improvements or
decorations to the demised premises after the date above fixed for the
commencement of the term, it being understood that rent shall, in any event,
commence to run at such date so above fixed.
RULES, ETC.
FIFTEENTH.--The Landlord may prescribe and regulate the placing of safes,
machinery, quantities of merchandise and other things. The Landlord may also
prescribe and regulate which elevator and entrances shall be used by the
Tenant's employees, and for the Tenant's shipping. The Landlord may make such
other and further rules and regulations as, in the Landlord's judgment, may from
time to time be needful for the safety, care or cleanliness of the building, and
for the preservation of good order therein. The Tenant and the employees and
agents of the Tenant will observe and conform to all such rules and regulations.
SHORING OF WALLS
SIXTEENTH.--In the event that an excavation shall be made for building or
other purposes upon land adjacent to the demised premises or shall be
contemplated to be made, the Tenant shall afford to the person or persons
causing or to cause such excavation, license to enter upon the demised premises
for the purpose of doing such work as said person or persons shall deem to be
necessary to preserve the wall or walls, structure or structures upon the
demised premises from injury and to support the same by proper foundations.
VAULT SPACE
SEVENTEENTH.--No vaults or space not within the property line of the
building are leased hereunder. Landlord makes no representation as to the
location of the property line of the building. Such vaults or space as Tenant
may be permitted to use or occupy are to be used or occupied under a revocable
license and if such license be revoked by the Landlord as to the use of part or
all of the vaults or space Landlord shall not be subject to any liability;
Tenant shall not be entitled to any compensation or reduction in rent nor shall
this be deemed constructive or actual eviction. Any tax, fee or charge of
municipal or other authorities for such vaults or space shall be paid by the
Tenant for the period of the Tenant's use or occupancy thereof.
ENTRY
EIGHTEENTH.--That during seven months prior to the expiration of the term
hereby granted, applicants shall be admitted at all reasonable hours of the day
to view the premises until rented; and the Landlord and the Landlord's agents
shall be permitted at any time during the term to visit and examine them at any
reasonable hour of the day, and workmen may enter at any time, when authorized
by the Landlord or the Landlord's agents, to make or facilitate repairs in any
part of the building; and if the said Tenant shall not be personally present to
open and permit an entry into said premises, at any time, when for any eason an
entry therein shall be necessary or permissible hereunder, the Landlord or the
Landlord's agents may forcibly enter the same without rendering the Landlord or
such agents liable to any claim or cause of action for damages by reason thereof
(if during such entry the Landlord shall accord reasonable care to the Tenant's
property) and without in any manner affecting the obligations and covenants of
this lease; it is, however, expressly understood that the right and authority
hereby reserved, does not impose, nor does the Landlord assume, by reason
thereof, any responsibility or liability whatsoever for the care or supervision
of said premises, or any of the pipes, fixtures, appliances or appurtenances
therein contained or therewith in any manner connected.
NO REPRESENTATIONS
NINETEENTH.--The Landlord has made no representations or promises in
respect to said building or to the demised premises except those contained
herein, and those, if any, contained in some written communication to the
Tenant, signed by the Landlord. This instrument may not be changed, modified,
discharged or terminated orally.
ATTORNEY'S FEES
TWENTIETH.--If the Tenant shall at any time be in default hereunder, and if
the Landlord shall institute an action or summary proceeding against the Tenant
based upon such default, the Tenant will reimburse the Landlord for the expense
of attorney's fees and disbursements thereby incurred by the Landlord, so far as
the same are reasonable in amount. Also so long as the Tenant shall be a tenant
hereunder the amount of such expenses shall be deemed to be "additional rent"
hereunder and shall be due from the Tenant to the Landlord on the first day of
the month following the incurring of such respective expenses.
POSSESSION
TWENTY-FIRST.--Landlord shall not be liable for failure to give possession
of the premises upon commencement date by reason of the fact that premises are
not ready for occupancy, or due to a prior Tenant wrongfully holding over or any
other person wrongfully in possession or for any other reason; in such event the
rent shall not commence until possession is given or is available, but the term
herein shall not be extended.
<PAGE>
THE TENANT FURTHER COVENANTS:
IF A FIRST FLOOR
TWENTY-SECOND.--If the demised premises or any part thereof consist of a
store, or of a first floor, or of any part thereof, the Tenant will keep the
sidewalk and curb in front thereof clean at all times and free from snow and
ice, and will keep insured in favor of the Landlord, all plate glass therein and
furnish the Landlord with policies of insurance covering the same.
INCREASED FIRE INSURANCE RATE
TWENTY-THIRD.--If by reason of the conduct upon the demised premises of a
business not herein permitted, or if by reason of the improper or careless
conduct of any business upon or use of the demised premises, the fire insurance
rate shall at any time be higher than it otherwise would be, then the Tenant
will reimburse the Landlord, as additional rent hereunder, for that part of all
fire insurance premiums hereafter paid out by the Landlord which shall have been
charged because of the conduct of such business not so permitted, or because of
the improper or careless conduct of any business upon or use of the demised
premises, and will make such reimbursement upon the first day of the month
following such outlay by the Landlord; but this covenant shall not apply to a
premium for any period beyond the expiration date of this lease, first above
specified. In any action or proceeding wherein the Landlord and Tenant are
parties, a schedule or "make up" of rate for the building on the demised
premises, purporting to have been issued by New York Fire Insurance Exchange, or
other body making fire Insurance rates for the demised premises, shall be prima
facie evidence of the facts therein stated and of the several items and charges
included in the fire insurance rate then applicable to the demised premises.
WATER RENT,
SEWER
TWENTY-FOURTH.--If a separate water meter be installed for the demised
premises, or any part thereof, the Tenant will keep the same in repair and pay
the charges made by the municipality or water supply company for or in respect
to the consumption of water, as and when bills therefor are rendered. If the
demised premises, or any part thereof, be supplied with water through a meter
which supplies other premises, the Tenant will pay to the Landlord, as and when
bills are rendered therefor, the Tenant's proportioate part of all charges which
the municipality water supply company shall make for all water consumed through
said meter, as indicated by said meter. Such proportionate part shall be fixed
by apportioning the respective charge according to floor area against all of the
rentable floor area in the building (exclusive of the basement) which shall have
been occupied during the period of the respective charges, taking into account
the period that each part of such area was occupied. Tenant agrees to pay as
additional rent the Tenant's proportionate part, determined as aforesaid, of the
sewer rent or charge imposed or assessed upon the building of which the premises
are a part.
ELECTRIC CURRENT
TWENTY-FIFTH.--That the Tenant will purchase from the Landlord, if the
Landlord shall so desire, all electric current that the Tenant requires at the
demised premises, and will pay the Landlord for the same, as the amount of
consumption shall be indicated by the meter furnished therefor. The price for
said current shall be the same as that charged for consumption similar to that
of the Tenant by the company supplying electricity in the same community.
Payments shall be due as and when bills shall be rendered. The Tenant shall
comply with like rules, regulations and contract provisions as those prescribed
by said company for a consumption similar to that of the Tenant.
SPRINKLER SYSTEM
TWENTY-SIXTH.--If there now is or shall be installed in said building a
"sprinkler system" the Tenant agrees to keep the appliances thereto in the
demised premises in repair and good working condition, and if the New York Board
of Fire Underwriters or the New York Fire Insurance Exchange or any bureau,
department or official of the State or local government requires or recommends
that any changes, modifications, alterations or additional sprinkler heads or
other equipment be made or supplied by reason of the Tenant's business, or the
location of partitions, trade fixtures, or other contents of the demised
premises, or if such changes, modifications, alterations, additional sprinkler
heads or other equipment be made or supplied by reason of the modifications,
alterations, additional sprinkler heads or other equipment in the demised
premises are necessary to prevent the imposition of a penalty or charge against
the full allowance for a sprinkler system in the fire insurance rate as fixed by
said Exchange, or by any Fire Insurance Company, the Tenant will at the Tenant's
own expense, promptly make and supply such changes, modifications, alterations,
additional sprinkler heads or other equipment. As additional rent hereunder the
Tenant will pay to the Landlord, annually in advance, throughout the term
$..........., toward the contract price for sprinkler supervisory service.
SECURITY
TWENTY-SEVENTH.--The sum of ONE THOUSAND SIX HUNDRED AND 00/100 ($1,600)
Dollars is deposited by the Tenant herein with the Landlord herein as security
for the faithful performance of all the covenants and conditions of the lease by
the said Tenant. If the Tenant faithfully performs all the covenants and
conditions on his part to be performed, then the sum deposited shall be returned
to said Tenant.
NUISANCE
TWENTY-EIGHTH.--This lease is granted and accepted on the especially
understood and agreed condition that the Tenant will conduct has business in
such a manner, both as regards noise and kindred nuisances, as will in no wise
interfere with, annoy, or disturb any other tenants, in the conduct of their
several businesses, or the landlord in the management of the building; under
penalty of forfeiture of this lease and consequential damages.
BROKERS COMMISSIONS
TWENTY-NINTH.--The Landlord hereby recognizes__________ as the broker who
negotiated and consummated this lease with the Tenant herein, and agrees that
if, as, and when the Tenant exercises the option, if any, contained herein to
renew this lease, or fails to exercise the option, if any, contained therein to
cancel this lease, the Landlord will pay to said broker a further commission in
accordance with the rules and commission rates of the Real Estate Board in the
community. A sale, transfer, or other disposition of the Landlord's Interest in
said lease shall not operate to defeat the Landlord's obligation to pay the said
commission to the said broker. The Tenant herein hereby represents to the
Landlord that the said broker is the sole and only broker who negotiated and
consummated this lease with the Tenant.
WINDOW CLEANING
THIRTIETH.--The Tenant agrees that it will not require, permit, suffer, nor
allow the cleaning of any window, or windows, in the demised premises from the
outside (within the meaning of Section 202 of the Labor Law) unless the
equipment and safety devices required by law, ordinance, regulation or rule,
including, without limitation, Section 202 of the New York Labor Law, are
provided and used, and unless the rules, or any supplemental rules of the
Industrial Board of the State of New York are fully complied with; and the
Tenant hereby agrees to indemnify the Landlord, Owner, Agent, Manager and/or
Superintendent, as a result of the Tenant's requiring, permitting, suffering, or
allowing any window, or windows in the demised premises to be cleaned from the
outside in violation of the requirements of the aforesaid laws, ordinances,
regulations and/or rules.
VALIDITY
THIRTY-FIRST.--The invalidity or unenforceability of any provision of this
lease shall in no way affect the validity or enforceability of any other
provision hereof.
EXECUTION & DELIVERY OF LEASE
THIRTY-SECOND.--In order to avoid delay, this lease has been prepared and
submitted to the Tenant for signature with the understanding that it shall not
bind the Landlord unless and until it is executed and delivered by the Landlord.
EXTERIOR OF PREMISES
THIRTY-THIRD.--The Tenant will keep clean and polished all metal, trim,
marble and stonework which are a part of the exterior of the premises, using
such materials and methods as the Landlord may direct, and if the Tenant shall
fail to comply with the provision of this paragraph, the Landlord may cause such
work to be done at the expense of the Tenant.
PLATE GLASS
THIRTY-FOURTH.--The Landlord shall replace at the expense of the Tenant any
and all broken glass in the skylights, doors and walls in and about the demised
premises. The Landlord may insure and keep insured all plate glass in the
skylights, doors and walls in the demised premises, for and in the name of the
Landlord and bills for the premiums therefor shall be rendered by the Landlord
to the Tenant at such times as the Landlord may elect, and shall be due from and
payable by the Tenant when rendered, and the amount thereof shall be deemed to
be, and shall be paid as, additional rent.
WAR EMERGENCY
THIRTY-FIFTH.--This lease and the obligation of Tenant to pay rent
hereunder and perform all of the other covenants and agreements hereunder on
part of Tenant to be performed shall in nowise be affected, impaired or excused
because Landlord is unable to supply or is delayed in supplying any service
expressly or impliedly to be supplied or is unable to make, or is delayed in
making any repairs, additions, alterations or decorations or is unable to supply
or is delayed in supplying any equipment or fixtures if Landlord is prevented or
delayed from so doing by reason of governmental preemption in connection with a
National Emergency declared by the President of the United States or in
connection with any rule, order or regulation of any department or subdivision
thereof of any government agency or by reason of the conditions of supply and
demand which have been or are affected by war or other emergency.
THE LANDLORD COVENANTS
QUIET POSSESSION
FIRST.--That if and so long as the Tenant pays the rent and "additional
rent" reserved hereby, and performs and observes the covenants and provisions
hereof, the Tenant shall quietly enjoy the demised premises, subject, however,
to the terms of this lease, and to the mortgages above mentioned, provided
however, that this covenant shall be conditioned upon the retention of title to
the premises by Landlord.
ELEVATOR
HEAT
SECOND.--Subject to the provisions of Paragraph "Fourteenth" above the
Landlord will furnish the following respective services: (a) Elevator service,
if the building shall contain an elevator or elevators, on all days except
Sundays and holidays, from __________ A.M. to __________ P.M. and on Saturdays
from __________ A.M. to __________ P.M.; (b) Heat, during the same hours on the
same days in the cold season in each year.
And it is mutually understood and agreed that the covenants and agreements
contained in the within lease shall be binding upon the parties hereto and upon
their respective successors, heirs, executors and administrators.
IN WITNESS WHEREOF, the Landlord and Tenant have respectively signed and
sealed these presents the day and year first above written.
EDUCATIONAL AND CHARITABLE FOUNDATION
OF EASTERN ORANGE COUNTY, INC.
BY: /s/ Signature on File, Pres. [L. S.]
------------------------------
Landlord
NEW YORK HEALTH CARE, INC.
BY: /s/ Jerry Braun, CEO [L. S.]
------------------------------
Tenant
<PAGE>
State of New York, County of __________ ss:
On the __________ day of __________19__, before me personally
came___________ to me known, who, being by me duly sworn, did depose and say
that he resides at __________; that he is __________ of __________, the
corporation described in and which executed the withing instrument; that he
knows the seal of said corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by order of the Board of Directors
of said corporation, and that he signed his name thereto by like order.
State of New York, County of __________ ss:
On the __________ day of __________19__, before me personally came________
to me known, who, being by me duly sworn, did depose and say that he resides at
__________; that he is __________ of __________, the corporation described in
and which executed the within instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal;
that it was so affixed by order of the Board of Directors of said corporation,
and that he signed his name thereto by like order.
State of New York, County of __________ ss:
On the __________ day of __________ 19__, before me personally came
__________ to me known and known to me to be the individual described in and who
executed the foregoing instrument, and duly acknowledged that he executed the
same.
State of New York, County of __________ ss:
On the __________ day of __________ 19__, before me personally came
__________, subscribing witness to the foregoing instrument, with whom I am
personally acquainted, who, being by me duly sworn, did dispose and say, that he
resided, at the time of the execution of said instrument, and still resides, in
__________ that he is and then was acquainted with __________, and knew
__________ to be __________ the individual described in and who executed the
foregoing instrument; and that he, said subscribing witness, was present and saw
__________ execute the same; and that he, said witness, thereupon at the same
time subscribed his name as written thereto.
BUILDING
------------------------------------------------------------------------
Premises 45 Grand Street
------------------------------------------------------------------------
================================================================================
EDUCATIONAL AND CHARITABLE FOUNDATION OF EASTERN ORANGE COUNTY, INC.
Landlord
to
NEW YORK HEALTH CARE, INC.
Tenant
================================================================================
LEASE
================================================================================
================================================================================
GUARANTY
In consideration of the letting of the premises within mentioned to the
Tenant within named, and of the sum of One Dollar, to the underlined in hand
paid by the Landlord within named, the undersigned hereby guarantees to the
Landlord and to the heirs, successors and/or assigns of the Landlord, the
payment by the Tenant of the rent, within provided for, and the performance by
the Tenant of all of the provisions of the within lease. Notice of all defaults
is waived, and consent is hereby given to all extensions of time that any
Landlord may grant.
Dated, 19
____________________________L.S.
STATE OF COUNTY OF ss:
On this __________ day of __________, 19__, before me personally appeared
__________ to me known and known to be the individual described in and who
executed the foregoing instrument, and duly acknowledged to me that he executed
the same.
<PAGE>
RIDER TO LEASE DATED AUGUST ____, 1992
BETWEEN EDUCATIONAL AND CHARITABLE FOUNDATION OF
EASTERN ORANGE COUNTY, INC., AS LANDLORD, AND
NEW YORK HEALTH CARE, INC., AS TENANT
36. If Tenant is not in default under the terms of this lease, Tenant shall
have the option to renew the lease for an additional three-year term for the
annual rent of $10,800.00 per year for the first two years and $12,000 for the
third year.[change initialed: /s/ JB] In order to exercise such option, Tenant
must give Landlord at least six months' written notice of exercise of such
option to renew.
37. In the event that Landlord transfers ownership of the demised premises
to another party, such transfer shall be subject to the terms of this lease.
38. Tenant shall place no signs on the front of the demised premises.
39. Any signage on the front window of the demised premises shall be
subject to prior written approval of Landlord.
40. As part of the rent described above, Landlord shall provide security,
(as described to Tenant prior to execution of the lease), air conditioning and
heat. All other maintenance and repair of the demised premises is the
responsibility of Tenant.
41. Tenant shall provide liability insurance coverage in at least the
amount of $500,000.00 per individual and $1,000,000.00 in the aggregate naming
Landlord as insured. Tenant shall provide Landlord with a Certificate of
Insurance naming Landlord as insured prior to taking possession of the demised
premises.
42. Tenant shall provide Landlord with notice concerning any change of
insurance carrier during the term of the lease.
43. If Tenant has not exercised its option to renew by six months prior to
expiration of the term as described in Paragraph 36 above, Landlord has
permission to install "to let" or "for sale" signs on the premises for the
remainder of the term and Tenant shall cooperate with Landlord or Landlord's
agencies in showing the premises for possible rental or sale.
STANDARD FORM OF OFFICE LEASE
The Real Estate Board of New York, Inc.
Agreement of Lease, made as of this 15th day of September 1995, between
Expressway Realty Co., 91-31 Queens Blvd., Elmhurst, NY 11373, party of the
first part, hereinafter referred to as OWNER, and NEW YORK HEALTH CARE, INC.
1667 Flatbush Avenue, Brooklyn, NY 11210, party of the second part, hereinafter
referred to as TENANT.
Witnesseth:
Owner hereby leases to Tenant and Tenant hereby hires from Owner that
portion of the Second Floor designated as Suite 210 in the building known as
91-31 Queens Boulevard, Elmhurst in the Borough of Queens, City of New York, for
the term of Two (2) Years (or until such term shall sooner cease and expire as
hereinafter provided) to commence on the 1st day of October Nineteen Hundred and
Ninety-Five, and to end on the 30th day of September, Nineteen Hundred and
Ninety-Seven, both days inclusive, at an annual rental rate of SEVENTEEN
THOUSAND FOUR HUNDRED ($17,400.00) DOLLARS, payable in equal monthly
installments of ONE THOUSAND FOUR HUNDRED FIFTY ($1,450.00) DOLLARS which Tenant
agrees to pay in lawful money of the United States which shall be legal tender
in payment of all debts and dues, public and private, at the time of payment, in
equal monthly installments in advance on the first day of each month during said
term, at the office of Owner or such other place as Owner may designate, without
any set off or deduction whatsoever, except that Tenant shall pay the first_____
monthly installment(s) on the execution hereof (unless this lease be a renewal).
In the event that, at the commencement of the term of this lease, or
thereafter, Tenant shall be in default in the payment of rent to Owner pursuant
to the terms of another lease with Owner or with Owner's predecessor in
interest, Owner may at Owner's option and without notice to Tenant add the
amount of such arrears to any monthly installment of rent payable hereunder and
the same shall be payable to Owner as additional rent.
The parties hereto, for themselves, their heirs, distributees, executors,
administrators, legal representatives, successors and assigns, hereby covenant
as follows:
Rent:
1. Tenant shall pay the rent as above and as hereinafter provided.
Occupancy:
2. Tenant shall use and occupy demised premises for office use for health care
provider and for no other purpose.
Tenant Alterations:
3. Tenant shall make no changes in or to the demised premises of any nature
without Owner's prior written constant. Subject to the prior written consent of
Owner, and to the provisions of this article, Tenant, at Tenant's expense, may
make alterations, installations, additions or improvements which are
nonstructural and which do not affect utility services or plumbing and
electrical lines, in or to the interior of the demised premises by using
contractors or mechanics first approved in each instance by Owner. Tenant shall,
before making any alterations, additions, installations or improvements, at its
expense, obtain all permits, approvals and certificates required by any
governmental or quasi-governmental bodies and (upon completion) certificates of
final approval thereof and shall deliver promptly duplicates of all such
permits, approvals and certificates to Owner and Tenant agrees to carry and will
cause Tenant's contractors and sub-contractors to carry such workman's
compensation, general liability, personal and property damage insurance as Owner
may require. If any mechanic's lien is filed against the demised premises, or
the building of which the same forms a part, for work claimed to have been done
for, or materials furnished to, Tenant, whether or not done pursuant to this
article, the same shall be discharged by Tenant within thirty days thereafter at
Tenant's expense, by payment or filing the bond required by law. All fixtures
and all paneling, partitions, railings and like installations, installed in the
premises at any time, either by Tenant or by Owner on Tenant's behalf, shall,
upon installation, become the property of Owner and shall remain upon and be
surrendered with the demised premises unless Owner, by notice to Tenant no later
than twenty days prior to the date fixed as the termination of this lease,
elects to relinquish Owner's right thereto and to have them removed by Tenant,
in which event the same shall be removed from the premises by Tenant prior to
the expiration of the lease at the Tenant's expense. Nothing in this Article
shall be construed to give Owner title to or to prevent Tenant's removal of
trade fixtures, moveable office furniture and equipment, but upon removal of any
such from the premises or upon removal of other installations as may be required
by Owner, Tenant shall immediately and at its expense, repair and restore the
premises to the condition existing prior to installation and repair any damage
to the demised premises or the building due to such removal. All property
permitted or required to be removed by Tenant at the end of the term remaining
in the premises after Tenant's removal shall be deemed abandoned and may, at the
election of Owner, either be retained as Owner's property or may be removed from
the premises by Owner, at Tenant's expense.
Maintenance and Repairs:
4. Tenant shall, throughout the term of this lease, take good care of the
demised premises and the fixtures and appurtenances therein. Tenant shall be
responsible for all damage or injury to the demised premises or any other part
of the building and the systems and equipment thereof, whether requiring
structural or nonstructural repairs caused by or resulting from carelessness,
omission, neglect or improper conduct of Tenant, Tenant's subtenants, agents,
employees, invitees or licensees, or which arise out of any work, labor, service
or equipment done for or supplied to Tenant or any subtenant or arising out of
the installation, use or operation of the property or equipment of Tenant or any
subtenant. Tenant shall also repair all damages to the building and the demised
premises caused by the moving of Tenant's fixtures, furniture and equipment.
Tenant shall promptly make, at Tenant's expense, all repairs in and to the
demised premises for which Tenant is responsible, using only the contractor for
the trade or trades in question, selected from a list of at least two
contractors per trade submitted by Owner. Any other repairs in or to the
building or the facilities and systems thereof for which Tenant is responsible
shall be performed by Owner at the Tenant's expense. Owner shall maintain in
good working order and repair the exterior and the structural portions of the
building, including the structural portions of its demised premises and the
public portions of the building interior and the building plumbing, electrical,
heating and ventilating systems (to the extent such systems presently exist)
serving the demised premises. Tenant agrees to give prompt notice of any
defective condition in the premises for which Owner may be responsible
hereunder. There shall be no allowance to Tenant for diminution of rental value
and no liability on the part of Owner by reason of inconvenience, annoyance or
injury to business arising from Owner or others making repairs, alterations,
additions or improvements in or to any portion of the building or the demised
premises or in and to the fixtures, appurtenances or equipment thereof. It is
specifically agreed that Tenant shall not be entitled to any setoff or reduction
of rent by reason of any failure of Owner to comply with the covenants of this
or any other article of this Lease. Tenant agrees that Tenant's sole remedy at
law in such instance will be by way of an action for damages for breach of
contract. The provisions of this Article 4 shall not apply in the case of fire
or other casualty which are dealt with in Article 9 hereof.
Window Cleaning:
5. Tenant will not clean nor require, permit, suffer or allow any window in the
demised premises to be cleaned from the outside in violation of Section 202 of
the Labor Law or any other applicable law or of the Rules of the Board of
Standards and Appeals, or of any other Board or body having or asserting
jurisdiction.
Requirements of Law, Fire Insurance, Floor Loads:
6. Prior to the commencement of the lease term, if Tenant is then in possession,
and at all times thereafter, Tenant, at Tenant's sole cost and expense, shall
promptly comply with all present and future laws, orders and regulations of all
state, federal, municipal and local governments, departments, commissions and
boards and any direction of any public officer pursuant to law, and all orders,
rules, and regulations of the New York Board of Fire Underwriters, Insurance
Services Office, or any similar body which shall impose any violation, order, or
duty upon Owner or Tenant with respect to the demised premises, whether or not
arising out of Tenant's permitted use or, with respect to the building if
arising out of Tenant's use or manner of use of the premises or the building
(including the use permitted under the lease). Nothing herein shall require
Tenant to make structural repairs or alterations unless Tenant has, by its
manner of use of the demised premises or method of operation therein, violated
any such laws, ordinances, orders, rules, regulations or requirements with
respect thereto. Tenant may, after securing Owner to
[STAMP] INITIAL HERE /s/ JB
<PAGE>
Owner's satisfaction against all damages, interest, penalties and expenses,
including but not limited to, reasonable attorney's fees, by cash deposit or by
surety bond in an amount and in a company satisfactory to Owner, contest and
appeal any such laws, ordinances, orders, rules, regulations or requirements
provided same is done with all reasonable promptness and provided such appeal
shall not subject Owner to prosecution for a criminal offense or constitute a
default under any lease or mortgage under which Owner may be obligated or cause
the demised premises or any part thereof to be condemned or vacated. Tenant
shall not do or permit any act or thing to be done in or to the demised premises
which is contrary to law, or which will invalidate or be in conflict with public
liability, fire or other policies of insurance at any time carried by or for the
benefit of Owner with respect to the demised premises or the building of which
the demised premises form a part, or which shall or might subject Owner to any
liability or responsibility to any person or for property damage. Tenant shall
not keep anything in the demised premises except as now or hereafter permitted
by the Fire Department, Board of Fire Underwriters, Fire Insurance Rating
Organization or other authority having jurisdiction and then only in such manner
and such quantity so as not to increase the rate for fire insurance applicable
to the building, nor use the premises in any manner which will increase the
insurance rate for the building or any property located therein over that in
effect prior to the commencement of Tenant's occupancy. Tenant shall pay all
costs, expenses, fines, penalties, or damages which may be imposed upon Owner by
reason of Tenant's failure to comply with the provisions of this article and if
by reason of such failure the fire insurance rate shall, at the beginning of
this lease or at any time thereafter, be higher than it otherwise would be, then
Tenant shall reimburse Owner, as additional rent hereunder, for that portion of
all fire insurance premiums thereafter paid by Owner which shall have been
charged because of such failure by Tenant. In any action or proceeding wherein
Owner and Tenant are parties, a schedule or "make-up" of rate for the building
or demised premises issued by the New York Fire Insurance Exchange, or other
body making fire insurance rates applicable to said premises shall be conclusive
evidence of the facts therein stated and of the several items and charges in the
fire insurance rates then applicable to said premises. Tenant shall not place a
load upon any floor of the demised premises exceeding the floor load per square
foot area which it was designed to carry and which is allowed by law. Owner
reserves the right to prescribe the weight and position of all safes, business
machines and mechanical equipment. Such installations shall be placed and
maintained by Tenant, at Tenant's expense, in settings sufficient, in Owner's
judgment, to absorb and prevent vibration, noise and annoyance.
Subordination:
7. This lease is subject and subordinate to all ground or underlying leases and
to all mortgages which may now or hereafter affect such leases or the real
property of which demised premises are a part and to all renewals,
modifications, consolidations, replacements and extensions of any such
underlying leases and mortgages. This clause shall be self-operative and no
further instrument of subordination shall be required by any ground or
underlying lessor or by any mortgagee, affecting any lease or the real property
of which the demised premises are a part. In confirmation of such subordination,
Tenant shall from time to time execute promptly any certificate that Owner may
request.
Property Loss, Damage Reimbursement Indemnity:
8: Owner or its agents shall not be liable for any damage to property of Tenant
or of others entrusted to employees of the building, nor for loss of or damage
to any property of Tenant by theft or otherwise, nor for any injury or damage to
persons or property resulting from any cause of whatsoever nature, unless caused
by or due to negligence of Owner, its agents, servants or employees. Owner or
its agents will not be liable for any such damage caused by other tenants or
persons in, upon or about said building or caused by operations in construction
of any private, public or quasi public work. If at any time any windows of the
demised premises are temporarily closed, darkened or bricked up (or permanently
closed, darkened or bricked up, if required by law) for any reason whatsoever,
including, but not limited to, Owner's own acts, Owner shall not be liable for
any damage Tenant may sustain thereby and Tenant shall not be entitled to any
compensation therefor nor abatement or diminution of rent nor shall the same
release Tenant from its obligations hereunder nor constitute an eviction. Tenant
shall indemnify and save harmless Owner against and from all liabilities,
obligations, damages, penalties, claims, costs and expenses for which Owner
shall not be reimbursed by insurance, including reasonable attorneys fees, paid,
suffered, or incurred as a result of any breach by Tenant, Tenant's agents,
contractors, employees, invitees, or licensees, of any covenant or condition of
this lease, or the carelessness, negligence or improper conduct of the Tenant,
Tenant's agents, contractors, employees, invitees or licensees. Tenant's
liability under this lease extends to the acts and omissions of any sub-tenant,
and any agent, contractor, employee, invitees or licensee of any sub-tenant. In
case any action or proceeding is brought against Owner by reason of any such
claim, Tenant, upon written notice from Owner, will, at Tenant's expense, resist
or defend such action or proceeding by counsel approved by Owner in writing,
such approval not to be unreasonably withheld.
Destruction, Fire and Other Casualty:
9. (a) If the demised premises or any part thereof shall be damaged by fire or
other casualty, Tenant shall give immediate notice thereof to Owner and this
lease shall continue in full force and effect except as hereinafter set forth.
(b) If the demised premises are partially damaged or rendered partially unusable
by fire or other casualty, the damages thereto shall be repaired by and at the
expense of Owner and the rent and other items of additional rent, until such
repair shall be substantially completed, shall be apportioned from the day
following the casualty according to the part of the premise which is usable. (c)
If the demised premises are totally damaged or rendered wholly unusable by fire
or other casualty, then the rent and other items of additional rent as
hereinafter expressly provided shall be proportionately paid up to the time of
the casualty and thenceforth shall cease until the date when the premises shall
have been repaired and restored by Owner (or sooner reoccupied in part by Tenant
then rent shall be apportioned as provided in subsection (b) above), subject to
Owner's right to elect not to restore the same as hereinafter provided. (d) If
the demised premises are rendered wholly unusable or (whether or not the demised
premises are damaged in whole or in part) if the building shall be so damaged
that Owner shall decide to demolish it or to rebuild it, then, in any of such
events, Owner may elect to terminate this lease by written notice to Tenant,
given within 90 days after such fire or casualty, or 30 days after adjustment of
the insurance claim for such fire or casualty, whichever is sooner, specifying a
date for the expiration of the lease, which date shall not be more than 60 days
after the giving of such notice, and upon the date specified in such notice the
term of this lease shall expire as fully and completely as if such date were the
date set forth above for the termination of this lease and Tenant shall
forthwith quit, surrender, and vacate the premises without prejudice however, to
Landlord's rights and remedies against Tenant under the lease provisions in
effect prior to such termination, and any rent owing shall be paid up to such
date and any payments of rent made by Tenant which were on account of any period
subsequent to such date shall be returned to Tenant. Unless Owner shall serve a
termination notice as provided for herein, Owner shall make the repairs and
restorations under the conditions of (b) and (c) hereof, with all reasonable
expedition, subject to delays due to adjustment of insurance claims, labor
troubles and causes beyond Owner's control. After any such casualty, Tenant
shall cooperate with Owner's restoration by removing from the premises as
promptly as reasonably possible, all of Tenant's salvageable inventory and
moveable equipment, furniture, and other property. Tenant's liability for rent
shall resume five (5) days after written notice from Owner that the premises are
substantially ready for Tenant's occupancy. (e) Nothing contained hereinabove
shall relieve Tenant from liability that may exist as a result of damage from
fire or other casualty. Not withstanding the foregoing, including Owner's
obligation to restore under subparagraph (b) above, each party shall look first
to any insurance in its favor before making any claim against the other party
for recovery for loss or damage resulting from fire or other casualty and to the
extent that such insurance is in force and collectible and to the extent
permitted by law, Owner and Tenant each hereby releases and waives all right of
recovery with respect to subparagraphs (b), (d), and (e) above, against the
other or any one claiming through or under each of them by way of subrogation or
otherwise. The release and waiver herein referred to shall be deemed to include
any loss or damage to the demised premises and/or to any personal property,
equipment, trade fixtures, goods and merchandise located therein. The foregoing
release and waiver shall be in force only if both releasors' insurance policies
contain a clause providing that such a release or waiver shall not invalidate
the insurance. If, and to the extent, that such waiver can be obtained only by
the payment of additional premiums, then the party benefiting from the waiver
shall pay such premium within ten days after written demand or shall be deemed
to have agreed that the party obtaining insurance coverage shall be free of any
further obligation under the provisions hereof with respect to waiver of
subrogation. Tenant acknowledges that Owner will not carry insurance on Tenant's
furniture and/or furnishings or any fixtures or equipment, improvements, or
appurtenances removable by Tenant and agrees that Owner will not be obligated to
repair any damage thereto or replace the same. (f) Tenant hereby waives the
provisions of Section 227 of the Real Property Law and agrees that the
provisions of this article shall govern and control in lieu thereof.
Eminent Domain:
10. If the whole or any part of the demised premises shall be acquired or
condemned by Eminent Domain for any public or quasi public use or purpose, then
and in that event, the term of this lease shall cease and terminate from the
date of title vesting in such proceeding and Tenant shall have no claim for the
value of any unexpired term of said lease and assigns to Owner, Tenant's entire
interest in any such award. Tenant shall have the right to make an independent
claim to the condemning authority for the value of Tenant's moving expenses and
personal property, trade fixtures and equipment, provided Tenant is entitled
pursuant to the terms of the lease to remove such property, trade fixtures and
equipment at the end of the term and provided further such claim does not reduce
Owner's award.
Assignment, Mortgage, Etc.:
11. Tenant, for itself, its heirs, distributees, executors, administrators,
legal representative, successor and assigns, expressly covenants that it shall
not assign, mortgage or encumber this agreement, nor underlet, or suffer or
permit the demised premises or any part thereof to be used by others, without
the prior written consent of Owner in each instance. Transfer of the majority of
the stock of a corporate Tenant or the majority partnership interest of a
partnership Tenant shall be deemed an assignment. If this lease be assigned, or
if the demised premises or any part thereof be underlet or occupied by anybody
other than Tenant, Owner may, after default by Tenant, collect rent from the
assignee, under-tenant or occupant and apply the net amount collected to the
rent herein reserved, but no such assignment, underletting, occupancy or
collection shall be deemed a waiver of this covenant, or the acceptance of the
assignee, under-tenant or occupant as tenant, or a release of Tenant from the
further performance by Tenant of covenants on the part of Tenant herein
contained. The consent by Owner to an assignment or underletting shall not in
any wise be construed to relieve Tenant from obtaining the express consent in
writing of Owner to any further assignment or underletting.
Electric Current: [GRAPHIC OF POINTING HAND]
12. Rates and conditions in respect to submetering or rent inclusion, as the
case may be, to be added in RIDER, attached hereto. Tenant covenants and agrees
that at all times its use of electric current shall not exceed the capacity of
existing feeders to the building or the risers or wiring installation and Tenant
may not use any electrical equipment which, in Owner's opinion, reasonably
exercised, will overload such installations or interfere with the use thereof by
other tenants of the building. The change at any time of the character of
electric service shall in no wise make Owner liable or responsible to Tenant,
for any loss, damages, or expenses which Tenant may sustain.
Access to Premises:
13. Owner or Owner's agents shall have the right (but shall not be obligated) to
enter the demised premises in any emergency at any time, and at other reasonable
times, to examine the same and to make such repairs, replacements and
improvements as Owner may deem necessary and reasonably desirable to the demised
premises or to any other portion of the building on which Owner may elect to
perform. Tenant shall permit Owner to use and maintain and replace pipes and
conduits in and through the demised premises and to erect new pipes and conduits
therein provided they are concealed within the walls, floor, or ceiling. Owner
may, during the progress of any work in the demised premises, take all necessary
materials and equipment into said premises without the same constituting an
eviction nor shall the tenant be entitled to any abatement of rent while such
work is in progress nor to any damages by reason of loss or interruption of
business or otherwise. Throughout the term hereof Owner shall have the right to
enter the demised premises at reasonable hours for the purpose of showing the
same to prospective purchasers or mortgagees of the building, and during the
last six months of the term for the purpose of showing the
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[GRAPHIC OF POINTING HAND] Rider to be added if necessary.
<PAGE>
same to prospective tenants. If Tenant is not present to open and permit an
entry into the demised premises, Owner or Owner's agents may enter the same
whenever such entry may be necessary or permissible by master key or forcibly
and provided reasonable care is exercised to safeguard Tenant's property, such
entry shall not render Owner or its agents liable therefor, nor in any event
shall the obligations of Tenant hereunder be affected. If during the last month
of the term Tenant shall have removed all or substantially all of Tenant's
property therefrom Owner may immediately enter, alter, renovate or redecorate
the demised premises without limitation or abatement of rent or incurring
liability to Tenant for any compensation and such act shall have no effect on
this lease or Tenant's obligations hereunder.
Vault, Vault Space, Area:
14. No Vaults, vault space or area, whether or not enclosed or covered, not
within the property line of the building is leased hereunder, anything contained
in or indicated on any sketch, blueprint or plan, or anything contained
elsewhere in this lease to the contrary notwithstanding. Owner makes no
representation as to the location of the property line of the building. All
vaults and vault space and all such areas not within the property line of the
building, which Tenant may be permitted to use and/or occupy, is to be used
and/or occupied under a revocable license, and if any such license be revoked,
or if the amount of such space or area be diminished or required by any federal,
state or municipal authority or public utility, Owner shall not be subject to
any liability nor shall Tenant be entitled to any compensation or diminution or
abatement of rent nor shall such revocation, diminution or requisition be deemed
constructive or actual eviction. Any tax, fee or charge of municipal authorities
for such vault or area shall be paid by Tenant.
Occupancy:
15. Tenant will not at any time use or occupy the demised premises in violation
of the certificate of occupancy issued for the building of which the demised
premises are a part. Tenant has inspected the premises and accepts them as is,
subject to the riders annexed hereto with respect to Owner's work, if any. In
any event, Owner makes no representation as to the condition of the premises and
Tenant agrees to accept the same subject to violations, whether or not of
record.
Bankruptcy:
16. (a) Anything elsewhere in this lease to the contrary notwithstanding, this
lease may be cancelled by Owner by the sending of a written notice to Tenant
within a reasonable time after the happening of any one or more the of the
following events: (1) the commencement of a case in bankruptcy or under the laws
of any state naming Tenant as the debtor; or (2) the making by Tenant of an
assignment or any other arrangement for the benefit of creditors under any state
statute. Neither Tenant nor any person claiming through or under Tenant, or by
reason of any statute or order of court, shall thereafter be entitled to
possession of the premises demised but shall forthwith quit and surrender the
premises. If this lease shall be assigned in accordance with its terms, the
provisions of this Article 16 shall be applicable only to the party then owning
Tenant's interest in this lease.
(b) It is stipulated and agreed that in the event of the termination of
this lease pursuant to (a) hereof, Owner shall forthwith, notwithstanding any
other provisions of this lease to the contrary, be entitled to recover from
Tenant as and for liquidated damages an amount equal to the difference between
the rent reserved hereunder for the unexpired portion of the term demised and
the fair and reasonable rental value of the the demised premises for the same
period. In the computation of such damages the difference between any
installment of rent becoming due hereunder after the date of termination and the
fair and reasonable rental value of the demised premises for the period for
which such installment was payable shall be discounted to the date of
termination at the rate of four percent (4%) per annum. If such premises or any
part thereof be re-let by the Owner for the unexpired term of said lease, or any
part thereof, before presentation of proof of such liquidated damages to any
court, commission or tribunal, the amount of rent reserved upon such re-letting
shall be deemed to be the fair and reasonable rental value for the part or the
whole of the premises to be re-let during the term of the re-letting. Nothing
herein contained shall limit or prejudice the right of the Owner to prove for
and obtain as liquidated damages by reason of such termination, an amount equal
to the maximum allowed by any statute or rule of law in effect at the time when,
and governing the proceedings in which, such damages are to be proved, whether
or not such amount be greater, equal to, or less than the amount of the
difference referred to above.
Default:
17. (1) If Tenant defaults in fulfilling any of the covenants of this lease
other than the covenants for the payment of rent or additional rent; or if the
demised premises become vacant or deserted; or if any execution or attachment
shall be issued against Tenant or any of Tenant's property whereupon the demised
premises shall be taken or occupied by someone other than Tenant; or if this
lease be rejected under ss.235 of Title 11 of the U.S. Code (bankruptcy code);
or if Tenant shall fail to move into or take possession of the premises within
thirty (30) days after the commencement of the term of this lease, then, in any
one or more of such events, upon Owner serving a written fifteen (15) days
notice upon Tenant specifying the nature of said default and upon the expiration
of said fifteen (15) days, if Tenant shall have failed to comply with or remedy
such default, or if the said default or omission complained or shall be of a
nature that the same cannot be completely cured or remedied within said fifteen
(15) day period, and if Tenant shall not have diligently commenced curing such
default within such fifteen (15) day period, and shall not thereafter with
reasonable diligence and in good faith, proceed to remedy or cure such default,
then Owner may serve a written five (5) days, notice of cancellation of this
lease upon Tenant, and upon the expiration of said five (5) days this lease and
the terms thereunder shall end and expire as fully and completely as if the
expiration of such five (5) day period were the day herein definitely fixed for
the end and expiration of this lease and the term thereof and Tenant shall then
quit and surrender the demised premises to Owner but Tenant shall remain liable
as hereinafter provided.
(2) If the notice provided for in (1) hereof shall have been given and the
term shall expire as aforesaid; or if Tenant shall make default in the payment
of the rent reserved herein or any item of additional rent herein mentioned or
any part of either or in making any other payment herein required; then and in
any of such events Owner may without notice, re-enter the demised premises
either by force or otherwise, and dispossess Tenant by summary proceedings or
otherwise, and the legal representative of Tenant or other occupant of demised
premises and remove their effects and hold the premises as if this lease had not
been made, and Tenant hereby waives the service of notice of intention to
re-enter or to institute legal proceedings to that end. If Tenant shall make
default hereunder prior to the date fixed as the commencement of any renewal or
extension of this lease, Owner may cancel and terminate such renewal or
extension agreement by written notice.
Remedies of Owner and Waiver of Redemption:
18. In case of any such default, re-entry, expiration and/or dispossess by
summary proceedings or otherwise, (a) the rent shall become due thereupon and be
paid up to the time of such re-entry, dispossess and/or expiration, (b) Owner
may re-let the premises or any part or parts thereof either in the name of Owner
or otherwise, for a term or terms, which may at Owner's option be less than or
exceed the period which would otherwise have constituted the balance of the term
of this lease and may grant concessions or free rent or charge a higher rental
than that in this lease, and/or (c) Tenant or the legal representatives of
Tenant shall also pay Owner as liquidated damages for the failure of Tenant to
observe and perform said Tenant's covenants herein contained, any deficiency
between the rent hereby reserved and/or covenanted to be paid and the net
amount, if any, of the rents collected on account of the lease or leases of the
demised premises for each month of the period which would otherwise have
constituted the balance of the term of this lease. The failure of Owner to
re-let the premises or any part or parts thereof shall not release or affect
Tenant's liability for damages. In computing such liquidated damages there shall
be added to the said deficiency such expenses as Owner may incur in connection
with re-letting, such as legal expenses, reasonable attorneys' fees, brokerage,
advertising, and for keeping the demised premises in good order or for preparing
the same for re-letting. Any such liquidated damages shall be paid in monthly
installments by Tenant on the rent day specified in this lease and any suit
brought to collect the amount of the deficiency for any month shall not
prejudice in any way the rights of Owner to collect the deficiency for any
subsequent month by a similar proceeding. Owner, in putting the demised premises
in good order or preparing the same for re-rental may, at Owner's option, make
such alterations, repairs, replacements and/or decorations in the demised
premises as Owner, in Owner's sole judgment, considers advisable and necessary
for the purpose of re-letting the demised premises, and the making of such
alterations, repairs, replacements, and/or decorations shall not operate or be
construed to release Tenant from liability hereunder as aforesaid. Owner shall
in no event be liable in any way whatsoever for failure to re-let the demised
premises, or in the event that the demised premises are re-let, for failure to
collect the rent thereof under such re-letting, and in no event shall Tenant be
entitled to receive any excess, if any, of such net rents collected over the
sums payable by Tenant to Owner hereunder. In the event of a breach or
threatened breach by Tenant of any of the covenants or provisions hereof, Owner
shall have the right of injunction and the right to invoke any remedy allowed at
law or in equity as if re-entry, summary proceedings and other remedies were not
herein provided for. Mention in this lease of any particular remedy, shall not
preclude Owner from any other remedy, in law or in equity. Tenant hereby
expressly waives any and all rights of redemption granted by or under any
present or future laws in the event of Tenant being evicted or dispossessed for
any cause, or in the event of Owner obtaining possession of demised premises, by
reason of the violation by Tenant of any of the covenants and conditions of this
lease, or otherwise.
Fees and Expenses:
19. If Tenant shall default in the observance or performance of any term or
covenant on Tenant's part to be observed or performed under or by virtue of any
of the terms or provisions in any article of this lease, after notice if
required and upon expiration of any applicable grace period if any, (except in
an emergency), then, unless otherwise provided elsewhere in this lease, Owner
may immediately or at any time thereafter and without notice perform the
obligation of Tenant thereunder. If Owner, in connection with the foregoing or
in connection with any default by Tenant in the covenant to pay rent hereunder,
makes any expenditures or incurs any obligations for the payment of money,
including but not limited to reasonable attorneys' fees, in instituting,
prosecuting, or defending any action or proceeding, and prevails in any such
action or proceeding then Tenant will reimburse Owner for such sums so paid or
obligations incurred with interest and costs. The foregoing expenses incurred by
reason of Tenant's default shall be deemed to be additional rent hereunder and
shall be paid by Tenant to Owner within ten (10) days of rendition of any bill
or statement to Tenant therefor. If Tenant's lease term shall have expired at
the time of making of such expenditures or incurring of such obligations, such
sums shall be recoverable by Owner, as damages.
Building Alterations and Management:
20. Owner shall have the right at any time without the same constituting an
eviction and without incurring liability to Tenant therefor to change the
arrangement and/or location of public entrances, passageways, doors, doorways,
corridors, elevators, stairs, toilets or other public parts of the building and
to change the name, number or designation by which the building may be known.
There shall be no allowance to Tenant for diminution of rental value and no
liability on the part of Owner by reason of inconvenience, annoyance or injury
to business arising from Owner or other Tenants making any repairs in the
building or any such alterations, additions and improvements. Furthermore,
Tenant shall not have any claim against Owner by reason of Owner's imposition of
such controls of the manner of access to the building by Tenant's social or
business visitors as the Owner may deem necessary for the security of the
building and its occupants.
No Representations by Owner:
21. Neither Owner nor Owner's agents have made any representations or promises
with respect to the physical condition of the building, the land upon which it
is erected, or the demised premises, the rents, leases, expenses of operation or
any other matter or thing affecting or related to the premises except as herein
expressly set forth and no rights, easements or licenses are acquired by Tenant
by implication or otherwise except as expressly set forth in the provisions of
this lease. Tenant has inspected the building and the demised premises and is
thoroughly acquainted with their condition and agrees to take the same "as is"
and acknowledges that the taking of possession of the demised premises by Tenant
shall be conclusive evidence that the said premises and the building of which
the same form a part were in good and satisfactory condition at the time such
possession was so taken, except as to latent defects. All understandings and
agreements heretofore made between the parties hereto are merged in this
contract, which alone fully and completely expresses the agreement between Owner
and Tenant and any executory agreement
[STAMP] INITIAL HERE /s/ JB
<PAGE>
hereafter made shall be ineffective to change, modify, discharge or effect an
abandonment of it in whole or in part, unless such executory agreement is in
writing and signed by the party against whom enforcement of the change,
modification, discharge or abandonment is sought.
End of Term:
22. Upon the expiration or other termination of the term of this lease, Tenant
shall quit and surrender to Owner the demised premises, broom clean, in good
order and condition, ordinary wear and damages which Tenant is not required to
repair as provided elsewhere in this lease excepted and Tenant shall remove all
its property. Tenant's obligation to observe or perform this covenant shall
survive the expiration or other termination of this lease. If the last day of
the term of this Lease or any renewal thereof, falls on Sunday, this lease shall
expire at noon on the preceding Saturday unless it be a legal holiday in which
case it shall expire at noon on the preceding business day.
Quiet Enjoyment:
23. Owner covenants and agrees with Tenant that upon Tenant paying the rent and
additional rent and observing and performing all terms, covenants and
conditions, on Tenant's part to be observed and performed, Tenant may peaceably
and quietly enjoy the premises hereby demised, subject, nevertheless, to the
terms and conditions of this lease including, but not limited to, Article 31
hereof and to the ground leases, underlying leases and mortgages hereinbefore
mentioned.
Failure to Give Possession:
24. If Owner is unable to give possession of the demised premised on the date of
the commencement of the term hereof, because of the holding-over or retention of
possession of any tenant, undertenant or occupants or if the demised premises
are located in a building being constructed, because such building has not been
sufficiently completed to make the premises ready for occupancy or because of
the fact that a certificate of occupancy has not been procured or for any other
reason, Owner shall not be subject to any liability for failure to give
possession on said date and the validity of the lease shall not be impaired
under such circumstances, nor shall the same be construed in any wise to extend
the term of this lease, but the rent payable hereunder shall be abated (provided
Tenant is not responsible for Owner's inability to obtain possession or complete
construction) until after Owner shall have given Tenant written notice that the
Owner is able to deliver possession in condition required by this lease. If
permission is given to Tenant to enter into the possession of the demised
premises or to occupy premises other than the demised premises prior to the date
specified as the commencement of the term of this lease, Tenant covenants and
agrees that such possession and/or occupancy shall be deemed to be under all the
terms, covenants, conditions and provisions of this lease except the obligation
to pay the fixed annual rent set forth in the preamble to this lease. The
provisions of this article are intended to constitute "an express provision to
the contrary" within the meaning of Section 223-a of the New York Real Property
Law.
No Waiver:
25. The failure of Owner to seek redress for violation of, or to insist upon the
strict performance of any covenant or condition of this lease or of any of the
Rules or Regulations, set forth or hereafter adopted by Owner, shall not prevent
a subsequent act which would have originally constituted a violation from having
all the force and effect of an original violation. The receipt by Owner of rent
and/or additional rent with knowledge of the breach of any covenant of this
lease shall be deemed to have been waived by Owner unless such waiver be in
writing signed by Owner. No payment by Tenant or receipt by Owner of a lesser
amount than the monthly rent herein stipulated shall be deemed to be other than
on account of the earliest stipulated rent, nor shall any endorsement or
statement of any check or any letter accompanying any check or payment as rent
be deemed an accord and satisfaction, and Owner may accept such check or payment
without prejudice to Owner's right to recover the balance of such rent or pursue
any other remedy in this lease provided. No act or thing done by Owner or
Owner's agents during the term hereby demised shall be deemed an acceptance of a
surrender of said premises, and no agreement to accept such surrender shall be
valid unless in writing signed by Owner. No employee of Owner or Owner's agent
shall have any power to accept the keys of said premises prior to the
termination of the lease and the delivery of keys to any such agent or employee
shall not operate as a termination of the lease or a surrender of the premises.
Waiver of Trial by Jury:
26. It is mutually agreed by and between Owner and Tenant that the respective
parties hereto shall and they hereby do waive trial by jury in any action
proceeding or counterclaim brought by either of the parties hereto against the
other (except for personal injury or property damage) on any matters whatsoever
arising out of or in any way connected with this lease, the relationship of
Owner and Tenant, Tenant's use of or occupancy of said premises, and any
emergency statutory or any other statutory remedy. It is further mutually agreed
that in the event Owner commences any proceeding or action for possession
including a summary proceeding for possession of the premises, Tenant will not
interpose any counterclaim of whatever nature or description in any such
proceeding including a counterclaim under Article 4 except for statutory
mandatory counterclaims.
Inability to Perform:
27. This Lease and the obligation of Tenant to pay rent hereunder and perform
all of the other covenants and agreements hereunder on part of Tenant to be
performed shall in no wise be affected, impaired or excused because Owner is
unable to fulfill any of its obligations under this lease or to supply or is
delayed in supplying any service expressly or impliedly to be supplied or is
unable to make, or is delayed in making any repair, additions, alterations or
decorations or is unable to supply or is delayed in supplying any equipment,
fixtures, or other materials if Owner is prevented or delayed from so doing by
reason of strike or labor troubles or any cause whatsoever including, but not
limited to, government preemption or restrictions or by reason of any rule,
order or regulation of any department or subdivision thereof of any government
agency or by reason of the conditions which have been or are affected, either
directly or indirectly, by war or other emergency.
Bills and Notices
28. Except as otherwise in this lease provided, a bill, statement, notice or
communication which Owner may desire or be required to give to Tenant, shall be
deemed sufficiently given or rendered if, in writing, delivered to Tenant
personally or sent by registered or certified mail addressed to Tenant at the
building of which the demised premises form a part or at the last known
residence address or business address of Tenant or left at any of the aforesaid
premises addressed to Tenant, and the time of the rendition of such bill or
statement and of the giving of such notice or communication shall be deemed to
be the time when the same is delivered to Tenant, mailed, or left at the
premises as herein provided. Any notice by Tenant to Owner must be served by
registered or certified mail addressed to Owner at the address first hereinabove
given or at such other address as Owner shall designate by written notice.
Services Provided by Owners:
29. As long as Tenant is not in default under any of the covenants of this lease
beyond the applicable grace period provided in this lease for the curing of such
defaults, Owner shall provide: (a) necessary elevator facilities on business
days from 8 a.m. to 6 p.m. and have one elevator subject to call at all other
times; (b) heat to the demised premises when and as required by law, on business
days from 8 a.m. to 6 p.m.; (c) water for ordinary lavatory purposes, but if
Tenant uses or consumes water for any other purposes or in unusual quantities
(of which fact Owner shall be the sole judge), Owner may install a water meter
at Tenant's expense which Tenant shall thereafter maintain at Tenant's expense
in good working order and repair to register such water consumption and Tenant
shall pay for water consumed as shown on said meter as additional rent as and
when bills are rendered; (d) cleaning service for the demised premises on
business days at Owner's expense provided that the same are kept in order by
Tenant. If, however, said premises are to be kept clean by Tenant, it shall be
done at Tenant's sole expense, in a manner reasonably satisfactory to Owner and
no one other than persons approved by Owner shall be permitted to enter said
premises of the building of which they are a part for such purpose. Tenant shall
pay Owner the cost of removal of any of Tenant's refuse and rubbish from the
building; (e) If the demised premises are serviced by Owner's air
conditioning/cooling and ventilating system, air conditioning/cooling will be
furnished to tenant from May 15th through September 30th on business days
(Mondays through Fridays, holidays excepted) from 8:00 a.m. to __:00 p.m., and
ventilation will be furnished on business days during the aforesaid hours except
when air conditioning/cooling is being furnished as aforesaid.
(f) Owner reserves the right to stop services of the heating, elevators,
plumbing, air-conditioning, electric power systems or cleaning or other
services, if any, when necessary by reason of accident or for repairs,
alterations, replacements or improvements necessary or desirable in the judgment
of Owner for as long as may be reasonably required by reason thereof. If the
building of which the demised premises are a part supplies manually operated
elevator service, Owner at any time may substitute automatic control elevator
service and proceed diligently with alterations necessary therefor without in
any wise affecting this lease or the obligation of Tenant hereunder.
Captions:
30. The Captions are inserted only as a matter of convenience and for reference
and in no way define, limit or describe the scope of this lease nor the intent
of any provisions thereof.
Definitions:
31. The term "office" or "offices", wherever used in this lease, shall not be
construed to mean premises used as a store or stores, for the sale or display,
at any time, of goods, wares or merchandise, of any kind, or as a restaurant,
shop, booth, bootblack or other stand, barber shop, or for other similar
purposes or for manufacturing. The term "Owner" means a landlord or lessor, and
as used in this lease means only the owner, or the mortgagee in possession, for
the time being of the land and building (or the owner of a lease of the building
or of the land the building) of which the demised premises form a part, so that
in the event of any sale or sales of said land and building or of said lease, or
in the event of a lease of said building, or of the land and building; the said
Owner shall be and hereby is entirely freed and relieved of all covenants and
obligations of Owner hereunder, and it shall be deemed and construed without
further agreement between the parties or their successors in interest, or
between the parties and the purchaser, at any such sale, or the said lessee of
the building, or of the land and building, that the purchaser or the lessee of
the building has assumed and agreed to carry out any and all covenants and
obligations of Owner, hereunder. The words "re-enter" and "re-entry" as used in
this lease are not restricted to their technical legal meaning. The term
"business days" as used in this lease shall exclude Saturdays, Sundays and all
days as observed by the State or Federal Government as legal holidays and those
designated as holidays by the applicable building service union employees
service contract or by the applicable Operating Engineers contract with respect
to HVAC service. Wherever it is expressly provided in this lease that consent
shall not be unreasonably withheld, such consent shall not be unreasonably
delayed.
Adjacent Excavation-Shoring:
32. If any excavation shall be made upon land adjacent to the demised premises,
or shall be authorized to be made, Tenant shall afford to the person causing or
authorized to cause such excavation, license to enter upon the demised premises
for the purpose of doing such work as said person shall deem necessary to
preserve the wall or the building of which demised premises form a part from
injury or damage and to support the same by proper foundations without any claim
for damages or indemnity against Owner, or diminution or abatement of rent.
Rules and Regulations:
33. Tenant and Tenant's servants, employees, agents, visitors and licensees
shall observe faithfully, and comply strictly with, the Rules and Regulations
and such other and further reasonable Rules and Regulations as Owner or Owner's
agents may from time to time adopt. Notice of any additional rules or
regulations shall be given in such manner as Owner may elect. In case Tenant
disputes the reasonableness of any additional Rule or Regulation hereafter made
or adopted by Owner or Owner's agents, the parties hereto agree to submit the
question of the reasonableness of such Rule or Regulation for decision to the
New York office of the American Arbitration Association, whose determination
shall be final and conclusive upon the parties hereto. The right to dispute the
reasonableness of any additional Rule or Regulation upon Tenant's part shall be
deemed waived unless the same shall be asserted by service of a notice, in
writing upon owner within fifteen (15) days after the giving of notice thereof.
Nothing
[STAMP] INITIAL HERE /s/ JB
- ----------
[GRAPHIC OF POINTING HAND] Rider to be added if necessary
<PAGE>
in this lease contained shall be construed to impose upon Owner any duty or
obligation to enforce the Rules and Regulations or terms, covenants or
conditions in any other lease, as against any other tenant and Owner shall not
be liable to Tenant for violation of the same by any other tenant, its servants,
employees, agents, visitors or licensees.
Security:
34. Tenant has deposited with Owner the sum of [GRAPHIC OF POINTING HAND]
$4,350.00* as security for the faithful performance and observance by Tenant of
the terms, provisions and conditions of this lease; it is agreed that in the
event Tenant defaults in respect of any of the terms, provisions and conditions
of this lease, including, but not limited to, the payment of rent and additional
rent, Owner may use, apply or retain the whole or any part of the security so
deposited to the extent required for the payment of any rent and additional rent
or any other sum as to which Tenant is in default or for any sum which Owner may
expend or may be required to expend by reason of Tenant's default in respect of
any of the terms, covenants and conditions of this lease, including but not
limited to, any damages or deficiency in the re-letting of the premises, whether
such damages or deficiency accrued before or after summary proceedings or other
re-entry by Owner. In the event the Tenant shall fully and faithfuly comply with
all of the terms, provisions, covenants and conditions of this lease, the
security shall be returned to Tenant after the date fixed as the end of the
Lease and after delivery of entire possession of the demised premises to Owner.
In the event of a sale of the land and building or leasing of the building, of
which the demised premises form a part, Owner shall have the right to transfer
the security to the vendee or lessee and Owner shall thereupon be released by
Tenant from all liability for the return of such security; and Tenant agrees to
look to the new Owner solely for the return of said security, and it is agreed
that the provisions hereof shall apply to every transfer or assignment made of
the security to a new Owner. Tenant further covenants that it will not assign or
encumber or attempt to assign or encumber the monies deposited herein as
security and that neither Owner nor its successors or assigns shall be found by
any such assignment, encumbrance, attempted assignment or attempted encumbrance.
Estoppel Certificate:
35. Tenant, at any time, and from time to time, upon at least 10 days' prior
notice by Owner, shall execute, acknowledge and deliver to Owner, and/or to any
other person, firm or corporation specified by Owner, a statement certifying
that this Lease is unmodified and in full force and effect (or, if there have
been modifications, that the same is in full force and effect as modified and
stating the modifications), stating the dates to which the rent and additional
rent have been paid, and stating whether or not there exists any default by
Owner under this Lease, and, if so, specifying each such default.
Successors and Assigns:
36. The covenants, conditions and agreements contained in this lease shall bind
and inure to the benefit of Owner and Tenant and their respective heirs,
distributees, executors, administrators, successors, and except as otherwise
provided in this lease, their assigns. Tenant shall look only to Owner's estate
and interest in the land and building, for the satisfaction of Tenant's remedies
for the collection of a judgment (or other judicial process) against Owner in
the event of any default by Owner hereunder, and no other property or assets of
such Owner (or any partner, member, officer or director thereof, disclosed or
undisclosed), shall be subject to levy, execution or other enforcement procedure
for the satisfaction of Tenant's remedies under or with respect to this lease,
the relationship of Owner and Tenant hereunder, or Tenant's use and occupancy of
the demised premises.
- ----------
[GRAPHIC OF POINTING HAND] Space to be filled in or deleted.
* See Rider to Lease - Paragraph 34B
In Witness Whereof, Owner and Tenant have respectively signed and sealed this
lease as of the day and year first above written.
EXPRESSWAY REALTY CO.
---------------------------
Witness for Owner:
/s/ Signature on File
- --------------------------- ---------------------------
NEW YORK HEALTH CARE, INC.
---------------------------
Witness for Tenant:
[STAMP] /s/ Jerry Braun
- --------------------------- SIGN HERE ---------------------------
ACKNOWLEDGEMENTS
CORPORATE OWNER
STATE OF NEW YORK, ss:
County of
On this __ day of ______________, 19 , before me personally came
_____________________ to me known, who being by me duly sworn, did depose and
say that he resides in __________ ; that he is the _____________________of
__________________ the corporation described in and which executed the foregoing
instrument, as OWNER; that he knows the seal of said corporation; the seal
affixed to said instrument is such corporate seal; that it was so affixed by
order of the Board of Directors of said corporation, and that he signed his name
thereto by like order.
---------------------------
CORPORATE TENANT
STATE OF NEW YORK,
County of
On this __ day of ______________, 19 , before me personally came
_____________________ to me known, who being my me duly sworn, did depose and
say that he resides in __________ ; that he is the _____________________of
__________________ the corporation described in and which executed the foregoing
instrument, as TENANT; that he knows the seal of said corporation; the seal
affixed to said instrument is such corporate seal; that it was so affixed by
order of the Board of Directors of said corporation, and that he signed his name
thereto by like order.
---------------------------
INDIVIDUAL OWNER
STATE OF NEW YORK, ss:
County of
On this __ day of ________________, 19 , before me personally came to be known
and known to me to be the individual __________________ described in and who, as
OWNER, executed the foregoing instrument and acknowledged to me that
______________________ he executed the same.
---------------------------
INDIVIDUAL TENANT
STATE OF NEW YORK,
County of
On this __ day of ________________, 19 , before me personally came to be
known and known to me to be the individual __________________ described in and
who, as TENANT, executed the foregoing instrument and acknowledged to me that
_______________________ he executed the same.
---------------------------
<PAGE>
GUARANTY
FOR VALUE RECEIVED, and in consideration for, and as an inducement to Owner
making the within lease with Tenant, the undersigned guarantees to Owner,
Owner's successors and assigns, the full performance and observance of all the
covenants, conditions and agreements, therein provided to be performed and
observed by Tenant, including the "Rules and Regulations" as therein provided,
without requiring any notice of non-payment, non-performance, or non-observance,
or proof, or notice, or demand, whereby to charge the undersigned therefor, all
of which the undersigned hereby expressly waives and expressly agrees that the
validity of this agreement and the obligations of the guarantor hereunder shall
in no wise be terminated, affected or impaired by reason of the assertion by
Owner against Tenant of any of the rights or remedies reserved to Owner pursuant
to the provisions of the within lease. The undersigned further covenants and
agrees that this guaranty shall remain and continue in full force and effect as
to any renewal, modification or extension of this lease and during any period
when Tenant is occupying the premises as a "statutory tenant." As a further
inducement to Owner to make this lease and in consideration thereof, Owner and
the undersigned covenant and agree that in any action or proceeding brought by
either Owner or the undersigned against the other on any matters whatsoever
arising out of, under, or by virtue of the terms of this lease or of this
guarantee that Owner and the undersigned shall and do hereby waive trial by
jury.
Dated: ........................... .................19.....
Guarantor ........................ ..................
Witness.......................... ...................
Guarantor's Residence.............. .................
Business Address.....................................
Firm Name............................................
STATE OF NEW YORK) ss:
COUNTY OF )
On this __ day of _____________ , 19 __, before me personally came __________ to
me known and known to me to be the individual described in, and who executed the
foregoing Guaranty and acknowledged to me that he executed the same.
---------------------------
Notary
[GRAPHIC OF POINTING HAND] IMPORTANT - PLEASE READ [GRAPHIC OF POINTING HAND]
RULES AND REGULATIONS
ATTACHED TO AND
MADE A PART OF THIS LEASE
IN ACCORDANCE WITH ARTICLE 33.
1. The sidewalks, entrances, driveways, passages, courts, elevators, vestibules,
stairways, corridors or halls shall not be obstructed or encumbered by any
Tenant or used for any purpose other than for ingress or egress from the demised
premises and for delivery of merchandise and equipment in a prompt and efficient
manner using elevators and passageways designated for such delivery by Owner.
There shall not be used in any space, or in the public hall of the building,
either by any Tenant or by jobbers or others in the delivery or receipt of
merchandise, any hand trucks, except those equipped with rubber tires and
sideguards. If said premises are situated on the ground floor of the building,
Tenant thereof shall further, at Tenant's expense, keep the sidewalk and curb in
front of said premises clean and free from ice, snow, dirt and rubbish.
2. The water and wash closets and plumbing fixtures shall not be used for any
purposes other than those for which they were designed or constructed and no
sweepings, rubbish, rugs, acids or other substances shall be deposited therein,
and the expense of any breakage, stoppage, or damage resulting from the
violation of this rule shall be borne by the Tenant who, or whose clerks,
agents, employees or visitors, shall have caused it.
3. No carpet, rug or other article shall be hung or shaken out of any window of
the building and no Tenant shall sweep or throw or permit to be swept or thrown
from the demised premises any dirt or other substances into any of the corridors
of halls, elevators, or out of the doors or windows or stairways of the building
and Tenant shall not use, keep or permit to be used or kept any foul or noxious
gas or substance in the demised p[remises, or permit or suffer the demised
premises to be occupied or used in a manner offensive or objectionable to Owner
or other occupants of the building by reason of noise, odors, and/or vibrations,
or interfere in any way with other Tenants or those having business therein, nor
shall any bicycles, vehicles, animals, fish, or birds be kept in or about the
building. Smoking or carrying lighted cigars or cigarettes in the elevators of
the building is prohibited.
4. No awnings or other projections shall be attached to the outside walls of the
building without the prior written consent of Owner.
5. No sign, advertisement, notice or other lettering shall be exhibited,
inscribed, painted or affixed by any Tenant on any part of the outside of the
demised premises or the building or on the inside of the demised premise if the
same is visible from the outside of the premises without the prior written
consent of Owner, except that the name of Tenant may appear on the entrance door
of the premises. In the event of the violation of the foregoing by any Tenant,
Owner may remove same without any liability, and may charge the expense incurred
by such removal to Tenant or Tenants violating this rule. Interior signs on
doors and directory tablets shall be inscribed, painted or affixed for each
Tenant by Owner at the expense of such Tenant, and shall be of a size, color and
style acceptable to Owner.
6. No Tenant shall mark, paint, drill into, or in any way deface any part of the
demised premises or the building of which they form a part. No boring, cutting
or stringing of wires shall be permitted, except with the prior written consent
of Owner, and as Owner may direct. No Tenant shall lay linoleum, or other
similar floor covering, so that the same shall come in direct contact with the
floor of the demised premises, and, if linoleum or other similar floor covering
is desired to be used an interlining of builder's deadening felt shall be first
affixed to the floor, by a paste or other material, soluble in water, the use of
cement or other similar adhesive material being expressly prohibited.
7. No additional locks or bolts of any kind shall be placed upon any of the
doors or windows by any Tenant, nor shall any changes be made in existing locks
or mechanism thereof. Each Tenant must, upon the termination of his Tenancy,
restore to Owner all keys of stores, offices and toilet rooms, either furnished
to, or otherwise procured by, such Tenant, and in the event of the loss of any
keys, so furnished, such Tenant shall pay to Owner the cost thereof.
8. Freight, furniture, business equipment, merchandise and bulky matter of any
description shall be delivered to and removed from the premises only on the
freight elevators and through the service entrances and corridors, and only
during hours and in a manner approved by Owner. Owner reserves the right to
inspect all freight to be brought into the building and to exclude from the
building all freight which violates any of these Rules and Regulations of the
lease of which these Rules and Regulations are a part.
9. Canvassing, soliciting and peddling in the building is prohibited and each
Tenant shall cooperate to prevent the same.
10. Owner reserves the right to exclude from the building all persons who do not
present a pass to the building signed by Owner. Owner will furnish passes to
persons for whom any Tenant requests same in writing. Each Tenant shall be
responsible for all persons for whom he requests such pass and shall be liable
to Owner for all acts of such persons. Tenant shall not have a claim against
Owner by reason of Owner excluding any person who does not present such pass.
11. Owner shall have the right to prohibit any advertising by any Tenant which
in Owner's opinion, tends to impair the reputation of the building or its
desirability as a building for offices, and upon written notice from Owner,
Tenant shall refrain from or discontinue such advertising.
12. Tenant shall not bring or permit to be brought or kept in or on the demised
premises, any inflammable, combustible, explosive, or hazardous fluid, material,
chemical or substance, or cause or permit any odors of cooking or other
processes, or any unusual or other objectionable odor to permeate in or emanate
from the demised premises.
13. If the building contains central air conditioning and ventilation, Tenant
agrees to keep all windows closed at all times and to abide by all rules and
regulations issued by Owner with respect to such services.
Tenant shall cooperate with Owner in obtaining maximum effectiveness of
the cooling system by lowering and closing venetian blinds and/or drapes and
curtains when the sun's rays fall directly on the windows of the demised
premises.
14. Tenant shall not move any safe, heavy machinery, heavy equipment, bulky
matter, or features into or out of the building without Owner's prior written
consent. If such safe, machinery, equipment, bulky matter or fixtures requires
special handling, all work in connection therewith shall comply with the
Administrative Code of the City of New York and all other laws and regulations
applicable thereto.
15. Refuse and Trash. (1) Compliance by Tenant. Tenant covenants and agrees, at
its sole cost and expense, to comply with all present and future laws, orders,
and regulations of all state, federal, municipal, and local governments,
departments, commissions and boards regarding the collection, sorting,
separation and recycling of waste products, garbage, refuse and trash. Tenant
shall sort and separate such waste products, garbage, refuse and trash into such
categories as provided by law. Each separately sorted category of waste
products, garbage, refuse and trash shall be placed in separate receptacles
reasonably approved by Owner. Such separate receptacles may, at Owner's option,
be removed from the demised premises in accordance with a collection schedule
prescribed by law. Tenant shall remove, or cause to be removed by a contractor
acceptable to Owner, at Owner's sole discretion, such items as Owner may
expressly designate. (2) Owner's Rights in Event of Noncompliance. Owner has the
option to refuse to collect or accept from Tenant waste products, garbage,
refuse or trash (a) that is not separated and sorted as required by law or (b)
which consists of such items as Owner may expressly designate for Tenant's
removal, and to require Tenant to arrange for such collection at Tenant's sole
cost and expense, utilizing a contractor satisfactory to Owner. Tenant shall pay
all costs, expenses, fines, penalties, or damages that may be imposed on Owner
or Tenant by reason of Tenant's failure to comply with the provisions of this
Building Rule 15, and, at Tenant's sole cost and expense, shall indemnify,
defend and hold Owner harmless (including reasonable legal fees and expenses)
from and against any such actions, claims and suits arising from such
noncompliance, utilizing counsel reasonably satisfactory to Owner.
[STAMP] INITIAL HERE /s/ JB
Address 91-31 Queens Blvd.
Premises Suite 210
================================================
EXPRESSWAY REALTY CO.
TO
NEW YORK HEALTH CARE, INC.
================================================
STANDARD FORM OF
[LOGO] Office [LOGO]
Lease
The Real Estate Board of New York, Inc.
(C) Copyright 1994. All rights Reserved.
Reproduction in whole or in part prohibited.
================================================
Dated September 14, 1995
Rent Per Year $17,400.00
Rent Per Month $1,450.00
Term Two (2) Years
From October 1, 1995
To September 30, 1997
Drawn by ............
Checked by...........
Entered by...........
Approved by..........
================================================
<PAGE>
RIDER TO LEASE - SUITE 210
--------------------------
Owner: Expressway Realty Co.
Tenant: New York Health Care, Inc.
Date: September 15, 1995
12. ELECTRIC CURRENT
(a) Owner shall furnish to the Tenant, the electric energy required in the
demised premises on a rent-inclusion basis. There shall be no charge
to the Tenant therefor by way of measuring the same on any meter or
otherwise, the furnishing of electric current being included in the
fixed annual rental set forth in this lease. Owner shall in no way be
liable or responsible to the Tenant for any loss or damage or expense
which the Tenant may sustain or incur, if either the quantity or the
character of electric service is changed.
(b) Owner reserves the right to discontinue furnishing electric energy to
the Tenant at any time, if required by public utility company
servicing the building, or by any governmental agencies having
jurisdiction, upon thirty (30) days prior written notice to Tenant,
and from and after the effective date of such termination Owner shall
no longer be obligated to furnish Tenant with electric energy. If
Owner exercises such right of termination, this Lease shall remain
unaffected thereby and shall continue in full force and effect, and
same shall not be deemed a diminution of services within the meaning
of any law, rule or regulation now or hereafter enacted, promulgated
or issued.
1
[STAMP] INITIAL HERE /s/ JB
<PAGE>
Thereafter, the Tenant shall arrange to obtain electric service direct
from the public utility company servicing the building. In each
instance, the Tenant at Owner's expense may utilize the then existing
electric feeders, risers, and wiring servicing the demised premises.
Commencing with the date when the Tenant receives such direct service
and so long as the Tenant shall continue such service, the fixed
annual rental rate payable under this lease shall be reduced by
$840.00.
(c) Tenant shall make no alterations or additions to the electrical system
without the prior written consent of the Owner in each instance. The
designated capacity of feeders, risers and wiring in the building is 4
volt amperes per square foot of area, and the Tenant agrees at all
times its use of electric current shall never exceed such capacity.
29A. AIR CONDITIONING, LIGHT BULBS, CLEANING
(a) AIR CONDITIONING
(1) Owner shall, through the existing air conditioning system of
the building, furnish air conditioning to the demised
premises on business days from 8:00 a.m. to 5:00 p.m.,
Monday through Friday, as and when required and permitted.
Said system shall provide interior conditions of 75 degrees
dry bulb, 50% relative humidity, when outside conditions are
95 degrees dry bulb, 75 degrees wet bulb.
(2) Owner will maintain the air conditioning system in a manner
befitting a first class building, and will use reasonable
care to keep the same in proper and efficient operating
condition. The Owner will not be responsible for the failure
of the air conditioning system to meet the requirement
hereinbefore specified if such failure results from the
2
[STAMP] INITIAL HERE /s/ JB
<PAGE>
occupancy of the demised premises of more than an average of
one person for each 100 square feet, or if the Tenant
installs and operates machines and appliances the total
connected electric load of which exceeds 2 volt amperes per
square foot of area.
(3) Tenant agrees to keep all of the windows in the demised
premises closed at all times that either the air
conditioning system or heating system is in use and meeting
the requirements as stated in (1) above, and to abide by all
the regulations and requirements which Owner may reasonably
prescribe for the proper function and protection of said air
conditioning and heating system.
(b) At the option of the Owner, the Tenant agrees to purchase from Owner
or its agents alL bulbs used in the demised premises, and in addition
thereto, to pay the cost of installation thereof. Owner's current
charge is $7.50 plus sales tax for the first bulb installed and $6.00
plus sales tax for each additional bulb installed at the same time.
(c) Owner agrees to clean the demised premises in accordance with the
cleaning schedule attached hereto, at no additional charge to Tenant
therefor.
34A. SECURITY DEPOSIT
(a) Tenant shall deposit with Owner, upon execution of the Lease, the sum
of $4,350.00 which represents the security for this Lease, and which
shall be held by Owner pursuant to the provisions of Paragraph 34.
(b) Tenant shall deposit with Owner, as additional security, at least
thirty (30) days prior to the date when any rent increase is to go
into effect, including any monies due as additional rent, as provided
in this Lease, a sum equal to three
3
[STAMP] INITIAL HERE /s/ JB
<PAGE>
(3) times the monthly increase in the Base Rent or additional rent as
provided elsewhere it being the intention of the parties hereto that
Owner will, at all times, hold as security a sum equal to not less
than three (3) times the monthly rent and additional rent currently in
effect.
(c) Tenant's failure to pay all or any portion of the security deposit
shall be deemed the breach by Tenant of a substantial obligation of
the tenancy and Owner shall have a right, in addition to any other
rights under the lease at law or equity, to terminate the lease
immediately as a result of Tenant's default and Tenant shall
nevertheless remain liable to Owner for all damages sustained by Owner
including, but not limited to, loss of rent as a result of Tenant's
breach of the terms and conditions of this Lease.
(d) Owner shall deposit Tenant's security in an interest bearing account,
in a commercial or savings bank, in an account entitled "Expressway
Realty Co. Tenant's Security Account" or words of like effect, and in
a sub-account listing Tenant's name. Interest shall be for the benefit
of Tenant as provided by law less a 1% administrative fee which is
paid by the bank to Owner. Tenant shall provide Owner with its
Employer Registration Number or Social Security Number.
37. OWNER'S WORK IN THE DEMISED PREMISES
Owner agrees to perform the following work in the demised premises at
Owner's cost and expense:
(1) Paint all plastered and dry wall surfaces one coat standard paint job
on existing walls. Tenant shall select paint color from Owner's
standard paint chart.
(2) Furnish and install Owner's standard grade commercial carpeting in
color designated by Tenant.
4
[STAMP] INITIAL HERE /s/ JB
<PAGE>
38. HOURS
Tenant acknowledges that the building of which the demised premises forms a
part therof, is open to the Tenant and its visitors on Mondays through
Fridays from 8:00 a.m. to 10:00 p.m. and on Saturdays from 9:00 a.m. to
2:00 p.m. Tenant acknowledges that the Owner has advised the Tenant that
the building is closed to the Tenant and their visitors at all other times,
including Sundays and Legal Holidays.
39. COMMENCEMENT OF THE LEASE TERM
(a) Notwithstanding anything herein provided for to the contrary, it is
agreed that the term of the lease shall commence on the earlier of:
(1) The date when the work to be performed by Owner has been
substantially completed. Substantial completion shall be deemed
to mean that the work remaining to be performed by Owner, if any,
as required under Paragraph 37 herein, shall be such as not to
unreasonably interfere with Tenant's ability to carry on its
business in the demised premises, or
(2) The date when the Tenant shall occupy the demised premises.
(b) This Lease shall expire on the last calendar day of the 24th month
after commencement of the Lease term.
40. BROKER
Tenant warrants and represents that it has dealt with no broker, and Tenant
agrees to indemnify and save the Owner harmless from any claims of any
brokers claiming to have brought about this Lease or alleging a commission
hereunder.
5
[STAMP] INITIAL HERE /s/ JB
<PAGE>
41. ESCALATION
(a) The rent as set forth on the first page of this lease preceding
Article 1 is hereinafter referred to as the "Base Rent".
(b) Adjustments in rent starting with the year 1996-97 shall be made in
the following manner:
1. Tenant covenants and agrees that as provided in this paragraph if
the [I] Real Estate Taxes, Assessments, Water and Sewer Rents or
Charges levied against the land and building of which the demised
premises are a part, including reasonable Attorney's fees or
expenses reasonably incurred in securing or attempting to secure
any reduction in valuations or taxes, assessments, water and
sewer rents or charges levied, and/or [II] Expenses for
maintaining and operating the building shall be increased over
the amounts for the Base Year 1995-96 the Base Rent shall be
increased by 1.40% of the amount of the increase in such
expenses.
2. The term "Expenses for maintaining and operating the building"
shall be deemed to mean:
(1) All expenses incurred during such year in respect to the
operation and maintenance of the building in accordance with
accepted principles and sound management and accounting
practices as applied to the operation and maintenance of
first-class office buildings including premiums for instance
carried by Owner, plus
(2) Those additional expenses which Owner reasonably determines
it would have so incurred during such year had the building
been 100% occupied. Such expenses shall include all expenses
with the following exceptions only:
6
[STAMP] INITIAL HERE /s/ JB
<PAGE>
a- Expenses for any capital improvements made to the land
or the building.
b- Expenses for painting, redecorating or other work,
which Owner performs for any other tenant in the
building other than painting, decorating or other work
which is standard for the building.
c- Expenses for repairs or other work occasioned by fire,
windstorm or other normally insurable casualty.
d- Expenses incurred in leasing or procuring new tenants
including leasing commissions, advertising expenses and
expenses of renovating new space for tenants.
e- Legal expenses in enforcing the terms of any lease
(other than tenant's lease).
f- Interest or amortization payments on any mortgage or
mortgages.
g- Depreciation.
h- Wages, salaries or other compensation paid to any
employee above the grade of building superintendent.
3. In addition to the rental adjustment provided for hereunder
Tenant shall pay for the fractional portion of the last year of
the lease, the base rent for such period plus the increase, if
any, at the same rate for the comparison year immediately prior
to such calendar year as increased by reason of an increase in
Real Estate Taxes and in the expenses for maintaining and
operating the building.
4. Statements for the amount of Tenant's pro-rata portion of Real
Estate Taxes and Expenses for Maintaining and Operating the
Building to be paid by Tenants as additional rent, shall be
rendered to Tenants at
7
<PAGE>
Tenants' request as soon as reasonably feasible, except as
otherwise provided in sub-section (b)3 hereof with respect to
any fractional period at the end of the Lease.
5. All sums payable by Tenants as additional rent above the Base
Rental shall be payable within twenty (20) days after statements
therefor have been rendered. Any payment made pursuant to this
Article shall be made without prejudice to any right of Tenant to
dispute any item or items in such statement, pursuant to
subparagraph (b)6 herein. Any adjustment required pursuant to
said subparagraph (b)6 shall be made within twenty (20) days
after the decision requiring such adjustments shall have been
rendered by the Certified Public Accountants concerned.
6. If Tenant shall dispute any item or items included by Owner in
determining the expenses for maintaining and operating the
building or the additional expenses which would have been
incurred had the building been 100% occupied, and any such
dispute is not amicably settled between Owner and Tenant within
twenty (20) days after statements therefor have been rendered,
either party may during twenty (20) days next following the
expiration of the first mentioned (20) days refer such disputed
item or items to a firm of Certified Public Accountants selected
by Owner and Tenant for decision and the decision of such firm
shall be conclusive and binding upon Owner and Tenant. The
expenses involved in such determination shall be borne by the
party against whom the decision is rendered by said accountants
provided. If Tenant shall not dispute any item or items of any
statement within twenty (20) days after such statement has been
rendered Tenant shall be deemed to approve such statement.
8
[STAMP] INITIAL HERE /s/ JB
<PAGE>
7. Tenant or his representatives shall have the right to inspect the
books of Owner during business hours for the purpose of verifying
information in the statements submitted by Owner providing
written requests for such inspection shall be made by Tenant
within ten (10) days after receipt of such statement.
8. "Lease Year" shall mean any period of twelve (12) consecutive
months beginning on the first day of July.
9. "Base Year" shall mean the period of twelve (12) consecutive
months beginning on the first day of July 1995.
10. Commencing on August 1, 1997 and each month thereafter, Tenant
shall pay Owner in equal monthly installments, one-twelfth of
Tenant's share, if any, of Owner's increased Real Estate Taxes,
Water & Sewage Charges and Operating Expenses for the immediately
preceding fiscal year ending June 30th above the expenses for the
Base Year. Adjustments shall be made within sixty (60) days after
the end of each fiscal year. All such payments shall be deemed to
be additional rent.
For the period commencing August 1, 1996 and each month
thereafter through July 1, 1997, Tenant shall pay Owner in equal
monthly installments, one-twelfth of the amount that Tenant's
share of Owner's increased Real Estate Taxes, Water and Sewer
Charges, and Operating Expenses for the period commencing July 1,
1995 and ending June 30, 1996 would have been if the Base Year
under this Subparagraph (10) was July 1, 1994 through June 30,
1995 and escalation payments would have been required for the
Lease Year 1995-96. This sum shall be on account of the
"Escalation Expenses" due Owner from Tenant for the year 1996-97.
9
[STAMP] INITIAL HERE /s/ JB
<PAGE>
CLEANING SCHEDULE
Monday-Friday
GENERAL
o All tile and other similar types of flooring to be swept nightly.
o Hand-dust and wipe clean all furniture weekly.
o Empty and clean all waste receptacles nightly.
o Empty and clean all ash trays.
o Wash clean all water fountains and coolers nightly.
o Dust all telephones as necessary. Vacuum all carpeted floors nightly.
LAVATORIES
o Sweep and wash all lavatory floors nightly, using proper
disinfectants.
o Wash and polish all mirrors, bright work and enameled surfaces in all
lavatories nightly.
o Scour, wash and disinfect all basins, bowls and urinals throughout all
lavatories nightly.
o Wash all toilet seats nightly. Empty paper towel receptacles nightly.
o Thoroughly wash and polish all wall tile and stall surfaces as often
as necessary.
10
[STAMP] INITIAL HERE /s/ JB
<PAGE>
SECOND RIDER TO LEASE - SUITE 210
---------------------------------
Owner: Expressway Realty Co.
Tenant: New York Health Care, Inc.
Date: September 21, 1995
1. 37.(1)(A) OWNER'S WORK IN THE DEMISED PREMISES
Owner agrees that if one (1) coat of paint is not sufficient to properly
cover walls, a second coat will be applied or any unsatisfactory areas will
be covered.
2. Owner represents to Tenant that the building is closed on the following
Holidays only:
1. New Year's Day
2. President's Day
3. Memorial Day
4. July 4th - Independence Day
5. Labor Day
6. Thanksgiving Day
7. Christmas Day
The Owner will not add any other Holidays that the building will not be
open.
3. The Owner will place New York Inc.'s name on lobby wall at no cost to
N.Y.H.C.
NEW YORK HEALTH CARE, INC. EXPRESSWAY REALTY CO.
/s/ Jerry Braun /s/ Signature on File
- -------------------------- --------------------------
<PAGE>
THIRD RIDER TO LEASE - SUITE 210
--------------------------------
Owner: Expressway Realty Co.
Tenant: New York Health Care, Inc.
Date: September 22, 1995
It is mutually agreed between the parties that notwithstanding anything to the
contrary, as contained in Paragraphs 34 and 34A of the Agreement of Lease, dated
as of the 15th day of September 1995 between the parties hereto, that Tenant's
obligation under Paragraph 34 is to deposit $2,900.00 in lieu of the $4,350.00
stated therein and that Tenant has deposit with Owner by check, subject to
collection, the sum of TWO THOUSAND NINE HUNDRED ($2,900.00) DOLLARS to be held
by Owner as security for the faithful performance by Tenant of its obligations
under said Agreement of Lease and that Tenant's obligation in the future under
Paragraphs 34A(b) and (c) of the Rider to the Lease shall be limited to two (2)
times the monthly rent and additional rent in lieu of the provision for three
(3) times the monthly rent and additional rent.
All other terms and conditions of the Agreement of Lease, including the Riders
thereto, shall remain in full force and effect.
In Witness Whereof the parties hereto have set their respective hands and seals
as of the day and year first above written.
NEW YORK HEALTH CARE, INC. EXPRESSWAY REALTY CO.
/s/ Jerry Braun /s/ Signature on File
- -------------------------- --------------------------
SETTLEMENT AGREEMENT AND GENERAL RELEASE,
This Settlement Agreement and General Release (the "Agreement") is made and
entered into by and between NEW YORK HEALTH CARE, INC., a New York corporation
with its principal office and place of business located at 1667 Flatbush Avenue,
Brooklyn, New York 11210 (the "Company") and SAMSON SOROKA residing at 1228 East
22nd Street, Brooklyn, New York 11210 ("Soroka");
WHEREAS, Soroka has been employed by the Company; and
WHEREAS, the Company is desirous of terminating the employment of Soroka;
and
WHEREAS the Company and Soroka both desire to fully and finally compromise
and settle all potential claims, disputes and disagreements between them without
the distraction and expense of litigation.
NOW, THEREFORE, the parties intending to be legally bound thereby, in
consideration of the mutual covenants and undertakings set forth herein, agree
as follows:
1. Soroka's termination of employment with the Company was effective as
of 5 P.M. on February 13, 1995 (the "Termination Date"). Soroka
acknowledges that he has been fully paid for his services through the
Termination Date and is not entitled to any further compensation or
benefits or reimbursement from the Company except as set forth in this
Agreement.
2. The Company agrees to continue to pay Soroka's base salary of $85,000
per annum for a period of six months after the Termination Date and to
continue for a period of one year to provide Soroka with the same
level of medical benefits, at the same cost to him, if any, as he had
prior to the Termination Date. After the six month period described in
the preceding sentence, Soroka will not be entitled to any further
salary payments from the Company and he will be entitled to only such
benefits to which he may be entitled by law. Upon the execution of
this Agreement, the Company will pay Soroka any salary payments due
and unpaid at such time. If any checks given in
<PAGE>
connection with the execution of this Agreement are returned unpaid by
the drawee bank, including those described in paragraph 5 hereunder,
and shall not be repaid after notice and demand similar to that
specified in paragraph 5e hereunder, this Agreement shall be null and
void.
3. Soroka will continue currently as an 18.75% shareholder of the
Company, with full voting privileges, subject to the forfeiture
provisions set forth below in connection with a default on a loan
payment. In the event, however, that the Company makes a public
offering of its shares, pursuant to which the percentage ownership
interests of all of the other current shareholders of the Company are
reduced, Soroka's interest will be reduced in the same proportion as
that of all of the other Company shareholders similarly situated. The
Company and Soroka agree that the Company is to be valued at
$5,000,000 as of October I, 1995.
4. Soroka agrees that his shares may not be transferred to any individual
or entity, for any reason, without the express written consent of the
Company, which shall not be unreasonably withheld. Soroka further
consents to the placing of a legend on his stock certificate
evidencing the foregoing restriction on transfer. At such time as the
common stock of the Company shall be publicly traded, the restriction
of this paragraph shall lapse, except as provided (i) in any
underwriting agreement in connection with such public offering or (ii)
in any other agreement between the parties hereunder, including
Shareholders' agreements.
5. Upon the execution of this Agreement, the Company will make a
distribution to Soroka of $25,000 (the "Advance") which is an advance
distribution on any future cash distributions or dividends payable to
all Company shareholders and shall not bear interest. Additionally,
upon the execution of this Agreement, the Company will loan to Soroka
the amount of $125,000 (the "Loan") on the following terms and
conditions:
2
<PAGE>
a. The entire principal amount of the Loan is due and payable no
later than two years from the date this Agreement is executed.
Prepayments are permitted without penalty, provided, however,
that each such prepayment must be in the minimum amount of
$10,000. In the event the Company makes a public offering of its
shares, the Loan must be repaid at such time as the Company files
a registration statement for review with the Securities and
Exchange Commission in connection with such public offering. In
such event, the Company will give Soroka written notice of its
intention to file a registration statement for review with the
Securities and Exchange Commission, which notice shall be deemed
to be a demand for final repayment of the Loan no later than 30
days after such filing for review.
b. Interest on the amount outstanding is payable on the first day of
each and every calendar month. Soroka acknowledges his
understanding that the Company may borrow money in order to
extend this Loan to him. Consequently, whether or not the Company
actually borrows money in connection with the loan, the interest
rate generally charged the Company by UMB Bank and Trust Company
(the "Lender") (or such other lending institution as may be
substituted for the Lender from time to time) will be
"passed-through" as the rate charged Soroka by the Company, as
from time to time adjusted. The Company and Soroka agree to
periodically adjust prior interest payments to reflect
recomputations that may be caused by the Lender's implementation
of rate changes, retroactive or otherwise. Upon request, the
Company will provide Soroka with proof of the interest rate that
it is paying to the Lender, or that it would pay if it were to
borrow money from the Lender.
c. Any cash distributions or dividends on Company stock to which
Soroka may be entitled shall be retained by the Company and
applied to reduce the amount of the Advance outstanding, if any.
3
<PAGE>
d. Soroka acknowledges that the Company is holding his stock
certificate(s) as collateral for the repayment of the Loan, and,
in connection therewith, Soroka will provide the Company with a
blank signed "stock power" (to be held in escrow by the attorney
for the Company) to be used to transfer his shares to the Company
in connection with the forfeiture provisions described in the
next subparagraph. Such blank stock power shall be returned to
Soroka, along with his stock certificate(s) upon Soroka's full
repayment of the Loan.
e. In the event of any default by Soroka in making any payment on
the Loan, whether of interest or principal, he shall immediately,
without the need for notice and demand, forfeit and relinquish a
portion of his percentage ownership interest in the Company as
shall be determined by dividing the then outstanding principal of
the Loan, plus any interest accrued thereon, by $5,000,000. No
payment shall be deemed to be in default if paid within five days
after the due date thereof. If any checks given by Soroka are
returned unpaid by the drawee bank, he shall be immediately
deemed to be in default hereunder, without the need for notice
and demand. Notwithstanding the previous provisions of this
paragraph, however, the first time (only) that Soroka is in
default in making any payment on the Loan, whether of interest or
principal, he shall be given written notice by the Company of
such default, which shall include a demand for payment thereof,
and shall have five days from the date he receives such notice in
which to cure such default and avoid the forfeiture provisions
set forth hereunder.
f. In order to facilitate the repayment of the Loan, the Company
will, upon written request, furnish Soroka with such information
as he may reasonably require in order to transfer funds by wire
directly into the Company's bank account.
6. Soroka will continue to maintain in confidence all information of a
commercial, financial or technical nature about the Company learned
during his employment and
4
<PAGE>
consulting and will not use or disclose same unless and until it
becomes generally publicly known (by means other than Soroka's
unauthorized disclosure). Soroka will not make any statement, written
or oral, in any way materially adverse to the interests of the Company
or likely to injure its good will and business reputation unless
required by law to do so in connection with testifying before a court
or governmental agency. Soroka and the Company agree to keep the terms
of this Agreement strictly confidential as a bilateral contract to
which only the parties have access or knowledge. In the event,
however, of any dispute with respect to this Agreement, the Agreement
may be disclosed to the arbitrator, trier of fact or court responsible
for adjudicating the dispute.
7. Soroka hereby releases and discharges the Company and its affiliates
and their respective officers, directors, agents, predecessors,
successors and assigns (the "Released Company Parties"), from all
actions, causes of action, suits, debts, covenants, contracts,
agreements, promises, claims, sums of money, attorneys' fees, costs,
accounts, covenants, controversies, agreements, damages, grievances,
arbitrations, and demands whatsoever, known or unknown, at law or in
equity, by contract, tort, pursuant to statute, or otherwise, that he
now has or ever has had, through the date of this Agreement, expressly
including, without limiting the generality of the foregoing, all
claims of discrimination under any law, rule or regulation pertaining
to discrimination on the basis of age, race, color, sex, national
origin, religion, physical or mental disability, marital status,
citizenship or sexual orientation, which he had, has or hereafter may
have by reason of any matter, cause or thing whatsoever to the date of
this Agreement including, without limitation, any claim arising out of
his employment or consulting with the Company or its termination. Such
release and discharge shall not apply in respect of (i) any
obligations of the Company arising under this Agreement or the
Shareholders' agreement between the shareholders of the Company
(including Soroka), which are the only and complete agreements between
the parties setting forth their entire understanding and which may
only be modified in writings signed by the Company
5
<PAGE>
and Soroka or (ii) any personal obligations between Soroka and any of
the Released Company Parties in their individual capacities. Soroka
agrees to indemnify the Released Company Parties and hold them safe
and harmless from any breach by him of the terms of this Agreement.
The Company agrees to release and discharge Soroka from all actions,
and causes of action, suits, debts, demands whatsoever, in law or in
equity, which it had, has or hereafter may have by reason of any
matter, cause or thing whatsoever to the date of this Agreement.
Notwithstanding the foregoing, such release and discharge shall not
apply in respect of Soroka's obligations arising under this Agreement
or the aforementioned Shareholders' agreement. The Company agrees to
indemnify Soroka and hold him safe and harmless from any breach by it
or by the Released Company Parties of the terms of this Agreement. The
Company covenants and agrees not to commence or cooperate in the
commencement of any legal action or administrative proceeding against
Soroka unless compelled to do so by a court of competent jurisdiction,
and Soroka covenants and agrees not to commence or cooperate in the
commencement of any legal action or administrative proceeding against
any of the Released Company Parties unless compelled to do so by a
court of competent jurisdiction. The mutual releases herein described
are expressly intended to apply to all unknown, unsuspected and
unanticipated injuries and damages as well as to those that are now
disclosed.
8. Soroka acknowledges that he has read and does understand the terms of
this Agreement and has had adequate opportunity to consult his tax and
legal advisers. Soroka further agrees that the terms set forth herein,
including the Loan provisions in paragraph 5 and the release in
paragraph 7 above, have been negotiated by him and the Company and are
fair, reasonable and fully enforceable. Soroka also represents that
his agreement hereunder is an informed one.
9. The parties acknowledge that they are entering into this Agreement
knowingly and voluntarily after consultation with their respective
counsel and after extensive negotiations between counsel for plaintiff
and defendants.
6
<PAGE>
10. This Agreement may not be amended except in a suitable writing signed
by the parties.
11. The law of the State of New York will govern the interpretation and
enforcement of the provisions of this Agreement.
12. This Agreement constitutes the entire agreement between the parties
concerning the above subject matter and supersedes any and all prior
oral or written agreements or understandings between the parties.
NEW YORK HEALTH CARE, INC.
By: /s/ Jerry Braun CEO
Dated: September 28, 1995 -----------------------------------
Title: CEO
/s/ Samson Soroka
Dated: September 28, 1995 -----------------------------------
SAMSON SOROKA
7
<PAGE>
STATE OF NEW YORK )
).ss:
COUNTY OF KINGS )
On this 28 day of Sept., 1995 before me personally came Jerry Braun, to me
known, who, being by me duly sworn, did depose and say that he resides at 929 E.
28 St. Brooklyn, NY; that he is the CEO of New York Health Care, Inc., the
corporation described in, and which executed the foregoing instrument; that he
knows the seal of said corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by order of the Board of Directors
of said corporation; and that he signed his name thereto by like order.
/s/ AVROHOM P. DUBIN
- -----------------------------
NOTARY PUBLIC
AVROHOM P. DUBIN
Notary Public, State of New York
No. 24~4973310
Qualified In Kings County
Certificate Filed in New York County
Commission Expires Oct. 15, 1996
STATE OF NEW YORK )
).ss:
COUNTY OF KINGS )
On this 28 day of Sept., 1995, before me personally came SAMSON SOROKA, to me
known and known to be the individual described in, and who executed the
foregoing Agreement and duly acknowledged to me that he executed the same.
/s/ AVROHOM P. DUBIN
- -----------------------------
NOTARY PUBLIC
AVROHOM P. DUBIN
Notary Public, State of New York
No. 24~4973310
Qualified In Kings County
Certificate Filed in New York County
Commission Expires Oct. 15, 1996
8
<PAGE>
SHTAR ISKO
AN AGREEMENT CONCERNING INTEREST AND LOANS
INTRODUCTION
Jewish Religious Law strictly prohibits the paying or receiving of interest on
loans made between Jews. However, when monies are advanced in the course of a
business transaction, an agreement may be entered into whereby the provider and
receiver of the funds are considered equal partners. This partnership is based
on the stipulation that, upon request, every loss must be proved by two
trustworthy witnesses and all profits verified by each. All consequent profits
and losses are then equally shared. However, in order to avoid these very
stringent requirements, the provider of the funds, under this "Shtar Isko",
agrees to waive his share of the profits and to receive instead a fixed
percentage of the money advanced in full settlement of his claim for profits.
This fixed percentage is then considered profit, rather than interest on a loan.
This agreement becomes effective when the receiver of the funds executes the
agreement form set forth below.
THE AGREEMENT
I, the undersigned, have received from New York Health Care, Inc. the sum of
$125,000, repayable in two years, for the purpose of transacting business in
connection with miscellaneous investments, in which profits and losses are to be
equally shared. However, the said New York Health Care, Inc. has agreed that in
lieu of such sharing of profits and losses, which would require verification of
all losses by two trustworthy witnesses, and verification of all profits by oath
administered in accordance with Rabbinic Law, he will accept my payment of an
annual percentage of the said sum of $125,000 equal to the cost to New York
Health Care, Inc. of borrowing such money, and waive all other profits which may
be earned from the funds advanced. I have received a token payment of $1.00 from
the said New York Health Care, Inc. for my efforts in connection with this
undertaking, and have signed a note evidencing my receipt of the said $125,000.
Signed, this 28 day of September, 1995, at 1667 Flatbush Ave.
/s/ Samson Soroka
-------------------------------
SAMSON SOROKA
<PAGE>
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of
survivorship and not as tenants
in common
Additional abbreviations may also be used though not in the above list
UNIF GIFT MIN ACT - ........Custodian.........
(Cust) (Minor)
under Uniform Gifts to Minors
Act .........................
(State)
For value received _________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- --------------------------------------
| |
| |
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS
INCLUDING POSTAL ZIP CODE OF ASSIGNEE)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- ------------------------------------------------------------------------- Shares
represented by the within Certificate, and do hereby irrevocably
constitute and appoint
- ------------------------------------------------------------------------Attorney
to, transfer the said Shares on the books of the within named Corporation with
full power of substitution in the premises.
Dated_______________________19______
In presence of
/s/ Samson Soroka
-------------------------------
- -----------------------------
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR WITHOUT ALTERATION
OR ENLARGEMENT OR ANY CHANGE WHATEVER.
ATTACH CANCELLED CERTIFICATE HERE
THIS AGREEMENT made the ___ day of , ___________ 1995, by and between the COUNTY
OF NASSAU, a municipal corporation of the State of New, York, having its
principal office at One West Street, Mineola, New York 11501 (hereinafter called
"COUNTY"), acting for and on behalf of the NASSAU COUNTY DEPARTMENT OF SOCIAL
SERVICES (hereinafter called "DISTRICT"), and NEW YORK HEALTH CARE, INC., a
personal care agency, located at 175 FULTON AVENUE, HEMPSTEAD, NEW YORK 11550,
licensed or otherwise authorized by the State Department of Social Services to
provide personal care services (hereinafter called "CONTRACTOR").
W I T N E S S E T H
WHEREAS, local Social Services Districts are authorized pursuant to Section
365-a (2)(e) of the New York Social Services Law and New York State Department
of Social Services Regulation 18 NYCRR 505.14 and/or other Department
regulations to provide personal care services to persons eligible to receive
said services; and
WHEREAS, the DISTRICT is desirous of obtaining personal care services to be
rendered to recipients of medical assistance for which reimbursement is
available pursuant to Title XIX of the Federal Social Security and applicable
State law; and
WHEREAS, the CONTRACTOR herein represents that it will provide services
that are authorized pursuant to Title XIX of the Federal Social Security Act and
applicable state law and which are eligible for reimbursement thereto.
NOW, THEREFORE, the parties signing and executing this instrument do, in
consideration of the above, covenant and agree as follows:
1. The relationship of the CONTRACTOR to the District shall be that of an
independent CONTRACTOR. The CONTRACTOR, in accordance with its status as an
independent CONTRACTOR, covenants and agrees that it will conduct itself in
accordance with such status, that it will neither hold itself out as, nor
<PAGE>
claim to be an officer or employee of the Department by reason thereof and that
it will not by reason thereof, make any claim, demand or application to or for
any right or privilege applicable to an officer or employee of the State,
including, but not limited to, Worker's Compensation coverage, or retirement
membership or credits.
2. The CONTRACTOR agrees to provide personal care services, as defined in
New York State Department of Social Services Regulation 18 NYCRR 505.14 to
recipients of medical assistance (Medicaid), as defined in Title 11 of Article 5
of the New York State Social Services Law and/or Title XIX of the Federal Social
Security Act, if requested to provide said services by a social services
district pursuant to the orders and/or prescription(s) of a physician in
accordance with a plan of treatment to be supervised by a registered nurse
subject to the conditions set forth in the regulations of the New York State
Department of Social Services (18 NYCRR 505.14 or superseding provisions).
3. The personal care services will be rendered as authorized by the
DISTRICT at the locations specified by the DISTRICT during the term of this
Agreement and should be provided for particular recipients only as long as
authorized, pursuant to the DISTRICT'S direction as to frequency, type, and
amount.
4. The DISTRICT shall not be obligated to utilize the services of the
CONTRACTOR, and the DISTRICT or the New York State Department of Social Services
shall in its discretion be authorized to terminate any Agreement or request for
services to be rendered to any or all recipient(s) upon notification to the
CONTRACTOR, its agent(s) or employee(s); the cessation of services to a
particular recipient shall not render this entire Agreement void or voidable. In
the event of termination, the CONTRACTOR shall promptly transfer any and all
records pertaining to any individual who has been or is receiving services
provided by the CONTRACTOR to the DISTRICT or is to any subsequent provider
designated by the DISTRICT.
5. This Agreement shall be valid and binding for the time period set forth
below, except that if the time period set forth continues beyond one year from
the effective date of this Agreement, the Agreement shall be voidable any time
after the end of one year at the option of the local Social Services
2
<PAGE>
District or the New York State Department of Social Services; neither the
DISTRICT nor the State Department of Social Services shall be obligated to renew
or extend the terms of this contract.
6. The New York State Department of Social Services shall establish the
rate of CONTRACTOR'S reimbursement for the medical assistance services rendered
in accordance with this Agreement subject to the approval of the New York State
Director of the Budget. The CONTRACTOR shall not be required without its consent
to provide the services at a decreased rate, but any services provided after
notification of a decreased rate shall be deemed to have been rendered by
consent.
7. The CONTRACTOR agrees that its employees or agents rendering personal
care services shall be subject to the supervision of the DISTRICT and/or the New
York State Department of Social Services and/or any nurse(s), agency(ies)
designated by the DISTRICT to provide supervision of the personal care services
being rendered to the authorized recipient of medical assistance (Medicaid) in
accordance with state-established policies and standards. It is understood and
agreed that the DISTRICT and/or the New York State Department of Social Services
retains the right to maintain and continue case management for any recipients of
medical assistance (Medicaid) and that all the activities of the CONTRACTOR
shall be subject to the monitoring of the local and State Social Services
Departments.
8. The CONTRACTOR agrees that all employees rendering personal care or
other services to medical assistance recipients shall have completed
successfully a basic training program, as defined in the New York State
Department of Social Services Regulations 18 NYCRR 505.14 or superseding
regulations and participated in on- the-job and in- service training pursuant to
a plan submitted to and approved by the New York State Department of Social
Services.
9. The CONTRACTOR will cooperate and participate as directed by the
DISTRICT or the New York State Department of Social Services, in any endeavors
incident to the rendering of personal care services herein,
3
<PAGE>
including, but not limited to, testimony for fair hearings for recipients;
grievance hearings and notices thereof to recipients; reports, surveys, studies,
audits, court or judicial proceedings; and any other matters of procedures
relating to the furnishing of personal care services by the CONTRACTOR.
10. The CONTRACTOR shall make the necessary and/or required payroll
reports, deductions, and tax, insurance, or other payments, including, but not
limited to, providing for worker's compensation insurance, disability insurance,
U.S. Social Security taxes, Federal and State unemployment insurance benefits,
withholding Federal, State and local income taxes, and comply with any other
legal or customary requirements; the CONTRACTOR shall conduct its affairs in a
manner such that the DISTRICT and/or the New York State Department of Social
Services will not be held liable (and/or shall be held harmless) for any actions
or omissions of the CONTRACTOR, its employees, agents, or other representatives.
11. The CONTRACTOR shall obtain and maintain in full force and effect
liability or other insurance that protects the DISTRICT and the New York State
Department of Social Services from any potential liability that may accrue as a
result of any actions of the CONTRACTOR; such coverage may be an endorsement to
an existing policy of the CONTRACTOR. Regardless of form or manner of coverage,
the insurer shall be requested by the CONTRACTOR to provide the DISTRICT with a
written acknowledgment of coverage, the terms and conditions thereof, and a
commitment to notify the DISTRICT at least ten (10) days before any
cancellation, reduction or other change in coverage becomes effective (pursuant
to usual insurance "hold harmless" or "loss payee" provisions).
12 . The CONTRACTOR agrees to maintain books, records, documents, and other
evidence and accounting procedures and practices which sufficiently and properly
reflect all direct and indirect costs of any nature expended in performance of
this Agreement in accordance with accepted accounting practices. These records
shall be subject at all reasonable times for inspection, review, or audit by
State personnel, the County Comptroller, and other personnel duly authorized by
District, as well as by Federal personnel
4
<PAGE>
when Federal funds are being utilized in making payments to the CONTRACTOR. The
CONTRACTOR agrees to collect statistical data of a fiscal nature on a regular
basis and to make fiscal statistical reports at times prescribed by and on forms
furnished by the District and duly authorized by the State Department of Social
Services.
13. The CONTRACTOR agrees to maintain program and statistical records and
to produce program narrative and statistical data at times as prescribed by, and
on forms furnished by the DISTRICT, as duly authorized by the State Department
of Social Services.
14. The CONTRACTOR agrees to retain all books, records, and other documents
relevant to this Agreement for six (6) full years after final payment. Federal
and/or State auditors, the County Comptroller, and any persons duly authorized
by the DISTRICT shall have full access to and the right to examine any of said
materials during said period.
15. The DISTRICT and the CONTRACTOR shall observe and require the
observance of applicable Federal and State requirements relating to
confidentiality of records and information, and each agrees not to allow
examination of records or disclose information, except that examination of
records by the DISTRICT and/or the New York State Department of Social Services
as may be necessary to assure that the purpose of the Agreement will be
effectuated, and also to otherwise comply, with the DISTRICT'S requirements and
obligations under law, will be allowed
16. The CONTRACTOR agrees that it has notified or will notify, the DISTRICT
and/or the New York State Department of Social Services of any affiliated
entities with which it has direct or indirect cooperative Agreements, contracts
for services, or any other type of formal or informal arrangements whereby the
costs and/or the amounts received in reimbursement of services rendered to
recipients are shared among or transferred between the CONTRACTOR and any other
entity(ies); if the CONTRACTOR makes any disbursement directly or indirectly to
any entity receiving reimbursement from any governmental agency, the DISTRICT
and/or the New York State Department of Social Services shall be so notified.
5
<PAGE>
17. (a) The terms set forth in Appendix A appended hereto (Revision of
March, 1982) shall be made a part hereof and shall be incorporated herein.
(b) The terms set forth in Appendix B and appended hereto shall be made a
part hereof and shall be incorporated herein.
(c) The CONTRACTOR agrees to comply with the requirements of the United
States Civil Rights Act of 1964 as amended and Executive Order No. 11246
entitled "Equal Employment Opportunities" and the regulations issued pursuant
thereto as contained in 41 CFR Part 60 and/or any other Federal or State
regulation or laws.
(d) CONTRACTOR agrees to observe and comply with the Federal regulations
contained in 45 CFR 84 entitled "Non-discrimination on the Basis of Handicap;
Programs and Activities Receiving or Benefitting from Federal Financial
Assistance".
18. Local variations, if any, shall be set forth in Appendix B, appended
hereto and shall be effective only if the terms and form of such variations have
been approved in writing by the New York State Department of Social Services and
reference to such approval is indicated thereon; if the terms of any such local
variations conflict with the meaning of the terms in the main body of this
contract, the words and meaning in the main body shall be controlling to the
exclusion of the local variations unless a separate executed Agreement between
the State Department of Social Services and the DISTRICT deliberately changes
said effect and a copy of said Agreement is appended hereto.
19. The terms of reimbursement for Medical Assistance services (pursuant to
Title XIX of the Federal Social Security Act) shall be the rates established by
the New York State Department of Social Services and the Director of the Budget.
The said terms of reimbursement shall be as set forth in Appendix B.
Unless otherwise stated, the rate of payment set forth shall be the total gross
amount of payment, and no additional reimbursement to the CONTRACTOR will be
made for any subsidiary or other services supplementary or in addition to the
terms herein set forth.
6
<PAGE>
20. The parties agree to renegotiate this Agreement in the event that the
Department of Health and Human Services or the New York State Department of
Social Services issue new or revised requirements on the Department as a
condition for receiving continued Federal or State reimbursement.
21. This Agreement may be amended whenever determined necessary by the
DISTRICT and the CONTRACTOR, if such amendments are approved by the New York
State Department of Social Services. All amendments must be in writing, duly
signed by both parties, and be annexed to the contract.
22. This Agreement contains all the terms and conditions agreed upon by the
parties. All items incorporated by reference are to be attached. No other
understandings, oral or otherwise, regarding the subject matter of this
Agreement, shall be deemed to exist or to bind any of the parties hereto.
This Agreement is not in effect unless and until:
1. All signatures have been completed on the signature page of the
Agreement, and/or
2. Approval has been obtained by the Board of Supervisors, where required,
and
3. This Agreement is sealed by the County of Nassau.
IN WITNESS WHEREOF, the parties hereunto have signed and executed this
Agreement the date(s) indicated opposite their respective signatures.
NASSAU COUNTY
- --------------------------- ---------------------------
DATE: COUNTY EXECUTIVE
New York Health Care, Inc.
10/18/95 /s/ Jerry Braun, CEO
- --------------------------- ---------------------------
DATE: CONTRACTOR'S SIGNATURE
Jerry Braun, CEO
---------------------------
Approved: Printed Name & Title
- ---------------------------
NASSAU COUNTY DEPARTMENT OF
SOCIAL SERVICES
APPROVED AS TO FORM: ---------------------------
NAUSSAU COUNTY COMPTROLLER
- --------------------------- ---------------------------
DEPUTY COUNTY ATTORNEY BUREAU OF REAL ESTATE &
INSURANCE
PLEASE SIGN IN BLACK INK
7
<PAGE>
STATE OF NEW YORK)
) ss.:
COUNTY OF NASSAU )
On this __ day of _________, 1995, before me personally appeared THOMAS S.
GULOTTA, County Executive of the County of Nassau, the municipal corporation
described herein, and who executed the foregoing instrument, to me known and
known to me to be such County Executive and he being by me duly sworn, did
depose and say: That he is the County Executive of Nassau County; and that he
executed the same as such County Executive for the purposes therein mentioned.
---------------------------
NOTARY PUBLIC
STATE OF NEW YORK)
) ss.:
COUNTY OF NASSAU )
On this __ day of __________ , 1995 before me personally appeared ROBERT L.
OLDEN, SR., Deputy County Executive of the County of Nassau, the municipal
corporation described herein and who executed the foregoing instrument, to me
known to me to be such Deputy County Executive, and he by me being duly sworn,
did depose and say: That he is the Deputy County Executive of the County of
Nassau and that pursuant to Section 205 of the County Government Law of Nassau
County executed the same as such Deputy County Executive for the purposes
therein mentioned.
---------------------------
NOTARY PUBLIC
STATE OF NEW YORK)
) ss.:
COUNTY OF NASSAU )
On this 18 day of October, 1995, before me personally came Jerry Braun to me
known, who being by me duly sworn, did depose and say: That he resides at 1667
Flatbush Ave. and that he is the CEO of NY Health Care, Inc. the corporation
describe in and which executed the above Agreement; and that he signed his name
thereto by order of its Board of Directors.
/s/ Margaret Braun
---------------------------
NOTARY PUBLIC
Margaret Braun
Commissioner of Deeds
City of New York, No. 24293
Certificate Filed in Kings County
Commission Expires Nov. 1, 1996
STATE OF NEW YORK)
) ss.:
COUNTY OF NASSAU )
On this __ day of _______, 1995, before me personally came ________________ to
me known and known to me to be the person described in and who executed the
same.
---------------------------
NOTARY PUBLIC
PLEASE SIGN IN BLACK INK
8
<PAGE>
AN ADDENDUM TO THE AGREEMENT made by and between the COUNTY OF NASSAU, a
municipal corporation of the State of New York, having its principal office at
One West Street, Mineola, New York ll501 (hereinafter called the "COUNTY"),
acting for and on behalf of the NASSAU COUNTY DEPARTMENT OF SOCIAL SERVICES
(hereinafter called "DISTRICT"), and N.Y. HEALTH CARE INC., a personal care
agency, located at 175 FULTON AVENUE, HEMPSTEAD, NEW YORK 11550, licensed or
otherwise authorized by the State Department of the Social Services to provide
personal care services (hereinafter called CONTRACTOR").
W I T N E S S E T H:
WHEREAS, an Agreement has been or is simultaneously being executed between
the parties hereto for the provision of home health care and personal care
services; and
WHEREAS, nursing supervision for personal care may be provided by a
registered nurse who is an employee of a voluntary or proprietary agent pursuant
to New York State Department of Social Services Regulation 18 NYCRR
505.14(f)(3)(iii); and
WHEREAS, the local Social Services Department has requested and obtained an
exception from the New York State Department of Social Services to use a nurse
supervisor from a voluntary or proprietary agency pursuant to Regulation 18
NYCRR 505.14 (f) (3) (iii), and
WHEREAS, the CONTRACTOR herein represents that it will provide said nursing
supervision services as authorized pursuant to Title XIX of the Federal Social
Security Act and applicable State law and which are eligible for reimbursement
thereto.
NOW, THEREFORE, the parties signing and executing this instrument in
consideration of the above covenant and agree as follows:
A. All the terms and conditions contained in the Agreement to which this
addendum is appended shall continue in effect and the terms and conditions in
this addendum are to be supplementary and subordinate thereto.
9
<PAGE>
B. The CONTRACTOR agrees to provide nursing supervision for personal care
as defined in New York State Department of Social Services Regulation 18 NYCRR
505.14(f)(3) for services rendered to recipients of medical assistance
(Medicaid), as defined in Title 11 of Article 5 of the New York State Social
Services Law and/or Title XIX of the Federal Social Security Act, if requested
to provide said services by a social services district subject to the
conditions set forth in the regulations of the New York State Department of
Social Services (18 NYCRR 505.14 or superseding provisions); said nursing
supervision services shall be rendered subject to the same terms and conditions
set forth for personal care services in the Agreement to which this addendum is
appended.
C. The CONTRACTOR agrees that all nursing supervision services performed
under its direction shall be performed by a registered nurse who possesses the
qualifications required by New York State Department of Social Services
Regulation 505.14(f)(3)(iii)(b) and/or 505.14(f) 3)(ii) and/or any other state
or federal law and/or regulations; all persons rendering such nursing
supervision services shall be employees of the CONTRACTOR in accordance with
the requirements of Regulation 505.14(f)(3)(iii)(c).
D. The reimbursement rates for nursing supervision services rendered
pursuant to this addendum shall be the rates established by the New York State
Department of Social Services and the Director of the Budget and authorized or
accepted by the New York State Department of Health. All claims for
reimbursement for nursing supervision services shall be submitted to the New
York State Department of Social Services. Unless otherwise stated, the rate of
payment set forth shall be the total gross amount of payment, and no additional
reimbursement to the CONTRACTOR will be mace for any subsidiary or other
services supplementary or in addition to the terms herein set forth.
E. Authorization by the New York State Department of Social Services for
the exception to use a nurse supervisor from a voluntary or proprietary agency
pursuant to 18 NYCRR 505.14(f)(3)(iii) is part of the Nassau County annual
Personal Care service plan and its terms made a part hereof; this authorization
shall be effective no longer than any time period set forth in said exception
and shall not be effective unless said exception satisfies the annual evaluation
and approval
10
<PAGE>
requirements set forth in 18 NYCRR 505.14 (f)(3)(iii)(a). In the event that
a modification of the exception is made during the terms of this addendum plan
for or Agreement, the CONTRACTOR agrees to be bound by the terms of said
modified exception subsequent to being notified of said modifications.
F. This service plan shall be valid and binding for the time period set
forth in the Agreement to which this addendum is appended.
G. This addendum plan contains al1 the additional terms and conditions
agreed upon by the parties . All items incorporated by reference are to be
attached. No other understandings, oral or otherwise, regarding the subject
matter of this Agreement, shall be deemed to exist or bind parties hereto,
and any amendments, modifications, or provisions shall be subject to the terms
and/or conditions set forth in the Agreement to which this addendum is
appended.
IN WITNESS WHEREOF, the parties hereunto have signed and executed this
Agreement on the date(s) indicated opposite their respective signatures.
NASSAU COUNTY
- --------------------------- ---------------------------
DATE: COUNTY EXECUTIVE
New York Health Care, Inc.
10/18/95 /s/ Jerry Braun, CEO
- --------------------------- ---------------------------
DATE: CONTRACTOR'S SIGNATURE
Jerry Braun, CEO
---------------------------
Approved: Printed Name & Title
- ---------------------------
NASSAU COUNTY DEPARTMENT OF
SOCIAL SERVICES
APPROVED AS TO FORM: ---------------------------
NAUSSAU COUNTY COMPTROLLER
- --------------------------- ---------------------------
DEPUTY COUNTY ATTORNEY BUREAU OF REAL ESTATE &
INSURANCE
PLEASE SIGN IN BLACK INK
11
<PAGE>
On this __ day of _________, 1995, before me personally appeared THOMAS S.
GULOTTA, County Executive of the County of Nassau, the municipal corporation
described herein, and who executed the foregoing instrument, to me known and
known to me to be such County Executive and he being by me duly sworn, did
depose and say: That he is the County Executive of Nassau County; and that he
executed the same as such County Executive for the purposes therein mentioned.
---------------------------
NOTARY PUBLIC
STATE OF NEW YORK)
) ss.:
COUNTY OF NASSAU )
On this __ day of __________ , 1995 before me personally appeared ROBERT L.
OLDEN, SR., Deputy County Executive of the County of Nassau, the municipal
corporation described herein and who executed the foregoing instrument, to me
known and known to me to be such Deputy County Executive, and he by me being
duly sworn, did depose and say: That he is the Deputy County Executive of the
County of Nassau and that pursuant to Section 205 of the County Government Law
of Nassau County executed the same as such Deputy County Executive for the
purposes therein mentioned.
---------------------------
NOTARY PUBLIC
STATE OF NEW YORK)
) ss.:
COUNTY OF NASSAU )
On this 18 day of October, 1995, before me personally came Jerry Braun to
me known, who being by me duly sworn, did depose and say: That he resides at
1667 Flatbush Ave. and that he is the CEO of NY Health Care, Inc. the
corporation describe in and which executed the above Agreement; and that he
signed his name thereto by order of its Board of Directors.
/s/ Margaret Braun
---------------------------
NOTARY PUBLIC
Margaret Braun
Commissioner of Deeds
City of New York, No. 24293
Certificate Filed in Kings County
Commission Expires Nov. 1, 1996
STATE OF NEW YORK)
) ss.:
COUNTY OF NASSAU )
On this __ day of _______, 1995, before me personally came to me known and
known to me to be the person described in and who executed the same.
---------------------------
NOTARY PUBLIC
PLEASE SIGN IN BLACK INK
12
<PAGE>
APPENDIX A
THE PARTIES TO THE ATTACHED CONTRACT FURTHER AGREE TO BE BOUND
BY THE FOLLOWING, WHICH ARE HEREBY MADE A PART OF SAID CONTRACT:
I. This contract may not be assigned by the contractor or its right, title
or interest therein assigned, transferred, conveyed, sublet or disposed of
without the previous consent, in writing, of the State.
II. This contract shall be deemed executory only to the extent of money
available to the State for the performance of the terms hereof and no liability
on account thereof shall be incurred by the State of New York beyond moneys
available for the purpose thereof.
III. The contractor specifically agrees, as required by Labor Law, Sections
220 and 220-d, as amended, that:
A. No laborer, workman or mechanic, in the employ of the contractor,
subcontractor or other person doing or contracting to do the whole or
any part of the work contemplated by the contract shall be permitted or
required to work more than eight hours in any one calendar day or more than
five days in any one week, except in the emergencies set forth in the
Labor Law.
B. The wages paid for a legal day's work shall be not less than the
prevailing rate of wages as defined by law.
C. The minimum hourly rate of wage to be paid shall not be less than that
stated in the specifications, and any redetermination of the prevailing
rate of wages after the contract is approved shall be deemed to be
incorporated herein by reference as of the effective date of
redetermination and shall form a part of these contract documents.
1. The Labor Law provides that the contract may be forfeited and no
sum paid for any work done thereunder on a second conviction for
willfully paying less than -
a) the stipulated wage scale as provided in Labor Law, Section
220, subdivision 3, as amended, or
b) less than the stipulated minimum hourly wage scale, as
provided in Labor Law, Section 220-d, as amended.
IV. The contractor specifically agrees, as required by the provisions of
the Labor Law, Section 220-e as amended, that --
A. In hiring of employees for the performance of work under this
contract or any subcontract hereunder, or for the manufacture, sale or
distribution of materials, equipment or supplies hereunder, no
contractor, subcontractor nor any person acting on behalf of such
contractor or subcontractor, shall by reason of race, creed, color,
sex or national origin discriminate against any citizen of the State
of New York who is qualified and available to perform the work to
which the employment relates.
B. No contractor, subcontractor, nor any person on his behalf shall,
in any manner, discriminate against or intimidate an employee hired
for the performance of work under this contract on account of race,
creed, color, sex or national origin.
C. There may be deducted from the amount payable to the contractor by
the State under this contract a penalty of five dollars for each
person for each calendar day during which such person was
discriminated against or intimidated in violation of the provisions of
the contract, and
13
<PAGE>
D. This contract may be canceled or terminated by the State or
municipality and all moneys due or to become due hereunder may be
forfeited for a second or any subsequent violation of the terms or
conditions of this section of the contract, and
E. The aforesaid provisions of this section covering every contract
for or on behalf of the state or a municipality for the manufacture,
sale or distribution of materials, equipment or supplies shall be
limited to operations performed within the territorial limits of the
State of New York.
V. During the performance of this contract, the contractor agrees as
follows:
A. The contractor will not discriminate against any employee or
applicant for employment because of race, creed, color sex, national
origin, age, disability or marital status.
B. If directed to do so by the Commissioner Of Human Rights, the
contractor will send to each labor union or representative of workers
with which the contractor has or is bound by a collective bargaining
or other Agreement or understanding, notice, to be provided by the
State Commissioner of Human Rights, advising such labor union or
representative of the contractor's Agreement under clauses (a)
through (g) (hereiafter called "non-discrimination clauses"). If the
contractor was directed to do so by the contracting agency as part of
the bid or negotiation of this contract, the contractor shall request
such labor union or representative to furnish a written statement that
such labor union or representative will not discriminate because of
race, creed, color, sex, national origin, age, disability or marital
status, and that such labor union or representative will cooperate,
within the limits of its legal and contractual authority, in the
implementation of the policy and provisions of these
non-discrimination clauses and that it consents and agrees that
recruitment, employment and the terms and conditions of employment
under this contract shall be in accordance with the purposes and
provisions of these non-discrimination clauses. If such labor union or
representative fails or refuses to comply with such a request that it
furnish such a statement, the contractor shall promptly notify the
State Commissioner of Human Rights of such failure or refusal.
C. If directed to do so by the Commissioner of Human Rights, the
contractor will post and keep posted in conspicuous places, available
to employees and applicants for employment, notices to be provided by
the State Commissioner of Human Rights setting forth the substance of
the provisions of clauses (a) and (b) and such provisions of the
State's laws against discrimination as the State Commissioner of Human
Rights shall determine.
D. The contractor will state, in all solicitations or advertisement
for employees placed by or on behalf of the contractor, that all
qualified applicants will be afforded equal employment opportunities
without discrimination because of race, creed, color, sex, national
origin, age, disability or marital status.
E. The contractor will comply with the provisions of Sections 290-299
of the Executive Law and with the Civil Rights Law, will furnish all
information and reports deemed necessary by the State Commissioner of
Human Rights under these nondiscriminatory clauses and such sections
of the Executive Law, and will permit access to the contractor's
books, records and accounts by the State Commissioner for the purposes
of investigation to ascertain compliance with these non-discrimination
clauses and such sections of the Executive Law and Civil Rights Law.
14
<PAGE>
F. This contract may be forthwith canceled, terminated or,
suspended, in whole or in part, by the contracting agency upon the
basis of a finding made by the State Commissioner of Human Rights that
the contractor has not complied with these non-discrimination clauses,
and the contractor may be declared ineligible for future contracts
made by or on behalf of the State or a public authority or agency of
the State, until the contractor satisfies the State Commissioner of
Human Rights that the contractor has established and is carrying out a
program in conformity with the provisions of these non-discrimination
clauses. Such finding shal1 be made by the State Commissioner of Human
Rights after conciliation efforts by the Commissioner have failed to
achieve compliance with these non-discrimination clauses and after a
verified complaint has been filed with the Commissioner, notice
thereof has been given to the contractor and an opportunity has been
afforded the contractor to be heard publicly in accordance with the
Executive Law. Such sanctions may be imposed and remedies invoked
independently of or in addition to sanctions and remedies otherwise
provided by law
G. The contractor will include the provisions of clauses (a) through
(f) in every subcontract or purchase order in such a manner that such
provisions will be binding upon each subcontractor or vendor as to
operations to be performed within the State of New York. The
contractor will take such action in enforcing such provisions of such
subcontract or purchase order as the State Commissioner of Human
Rights or the contracting agency may direct, including sanctions or
remedies for non-compliance. If the contractor becomes involved in or
is threatened with litigation with a subcontractor or vendor as a
result of such direction by the State Commissioner Of Human Rights or
the contracting agency, the contractor shall promptly so notify the
Attorney General, requesting the Attorney General to intervene and
protect the interests of the State of New York.
VI. A. By submission of this bid, each bidder and each person signing on
behalf of any bidder certifies, and in the case of a joint bid each party
thereto certifies as to its own organization, under penalty of perjury,
that to the best of his knowledge and belief:
1) The prices in this bid have been arrived at independently without
collusion, consultation, communication or Agreement, for the purpose
of restricting competition, as to any matter relating to such prices
with any other bidder or with any competitor;
2) Unless other wise required by law, the prices which have been
quoted in this bid have not been knowingly disclosed by the bidder
and will not knowingly be disclosed by the bidder prior to opening,
directly or indirectly, to any other bidder or to any competitor;
3) No attempt has been made or will be made by the bidder to induce
any other person, partnership or corporation to submit or not to
submit a bid for the purpose of restricting competition.
B. A bid shall not be considered for award nor shall any award be made
where (a)(1)(2) and (3) above have not been complied with provided,
however, that if in any case the bidder can not make the foregoing
certification, the bid shall so state and shall furnish with the bid a
signed statement which sets forth in detail the reasons therefore
15
<PAGE>
Where (a)(1)(2) and (3) above have not been complied with, the bid shall
not be considered for award nor shall any award be made unless the head of
the purchasing unit of the State, public department or agency to which the
bid is made, or his designee, determined that such disclosure was not made
for the purpose of restricting competition.
The fact that a bidder (a) has published price lists, rates covering items
being procured, (b) has informed prospective customers of purposed or
pending publication of new or revised price lists for such items, or (c)
has sold the same items to other customers at the same prices being bid,
does not constitute, without more, a disclosure within the meaning of
paragraph VI(a).
VII. The Agreement shall be void and of no force and effect unless the
contractor shall provide coverage for the benefit of, and keep covered during
the life of this Agreement, such employees as are required to be covered by the
provisions of the Worker's Compensation Law.
VIII. In accordance with Section 220-f of the Labor Law and Section 139-h
of the State Finance Law and the regulations of the Comptroller of the State of
New York promulgated thereunder, the contractor agrees, as a material condition
of the contract:
A. That neither the contractor nor any substantially owned or affiliated
person, firm, partnership or corporation has participated, is
participating, or shall participate in an international boycott in
violation of the provisions of the United States Export Administration Act
of 1969, as amended, or the Export Administration Act of 1979, as amended,
or the regulations of the United States Department of Commerce promulgated
thereunder;
B. That if the contractor or any substantially owned or affiliated person,
firm, partnership or corporation has been convicted or subjected to a final
determination by the United States Department of Commerce or any other
appropriate agency of the United States of a violations of the United
States Export Administration Act of 1969, as amended, or the Export
Administration Act of 1979, as amended, or the regulations of the United
States Department of Commerce promulgated thereunder, the contractor shall
notify the Comptroller of such conviction or determination in the manner
prescribed by the Comptroller's regulations.
16
<PAGE>
APPENDIX B
1. A. The reimbursement rates for personal care services rendered by
CONTRACTOR under this Agreement shall be the rates established by the New
York State Department of Social Services.
B. CONTRACTOR agrees that all claims for reimbursement for personal care
services rendered are to be submitted to the New York State Department of
Social Services, through their fiscal intermediary, COMPUTER SCIENCE
CORPORATION, 800 North Pearl Street, Albany, New York, for payment by the
State of New York, pursuant to the New York State Medical Assistance
Program. Under no circumstances should a claim be submitted to the COUNTY
or the DEPARTMENT for payment.
C. The District agrees to furnish the CONTRACTOR with Prior Approval forms
for individuals eligible for and entitled thereto pursuant to New York
State Law Rules and Regulations, and such other documents as are reasonably
necessary to enable the contractor to obtain payment from the State of New
York for services rendered by the contractor under the contract.
2. Performance under this Agreement shall include the period from October 1,
1995 to September 30, 1996.
3. The relationship of the CONTRACTOR to the COUNTY and DISTRICT shall be that
of independent CONTRACTOR. The CONTRACTOR, in accordance with his status as an
independent CONTRACTOR, convenants and agrees that he will conduct himself in
accordance with such status, that he will neither hold himself as, nor claim to
be, an officer or employee of the COUNTY or the DISTRICT thereof, and that he
will not by reason thereof, make any claim, demand, or application to, or for
any right or privilege applicable to an officer or employee of the State or the
COUNTY including, but not limited to worker's compensation coverage, or
retirement membership, or credits.
It is further understood and agreed that no agent, servant, or employee of
CONTRACTOR shall, at any time or under any circumstances, be deemed to be an
agent, servant, or employee of District or COUNTY.
4. CONTRACTOR agrees to conduct its activities pursuant to this Agreement
so as not to endanger or harm any person and to indemnify and hold harmless
COUNTY, its agents, officers and employees against any and all claims, demands,
causes of action, including claims for salaries or incurred expenses and for
personal injury and/or death, damages (including damages to COUNTY's property),
costs and liabilities, at law or in equity, of every kind and nature whatsoever,
directly or approximately resulting from, arising out of, or caused by the acts
or omissions of CONTRACTOR, its agents, officers, employees guests, patrons, or
invitees whether such actions are authorized by this Agreement or not.
CONTRACTOR shall, at County's demand, defend at its own risk and expense any and
all suits, actions or legal proceedings which may be brought or instituted
against COUNTY, its agents, officers, or employees on any such claim, demand,
or cause of action, and CONTRACTOR shall pay and satisfy any judgment or decree
which may be rendered against COUNTY, as agents, officers, or employees in any
such suit, action, or other legal proceeding.
5. This Agreement may not be assigned, transferred, or in any way disposed of by
CONTRACTOR without first having obtained written approval thereof from the
County Executive of Nassau County.
6. CONTRACTOR warrants that it is not in arrears to the COUNTY or DISTRICT upon
any debt or contracts, and that it has not been in default and is not in default
as surety, CONTRACTOR or otherwise.
7. This Agreement is subject to the provisions of Article 18 of the General
Municipal Law of the State of New York, as amended; Section 22-4.2 of the
Administrative Code of Nassau County; the provisions of the Anti-Discrimination
Order of Nassau County; and 41 CFR 60 including Parts 60-1.4, 60-250.4 and
60-741.4.
17
<PAGE>
This Agreement is not in effect unless and until:
1. all signatures have completed the signature page of the Agreement,
and/or
2. approval has been obtained by the Board of Supervisors, where
required, and
3. this Agreement is sealed by the County of Nassau.
8. The CONTRACTOR must maintain a business office in Nassau County.
9. The CONTRACTOR shall maintain full and complete books and records of accounts
in accordance with accepted accounting practices and such other records as may
be prescribed by the Comptroller of COUNTY or the DISTRICT. Such books and
records shall at all times be available for audit and inspection by the
Comptroller of COUNTY or his duly designated representative or by the District.
10. In addition to Section 9, supra, and until the expiration of six (6) years
after the furnishing of services pursuant to this Agreement or any subcontract
made pursuant to this Agreement, CONTRACTOR and its subcontractor(s) shall make
available, upon written request to the Secretary of the U. S. Department of
Health and Human Services, or upon request of the Comptroller General or any of
their duly authorized representatives, this Agreement, and books, documents and
records of CONTRACTOR or subcontractor(s) that are necessary to certify the
nature and extent of such costs.
11. The CONTRACTOR shall provide nursing supervision of its employees by a
registered nurse whose qualifications have been reviewed and approved by the
District in accordance with 18 NYCRR 505.14(f).
The CONTRACTOR shall be responsible for the performance of aides in
connection with their duties and shall develop methods to monitor the care
provided.
12. Nursing supervising visits are to be made in accordance with schedules
mandated by the District.
13. The CONTRACTOR agrees to maintain and pay for comprehensive general
liability insurance throughout the life of this contract, in the amount not less
than $1,000,000 combined single limit per occurrence for personal injury, bodily
injury and property damage, with the County of Nassau and the New York State
Department of Social Services as an additional insureds under such comprehensive
general liability policy. The CONTRACTOR shall maintain and pay for professional
liability insurance covering professional treatment, therapy, or consultation
services throughout the life of this contract, in an amount not less than
$1,000,000 combined single limit per occurrence for bodily injury and/or
personal injury with the County of Nassau and the New York State Department of
Social Services additional insureds under such professional liability policy.
The CONTRACTOR shall secure compensation insurance for the benefit of such
of its employees as must be so insured in compliance with the Worker's
Compensation Law, and shall keep such insurance in full force and effect during
the term of this Agreement.
All insurance policies shall be subject to the approval of the Bureau of
Real Estate and Insurance at 1550 Franklin Avenue, Mineola, New York. Regardless
of form or manner of coverage, the insurer shall be requested by the CONTRACTOR
to provide the DISTRICT with a written acknowledgment of coverage, the terms and
conditions thereof, and a commitment to notify the district at least ten (10)
days before any cancellation, reduction or other change in coverage becomes
effective.
Copies of the above mentioned policies or satisfactory Certificates of
Insurance reflecting such coverage shall be delivered to the Bureau of Real
Estate and Insurance of COUNTY at 1550 Franklin Avenue, Mineola, New York, upon
execution of this Agreement by CONTRACTOR . Failure of Contractor to procure or
maintain such insurance policies shall be deemed a substantial violation of the
terms of this Agreement.
18
<PAGE>
14. The CONTRACTOR agrees to immediately remove its employee from a recipient's
care and/or to terminate all of its services to a particular recipient upon the
request of the District to do so when the District has determined that such
removal and/or termination would be in the best interest of the recipient. The
cessation of services to a particular individual recipient shall not render the
entire Agreement void or voidable.
15. The CONTRACTOR agrees that all personal care aides shall complete a basic
training program or alternative methodology approved by the New York State
Department of Social Services in accordance with 18 NYCRR 50S.14 (e) and shall
maintain documentation of such training as required by applicable federal and
state regulations. In addition, all personal care aides shall meet the minimum
criteria and the health requirements for aides required by 18
NYCRR 505.14(d).
16. Notwithstanding any other provisions in this contract, the CONTRACTOR
remains responsible, pursuant to 10 NYCRR 766.2(d), for:
A. Ensuring that any service provided pursuant to this contract complies
with all pertinent provisions of Federal, State, and Local statutes, rules
and regulations;
B. Ensuring the quality of all services provided by the agency; and
C. Ensuring adherence by agency staff to the agency plan of care
established for patients.
17. CONTRACTOR agrees to pay COUNTY a One Hundred ($100.00) Dollars
administrative service charge for the processing of this Agreement pursuant to
Ordinance Number 74-1979, as amended by Ordinance Number 271-1982. Said sum
shall be due and payable upon CONTRACTOR'S signing said Agreement.
19
A 880 -- Lease of Business Premises. JULIUS BLUMBERG, INC. LAW BLANK PUBLISHERS
THIS LEASE, dated the first day of November 1995 Between 1667 Flatbush Avenue
LLC, 1667 Flatbush Avenue, Brooklyn, New York 11210 hereinafter referred to as
the Landlord, and New York Health Care, Inc., 1667 Flatbush Avenue, Brooklyn,
New York 11210 hereinafter referred to as the Tenant,
WITNESSETH: That the landlord hereby demises and leases unto the Tenant, and the
Tenant hereby hires and takes from the Landlord for the term and upon the
rentals hereinafter specified, the premises described as follows, situated in
the Borough of Brooklyn County of Kings and State of New York
Premises
The second and third floors of premises known as 1667 Flatbush Avenue, Brooklyn,
New York, 11210
Term
The term of this demise shall be for five years beginning November 1, 1995
and ending October 31, 2000
Rent
The rent for the demised term shall be as described in paragraph 30 of the
Rider annexed hereto
The said rent is to be payable monthly in advance on the first day of each
calendar month for the term hereof, in instalments as follows:
Payment of Rent
One Twelfth (1/12) of the annual rental at the office of Landlord or as may be
otherwise directed by the Landlord in writing.
THE ABOVE LETTING IS UPON THE FOLLOWING CONDITIONS.
Peaceful Possession
First.--The Landlord covenants that the Tenant, on paying the said rental
and performing the covenants and conditions in this Lease contained, shall and
may peaceably and quietly have, hold and enjoy the demised premises for the term
aforesaid.
Purpose
Second.--The Tenant covenants and agrees to use the demised premises as an
office building or for any other lawful purpose consented to by Landlord in
writing and agrees not to use or permit the premises to be used for any other
purpose without the prior written consent of the Landlord endorsed hereon.
Default in Payment of Rent
Abandonment of Premises
Re-entry and Reletting by Landlord
Tenant Liable for Deficiency
Lien of Landlord to Secure
Performance Attorney's Fees
Third.--The Tenant shall, without any previous demand therefor, pay to the
Landlord, or its agent, the said rent at the times and in the manner above
provided. In the event of the non-payment of said rent, or any instalment
thereof, at the times and in the manner above provided, and if the same shall
remain in default for ten days after becoming due, or if the Tenant shall be
dispossessed for non-payment of rent, or if the leased premises shall be
deserted or vacated, the Landlord or its agents shall have the right to and may
enter the said premises as the agent of the Tenant, either by force or
otherwise, without being liable for any prosecution or damages therefor, and may
relet the premises as the agent of the Tenant, and receive the rent therefor,
upon such terms as shall be satisfactory to the Landlord, and all rights of the
Tenant to repossess the premises under this lease shall be forfeited. Such
re-entry by the Landlord shall not operate to release the Tenant from any rent
to be paid or covenants to be performed hereunder during the full term of the
lease. For the purpose of reletting, the Landlord shall be authorized to make
such repairs or alterations in or to the leased premises as may be necessary to
place the same in good order and condition. The Tenant shall be liable to the
Landlord for the cost of such repairs or alterations, and all expenses of such
reletting. If the sum realized or to be realized from the reletting is
insufficient to satisfy the monthly or term rent provided in this lease, the
Landlord, at its option, may require the Tenant to pay such deficiency month by
month, or may hold the Tenant in advance for the entire deficiency to be
realized during the term of the reletting. The Tenant shall not be entitled to
any surplus accruing as a result of the reletting. The Landlord is hereby
granted a lien, in addition to any statutory lien or right to distrain that may
exist, on all personal property of the Tenant in or upon the demised premises,
to secure payment of the rent and performance of the covenants and conditions of
this lease. The Landlord shall have the right, as agent of the Tenant, to take
possession of any furniture, fixtures or other personal property of the Tenant
found in or about the premises, and sell the same at public or private sale and
to apply the proceeds thereof to the payment of any monies becoming due under
this lease, the Tenant hereby waiving the benefit of all laws exempting property
from execution, levy and sale on distress or judgment. The Tenant agrees to pay,
as additional rent, all attorney's fees and other expenses incurred by the
Landlord in enforcing any of the obligations under this lease.
Sub-letting and Assignment
Fourth.--The Tenant shall not sub-let the demised premises nor any portion
thereof, nor shall this lease be assigned by the Tenant without the prior
written consent of the Landlord endorsed hereon.
Condition of Premises, Repairs
Alterations and Improvements
Sanitation, Inflammable Materials
Sidewalks
Fifth.--The Tenant has examined the demised premises, and accepts them in
their present condition (except as otherwise expressly provided herein) and
without any representations on the part of the Landlord or its agents as to the
present or future condition of the said premises. The Tenant shall keep the
demised premises in good condition, and shall redecorate, paint and renovate the
said premises as may be necessary to keep them in repair and good appearance.
The Tenant shall quit and surrender the premises at the end of the demised term
in as good condition as the reasonable use thereof will permit. The Tenant shall
not make any alterations, additions, or improvements to said premises without
the
<PAGE>
prior written consent of the Landlord. All erections, alterations, additions and
improvements, whether temporary or permanent in character, which may be made
upon the premises either by the Landlord or the Tenant, except furniture or
movable trade fixtures installed at the expense of the Tenant, shall be the
property of the Landlord and shall remain and be surrendered with the premises
as a part thereof at the termination of this Lease, without compensation to the
Tenant. The Tenant further agrees to keep said premises and all parts thereof in
a clean and sanitary condition and free from trash, inflammable material and
other objectionable matter. If this lease covers premises, all or a part of
which are on the ground floor, the Tenant further agrees to keep the sidewalks
in front of such ground floor portion of the demised premises clean and free of
obstructions, snow and ice.
Mechanics' Liens
Sixth.--In the event that any mechanics' lien is filed against the premises
as a result of alternations, additions or improvements made by the Tenant, the
Landlord, at its option, after thirty days' notice to the Tenant, may terminate
this lease and may pay the said lien, without inquiring into the validity
thereof, and the Tenant shall forthwith reimburse the Landlord the total expense
incurred by the Landlord in discharging the said lien, as additional rent
hereunder.
Glass
Seventh.--The Tenant agrees to replace at the Tenant's expense any and all
glass which may become broken in and on the demised premises. Plate glass and
mirrors, if any, shall be insured by the Tenant at their full insurable value in
a company satisfactory to the Landlord. Said policy shall be of the full premium
type, and shall be deposited with the Landlord or its agent.
Liability of Landlord
Eighth.--The landlord shall not be responsible for the loss of or damage to
property, or injury to persons, occurring in or about the demised premises, by
reason of any existing or future condition, defect, matter or thing in said
demised premises or the property of which the premises are a part, or for the
acts, omissions or negligence of other persons or tenants in and about the said
property. The Tenant agrees to indemnify and save the Landlord harmless from all
claims and liability for losses of or damage to property, or injuries to persons
occurring in or about the demised premises.
Services and Utilities
Ninth.--Utilities and services furnished to the demised premises for the
benefit of the Tenant shall be provided and paid for as follows: water by the
Tenant; gas by the Tenant; electricity by the Tenant; heat by the Tenant;
refrigeration by the Tenant; hot water by the Tenant.
The Landlord shall not be liable for any interruption or delay in any of the
above services for any reason.
Right to Inspect and Exhibit
Tenth.--The Landlord, or its agents, shall have the right to enter the
demised premises at reasonable hours in the day or night to examine the same, or
to run telephone or other wires, or to make such repairs, additions or
alterations as it shall deem necessary for the safety, preservation or
restoration of the improvements, or for the safety or convenience of the
occupants or users thereof (there being no obligation, however, on the part of
the Landlord to make any such repairs, additions or alterations), or to exhibit
the same to prospective purchasers and put upon the premises a suitable "For
Sale" sign. For three months prior to the expiration of the demised term, the
Landlord, or its agents, may similarly exhibit the premises to prospective
tenants, and may place the usual "To Let" signs thereon.
Damage by Fire, Explosion, The Elements or Otherwise
Eleventh.--In the event of the destruction of the demised premises or the
building containing the said premises by fire, explosion, the elements or
otherwise during the term hereby created, or previous thereto, or such partial
destruction thereof as to render the premises wholly untenantable or unfit for
occupancy, or should the demised premises be so badly injured that the same
cannot be repaired within ninety days from the happening of such injury, then
and in such case the term hereby created shall, at the option of the Landlord,
cease and become null and void from the date of such damage or destruction, and
the Tenant shall immediately surrender said premises and all the Tenant's
Interest therein to the Landlord, and shall pay rent only to the time of such
surrender, in which event the Landlord may re-enter and repossess the premises
thus discharged from this lease and may remove all parties therefrom. Should the
demised premises be rendered untenantable and unfit for occupancy, but yet be
repairable within ninety days from the happening of said injury, the Landlord
may enter and repair the same with reasonable speed, and the rent shall not
accrue after said injury or while repairs are being made, but shall recommence
immediately after said repairs shall be completed. But if the premises shall be
so slightly injured as not to be rendered untenantable and unfit for occupancy,
then the Landlord agrees to repair the same with reasonable promptness and in
that case the rent accrued and accruing shall not cease or determine. The Tenant
shall immediately notify the Landlord in case of fire or other damage to the
premises.
Observation of Laws, Ordinances, Rules and Regulations
Twelfth.--The Tenant agrees to observe and comply with all laws,
ordinances, rules and regulations of the Federal, State, County and Municipal
authorities applicable to the business to be conducted by the Tenant in the
demised premises. The Tenant agrees not to do or permit anything to be done in
said premises, or keep anything therein, which will increase the rate of fire
insurance premiums on the improvements or any part thereof, or on property kept
therein, or which will obstruct or interfere with the rights of other tenants,
or conflict with the regulations of the Fire Department or with any insurance
policy upon said improvements or any part thereof. In the event of any increases
in insurance premiums, resulting from the Tenant's occupancy of the premises, or
from any act or omission on the part of the Tenant, the Tenant agrees to pay
said increase in insurance premiums on the improvements or contents thereof as
additional rent.
Signs
Thirteenth.--No sign, advertisement or notice shall be affixed to or placed
upon any part of the demised premises by the Tenant, except in such manner, and
of such size, design and color as shall be approved in advance in writing by the
Landlord.
Subordination to Mortgages and Deeds of Trust
Fourteenth.--This lease is subject and is hereby subordinated to all
present and future mortgages, deeds of trust and other encumbrances affecting
the demised premises or the property of which said premises are a part. The
Tenant agrees to execute, at no expense to the Landlord, any instrument which
may be deemed necessary or desirable by the Landlord to further effect the
subordination of this lease to any such mortgage, deed or trust or encumbrance.
Sales of Premises
Fifteenth.--In the event of the sale by the landlord of the demised
premises, or the property of which said premises are a part, the Landlord or the
purchaser may terminate this lease on the thirtieth day of April in any year
upon giving the Tenant notice of such termination prior to the first day of
January in the same year.
Rules and Regulations of Landlord
Sixteenth.--The rules and regulations regarding the demised premises,
affixed to this lease, if any, as well us any other and further reasonable rules
and regulations which shall be made by the Landlord, shall be observed by the
Tenant and by the Tenant's employees, agents and customers. The Landlord
reserves the right to rescind any presently existing rules applicable to the
demised premises, and to make such other and further reasonable rules and
regulations as, in its judgment, may from time to time be desirable for the
safety, care and cleanliness of the premises, and for the preservation of good
order therein, which rules, when so made and notice thereof given to the Tenant,
shall have the same force and effect as if originally made a part of this lease.
Such other and further rules shall not, however, be inconsistent with the proper
and rightful enjoyment by the Tenant of the demised premises.
Violation of Covenants, Forfeiture of Lease, Re-entry by Landlord
Non-waiver of Breach
Seventeenth.--In case of violation by the Tenant of any of the covenants,
agreements and conditions of this lease, or of the rules and regulations now or
hereafter to be reasonably established by the Landlord, and upon failure to
discontinue such violation within ten days after notice thereof given to the
Tenant, this lease shall thenceforth, at the option of the Landlord, become null
and void, and the Landlord may re-enter without further notice or demand. The
rent in such case shall become due, be apportioned and paid on and up to the day
of such re-entry, and the Tenant shall be liable for all loss or damage
resulting from such violation as aforesaid. No waiver by the Landlord of any
violation or breach of condition by the Tenant shall constitute or be construed
as a waiver of any other violation or breach of condition, nor shall lapse of
time after breach of condition by the Tenant before the Landlord shall exercise
its option under this paragraph operate to defeat the right of the Landlord to
declare this lease null and void and to re-enter upon the demised premises after
the said breach or violation.
<PAGE>
Notices
Eighteenth.--All notices and demands, legal or otherwise, incidental to
this lease, or the occupation of the demised premises, shall be in writing. If
the Landlord or its agent desires to give or serve upon the Tenant any notice or
demand, it shall be sufficient to send a copy thereof by registered mail,
addressed to the Tenant at the demised premises, or to leave a copy thereof with
a person of suitable age found on the premises, or to post a copy thereof upon
the door to said premises. Notices from the Tenant to the Landlord shall be sent
by registered mail or delivered to the Landlord at the place hereinbefore
designated for the payment of rent, or to such party or place as the Landlord
may from time to time designate in writing.
Bankruptcy, Insolvency, Assignment for Benefit of Creditors
Nineteenth.--It is further agreed that if at any time during the term of
this lease the Tenant shall make any assignment for the benefit of creditors, or
be decreed insolvent or bankrupt according to law, or if a receiver shall be
appointed for the Tenant, then the Landlord may, at its option, terminate this
lease, exercise of such option to be evidenced by notice to that effect served
upon the assignee, receiver, trustee or other person in charge of the
liquidation of the property of the Tenant or the Tenant's estate, but such
termination shall not release or discharge any payment of rent payable hereunder
and then accrued, or any liability then accrued by reason of any agreement or
covenant herein contained on the part of the Tenant, or the Tenant's legal
representatives.
Holding Over by Tenant
Twentieth.--In the event that the Tenant shall remain in the demised
premises after the expiration of the term of this lease without having executed
a new written lease with the Landlord, such holding over shall not constitute a
renewal or extension of this lease. The Landlord may, at its option, elect to
treat the Tenant as one who has not removed at the end of his term, and
thereupon be entitled to all the remedies against the Tenant provided by law in
that situation, or the Landlord may elect, at its option, to construe such
holding over as a tenancy from month to month, subject to all the terms and
conditions of this lease, except as to duration thereof, and in that event the
Tenant shall pay monthly rent in advance at the rate provided herein as
effective during the last month of the demised term.
Eminent Domain, Condemnation
Twenty-first.--If the property or any part thereof wherein the demised
premises are located shall be taken by public or quasi-public authority under
any power of eminent domain or condemnation, this lease, at the option of the
Landlord, shall forthwith terminate and the Tenant shall have no claim or
interest in or to any award of damages for such taking.
Security
Twenty-second.--The Tenant has this day deposited with the Landlord the sum
of $6,000-- as security for the full and faithful performance by the Tenant of
all the terms, covenants and conditions of this lease upon the Tenant's part to
be performed, which said sum shall be returned to the Tenant after the time
fixed as the expiration of the term herein, provided the Tenant has fully and
faithfully carried out all of said terms, covenants and conditions on Tenant's
part to be performed. In the event of a bona fide sale, subject to this lease,
the Landlord shall have the right to transfer the security to the vendee for the
benefit of the Tenant and the Landlord shall be considered released by the
Tenant from all liability for the return of such security; and the Tenant agrees
to look to the new Landlord solely for the return of the said security, and it
is agreed that this shall apply to every transfer or assignment made of the
security to a new Landlord. The security deposited under the lease shall not be
mortgaged, assigned or encumbered by the Tenant without the written consent of
the Landlord.
Arbitration
Twenty-third.--Any dispute arising under this lease shall be settled by
arbitration. Then Landlord and Tenant shall each choose an arbitrator, and the
two arbitrators thus chosen shall select a third arbitrator. The findings and
award of the three arbitrators thus chosen shall be final and binding on the
parties hereto.
Delivery of Lease
Twenty-fourth.--No rights are to be conferred upon the Tenant until this
lease has been signed by the Landlord, and an executed copy of the lease has
been delivered to the Tenant.
Lease Provisions Not Exclusive
Twenty-fifth.--The foregoing rights and remedies are not intended to be
exclusive but as additional to all rights and remedies the Landlord would
otherwise have by law.
Lease Binding on Heirs, Successors, Etc.
Twenty-sixth.--All of the terms, covenants and conditions of this lease
shall inure to the benefit of and be binding upon the respective heirs,
executors, administrators, successors and assigns of the parties hereto.
However, in the event of the death of the Tenant, if an individual, the Landlord
may, at its option, terminate this lease by notifying the executor or
administrator of the Tenant at the demised premises.
Twenty-seventh.--This lease and the obligation of Tenant to pay rent
hereunder and perform all of the other covenants and agreements hereunder on
part of Tenant to be performed shall in nowise be affected, impaired or excused
because Landlord is unable to supply or is delayed in supplying any service
expressly or impliedly to be supplied or is delayed in supplying any equipment
or fixtures if Landlord is prevented or delayed from so doing by reason of
governmental preemption in connection with the National Emergency declared by
the President of the United States or in connection with any rule, order or
regulation of any department or subdivision thereof any governmental agency or
by reason of the condition of supply and demand which have been or are affected
by the war.
Twenty-eighth.--This instrument may not be changed orally.
IN WITNESS WHEREOF, the said Parties have hereunto set their hands and
seals the day and year first above written.
Witness:
- ---------------------------------------
- ---------------------------------------
1667 Flatush Avenue LLC (Seal)
---------------------------------------
Landlord
By /s/ Jerry Braun, Managing Member
---------------------------------------
New York Health Care, Inc. (Seal)
---------------------------------------
Tenant
/s/ Jacob Rosenberg, V.P.
---------------------------------------
<PAGE>
RIDER ANNEXED TO AND FORMING A PART OF
THE LEASE DATED AS OF NOVEMBER 1, 1995
BETWEEN 1667 FLATBUSH AVENUE LLC, AS LANDLORD
AND NEW YORK HEALTH CARE, INC., AS TENANT
FOR A PORTION OF PREMISES KNOWN AS
1667 FLATBUSH AVENUE, BROOKLYN, NEW YORK
29. INCONSISTENT PROVISIONS. In the event of any inconsistency or conflict
between the provisions of the printed portion of the Lease and any other riders
thereto and this Rider (such Lease, other riders and this Rider together being
sometimes herein called this "Lease"), the provisions of this Rider shall be
deemed to control and be binding. All capitalized terms not defined herein shall
have the meaning ascribed thereto on the printed form of this Lease.
30. RENT. The rent for the first year of the Lease term shall be Thirty-Six
Thousand Dollars ($36,000). Beginning as of November 1, 1996 and each November 1
thereafter, the annual rent shall be increased by five percent (5%) over the
amount payable during the previous year of the Lease Term. In the event that
this Lease is renewed for one or both of the optional renewal terms set forth in
the next Section of this Rider, the annual rental for each year of each such
succeeding period shall be increased by five percent (5%) over the amount
payable during the previous year.
31. OPTION TO RENEW. Provided the Tenant is not in default under the terms
of this Lease, the Tenant shall have the right to renew this Lease for an
additional term of five (5) years, commencing November 1, 2000, and terminating
October 31, 2005, upon the same terms and conditions and upon a rental as
described in the previous Section of this Rider payable in equal monthly
installments. Provided the Tenant is not in default under the terms of this
Lease, the Tenant shall have the further right to renew this Lease for an
additional term of five (5) years, commencing November 1, 2005, and terminating
October 31, 2010, upon the same terms and conditions and upon a rental as
described in the previous Section in this Rider payable in equal monthly
installments. The Tenant agrees to give the Landlord at least sixty (60) days
prior written notice by certified mail of its intention to exercise either or
both of the options herein described. The failure to give such timely notice
shall be deemed a waiver by the Tenant of its right to exercise such option.
32. NET LEASE. This lease is intended to be a "triple net lease" whereby
Tenant is responsible for, and agrees to pay, any real estate taxes imposed on
the premises with respect to the Lease term, as well as any tax assessment,
water rents, sewer rents and charges, duties, impositions, license and permit
fees, charges for public utilities of any kind, payments and other charges of
every kind and nature, together with interest penalties thereon, that may be
imposed with respect to the Lease term by any sovereign, governmental, city or
municipal authority, or any department, bureau, board or officer thereof or of
any public utility.
License No. 9632L005 Effective Date 12/29/95
State of New York
Department of Health
Office of Health Systems Management
HOME CARE SERVICE AGENCY
LICENSE
(SEAL)
New York Health Care, Inc.
1667 Flatbush Ave
Brooklyn, NY 11210
Kings County
HAS BEEN GRANTED THIS LICENSE TO OPERATE PURSUANT TO ARTICLE 36 OF THE PUBLIC
HEALTH LAW FOR THE HEALTH SERVICES SPECIFIED:
SERVICE
NURSING
HOME HEALTH AIDE
PERSONAL CARE
Operator:
PROPRIETARY CORPORATION
NEW YORK HEALTH CARE, INC.
1667 FLATBUSH AVENUE
BROOKLYN, NY 11210
COUNTY(S) SERVED
Bronx
Kings
New York
Queens
Richmond
THIS CERTIFICATE MUST BE CONSPICUOUSLY DISPLAYED ON THE PREMISES
/s/ Signature on File /s/ Signature on File
- ------------------------------ -------------------------
AREA ADMINISTRATOR COMMISSIONER
DOH 502(K)3-95
AGREEMENT BETWEEN LICENSED AGENCY
AND
CENTER FOR NURSING AND REHABILITATION
This agreement made and entered into this 1st day of January 1996, by and
between the CENTER FOR NURSING AND REHABILITATION, with its principal place of
business at 520 Prospect Place, Brooklyn, New York 11238 (hereinafter "CNR") and
New York Health Care with its principal place of business at 1667 Flatbush
Avenue, Brooklyn, NY 11210 (hereinafter "Agency").
WITNESSETH
Whereas, CNR operates and maintains a Long Term Home Health Care Program
(hereinafter "LTHHCP") which provides home health aide, homemaker, housekeeper
and personal care worker services (hereinafter "Paraprofessional") to it's
homebound patients.
Whereas, the Agency is licensed in the state of New York to provide
Paraprofessional services.
Whereas CNR is desirous of engaging the Agency to provide Paraprofessional
services to its LTHHCP patients.
Whereas the Agency is willing to provide such services to CNR's LTHHCP as an
independent contractor on a "fee for service" basis, and in accordance with the
terms and conditions herein set forth;
NOW Therefore, in consideration of the mutual promises of the parties here to,
and other good and valuable consideration receipt of which is hereby
acknowledged, the parties hereto agree as follows:
1. CNR's LTHHCP agrees:
a) To contact the Agency and request Paraprofessionals for assignments to
its patients.
b) To provide the Agency with a Plan of Care for the provision of
Paraprofessional services. The Plan of Care will be developed in
accordance with applicable Federal, State and local government
regulations.
c) To make available to the Agency all pertinent patient information
including, but not limited to patient assessment, clinical record
entries, supervisory records of Paraprofessional services. This
documentation will be provided to the Agency upon request in order for
the Agency to comply with applicable Federal, State and local
statutes.
-1-
<PAGE>
d) To determine the scope and duration of the Paraprofessional services
for each assignment, and professionally supervise their performance
during their assignment to CNR's LTHHCP's patients.
e) To provide orientation, on the job instruction and record keeping
instructions with regard to the particular patient. Such instructions
will be provided by a registered nurse.
f) To continuously evaluate the performance of the Paraprofessional
assigned to its patient, and submit a written performance evaluation
to the Agency when requested.
g) To retain the right to change a Paraprofessional's assignment on oral
or written notice to the Agency.
h) To pay the Agency the following hourly fees: Home Health Aide $10.50
per hour; Housekeeping $ 10.50 per hour; Personal Care Worker $10.50
per hour; a rate of $145.00 per twenty-four (24) hours for Home Health
Aide, Homemaker, or Personal Care Worker.
2. The Agency agrees:
a) To provide to CNR's LTHHCP only Paraprofessionals who meet the
requirements specified in the New York State Hospital Code, directives
of the New York State Department of Health, New York State Department
of Social Services, New York City Human Resources Administration and
the policies and standards of CNR's LTHHCP.
b) To submit to CNR's LTHHCP proof of the qualification of the
Paraprofessionals assigned to its patients.
c) To provide continuous in-service education to its Paraprofessionals in
accordance with State and Federal regulations.
d) To maintain a personnel record for each Paraprofessional. Record shall
include verification of qualifications, references, reports of medical
examinations and tests, immunization record, performance evaluations,
and documentation of in-service training. These records shall be
subject to inspection by CNR's LTHHCP and State and City agencies.
e) To be responsible for the payment of wages and other compensation,
reimbursement of expenses, and compliance with Federal, State and
local tax withholding requirements, pertaining to Workmen's
Compensation, Social Security, unemployment and other insurance
-2-
<PAGE>
requirements and obligations imposed on the employer of personnel with
regard to Paraprofessionals, who shall be deemed to be employees of
the Agency.
f) To procure and maintain insurance coverage for personnel assigned
under the terms of this agreement in amounts and types usually
maintained by Certified Home Health Agencies which are to include
comprehensive general liability insurance relative to the activities
resulting from assignments under this agreement, and any other
employee's liability insurance required by law for an employer to
maintain on its employees.
The insurance must include a rider providing therein a statement that
specifies the types and amounts of insurance coverage for each group
of employees provided under the terms of this agreement, the name of
the insurance company and the policy number. The rider shall provide
for at least thirty (30) days notice to CNR of cancellation of any of
the insurance. A copy of the insurance certificate must be submitted
to CNR prior to any paraprofessional's assignment to a LTHHCP patient.
g) To indemnify and hold CNR harmless against liability or damages
including reasonable attorney fees for any act of the employee of the
agency which results in injury of damage to any LTHHCP patient.
h) To submit to CNR on a weekly basis a written statement (duty sheets)
about the services provided by its paraprofessionals to the LTHHCP
patients. The statement must be accompanied by bill for the amounts
due to the agency from CNR's LTHHCP.
i) To maintain records of all financial transactions with CNR such
records shall be kept in accordance with sound accounting practices
and each transaction shall be fully documented. Such records shall be
made available to the New York State Department of Health, State
Department of Social Services, federal government agencies and CNR for
inspection or audit, upon request of any of the aforementioned
organizations.
j) To prohibit its personnel from accepting fees from any LTHHCP patients
or patient's family for services provided under the LTHHCP's plan of
care. The splitting or sharing of fees between the agency and CNR or
an employee of CNR is also prohibited.
k) To allow CNR a two percent (2%) discount on disbursement made to the
agency within thirty (30) days of submission of its invoice.
-3-
<PAGE>
3. Both CNR and the Agency agree:
a) To designate a person within their respective organizations who shall
have the responsibility for the selection assignment and coordination
of paraprofessionals services.
b) To consult and cooperate with each other in establishing acceptable
standards and procedures for the selection and assignment of
personnel, billing procedures and any other matters incidental to
carrying out the provisions and purposes of this agreement.
c) To make available paraprofessionals to all and any LTHHCP patients
without regard to race, color, sex, creed, age, national origin,
handicap or payment source, except fiscal capability thereof.
d) To not discriminate against patients based on geographic location, or
service need intensity if they are residing within the catchment area.
e) To not discriminate against any paraprofessional because of race,
color, sex, age, creed, national origin, or handicap.
4. This agreement shall be in effect until December 31, 1996 and shall be
reviewed therewith during the month of January. This agreement shall remain
in force during review and renegotiation.
5. This agreement shall be terminated on at least thirty (30) days written
notice by either party. However, in the event that the agency defaults in
the performance of any of its obligations under this agreement, CNR may
terminate the agreement effective upon written notice at any time.
6. All written notices affecting agreement termination must be delivered by
Certified or Registered Mail. The date of deposit of any notice in a United
States Post Office or Post Office Box with all postage prepaid shall be
deemed the date of delivery thereof.
7. It is understood that this agreement constitutes the entire agreement
between CNR and the agency.
8. This agreement is understood to conform to the Public Health Law permitting
access to records pertinent to this transaction by the Secretary of Health
and Human Services, and the Comptroller General for verification purposes.
9. "Notwithstanding any other provisions in this contract, CNR's LTHHCP
remains responsible for:
-4-
<PAGE>
(a) ensuring that any service provided pursuant to this contract complies
with all pertinent provisions of Federal, State, OSHA, and local
statutes, rules and regulation;
(b) planning, coordinating and ensuring the quality of all services
provided;
(c) ensuring adherence to the plan of care established for patients; and
(d) ensuring that all patients are provided with their bill of Rights "as
per the regulations of the New York State Department of Health".
10. Notwithstanding any other provisions in this agreement, the agency remains
responsible for:
(a) ensuring that any service provided to this contract complies with all
pertinent provisions of Federal, State and local statutes, rules and
regulations;
(b) ensuring the quality of all services provided by the agency;
(c) ensuring adherence by the Agency's staff to the plan of care
established for the patients; and
(d) ensuring that all patients are provided with their Bill of Rights "as
per the regulations of the New York State Department of Health".
In witness whereof, this agreement has been duly executed and signed by:
CENTER FOR NURSING & REHABILITATION AGENCY
By: /s/ Signature on File By: /s/ Jerry Braun
- ------------------------------------ ------------------------------
Title: Executive Director Title: CEO
Date: December 29, 1995 Date: 1/10/96
By: /s/ Signature on File
- ------------------------------------
Title: Director of Patient Services
Date: December 28, 1995
-5-
APPENDIX B
PROVIDER CONTRACT DATES
New York Health Care, Inc. From To
49 South Main Street 1/1/96 12/31/96
Spring Valley, N.Y. 10977
Service Rates
The services herein contracted for will be provided by the Provider at
rates established by New York State Department of Social Services for the
personal care providers. In the event rates are not set on the effective date of
this agreement, the rates for the prior year shall continue. Retroactivity will
be determined by New York State Department of Social Services.
Your homemaker rates effective January 1, 1996 are:
1 person 2/3 persons 4/5 persons 6+ persons live-in
$12.32 $13.56 $14.92 $16.42 $148.39
The Provider shall take out and maintain:
(a) Workmen's Compensation Insurance as required by law.
(b) General Liability Insurance in amounts not less than $500,000 for each
occurrence and $1,000,000 aggregate for bodily injury, and $50,000 for each
occurrence for property damage. The Department and the County of Rockland shall
be named as additional insureds on such policy. The Provider will submit,
together with the execution of this agreement, all actual insurance policies
with declarations and all endorsements reflecting the coverage required in
Paragraphs (a) and (b).
The District and the Provider agree that the relationship between the
parties shall be on the basis of the Provider being an independent provider and
it is further agreed that notwithstanding the District's rights under this
agreement to exercise general supervision over the services the Provider is
responsible for all actions of its employees and agents in connection with the
performance of the services contracted for hereunder and the District shall have
no liability for the improper negligent conduct of the Provider or its agents or
employees.
The Provider agrees and warrants that it will hold harmless and indemnify
the District from any claims, causes of action or suits against the District as
a result of or in connection with the services provided by the Provider pursuant
to the provisions of this agreement.
In the event that the District is determined by the N.Y. State Department
of Social Services as not being in compliance with the regulations of the N.Y.
State Department of Social Services with regard to the provisions of any of the
services contracted for in this agreement and such lack of compliance is caused
by or related to the failure of the Provider to comply with any of the
regulations of the N.Y. State Department of Social Services or other terms of
this agreement, then the Provider shall be responsible to the District for the
loss of any funds which the District may suffer thereby and
-1-
<PAGE>
such funds may be deducted by the District from any future payments due the
Provider or the District may proceed in any other available manner, including
litigation, to recover such loss.
The District may, at its option, withhold for the purposes of set-off
monies due the Provider under this agreement up to the amount of any
disallowances resulting from audits by the County of Rockland, or any of its
agencies or employees, of the State of New York by any of its agencies or
employees, with regard to this agreement or any other agreement, including any
agreement for a term commencing prior to the term of this agreement.
Performance under this agreement shall commence on January 1, 1996 and
shall terminate on December 31, 1996. It is agreed by the Provider that
performance without this agreement will not be paid for by the District.
The Provider represents and warrants that prior to this agreement it filed
for a license from the N.Y.S. Department of Health as a home care services
agency, that such license application is either pending or has been approved. It
is agreed between the Provider and the District that no payments shall be made
to the Provider unless the services were provided during a time when the
Provider either possessed a license or had an application for such license
pending with the N.Y.S. Department of Health. The Provider agrees to immediately
notify, in writing, the District of any action which affects the Provider's
licensure status, the result of any pending applications or the suspension or
termination of an existing license.
Pursuant to Memorandum 86-51 of the N.Y.S. Department of Health, the
following language is inserted into this contract. "Notwithstanding any other
provisions in this contract, the Provider remains responsible for: (a) ensuring
that any service provided pursuant to this contract complies with all pertinent
provisions of federal, state and local statutes, rules and regulations; (b)
ensuring the quality of all services provided by the provider; and (c) ensuring
adherence by Provider staff to the Provider plan of care established for
patients."
The District and the Provider are aware of the provisions of Section 424-a
of the N.Y.S. Social Services Law which requires the District to inquire of the
N.Y.S. Department of Social Services whether any person who is employed by an
individual, corporation, or association which provides goods or services to the
District who has the potential for regular and substantial contact with children
who are cared for by the District is the subject of an indicated child abuse and
maltreatment report on file with the Statewide Central Register of Child Abuse
and Maltreatment. The Provider agrees to cooperate with the District for the
purpose of enabling the District to make inquiries to the N.Y.S. Department of
Social Services in all cases where the District determines that there exists the
potential for regular and substantial contact with children who are cared for by
the District by employees or agents of the Provider. In the event that an
employee or agent of the Provider is determined to be the subject of an
indicated report for child abuse or maltreatment, and if the District determines
that such employee or agent should not be permitted to have access to children
cared for by the District, it shall notify the Provider who shall immediately
remove such employee or agent from any situation which would provide such
employee or agent with access to children being cared for by the District.
The Provider agrees to maintain in a separate file for each aide such
documentation as is necessary to demonstrate to the District that the Provider
is in compliance with all of the requirements of the Regulations of the N.Y.S.
Department of Social Services and the N.Y.S. Department of Health. The District
shall have the right to notify the Provider of specific types of
-2-
<PAGE>
documentation required to be maintained in such files, and the Provider shall
comply with such notification. Such notices shall be given in writing to the
Provider. The Provider shall maintain the files referred to in this paragraph in
its Rockland County office, and the District shall have the right to review such
files.
In the event any insurance is canceled, this Department is to be notified
immediately.
-3-
<PAGE>
APPENDIX B
The services herein contracted for will be provided by the Provider at
rates determined by New York State Department of Social Services.
The Provider shall take out and maintain:
(a) Workmen's Compensation Insurance as required by law.
(b) General Liability Insurance in amounts not less than $500,000 for each
occurrence and $1,000,000 aggregate for bodily injury, and $50,000 for each
occurrence for property damage. The Department and the County of Rockland shall
be named as additional insureds on such policy. The Provider will submit,
together with the execution of this agreement, all actual insurance policies
with declarations and all endorsements reflecting the coverage required in
Paragraphs (a) and (b).
The District and the Provider agree that the relationship between the
parties shall be on the basis of the Provider being an independent provider and
it is further agreed that notwithstanding the District's rights under this
agreement to exercise general supervision over the services the Provider is
responsible for all actions of its employees and agents in connection with the
performance of the services contracted for hereunder and the District shall have
no liability for the improper negligent conduct of the Provider or its agents or
employees.
The Provider agrees and warrants that it will hold harmless and indemnify
the District from any claims, causes of action or suits against the District as
a result of or in connection with the services provided by the Provider pursuant
to the provisions of this agreement.
In the event that the District is determined by the N.Y. State Department
of Social Services as not being in compliance with the regulations of the N.Y.
State Department of Social Services with regard to the provision of any of the
services contracted for in this agreement and such lack of compliance is caused
by or related to the failure of the Provider to comply with any of the
regulations of the N.Y. State Department of Social Services or other terms of
this agreement, then the Provider shall be responsible to the District for the
loss of any funds which the District may suffer thereby and such funds may be
deducted by the District from any future payments due the Provider or the
District may proceed in any other available manner, including litigation, to
recover such loss.
The District may, at its option and subject to State regulations, withhold
for the purposes of set-off monies due to the Provider under this agreement up
to the amount of any disallowances resulting from audits by the County of
Rockland, or any of its agencies or employees, of the State of New York by any
of its agencies or employees, with regard to this agreement or any other
agreement, including any agreement for a term commencing prior to the term of
this agreement.
Performance under this agreement shall commence on January 1, 1996 and
shall terminate on December 31, 1996. It is agreed by the Provider that
performance without this agreement will not be paid for by the District.
The Provider represents and warrants that it is licensed by the N.Y.S.
Department of Health as a home care services agency. It is agreed between the
Provider and the District that no payments for personal care
<PAGE>
services shall be made to the Provider unless the services were provided during
a time when the Provider possessed a license. The Provider agrees to immediately
notify, in writing, the District of any suspension or termination of an existing
license or any other action which affects the Provider's licensure status.
Pursuant to Memorandum 86-51 of the N.Y.S. Department of Health, the
following language is inserted into this contract. "Notwithstanding any other
provisions in this contract, the Provider remains responsible for: (a) ensuring
that any service provided pursuant to this contract complies with all pertinent
provisions of federal, state and local statutes, rules and regulations; (b)
ensuring the quality of all services provided by the Provider; and (c) ensuring
adherence by Provider staff to the Provider plan of care established for
patients."
The District and the Provider are aware of the provisions of Section 424-a
of the N.Y.S. Social Services Law which requires the District to inquire of the
N.Y.S. Department of Social Services whether any person who is employed by an
individual, corporation, or association which provides goods or services to the
District who has the potential for regular and substantial contact with children
who are cared for by the District is the subject of an indicated child abuse and
maltreatment report on file with the Statewide Central Register of Child Abuse
and Maltreatment. The Provider agrees to cooperate with the District for the
purpose of enabling the District to make inquiries to the N.Y.S. Department of
Social Services in all cases where the District determines that there exists the
potential for regular and substantial contact with children who are cared for by
the District by employees or agents of the Provider. In the event that an
employee or agent of the Provider is determined to be the subject of an
indicated report for child abuse or maltreatment, and if the District determines
that such employee or agent should not be permitted to have access to children
cared for by the District, it shall notify the Provider who shall immediately
remove such employee or agent from any situation which would provide such
employee or agent with access to children being cared for by the District.
The Provider agrees to maintain in a separate file for each aide such
documentation as is necessary to demonstrate that the Provider is in compliance
with all of the requirements of the Regulations of the N.Y.S. Department of
Social Services and the N.Y.S. Department of Health regulating the
qualifications of the aide. The District shall have the right to notify the
Provider of specific types of documentation required to be maintained in such
files, and the Provider shall comply with such notification. Such notices shall
be given in writing to the Provider. The Provider shall maintain the files
referred to in this paragraph in its Rockland County office, and the District
shall have the right to review such files.
In the event any insurance is canceled, this Department is to be notified
immediately.
<PAGE>
AFFIDAVIT OF DISCLOSURE OF POLITICAL CONTRIBUTIONS PURSUANT
TO CHAPTER 323 OF THE ROCKLAND COUNTY CODE
STATE OF NEW YORK }
COUNTY OF ROCKLAND } ss:
NAME OF REPORTING ENTITY: New York Health Care Inc.
ADDRESS: 49 South Main St. Spring Valley, NY 10977
TELEPHONE NUMBER: (914) 352-3500
THE REPORTING ENTITY IS (Check One):
______WILL ENTER INTO A CONTRACT WITH THE COUNTY OF ROCKLAND, WHICH DID NOT
RESULT FROM PUBLIC BIDDING, IN EXCESS OF TEN THOUSAND DOLLARS ($10,000.00).
[X] IS CURRENTLY UNDER A CONTRACT WITH THE COUNTY OF ROCKLAND IN EXCESS OF
TEN THOUSAND DOLLARS ($10,000.00).
THE REPORTING ENTITY, ITS MEMBERS, DIRECTORS, POLICYMAKING OFFICERS, OR MAJORITY
SHAREHOLDERS, HAVE DIRECTLY OR INDIRECTLY MADE THE FOLLOWING CONTRIBUTIONS TO
THE PERSONS OR ORGANIZATIONS LISTED BELOW. (PLEASE LIST ALL CONTRIBUTIONS HAVING
A VALUE IN EXCESS OF TWO HUNDRED DOLLARS ($200.00) PER YEAR MADE TO ANY
POLITICAL PARTY OR ANY INDIVIDUAL OR ANY COMMITTEE FOR AN INDIVIDUAL RUNNING FOR
PUBLIC OFFICE IN ROCKLAND COUNTY OR IN A DISTRICT IN WHICH ROCKLAND COUNTY IS
LOCATED, FOR A PERIOD OF THREE (3) YEARS PRIOR TO THE DATE OF THIS AFFIDAVIT.
NOTE: PLEASE ANSWER "NONE" OR LIST EACH CONTRIBUTION SEPARATELY
NAME OF RELATIONSHIP TO CONTRIBUTION DATE OF VALUE & NATURE
CONTRIBUTOR REPORTING ENTITY MADE TO CONTRIBUTION OF CONTRIBUTION
- --------------------------------------------------------------------------------
NONE
- --------------------------------------------------------------------------------
NONE
- --------------------------------------------------------------------------------
NONE
- --------------------------------------------------------------------------------
NONE
- --------------------------------------------------------------------------------
(USE ADDITIONAL SHEETS IF NECESSARY)
I AM THE C.O.O. OF THE REPORTING ENTITY LISTED ABOVE.
----------------
(Title or Office)
I MAKE THIS AFFIRMATION BASED UPON MY PERSONAL REVIEW OF THE BOOKS AND RECORDS
OF THE REPORTING ENTITY. ALL OF THE FOREGOING INFORMATION IS TRUE TO THE BEST OF
MY KNOWLEDGE, AFTER INQUIRY. I MAKE THESE STATEMENTS UNDER PENALTY OF PERJURY.
/s/ JACOB ROSENBERG
------------------------
(Signature)
Jacob Rosenberg, C.O.O.
-----------------------
(Print Name and Title)
MARGARET BRAUN
Commissioner of Deeds
City of New York No. 2-4293
Certificate Filed in Kings County
Commission Expires Nov. 1, 1996
Sworn to before me this
28 Day of Feb., 1996
Margaret Braun
- --------------
NOTARY PUBLIC
<PAGE>
AFFIDAVIT OF DISCLOSURE
Pursuant to 18 NYCRR Section 505.14
STATE OF NEW YORK }
COUNTY OF ROCKLAND } ss:
Jacob Rosenberg, being duly sworn, deposes and says:
That (s)he is the C.O.O. of New York Health Care Inc., Provider, which is
about to enter into a contract with the Rockland County Department of Social
Services. The following is a list of each and every person with ownership or
control interest in the Provider.
NAME ADDRESS
---- ---------
Jerry Braun 1667 Flatbush Ave. Brooklyn, NY 11210
Jacob Rosenberg 1667 Flatbush Ave. Brooklyn, NY 11210
Sam Soroka 1667 Flatbush Ave. Brooklyn, NY 11210
Sid Borenstein 1667 Flatbush Ave. Brooklyn, NY 11210
Hirsh Chitrik 1667 Flatbush Ave. Brooklyn, NY 11210
None of the above persons has been convicted of a criminal offense against
Medicare, Medicaid, or Title XX Services Program.
- --------------------------------------------------------------------------------
(strike if not applicable)
/s/ JACOB ROSENBERG
------------------
Sworn to before me
this 28 day of Feb., 1996
/s/ MARGARET BRAUN
- ------------------
Notary Public
MARGARET BRAUN
Commissioner of Deeds
City of New York No. 2-4293
Certificate Filed in Kings County
Commission Expires Nov. 1, 1996
<PAGE>
CONTRACT EXTENSION AGREEMENT
This extension agreement made the_____day of________, 19 , by and between
the ROCKLAND COUNTY DEPARTMENT OF SOCIAL SERVICES, with offices at Bldg. L,
Sanatorium Road, Pomona, New York 10970 (hereinafter called the DEPARTMENT), and
New York Health Care, Inc., with offices at 49 South Main Street, Spring Valley,
N.Y. 10977 (hereinafter called the CONTRACTOR).
WITNESSETH
WHEREAS, a contract was entered into for the DEPARTMENT to purchase
homemaker services from the CONTRACTOR on June 26, 1992 and
WHEREAS, the contract has been last extended for the period January 1, 1995
to December 31, 1995, and
WHEREAS, the DEPARTMENT and the CONTRACTOR wish to extend such agreement
for an additional period,
NOW, THEREFORE, it is mutually agreed as follows:
1. The agreement above mentioned between the parties hereto is hereby
extended for the period January 1, 1996 to December 31, 1996 upon the same terms
and conditions. In the event any insurance is canceled, this Department is to be
notified immediately.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
ROCKLAND COUNTY DEPARTMENT
OF SOCIAL SERVICES
DATED:_________ BY:_________________________
Noah Weinberg, Commissioner
DATED: 3/1/96 BY:/s/ JACOB ROSENBERG, C.O.O.
<PAGE>
A C K N O W L E D G M E N T S
STATE OF NEW YORK )
) SS.:
COUNTY OF ROCKLAND )
On this _______day of______________ , 1996, before me personally appeared
NOAH WEINBERG, to me known and known to me to be the duly designated
Commissioner of the Rockland County Department of Social Services and the
individual mentioned in and who executed the foregoing instrument and he
acknowledged to me that he executed the same.
________________________
Notary Public
STATE OF NY )
) SS.:
COUNTY OF KINGS )
On this First day of March, 1996, before me personally appeared
JACOB ROSENBERG, to me known and known to me to be the duly designated
Commissioner of the Rockland County Department of Social Services and the
individual mentioned in and who executed the foregoing instrument and he
acknowledged to me that he executed the same.
/S/ MARGARET BRAUN
------------------------
Notary Public
MARGARET BRAUN
Commissioner of Deeds
City of New York No. 2-4293
Certified in Kings County
Commission Expires Nov. 1, 1996
REVIEW AND RENEWAL OF CONTRACT AGREEMENT
BETWEEN
BETH ABRAHAM HOSPITAL
CERTIFIED HOME HEALTH AGENCY
AND
NEW YORK HEALTH CARE
REGARDING HOME HEALTH AIDE/
PERSONAL CARE WORKER SERVICES
SCHEDULE 1
JANUARY 1, 1996
RATE: $10.10 HOME HEALTH AIDES
LIVE IN RATE: 12 HOUR HOME HEALTH AIDE SERVICE
/s/ Jerry Braun /s/ Gerry Polony
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JERRY BRAUN GERRY POLONY
CEO VICE PRESIDENT
NEW YORK HEALTH CARE HOME CARE SERVICES
1/12/96 1/10/96
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(DATE) (DATE)
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AGREEMENT
BETWEEN
BETH ABRAHAM HEALTH SERVICES
AND
NEW YORK HEALTH CARE
REGARDING HOME HEALTH AIDE/
PERSONAL CARE WORKER SERVICES
This Agreement is entered into as of April 1 1996, by and between Beth
Abraham Health Services, a New York not-for-profit corporation ("BAHS"), and New
York Health Care a New York corporation ("Home Care Agency").
WHEREAS, BAHS desires Home Care Agency to furnish home health aide/personal
care worker services as requested by BAHS ("Aide Services") to certain patients
in its Long Term Home Health Care Program ("LTHHCP"), and Home Care Agency has
agreed to furnish such services, in accordance with the terms and conditions set
forth herein; and
WHEREAS, BAHS desires that Home Care Agency also be available, upon request
of BAHS, to furnish Aide Services to certain patients of BAHS who are enrollees
(individually, an "Enrollee" and collectively, "Enrollees") in the Comprehensive
Care Management program ("CCMC Program") operated by Comprehensive Care
Management Corporation ("CCMC"), a New York not-for-profit corporation and
affiliate of BAHS, and Home Care Agency has agreed to provide such services upon
the request of BAHS, in accordance with the terms and conditions set forth
herein;
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants herein contained, the parties hereby agree to the following:
1. Engagement. BAHS hereby engages Home Care Agency to provide Aide
Services to patients of LTHHCP designated by BAHS (collectively, "Patients") who
may or may not be Enrollees, and Home Care Agency hereby agrees to provide such
services, in accordance with the terms and conditions of this Agreement and the
Aide Plan of Care (as defined in Section 4(a) hereof) developed by BAHS for each
Patient.
2. Term and Termination. Subject to termination as set forth in the next
sentence and in Section 10(i) hereof, this Agreement shall be effective on April
1, 1996, (the "Commencement Date"), and shall continue from year to year
thereafter unless
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terminated on the last day of any one-year term upon at least 30 days' prior
written notice of such termination from one party to the other party.
3. Personnel.
3(a) Home Care Agency agrees to provide the services of home health
aides/personal care workers who are acceptable to BAHS (individually, an "Aide"
and, collectively, "Aides") to render the Aide Services to Patients designated
by BAHS, as requested by BAHS hereunder. All Aides utilized by Home Care Agency
in performing the services to be provided hereunder shall remain employees of
Home Care Agency and shall not be deemed to be employees of BAHS for any
purpose. BAHS shall not be regarded as a party to any collective bargaining
agreement or agreements which have heretofore or may hereinafter be entered into
by Home Care Agency, nor shall BAHS be bound by the provisions of any such
agreement.
3(b) Home Care Agency shall be solely responsible for (1) the payment
to all Aides of all wages and other compensation for the services provided
hereunder and for reimbursement of any expenses incurred by Aides related hereto
and (2) complying with all legal obligations imposed upon an employer of
employees with respect to the Aides, including, but not limited to, compliance
with all federal, state, and local laws relating to workmen's compensation,
social security, unemployment insurance, income tax and other withholding
requirements. Home Care Agency represents, warrants and agrees that BAHS shall
have no obligation for any such payment to or reimbursement of Aides or for
performance of any such legal obligations imposed upon an employer with respect
to the Aides. In the event the Internal Revenue Service or the State of New York
shall question the independent contractor status of Home Care Agency, the
parties hereto agree that both Home Care Agency and the BAHS shall have the
right to participate in any discussion, negotiation or resolution occurring with
the Internal Revenue Service or the State of New York, regardless of with whom
such discussions or negotiations were initiated.
4. BAHS Riqhts and Responsibilities.
4(a) BAHS shall have the sole responsibility for assessing the needs
of its Patients for Aide Services in light of relevant factors. BAHS shall
determine the scope and duration of the activities of each Aide on each Patient
assignment (the "Aide Plan of Care"), and a BAHS registered nurse (or other
appropriate BAHS professional personnel) shall supervise each Aide's performance
during each assignment.
4(b) BAHS shall provide each Aide with the Aide Plan of Care for, and
medically pertinent data and instruction regarding, each Patient to whom the
Aide is assigned. BAHS shall instruct each Aide in appropriate recordkeeping
procedures for such patient.
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4(c) BAHS shall have the right, in its sole discretion, at any time
during the term hereof to approve or reject any Aide utilized or assigned by
Home Care Agency in performing its obligations under this Agreement, and upon
oral or written notice to Home Care Agency, to shorten, terminate, lengthen, or
change, the assignment of any Aide, effective immediately upon the giving of
such notice. After an Aide has been assigned to a Patient, Home Care Agency
shall not remove such Aide from such assignment without the consent of BAHS.
4(d) BAHS shall cooperate with Home Care Agency in evaluating each
Aide's performance of services hereunder.
4(e) Notwithstanding any other provision in this contract, BAHS
remains responsible for (1) ensuring that any service provided pursuant to this
contract complies with all pertinent provisions of federal, state and local
statutes, rules and regulations; (2) planning, coordinating and ensuring the
quality of all services provided, and (3) ensuring adherence to the Aide Plan of
Care established for patients.
4(f) The responsibilities imposed upon BAHS pursuant to Section 4(e)
hereof are not intended and shall not be deemed to relieve Home Care Agency of
any of its obligations pursuant to this Agreement.
5. Home Care Agency Riqhts and Responsibilities.
5(a) Home Care Agency shall make the Aide Services available to BAHS,
24 hours per day, 7 days per week during the term of this Agreement. Home Care
Agency shall ensure that all Aides providing services hereunder are legally
certified by the appropriate New York State governmental agency as Aides and
that Home Care Agency and all such Aides comply with all applicable laws,
including, without limitation, the following, to the extent applicable with
respect to Aides providing Aide Services: the New York State Hospital Code and
other directives of the New York State Department of Health ("DOH"), including,
but not limited to, Section 771.2 of Title 10 of the New York State Codes,
Rules, and Regulations; BAHS policies, regulations, and standards; and all
applicable laws, regulations, policies, and standards of the Department of
Social Services ("DSS"), the Health Care Financing Administration ("HCFA"), New
York State, New York City, and Westchester County. Such requirements include,
but are not limited to, the following: the wearing by each Aide of a uniform
acceptable to BAHS; the maintenance by each Aide of good health; the
administration to each Aide of the medical examinations and immunizations
specified in Part 761 of the State Hospital Code and in accordance with BAHS
policy; the satisfactory completion by each Aide of an appropriate certified
basic training program meeting all applicable DOH requirements; and Home Care
Agency's maintenance on file at its offices of character references and other
appropriate
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proofs of satisfactory performance for each Aide. Home Care Agency shall ensure
that each Aide rendering services hereunder is adequately trained and is fully
qualified to perform such services and has any licenses, certificates,
registrations, and other legal credentials (collectively, "Licenses") necessary
to perform the Aide Services. Home Care Agency shall immediately notify BAHS
upon the lapse, revocation, or suspension of any of the Licenses of any Aide
rendering services pursuant to this Agreement.
5(b) Home Care Agency shall maintain a written record regarding each
Aide including, at a minimum, the following information: reports regarding all
prior and current assignments, all professional qualifications, references,
reports of medical examinations, tests and immunizations, performance
evaluations, and documentation evidencing the extent and outcome of all Aide
training. Home Care Agency shall make these records, and all records specified
in Section 5(a) hereof, available for inspection during normal business hours by
BAHS and appropriate New York State and New York City governmental agencies.
Promptly upon the request of BAHS or any such agency, Home Care Agency also
shall provide BAHS or such agency with copies of such records.
5(c) Home Care Agency shall submit to BAHS documentation satisfactory
to BAHS regarding each Aide, including, but not limited to, documentation
regarding his or her professional qualifications as an Aide, Aide certification,
Patient assignments, rubella immunizations, and the date and results of physical
examinations, tuberculin testing, and rubella titre testing.
5(d) Home Care Agency shall provide to all Aides continuous education
that meets all applicable requirements of New York State and New York City law
and regulation and that is based on needs identified by Home Care Agency, the
Aides, and BAHS.
5(e) Home Care Agency shall ensure that each Aide follows all
instructions given to such Aide by BAHS and records and documents the care
rendered on each visit to a Patient in accordance with applicable law, BAHS
policy, and the Aide Plan of Care formulated by BAHS for such Patient. Such
documentation shall be submitted by Home Care Agency to BAHS as soon as possible
but in no event later than one week after the date the services are provided.
Home Care Agency shall also ensure that all Aide Services are rendered with a
high quality of care.
5(f) Home Care Agency shall ensure that each Aide or Home Care Agency
immediately reports to the supervising BAHS registered nurse, or in the
supervising BAHS registered nurse's absence, any BAHS Nurse Manager, any
situation or circumstance that could potentially impact upon the safe and
adequate care of any Patient, including, but not limited to, a change in the
Patient's health status and the failure of an Aide to perform an Aide Service
included in the Aide Plan of Care for a Patient.
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5(g) Home Care Agency shall maintain during the term of this
Agreement, at its sole cost and expense, such policies of general liability and
professional liability, and other insurance, with limits in such amounts, as are
satisfactory to BAHS in order to insure Home Care Agency and each Aide against
damages arising by reason of or in connection with personal injury or death, any
other claim(s) arising in connection with or related to this Agreement, and the
indemnification of BAHS by Home Care Agency pursuant to Section 5(j) below. Home
Care Agency shall cause BAHS and CCMC to be named additional insureds under each
such insurance policy. Evidence of such insurance policies shall be provided to
BAHS on April 1 1996, and on each annual anniversary thereof. Home Care Agency
shall notify BAHS 30 days prior to any material change in such insurance
coverage.
5(h) Home Care Agency shall maintain all records relating to the
services rendered hereunder in accordance with prudent record keeping procedures
and as required by applicable law, regulation and BAHS policies, regulations and
standards.
5(i) To the extent required by the 1980 Omnibus Budget Reconciliation
Act (Public Law 96-499), until the expiration of four (4) years after the
furnishing of the services pursuant to this Agreement, Home Care Agency shall
make available, upon written request by the Secretary of the United States
Department of Health and Human Services (the "Secretary"), or upon request by
the U.S. Comptroller General (the "Comptroller General"), or any of their
respective duly authorized representatives, this Agreement and all books,
documents and records of Home Care Agency that are necessary to certify the
nature and extent of the costs of such services. If Home Care Agency carries out
any of the duties of this Agreement through a permitted subcontract worth
$10,000 or more over a twelve (12) month period with a related organization, to
the extent required by the 1980 Omnibus Reconciliation Act, such subcontract
also shall contain a clause to the same effect with respect to the subcontract
and the books, documents and records of the subcontractor.
5(j) Indemnification. Home Care Agency hereby agrees to protect,
indemnify, and hold harmless BAHS and CCMC and their respective officers,
directors, agents, corporate affiliates, and employees (collectively, the
"Indemnified Party") from and against all demands, claims, actions or causes of
action, losses, damages, liabilities, costs, taxes, and expenses, including,
without limitation, reasonable attorneys' fees and disbursements, incurred by or
asserted against the Indemnified Party by reason of or resulting from or arising
out of any (1) actual or alleged negligence (including medical malpractice),
intentional tort, willful misconduct (including, but not limited to, fraud and
battery), act, or omission of Home Care Agency or its Aides, agents, officers,
and employees in connection with the performance of this Agreement, (2)
misrepresentation or breach of any of Home
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Care Agency's representations and/or warranties made herein or pursuant hereto,
or (3) failure of Home Care Agency or its Aides, agents, officers, and employees
to perform or comply with any of the provisions of this Agreement or of any
other agreement, document, or instrument delivered pursuant hereto or in
connection herewith.
5(k) Neither Home Care Agency nor any Aide providing services
hereunder shall charge, collect or accept any fee or payment from any Patient or
any Patient's family for Aide Services provided hereunder.
5(1) Notwithstanding any other provisions in this contract, the
licensed agency (aide organization) remains responsible for: (a) ensuring that
any service provided pursuant to this contract complies with all pertinent
provisions of federal, state and local statutes, rules and regulations; (b)
ensuring the quality of all services provided by the agency and (c) ensuring
adherence by agency staff to the LTHHCP Plan of Care established for its
patients.
5(m) No employee, agent, or other representative of Home Care Agency
("Home Care Agency Representative") shall provide any employee, agent, or other
representative of BAHS or CCMC ("BAHS Representative") with any item or items
for which the Home Care Agency Representative does not receive fair market
compensation (individually a "Gift" and collectively "Gifts"), including, but
not limited to, gifts, loans, or discounts, unless such Gift or Gifts are of
nominal value, as determined in BAHS's sole discretion.
6. Additional Responsibilities of BAHS and Home Care Agency.
BAHS and Home Care Agency each shall:
6(a) Designate a person within its respective organization who shall
have the responsibility for coordinating the assignments of Aides;
6(b) Subject to Sections 4(b) and 4(d) hereof, consult and cooperate
with each other in establishing mutually acceptable standards and procedures for
selection and assignment of Aides, handling of requests for emergency Aide
Services, billing procedures, and any other matters incidental to carrying out
the provisions and purposes of this Agreement; and
6(c) Subject to Sections 4(b) and 4(d] hereof, consult and cooperate
with each other in establishing mutually acceptable standards and procedures for
handling Aide grievances and Patient complaints.
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7. Fees and Payments.
7(a) Home Care Agency shall submit to BAHS, within 90 days or 3 months
of the date of service, a statement, in a form satisfactory to BAHS, setting
forth for such month the names of each Aide providing services hereunder, the
Aide Services performed by such Aide, and the amounts due Home Care Agency in
accordance with the fee schedule attached and incorporated herein as Schedule 1
for Aide Services performed during such month. Each such statement shall set
forth the Aide Services performed for each Patient using the Patient number and
any other identifier codes provided to Home Care Agency by BAHS. In computing
the hours worked by each Aide, only the time the Aide was physically present in
the Patient's home shall be taken into account. BAHS shall make payment of the
invoiced amount on or before the later of 90 days after BAHS's receipt of the
relevant statement or upon BAHS's verification of the items and costs contained
therein. Vendor statements received after 90 days or 3 months from the date of
service will not be paid. The exception to this would be invoices that were
received on a timely basis, but have had problems which we are mutually working
on to correct.
7(b) Upon BAHS's request, Home Care Agency, at its sole expense, shall
provide to BAHS a cost analysis based upon accounting procedures acceptable to
BAHS.
8. Representations Warranties and Covenants of Home Care Agency. Home Care
Agency represents and warrants (a) that none of its board members, agents or
management staff have been convicted of criminal offenses relating to their
involvement of the Medicaid program, Medicare program, or social service
programs under Title XX of the Social Security Act, and (b) that it currently
has and shall maintain throughout the term of this Agreement all licenses,
certifications, and registrations required by law to provide the services
hereunder.
9. Independent Relationships. Except as specifically provided herein, none
of the provisions of this Agreement are intended to create (nor shall be deemed
or construed to create) any relationship between BAHS and Home Care Agency other
than that of independent entities contracting with each other hereunder solely
for the purpose of effecting the provisions of this Agreement. Neither of the
parties hereto, nor any of their respective officers, directors or employees,
shall be deemed or construed to be the agent, employee, representative, partner,
or joint venturer of the other, except as specifically provided herein. Neither
party hereto is authorized to represent or bind the other party for any purpose
whatsoever without the prior written consent of the other party.
10. General Provisions. As required by DSS and/or HCFA with respect to Aide
Services furnished to Enrollees and in addition to
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the other provisions of this Agreement, the parties hereby agree to the
following provisions:
lO(a) Home Care Agency agrees to provide services hereunder as
authorized and requested by BAHS.
lO(b) Home Care Agency agrees to accept the payment from BAHS as
provided hereunder as payment in full for all services rendered to or on behalf
of Enrollees pursuant to this Agreement. Home Care Agency shall not, for any
reason, bill, charge, or collect any fee or payment from any Enrollee, DSS,
HCFA, or any private insurer for any services rendered to or on behalf of
Enrollees by Home Care Agency pursuant to this Agreement. Home Care Agency shall
hold harmless all Enrollees, DSS, and HCFA in the event that BAHS does not pay
for such services performed hereunder.
lO(c) Home Care Agency shall submit reports as required by BAHS.
lO(d) To the extent required by applicable law, Home Care Agency shall
retain all books and records relating to the services and items rendered
hereunder for six years. During the term of this Agreement and thereafter for a
period of six years, BAHS, CCMC, DSS, HCFA, the Comptroller of the State of New
York, and their respective agents shall have reasonable access to all such books
and records for inspection, examination, and copying. Home Care Agency also
shall comply with all applicable federal requirements regarding access to such
books and records.
lO(e) Home Care Agency and BAHS each shall comply with all applicable
state and federal non-discrimination laws and shall not discriminate unlawfully
on the basis of age, race, color, sex, creed, or national origin.
lO(f) Home Care Agency shall comply with all applicable federal,
state, and local laws, rules and regulations, including, but not limited to,
those governing confidentiality of Patient records.
lO(g) Home Care Agency acknowledges and agrees that DSS has the right
to review this Agreement.
lO(h) To the extent requested by BAHS, Home Care Agency shall
participate in and comply with BAHS's and CCMC's Utilization Review and Quality
Assurance programs and the CCMC Enrollee grievance procedure as in effect from
time to time.
lO(i) Home Care Agency shall immediately notify BAHS in writing if it
is suspended or terminated from participation in the medical assistance program
or the Medicare Program. This Agreement shall automatically terminate upon
notice to BAHS from Home Care Agency, DSS, or CCMC that Home Care Agency has
been so suspended or
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terminated.
lO(j) With respect to Enrollees, this Agreement shall be interpreted
and construed by the parties hereto in a manner consistent with the laws,
regulations, and agreements governing the operation of the CCMC Program, and
consistent with the purposes of such program.
11. Prohibition on Use of Federal Funds for Lobbyinq:
11(a) Home Care Agency agrees, pursuant to Section 1352, Title 31,
United States Code, not to expend Federal appropriated funds received under this
Agreement to pay any person for influencing or attempting to influence an
officer or employee of an agency, a member of Congress, an officer or employee
of Congress, or an employee of a member of Congress in connection with the
awarding of any Federal contract, the making of any Federal grant, the making of
any Federal loan, the entering into of any cooperative agreement, and the
extension, continuation, renewal, amendment, or modification of any Federal
contract, grant, loan or cooperative agreement. Home Care Agency agrees to
complete and submit the "Certification Regarding Lobbying", attached hereto as
Exhibit A.
ll(b) If any funds other than Federal appropriated funds have been
paid or will be paid to any person for influencing or attempting to influence an
officer or employee of an agency, a member of Congress, an officer or employee
of Congress, or an employee of a member of Congress in connection with this
Agreement or the underlying Federal grant, Home Care Agency agrees to complete
and submit Standard Form-LLL, 'Disclosure Form to Report Lobbying", in
accordance with its instructions.
ll(c) Home Care Agency shall include the provisions of this Section 11
in all subcontracts under this Agreement and require that all subcontractors
certify and disclose accordingly.
12. Patients/Enrollees. Unless otherwise specified herein, the term
"patient(s)" shall be deemed to include "Enrollee(s)", and the terms and
conditions of this Agreement shall apply to Home Care Agency's performance of
this Agreement with respect to all patients of BAHS, including all Enrollees.
13. Nonexclusivity. This Agreement is non-exclusive, and nothing contained
herein shall preclude or prevent either party from contracting with any other
third party.
14. Notices. All notices, demands, requests, or other communications which
may be or are required to be given, served or sent by any party to the other
party pursuant to this Agreement shall be in writing and shall be hand delivered
(including delivery by courier), mailed by first-class, registered or
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certified mail, return receipt requested, postage prepaid, or transmitted by
telegram, telex, or facsimile to the address indicated for each party beneath
its signature below to the attention of the undersigned or such new address as
such party may designate by notice to the other party.
15. Binding Effect. Subject to any provisions hereof restricting
assignment, this Agreement shall be binding upon and shall inure to the benefit
of the parties hereto and their respective successors and assigns.
16. Assignment. Neither party may assign or delegate this Agreement (or any
part thereof) without the prior written consent of the other party, except that
BAHS may assign this Agreement, in whole or in part, to CCMC or to any
corporation or entity which directly or indirectly, through one or more
intermediaries, controls, or is controlled by, or is under common control with
BAHS.
17. Limitation on Benefits. It is the explicit intention of the parties
hereto that no person or entity other than the parties hereto is or shall be
entitled to bring any action to enforce any provision of this Agreement against
any of the parties hereto, and the covenants, undertakings, and agreements set
forth in this Agreement shall be solely for the benefit of, and shall be
enforceable only by, the parties hereto or their respective successors, legal
representatives, and assigns as permitted hereunder; provided, however, that (a)
the covenants, undertakings, and agreements set forth in Section lO(b) hereof
shall be construed for the benefit of Enrollees and (b) the provisions of this
Agreement that expressly give CCMC rights or benefits shall be enforceable by
CCMC.
18. Entire Aqreement; Amendment. This Agreement constitutes the entire
agreement among the parties hereto with respect to the matters provided for
herein, and it supersedes all prior oral or written agreements, commitments or
understandings with respect to the matters provided for herein. No amendment,
modification or discharge of this Agreement shall be valid or binding unless set
forth in writing and duly executed by the party against whom enforcement of the
amendment, modification, or discharge is sought.
19. Headings. Section headings contained in this Agreement are inserted for
convenience of reference only, shall not be deemed to be a part of this
Agreement for any purpose, and shall not in any way define or affect the
meaning, construction or scope of any of the provisions hereof.
20. Governinq Law. This Agreement, the rights and obligations of the
parties hereto and any claims or disputes relating thereto shall be governed by
and construed in accordance
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with the laws of New York State (excluding the choice of law rules thereof).
21. Counterparts. To facilitate execution, this Amendment may be executed
in counterparts. It shall be sufficient that the signature of, or on behalf of,
each party appear on one or more of the counterparts. All counterparts shall
collectively constitute a single agreement.
22. Termination of Existing Aqreement. Any existing agreement between the
parties hereto regarding Aide Services, shall automatically terminate on the
Commencement Date and shall be superceded in its entirety by this Agreement;
provided, however, that all rights, obligations, and remedies of the parties
arising out of any breach, services, or transactions occuring prior to such
termination shall survive the termination thereof.
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement,
or have caused this Agreement to be duly executed on their behalf, as of the
date and year first above written.
Beth Abraham Health Services
By:/s/ Laura Page-Greifinger
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Name: Laura Page-Greifinger
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Title: V.P. of Operations
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New York Health Care
By: /s/ Jerry Braun
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Name: Jerry Braun
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Title: C.E.O
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CONTRACT. PCW
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SCHEDULE 1
PERSONAL CARE WORKERS AT $10.45 PER HOUR.
HOME HEALTH AIDES AT $______ PER HOUR.
AUTHORIZED CLUSTERED AIDES AT $1.25 MORE PER HOUR OF WHICH $1.10 PER HOUR GOES
TO THE AIDE.
IF THE VENDOR PROVIDES HOUSEKEEPER OR HOMEMAKER, THE RATE WILL BE THE SAME AS
THE PERSONAL CARE WORKER.
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HOME CARE AGENCY
EXHIBIT A
CERTIFICATION REGARDING LOBBYING
On behalf of Home Care Agency, the undersigned certifies, to the best of
his or her knowledge and belief, that:
(1) No federal appropriated funds have been paid or will be paid by or on
behalf of Home Care Agency, to any person for influencing or attempting to
influence an officer or employee of an agency, a Member of Congress, an
officer or employee of Congress, or an employee of a Member of Congress in
connection with the awarding of any Federal contract, the making of any
Federal contract, the making of any Federal grant, the making of any
Federal loan, the entering into of any cooperative agreement, and the
extension continuation, renewal, amendment, or modification of any Federal
contract, grant, loan, or cooperative agreement.
(2) If any funds other than Federal appropriated funds have been paid or will
be paid to any person for influencing or attempting to influence an officer
or employee of any agency, a Member of Congress, an officer or employee of
Congress, or an employee of a Member of Congress in connection with this
Federal contract grant, loan, or cooperative agreement, the Home Care
Agency shall complete and submit Standard Form-LLL, "Disclosure Form to
Report Lobbying", in accordance with its instructions.
(3) Home Care Agency shall require that the language of this certification be
included in the award documents for all subawards at all tiers (including
subcontracts, subgrants, and contracts undergrants, loans, and cooperative
agreements) and that all subrecipients shall certify and disclose
accordingly.
This certification is a material representation of fact upon which reliance was
placed when this transaction was made or entered into. Submission of this
certification is a prerequisite for making or entering into this transaction
imposed by section 1352, title 31, U.S. Code. Any person who fails to file the
required certification shall be subject to a civil penalty of not less than
$10,000 and not more than $100,000 for each such failure.
Date: 4/8/96 /s/ Jerry Braun CEO
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Name: Jerry Braun
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14
HOMEMAKER SERVICES
AGREEMENT BY AND BETWEEN
THE ORANGE COUNTY DEPARTMENT OF SOCIAL SERVICES located at Box Z, Quarry
Road, Goshen, NY 10924, hereinafter called the Department and NEW YORK HEALTH
CARE, INC. located at 1667 FLATBUSH AVENUE, BROOKLYN, NEW YORK 11210 hereinafter
called the Contractor.
WITNESSETH:
WHEREAS, the Commissioner of Social Services of the County of Orange is an
authorized social services official charged with the responsibility, insofar
that funds are available for that purpose, to administer such care, treatment
and services that may be necessary to restore persons unable to maintain
themselves to a condition of self-support or self-care and to provide services
that may be necessary to maintain and strengthen family life so that families
may be kept together pursuant to Sections 131, 131(a) and 250(l) of the Social
Services Law of the State of New York (SSL), and
WHEREAS, Homemaker and Housekeeper/Chore Services are included in the
latest Comprehensive Annual Social Services Program Plan for New York State
including the Orange County Social Services District, and
WHEREAS, the Contractor under the terms of its corporate authority has the
power to provide the Services set forth in Appendix A annexed hereto and made a
part hereof, and
WHEREAS, the Contractor is an authorized provider of homemaker
housekeeper/chore services and meets all Federal and State standards applicable
to providers of such services, and
WHEREAS, the Department finds that the Contractor's charges are reasonable
and necessary to assure quality of services, and
WHEREAS, it is economically and organizationally feasible for the
Department to contract with the Contractor for the performance of these
services.
NOW, THEREFORE, the parties in consideration of the above, do covenant and
agree as follows:
1. The Contractor shall furnish to the Department Homemaker, Educational
Homemaker, and Housekeeper/Chore Services as follows:
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Objectives
(a) To provide quality homemaker and housekeeper/chore services for
children in their own home because of illness, incapacity, or absence of a
caretaker relative; for individuals in their own home because of illness or
incapacity; and, for individuals, families, caretaker relatives and/or children
in their own home to achieve adequate household and family management.
To provide quality educational teaching homemakers for assignment to and
utilization in a program involving the detection and prevention of child abuse
in the home, and the maintenance. care and rehabilitation of those parents and
children concerned.
All services are to be provided in accordance with State and Federal
standards of care.
Location of Services
(b) The Contractor will provide the agreed services in the home of each
eligible client in all parts of Orange County.
Unit of Service
(c) A unit of service is defined, for the purpose of this Agreement, as
appropriate care for one hour.
Staff
(d) The Contractor will allocate the direct service delivery personnel in
the following categories, numbers. and the competencies to provide the agreed
services.
Subcontractors
(e) The Contractor or its employees will provide all services contemplated
under this Agreement except for N/A . The Contractor has subcontracted with
N/A, hereinafter called the Subcontractor, to provide for those necessary
specific services. The Contractor is fully responsible for the performance of
the Subcontractor, including the subcontractors compliance with the applicable
requirements of the New York State Department of Social Services including but
not limited to pertinent Regulations of the New York State Department of Social
Services.
Other Responsibilities
(f) The Contractor shall comply with all procedures required by the
Department for the planning, use and evaluation of services provided by
Homemakers, Educational Homemakers and Housekeeper/Chore providers.
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(g) It shall be the responsibility of the Contractor to submit charges to
the Department on the forms and according to the procedures established by the
Department.
(h) The Contractor shall employ, train and supervise all homemakers,
educational homemakers and persons providing housekeeping/chore services and
will assign them as needed to individuals and families.
(i) All training programs shall be approved by the New York State
Departments of Health, Education and Social Services.
(j) The Contractor shall perform all supervisory activities in compliance
with guidelines and requirements of the State of New York. Field supervision
will be performed by a licensed registered nurse and/or caseworker.
(k) Homemaker services shall be available twenty-four hours per day, seven
days per week. Housekeeper/chore and educational homemaker shall be available as
necessary.
(1) The Department will furnish to the contractor the following information
in each case where the client has signed the appropriate authorization to
release information.
(i) most recent social assessment
(ii) most recent nursing assessment
(iii) most recent physician's statement
(iv) name and address of closest relative or responsible relative
(m) The Contractor agrees to notify immediately the Department if the
client: enters a hospital or other institution or relocates his/her principal
place of residence.
(n) The Contractor agrees to furnish upon request of the Department
information regarding: client's progress or changes in composition of the
client's household.
(o) The Department agrees to furnish the Contractor the information agreed
above in sections (m) and (n) if the Department obtains this information first.
(p) If the Contractor or agent thereof in the course of duty discovers or
has reason to believe that there are irregularities concerning any family or
individual serviced by the Contractor under the terms of this contract and
involving child neglect or abuse the Contractor shall at once notify the
Department and thereafter cooperate fully in supplying information concerning
such matters as may be requested by the Department.
3
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(q) The Contractor agrees that the charges submitted to the Department for
the services of a homemaker, housekeeper/chore or educational homemaker shall
not be higher than charges submitted for services rendered to other individuals
whose source of payment is other than by the Department for each individual so
cared for whether on behalf of the Department, a private client or otherwise. In
the event that the Contractor has separate income or contributions restricted as
to application that operate to cause discrimination in the amounts charged for
care as between clients of the Department and others, then Contractor agrees to
furnish to the Department complete documentation justifying such discrimination.
(r) The Contractor will not place an educational homemaker in any household
unless a joint visit has been made by a Department caseworker and the
Contractor. It will be the responsibility of the Contractor to devise the plan
of how the homemaker will approach her tasks. When an educational homemaker is
authorized, the Department will clearly specify "educational homemaker" on all
acceptance letters. The acceptance letter will include a date on which a
progress report will be due.
2. The Contractor shall obtain and maintain in full force and effect
liability or other insurance in an amount equal to $1,000,000.00 that protects
the local Department and/or the New York State Department of Social Services
from any potential liability that may accrue as a result of any actions of the
Contractor; such coverage may be an endorsement to an existing policy of the
Contractor. Regardless of form or manner of coverage, the insurer shall be
requested by the Contractor to provide the local Department with a written
acknowledgment of coverage, the terms and conditions thereof, and a commitment
to notify the Department within ten ( 10) days before any cancellation,
reduction or other change in coverage becomes effective (pursuant to usual
insurance "hold harmless" or "loss payee" provisions). The Contractor hereby
agrees to indemnify and hold harmless the Department from any and all claims,
causes of action or proceedings in any forum whatsoever for personal injuries or
property damage.
3 Total expenditures under this Agreement are not to exceed $2,000,000.00
per annum.
4. The Department will pay the Contractor for each unit of homemaker or
housekeeper/chore service (ref. item 1(c)) provided pursuant to this Agreement.
The said terms of reimbursement shall be as promulgated by the New York State
Department of Social Services. This rate per service unit has been determined
by the Department to be an amount reasonable and necessary to assure the quality
of the services purchased. Payment of this rate is contingent upon approval of
said rate by the New York State Department of Social Services for the indicated
time period.
4
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5. The Department will pay the Contractor for each unit of educational
homemaker service (ref. item 1(c)) provided pursuant to this Agreement. The
said terms of reimbursement shall be as promulgated by the Orange County
Department of Social Services. This rate per service unit has been determined by
the Department to be an amount reasonable and necessary to assure the quality of
the services purchased. Payment of this rate is contingent upon approval of said
rate by the Orange County Department of Social Services for the indicated time
period. The Department will not obligated to pay said rate if it is not
approved.
6. In certain special cases where it is necessary to provide twenty-four
hour homemaker service on a temporary basis, and where such care can be
provided by one individual who is available and willing to provide such care
because the client's condition does not require constant alertness or personal
attendance by the caretaker, then the agreed rate of payment is eight hours at
the full time rate, eight hours at one-half rate and eight hours at one-quarter
the full time rate, per twenty four hour period. Payment of this rate is
contingent upon approval of said rate by the New York State Department of
Social Services for the indicated time period. The Department will not be
obligated to pay said rate if it is not approved.
7. This Agreement may be terminated by either party upon 30 days written
notice to the other party.
8. This Agreement shall be in full force and effect for a period of one
year from 1/1/96 to 12/31/96
9. This Agreement shall be governed by the applicable laws of the State of
New York.
10. This Agreement contains the entire understanding between the Department
and the Contractor. There are no other understandings regarding the subject
matter of this Agreement either oral or in writing which bind either party as to
the subject matter of this Agreement. Any modification of this Agreement must be
in writing executed by the parties hereto.
11. Should any of the provisions of this Agreement be determined to be
unenforceable, then that determination shall have no effect on the remaining
terms of this Agreement which shall remain in full force and effect for the term
of this Agreement.
12. The parties hereto agree to abide by all the items and requirements as
set forth in Contract Attachment A, hereto annexed and made a part hereof, or as
the same may be amended by amendments hereto.
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IN WITNESS WHEREOF, the parties have hereunto signed this Agreement on the
day and year appearing opposite their respective signatures.
ORANGE COUNTY
DATE: 2/1/96 /s/ JOSEPH G. RAMPE
---------------------------------
JOSEPH G. RAMPE, COUNTY EXECUTIVE
NEW YORK HEALTH CARE, INC.
DATE: 2/1/96 /s/ JERRY BRAUN, CEO
---------------------------------
BY: Jerry Braun, CEO
---------------------------------
AGREEMENT BETWEEN A LOCAL DEPARTMENT OF
SOCIAL SERVICES AND A CONTRACTING AGENCY
FOR PERSONAL CARE SERVICE (PURSUANT TO
TITLE II OF ARTICLE 5 OF THE NEW YORK
SOCIAL SERVICE AND TITLE XIX OF THE
UNITED STATES SOCIAL SECURITY ACT)
(FOR TITLE XIX SERVICES ONLY)
AN AGREEMENT
Between: THE ORANGE COUNTY DEPARTMENT OF SOCIAL SERVICES
and: NEW YORK HEALTH CARE, INC.
<PAGE>
WHEREAS, Local Social Services Districts are authorized pursuant to Section
365 a(2)(e) of New York State Social Services Law and New York State Department
of Social Services Regulation 18 NYCRR 505.14 and/or other Department
regulations to provide personal care services to persons eligible to receive
said services, and
WHEREAS, the District is desirous of obtaining personal care service to be
rendered to recipients of medical assistance for which reimbursement is
available pursuant to Title XIX of the Federal Social Security Act and
applicable State Law, and
WHEREAS, the contractor(s) herein represent(s) the he, she, it or they will
provide services that are authorized pursuant to Title XIX of the Federal Social
Security Act and applicable State law and which are eligible for reimbursement
thereto,
NOW, THEREFORE, the parties signing and executing this instrument do, in
consideration of the above, covenant and agree as follows:
1. The relationship of the Providers to the District shall be that of
independent contractor. The provider, in accordance with his status as an
independent contractor, covenants and agrees that he will conduct himself in
accordance with such status, that he will neither hold himself out as, nor claim
to be, an officer or employee of the Department by reason thereof and that he
will not by reason thereof, make any claim, demand, or application to or for any
right or privilege applicable to an officer or employee of the State, including,
but not limited to Workmen's Compensation coverage, or retirement membership or
credits.
2. The Contractor(s) agree(s) to provide personal care services, as defined
in New York State Department of Social Services Regulations 18 NYCRR 505.14 to
recipients of medical assistance (Medicaid), as defined in Title 11 of Article 5
of the New York State Social Service Law and/or Title XIX of the Federal Social
Security Act, if requested to provide said services by a social services
district pursuant to the order(s) and/or prescription(s) of a physician in
accordance with a plan of treatment to be supervised by a registered nurse
subject to the conditions set forth in the regulations of the New York State
Department of Social Services (18 NYCRR 505.14 or superseding provisions).
3. The personal care services will be rendered as authorized by the
district at the locations specified by the district during the term of this
agreement and should be provided for particular recipients only as long as
authorized, pursuant to the district's direction as to frequency, type and
amount.
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4. The district shall not be obligated to utilize the services of the
contractor(s), and the district of the New York State Department of Social
Services shall in its discretion be authorized to terminate any agreement or
request for services to be rendered to any or all recipient(s) upon notification
to the contractor(s), its agent(s) or employee(s). The cessation of services to
a particular recipient shall not render this entire agreement void or voidable.
Except for emergencies, the district shall give the provider contractor(s)
thirty (30) days notice of intention to terminate the services of the provider
to any individual who would otherwise remain eligible to continue receiving said
services; in the event of termination, the provider shall promptly transfer any
and all records pertaining to any individual who has been or is receiving
services provided by the Contractor to the local district or to any subsequent
provider designated by the local district.
5. This agreement shall be valid and binding for the time period set forth
below, except that if the time period set forth continues beyond one year from
the effective date of this agreement the agreement shall be voidable any time
after the end of one year at the option of the local Social Services District or
the New York State Department of Social Services; neither the district nor the
State Department of Social Services shall be obligated to renew or extend the
terms of this contract.
6. The district shall reimburse the contractor(s) at the rate(s) set forth
below; the contractor(s) shall not be required without its (their) consent to
provide the services at a decreased rate, but any services provided after
notification of a decreased rate shall be deemed to have been rendered by
consent.
7. The Contractor(s) agree(s) that its employees or agents rendering
personal care services shall be subject to the supervision of the district
and/or the New York State Department of Social Services and/or any nurse(s) or
agency(ies) designated by the district to provide supervision of the personal
care services being rendered to the authorized recipient of medical assistance
(Medicaid) in accordance with state established policies and standards. It is
understood and agreed that the district and/or the New York State Department of
Social Services retains the right to maintain and continue case management for
any recipients of medical assistance (Medicaid) and that all the activities of
the provider contractor(s) shall be subject to the monitoring of the local and
state Social Services departments.
8. The Contractor(s) agree(s) that all employees rendering personal care or
other services to medical assistance recipients, shall have completed
successfully a basic training program as defined in the New York State
Department of Social Services Regulations 18 NYCRR 505.14 or superseding
regulations and participated in on-the-job and in-service training pursuant to a
plan submitted and approved by the New York State Department of Social Services.
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9. The Contractor(s) will cooperate and participate as directed by the
local district or the New York State Department of Social Services, in any
endeavors incident to the rendering of personal care services herein, including,
but not limited to testimony for fair hearings for recipients, grievance
hearings and notices thereof to recipients, reports, surveys, studies, audits,
court or judicial proceedings and any other matters or procedures relating to
the furnishing of personal care services by the contractor.
10. The Contractor(s) shall make the necessary and/or required employer
payroll reports, deductions, and tax, insurance or other payments, including but
not limited to, providing for workman's compensation insurance, disability
insurance, U.S. Social Security taxes, federal and state unemployment insurance
benefits, withholding federal, state and local income taxes; and comply with any
other legal or customary requirements; the contractor(s) shall conduct their
affairs in a manner such that the local District and/or the New York State
Department of Social Services will not be held liable (and/or shall be held
harmless) for any actions or omissions of the Contractor, its employees, agents
or other representatives.
11. The Provider shall obtain and maintain in full force and effect
liability or other insurance in the amount of $1,000,000 that protects the local
district and/or the New York State Department of Social Services from any
potential liability that may accrue as a result of any actions of the Provider;
such coverage may be an endorsement to an existing policy of the Provider.
Regardless of form or manner of coverage, the insurer shall be requested by the
Provider to provide the local district with a written acknowledgment of
coverage, the terms and conditions thereof, and a commitment to notify the
District at least ten (10) days before any cancellation, reduction or other
changes in coverage becomes effective (pursuant to usual insurance "hold
harmless" or "loss payee" provisions). In the alternative, the Provider hereby
agrees to indemnify and hold harmless the District from any and all claims,
causes of action or proceedings in any forum whatsoever for personal injuries or
property damage.
12. The Contractor(s) agree(s) to maintain books, records, documents, and
other evidence and accounting procedures and practices which sufficiently and
properly reflect all direct and indirect costs of any nature expended in the
performance of this agreement. These records shall be subject at all reasonable
times for inspection, review, or audit by State personnel and other personnel
duly authorized by the District, as well as by Federal personnel when Federal
funds are being utilized in making payments to the Provider. The Provider agrees
to collect statistical data of a fiscal nature on a regular basis and to make
fiscal statistical reports at times prescribed by and on forms furnished by the
District and duly authorized by the State Department of Social Services.
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<PAGE>
13. The Provider agrees to maintain program and statistical records and to
produce program narrative and statistical data at times as prescribed by, and on
forms furnished by the local district as duly authorized by the State Department
of Social Services.
14. The Provider agrees to retain all books, records, and other documents
relevant to this agreement for six (6) full years after final payment. Federal
and/or State auditors and any persons duly authorized by the District shall have
full access to and the right to examine any of said materials during said
period.
15. The District and the Contractor(s) shall observe and require the
observance of applicable Federal and State requirements relating to
confidentiality of records and information, and each agrees not to allow
examination of records or disclose information, except that examination of
records by the district and/or the New York State Department of Social Services
as may be necessary to assure that the purpose of the agreement will be
effectuated, and also to otherwise comply with the District's requirements and
obligations under law, will be allowed.
16. The Contractor(s) agree(s) that it has notified or will notify the
District and/or the New York State Department of Social Services of any
affiliated entities with which it has direct or indirect cooperative agreements,
contracts for services, or any other type of formal or informal arrangement
whereby the costs and/or the amounts received in reimbursement of services
rendered to recipients are shared among or transferred between the Provider and
any other entity(ies); if the Provider makes any disbursement directly or
indirectly to any entity receiving reimbursement from any governmental agency,
the District and/or the New York State Department of Social Services shall be so
notified.
17. (a) The terms set forth in Attachment A appended hereto shall be made a
part hereof and shall be incorporated herein.
(b) The Provider agrees to comply with the requirements of the United
States Civil Rights Act of 1964 as amended and Executive Order No. 11246
entitled "Equal Employment Opportunities" and the regulations issued pursuant
thereto as contained in 41 CFR Part 60 and/or any other Federal or State
regulation or laws.
(c) The Provider agrees to observe and comply with the Federal regulations
contained in 45 CFR 84 entitled "Non-discrimination on the Basis of Handicap;
Programs and Activities Receiving or Benefitting from Federal Financial
Assistance."
11
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18. The terms of reimbursement for medical assistance services (pursuant to
Title XIX of the Federal Social Security Act) shall be The said terms of
reimbursement shall be as promulgated by the New York State Department of Social
Services for the term 1/1/96 through 12/31/96.
Unless otherwise stated, the rate of payment set forth shall be the total
gross amount of payment and no additional reimbursement to the Provider will be
made for any subsidiary or other services supplementary to or in addition to the
terms herein set forth. Payment of this rate is contingent upon approval of said
rate by the New York State Department of Social Services for the indicated time
period. The Department will not obligated to pay said rate if it is not
approved.
19. The parties agree to renegotiate this agreement in the event that the
Department of Health and Human Services of the New York State Department of
Social Services issue new or revised requirements on the Department as a
condition for receiving continued Federal or State reimbursement.
20. This agreement may be amended whenever determined by the District and
the Contractor(s), if such amendments are approved by the New York State
Department of Social Services. All amendments must be in writing, duly signed by
both parties, and be annexed to the contract.
21. This agreement contains all the terms and conditions agreed upon by the
parties. All items incorporated by reference are to be attached. No other
understandings, oral or otherwise, regarding the subject matter of this
agreement, shall be deemed to exist or to bind any of the parties hereto.
22. This Agreement may be terminated by either party upon 30 days written
notice to the other party.
23. This Agreement shall be governed by the applicable laws of the State of
New York.
24. Should any of the provisions of this Agreement be determined to be
unenforceable, than that determination shall have no effect on the remaining
terms of this Agreement which shall remain in full force and effect for the term
of this Agreement.
25. The district will furnish the following information to the contractor
in each case where the client has signed the appropriate authorization to
release information.
(a) most recent social assessment
(b) most recent nursing assessment
(c) most recent physician's evaluation
(d) name and address of closest relative or responsible person
(e) each succeeding assessment and/or evaluation
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<PAGE>
26. The contractor agrees to notify the district the same day the
contractor learns a client enters a hospital or another institution, leaves
his/her residence for any reason or moves to a new address.
27. The contractor agrees to furnish upon request of the district
information regarding client's progress or changes in composition of the
client's household. Contractor will advise the district of available informal
family support.
28. The district agrees to furnish the contractor the information
stipulated above in section (1) and (2) if the district obtains this information
first.
29. If the contractor or agent thereof in the course of duty discovers or
has reason to believe that there are irregularities concerning any family or
individual serviced by employees of the contractor under the terms of this
contract and involving child neglect or abuse the contractor shall at once
notify the district and thereafter cooperate fully in supplying information
concerning such matters as may be requested by the district.
30. Sections twenty-five through twenty-nine (25-29) as set forth above
were approved in writing by the New York State Department of Social Services on
February 6, 1980.
31. The provider shall obtain and maintain in full force and effect
liability or other insurance in an amount equal to $1,000,000.00 that protects
the local District and/or the New York State Department of Social Services from
any potential liability that may accrue as a result of any actions of the
provider; such coverage may be an endorsement to an existing policy of the
provider. Regardless of form or manner of coverage, the insurer shall be
requested by the provider to provide the local District with a written
acknowledgment of coverage, the terms and conditions thereof, and a commitment
to notify the District within ten (10) days before any cancellation, reduction
or other change in coverage becomes effective (pursuant to usual insurance "hold
harmless" or "loss payee" provisions).
The provider hereby agrees to indemnify and hold harmless the District from
any and all claims, causes of action or proceedings in any forum whatsoever for
personal injuries or property damage.
32. Section thirty-one (31) as set forth above was approved in writing by
the New York State Department of Social Services on February 17, 1981.
33. The contractor will provide telephone coverage on a twenty-four hour,
seven days per week basis, in order to ensure that any emergencies which may
arise are handled in a timely and adequate manner.
34. Section thirty-three (33) as set forth above was approved in writing by
the New York State Department of Social Services on October 21, 1982.
13
<PAGE>
35. The parties hereto agree to abide by all the items and requirements as
set forth in Contract Attachment A, hereto annexed and made a part hereof, or as
the same may be amended by amendments hereto.
IN WITNESS WHEREOF, the parties hereunto have signed and executed this
agreement on the date(s) indicated opposite their respective signatures.
ORANGE COUNTY
DATE: 2/16/96 /s/ Joseph G. Rampe
------- ----------------------------------------
JOSEPH G. RAMPE, COUNTY EXECUTIVE
NEW YORK HEALTH CARE, INC.
DATE: 2/1/96 /s/ Jerry Braun CEO
------- ----------------------------------------
BY: C.E.O. JERRY BRAUN
14
<PAGE>
CONTRACT ATTACHMENT A
The parties to the Purchase of Service agreement made on the 22nd day of
January, 1996, By and Between the ORANGE COUNTY DEPARTMENT OF SOCIAL SERVICES,
located at Quarry Road, Box Z, Goshen, New York 10924, hereinafter called the
Department and NEW YORK HEALTH CARE, INC. located at 1667 FLATBUSH AVENUE,
BROOKLYN, NEW YORK 11210 hereinafter called the Contractor do hereby agree that
this Attachment A is part and parcel of aforesaid agreement and do further
covenant and agree as follows:
A. If and so long as funds are available therefore, the Contractor shall
furnish services to the Department in accordance with standards prescribed by
the Department and the State Department of Social Services.
B. If and so long as funds are available therefore, the Department shall
purchase from the Contractor, any or all of the services set forth in this
agreement which the Contractor may furnish to the Department.
C. The Contractor shall furnish such services in accordance with applicable
requirements of law and shall cooperate with the Department, as may be required
so that the Department and the New York State Department of Social Services will
be able to fulfill their function and responsibilities as the Single State
Agency under Title IV-D and the other applicable provisions of the Social
Security Act and the Social Services Law and be able to meet all of the
applicable requirements, both State and Federal pertaining thereto.
D. The Contractor, upon the request of the Department shall participate in
support proceedings, paternity proceedings, appeals and fair hearings as
witnesses when necessary for a determination of the issues.
E. The Contractor agrees to maintain books, records, documents, and other
evidence and accounting procedures and practices which sufficiently and properly
reflect all direct and indirect costs of any nature expended in the performance
of this agreement.
These records shall be subject at all reasonable times for inspection,
review, or audit by State personnel and other personnel duly authorized by the
Department, as well as by Federal personnel.
The Contractor agrees to collect statistical data of a fiscal nature on a
regular basis and to make fiscal statistical reports at times prescribed by and
on forms furnished by the Department.
The Contractor agrees to include these requirements in all subcontracts and
assignments.
F. Contractor agrees to maintain program records required by the Department
and agrees that a program and facilities review, including meetings with
interviewees, review of service records, review of service policy and procedural
issuances, review of staffing ratios and job descriptions, and meetings with any
staff directly or indirectly involved in the provision of
15
<PAGE>
service may be conducted at a reasonable time by appropriate State and Federal
personnel and other persons duly authorized by the Department.
The Contractor agrees to maintain program statistical records required by
the Department and to produce program narative and statistical data at times
prescribed by, and on forms furnished by, the Department.
The Contractor agrees to include these requirements in all subcontracts and
assignments.
G. The Contractor agrees to retain all books, records, and other documents
relevant to this agreement for five years after final payment, Federal and/or
State auditors and any persons duly authorized by the Department shall have full
access to and the right to examine any of said materials during said period. If
an audit by or on behalf of the Federal and/or State Government has begun but is
not completed at the end of the five year period, the records shall be retained
until resolution of the audit findings. The Department of Social Services will
have the right to make copies of the Contractors files during the five year
retention period after termination.
H. The Contractor shall cooperate in developing a system of reports to be
made periodically as are or may be necessary to comply with applicable Federal
and State requirements.
I. The Contractor shall inform the Department of problems, delays, or
adverse conditions which will materially impair the ability to obtain the
objectives of the Agreement, as soon as the problems, delays or adverse
conditions become known to the Contractor.
J. The Contractor shall use as mandated by the Department forms, procedures
and financial controls for carrying out their respective responsibilities under
this Agreement.
K. The Contractor shall not assign, transfer, convey, or otherwise dispose
of this agreement or Contractor's right, title or interest therein or
Contractor's power to execute this Agreement to any other person or corporation
without prior written approval of the Department (which shall be attached to the
original agreement) and subject to such conditions and provisions as the
Department may deem necessary. No such approval by the Department of any
assignment, transfer conveyance or other disposition shall be deemed in any
event or in any manner to provide for the incurrence of any obligation of the
Department in addition to the total agreed upon prices.
L. The Contractor agrees to limit the use or disclosure of information
concerning applicants or recipients of child support enforcement services to
purposes directly connected with:
(1) The administration of the plan or program approved under parts A, B, C,
D of Title IV or under titles I, X, XIV, XVI, XIX, or XX of the
supplemental security income program established under Title XVI.
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(2) Any investigations, prosecution or criminal or civil proceeding
conducted with the administration of any such plan or program, and
(3) The administration of any other Federal or Federally assisted program
which provides assistance, in cash or in-kind services, directly to
individuals on the basis of need.
The Contractor further agrees that the names or addresses of persons
applying for or receiving public assistance and care shall not be included in
any published report or printed in any newspaper or reported at any public
meeting except meetings of the county board of supervisors, city council, town
board or other board or body authorized and required to appropriate funds for
public assistance and care in and for such county, city or town: nor shall such
names and addresses and the amount received by or expended for such persons be
disclosed, except to the commissioner of Social Services or her authorized
representative, such county, city or town board or body or its authorized
representative, any other body or official required to have such information
properly to discharge its or his duties, or by authority of such county, city or
town appropriating board or body or of the social services official of the
county, city or town, to a person or agency considered entitled to such
information.
The Contractor agrees not to solicit, disclose, receive, make use of, or
authorize, knowingly permit, participate in or acquiesce in the use of
information relating to any applicant for or recipient of public assistance or
care for commercial or political purposes.
This section shall survive the termination of this agreement.
M. In all subcontracts, The Contractor agrees to comply with the
requirements of the Civil Rights Act of 1964, and Executive Order number 11246,
entitled, "Equal Employment Opportunity."
N. The Contractor agrees to comply with new or revised requirements issued
by the Department of Health, Education and Welfare, or the New York State
Department of Social Services.
O. This agreement may be amended whenever determined necessary by the
Department and the Contractor. All amendments must be in writing, duly signed by
both parties and be annexed to the contract.
P. This agreement contains all the terms and conditions agreed upon by the
parties. All items incorporated by reference are to be attached. No other
understandings, oral or otherwise, regarding the subject matter of this
agreement, shall be deemed to exist or to bind any of the parties hereto.
Q. The parties to the attached contract further agree to be bound by the
following, which are hereby made a part of said contract:
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(1) This contract may not be assigned by the contractor or its right, title
or interest therein assigned, transferred, conveyed, sublet or disposed of
without the previous consent, in writing, of the State.
(2) This contract shall be deemed executory only to the extent of money
available to the State for the performance of the terms hereof and no
liability on account thereof shall be incurred by the State of New York
beyond moneys available for the purpose thereof.
(3) The contractor specifically agrees, as required by Labor Law, Sections
220 and 220-d. as amended, that:
(a) no laborer, workman or mechanic, in the employ of the contractor,
subcontractor or other person doing or contracting to do the whole or any
part of work contemplated by the contract shall be permitted or required to
work more than sixteen hours in any one calendar day or more than six days
in any one week, except in the emergencies set forth in the Labor Law.
(b) The wages paid for a legal day's work shall be not less than the
prevailing rate of wages as defined by law.
(c) The minimum hourly rate of wage to be paid shall not be less than
that stated in the specifications, and any redetermination of the
prevailing rate of wages after the contract is approved shall be deemed to
be incorporated herein by reference as to the effective date of
redetermination and shall form a part of these contract documents.
(4) The Labor Law provides that the contract may be forfeited and no sum
paid for any work done thereunder on a second conviction for willfully
paying less than...
(a) the stipulated wage scale as provided in Labor Law, Section 220,
subdivision 3, as amended, or
(b) less than the stipulated minimum hourly wage scale as provided in
Labor Law, Section 220-d, as amended.
(5) The contractor specifically agrees, as required by the provisions of
the Labor Law, Section 220-e as amended, that....
(a) In hiring of employees for the performance of work under this
contract or any subcontract hereunder, or for the manufacture, sale or
distribution of materials, equipment or supplies hereunder, no
contractor, subcontractor nor any person acting on behalf of such
contractor or subcontractor, shall by reason of race, creed, color,
sex or national origin discriminate against any citizen of the State
of New York who is qualified and available to perform the work to
which the employment relates.
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<PAGE>
(b) No contractor, subcontractor, nor any person acting on his behalf
shall, in any manner, discriminate against or intimidate any employee
hired for the performance of this contract on account of race, creed,
color, sex or national origin.
(c) There may be deducted from the amount payable to the contractor by
the State under this contract a penalty of five dollars for each
person for each calendar day during which such person was
discriminated against or intimidated in violation of the provisions of
the contract, and
(d) This contract may be canceled or terminated by the State or
municipality and all monies due or to become due hereunder may be
forfeited for a second or any subsequent violation of the terms or
conditions of this section of the contract, and
(e) The aforesaid provisions of this section covering every contract
for or on behalf of the State or a municipality for the manufacture,
sale or distribution of materials, equipment or supplies shall be
limited to operations performed within the territorial limits of the
State of New York.
(6) (a) By submission of this bid, each bidder and each person signing on
behalf of any bidder certifies, and in the case of a joint bid each party
thereto certifies as to its own organization, under penalty of perjury,
that to the best of his knowledge and belief:
(1) The prices in this bid have been arrived at independently without
collusion, consultation, communication or agreement, for the purpose of
restricting competition, as to any matter relating to such prices with any
other bidder or with any other competitor;
(2) Unless otherwise required by law; the prices which have been
quoted in this bid have not been knowingly disclosed by the bidder and will
not knowingly be disclosed by the bidder prior to opening, directly or
indirectly, to any other bidder or to any other competitor;
3) No attempt has been made or will be made by the bidder to induce
any other person, partnership or corporation to submit or not to submit a
bid for the purpose of restricting competition.
(b) A bid shall not be considered for award nor shall any award be made
where (a)(1)(2) and (3) above have not been complied with provided,
however, that if in any case the bidder can not make the foregoing
certification, the bidder shall so state and shall furnish with the bid a
signed statement which sets forth in detail the reasons therefore. Where
(a)(1)(2) and (3) above have not been complied with, the bid shall not be
considered for award nor shall any award be made unless the head of the
purchasing unit of the State, public department or agency to which the bid
is made, or his designee, determined that such disclosure was not made for
the purpose of restricting competition.
19
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The fact that a bidder (a) has published price lists, rates, or tariffs
covering items being procured, (b) has informed prospective customers of
proposed or pending publication of new or revised price lists for such
items, or (c) has sold the same items to other customers at the same price
being bid, does not constitute, without more, a disclosure within the
meaning of subparagraph one (a).
7. During the performance of this contract, the contract agrees as follows:
(a) The contractor will not discriminate against any employee or applicant
for employment because of race, creed, color, sex, national origin, age
disability or marital status.
(b) If directed to do so by the Commissioner of Human Rights, the
contractor will send to each labor union or representative of works with
which the contractor has or is bound by a collective bargaining or other
agreement or understanding, a notice, to be provided by the State
Commissioner of Human Rights, advising such labor union or representative
of the contractor's agreement under clauses (a) through (g) (hereinafter
called "non-discrimination clauses"). If the contractor was directed to do
so by the contracting agency as part of the bid or negotiation of this
contract, the contractor shall request such labor union or representative
to furnish a written statement that such labor union or representative will
not discriminate because of race, creed, color, sex, national origin, age,
disability or marital status, and that such labor union or representative
will cooperate within the limits of its legal and contractual authority, in
the implementation of the policy and provisions of these non-discrimination
clauses and that it consents and agrees that recruitment, employment and
the terms and conditions of employment under this contract shall be in
accordance with the purposes and provisions of these non-discrimination
clauses. If such labor union or representative fails or refuses to comply
with such a request that it furnish such a statement, the contractor shall
promptly notify the State Commissioner of Human Rights of such failure or
refusal.
(c) If directed to do so by the Commissioner of Human Rights, the
contractor will post and keep posted in conspicuous places, available to
employees and applicants for employment, notices to be provided by the
State Commissioner of Human Rights setting forth the substance of the
provisions of clauses (a) and (b) and such provisions of the State's laws
against discrimination as the State Commissioner of Human Rights shall
determine.
(d) The contractor will state, in all solicitations or advertisements for
employees placed by or on behalf of the contractor, that all qualified
applicants will be afforded equal employment opportunities without
discrimination because of race, creed, color, sex, national origin, age,
disability or marital status.
(e) The contractor will comply with the provisions of Sections 290-299 of
the Executive Law and with the Civil Rights Law, will furnish all
information and reports
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<PAGE>
deemed necessarily by the State Commissioner of Human Rights under these
nondiscriminatory clauses and such sections of the Executive Law, and will
permit access to the contractor's books, records and accounts by the State
Commissioner for the purposes of investigation to ascertain compliance with
these non-discrimination clauses and such sections of the Executive Law and
Civil Rights Law.
(f) This contract may be forthwith canceled, terminated or suspended, in
whole or in part, by the contracting agency upon the basis of a finding
made by the State Commissioner of Human Rights that the contractor has not
complied with these non-discrimination clauses, and the contract may be
declared ineligible for future contracts made by or on behalf of the State
or a public authority or agency of the State, until the contractor has
established and is carrying out a program in conformity with the provisions
of these non-discrimination clauses. Such finding shall be made by the
State Commissioner of Human Rights after conciliation efforts by the
Commissioner has failed to achieve compliance with these non-discrimination
clauses and after a verified complaint has been filed with the
Commissioner, notice thereof has been given to the contractor and an
opportunity has been afforded the contractor to be heard publicly in
accordance with the Executive Law. Such sanctions may be imposed and
remedies invoked independently of or in addition to sanctions and remedies
otherwise provided by law.
(g) The contractor will include the provisions of clauses (a) through (f)
in every subcontract or purchase order in such a manner that such
provisions will be binding upon each subcontractor or vendor as to
operations to be performed within the State of New York. The contractor
will take such action in enforcing such provisions of such subcontract or
purchase order as the State Commissioner of Human Rights or the contracting
agency may direct, including sanctions or remedies for non-compliance. If
the contractor becomes involved in or is threatened with litigation with a
subcontract or vendor as a result of such direction by the State
Commissioner of Human Rights or the contracting agency, the contractor
shall promptly so notify the Attorney General, requesting the Attorney
General to intervene and protect the interests of the State of New York.
(8) The agreement shall be void and of no force and effect unless the
contractor shall provide such coverage for the benefit of, and keep covered
during the life of this agreement, such employees as are required to be covered
by the provisions of the Worker's Compensation Law.
(9) In accordance with Section 220-f of the Labor Law and Section 139-h of
the State Finance Law and the regulations of the Comptroller of the State of New
York promulgated thereunder, the contractor agrees, as a material condition of
the contract
(a) That neither the contractor nor any substantially owned or affiliated
person, film, partnership or corporation has participated, is
participating, or shall participate in an international boycott in
violation of the provisions of the United States Export
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Administration Act of 1969, as amended, or the Export Administration Act of
1979. as amended, or the regulations of the United States Department of
Commerce promulgated thereunder;
(b) That if the contractor or any substantially owned or affiliated person,
firm, partnership or corporation has been convicted or subjected to a final
determination by the United States Department of Commerce or any other
appropriate agency of the United States of a violation of the United States
Export Administration Act of 1969, as amended, or the Export Administration
Act of 1979, as amended, or the regulations of the United States Department
of Commerce promulgated thereunder, the contractor shall notify the
Comptroller of such conviction or determination in the manner prescribed by
the Comptroller's regulations.
R. When the Contractor has materially failed to comply with the terms and
conditions of this agreement, the Department may, in whole or in part, terminate
this Agreement after giving reasonable notice to the Contractor of the reason.
The Department may take such other remedies as may be legally available and
appropriate.
S. This Agreement may be terminated by either party upon thirty days
written notice to the other party deliverable to the addresses first set forth
above.
T. In the event this Agreement is terminated, suspended, revoked, nullified
or voided, the Department, as a settlement, agrees to pay the Contractor for
services performed under this contract which have been completed prior to such
termination, suspension, revocation, nullification or voiding. The Department
may at its discretion pay for necessary and proper costs, which the Contractor
could not reasonably avoid, for services begun but not completed prior to the
termination, suspension, revocation, nullification or voiding of this Agreement;
provided such costs would have otherwise been allowable.
U. For contracts in excess of $100,000., the Contractor agrees to comply
with all applicable standards, orders, or regulations issued pursuant to the
Clean Air Act of 1970 as amended (42 U.S.C. 1857b et seq.)
V. This Agreement shall be governed by the applicable laws of the State of
New York.
W. Should any of the provisions of this Agreement be determined to be
unenforceable, than that determination shall have no effect on the remaining
terms of this Agreement which shall remain in full force and effect for the term
of this Agreement.
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<PAGE>
IN WITNESS WHEREOF, the parties have hereunto signed this Agreement on the
day and year appearing opposite their respective signatures.
ORANGE COUNTY
DATE: 2/16/96 /s/ Joseph G. Rampe
------- ----------------------------------------
JOSEPH G. RAMPE, COUNTY EXECUTIVE
NEW YORK HEALTH CARE, INC.
DATE: 2/1/96 /s/ Jerry Braun CEO
------- ----------------------------------------
BY: C.E.O. JERRY BRAUN
----------------------
23
<PAGE>
ADDENDUM
(To provider for nursing supervision services)
in relation to an
AGREEMENT BETWEEN A LOCAL DEPARTMENT OF SOCIAL
SERVICES AND A CONTRACTING AGENCY FOR PERSONAL
CARE SERVICE (PURSUANT TO TITLE 11 OF ARTICLE
5 OF THE NEW YORK SOCIAL SERVICES LAW AND TITLE
XIX OF THE UNITED STATES SOCIAL SECURITY ACT)
(FOR TITLE XIX SERVICES ONLY)
ADDENDUM TO AN AGREEMENT
Between: THE ORANGE COUNTY DEPARTMENT OF SOCIAL SERVICES
and : NEW YORK HEALTH CARE, INC.
24
<PAGE>
WHEREAS, an agreement has been or is simultaneously being executed between
the parties hereto for the provision of home health care and personal care
services; and,
WHEREAS, nursing supervision for personal care may be provided by a
registered nurse who is an employee of a voluntary or proprietary agency
pursuant to New York State Department of Social Services Regulation 18 NYCRR
505.14 (f)(3)(iii); and,
WHEREAS, the local social services department has requested and obtained an
exception from the New York State Department of Social Services to use a nurse
supervisor from a voluntarily or proprietary agency pursuant to regulation 18
NYCRR 505.14 (f)(3)(iii); and,
WHEREAS, the contractor(s) herein represent(s) that he, she, it, or they
will provide said nursing supervision services as authorized pursuant to Title
XIX of the Federal Social Security Act and applicable state law and which are
eligible for reimbursement thereto
NOW, THEREFORE, the parties signing and executing this instrument do in
consideration of the above covenant and agree as follows:
A. All the terms and conditions contained in the agreement to which this
addendum is appended, shall continue in effect and the terms and conditions
in this addendum are to be supplementary and subordinate thereto.
B. The Contractor(s) agree(s) to provide nursing supervision for personal
care as defined in the New York State Department of Social Services
Regulation 18 NYCRR 505.14 (f)(3) for services rendered to recipients of
medical assistance (Medicaid), as defined in Title 11 of Article 5 of the
New York State Social Services Law and/or Title XIX of the Federal Social
Security Act, if requested to provide said services by a social services
district subject to the conditions set forth in the regulations of the New
York State Department of Social Services (18 NYCRR 505.14 or superseding
provisions); said nursing supervision services shall be rendered subject to
the same terms and conditions set forth personal care services in the
agreement to which this addendum is appended.
C. The Contractor(s) agree(s) that all nursing supervision services
performed under its direction shall be performed by a registered nurse who
possesses the qualifications required by the New York State Department of
Social Services Regulation 505.14 (f)(3)(iii)(b) and/or 505.14 (f)(3)(ii)
and/or any other state or federal law and/or regulations; all persons
rendering such nursing supervision services shall be employees of the
Contractor(s) in accordance with the requirements of Regulation 505.14
(f)(3)(iii)(c).
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<PAGE>
D. The terms of reimbursement for nursing supervision services rendered
pursuant to this addendum shall be effective only if said rates are
approved by the New York State Department of Social Services and the
Director of the Budget and do not conflict with the rates authorized or
accepted by the New York State Department of Health. The said terms of
reimbursement shall be as follows:
The Orange County Department of Social Services shall reimburse the
Contractor for nursing supervision of personal care workers at the
flat rate per client every ninety (90) days. In the case of shared
aides, there shall be six (6) nursing supervision visits in the first
six months of care. The said terms of reimbursement shall be as
promulgated by the New York State Department of Social Services.
The nurse supervisor shall make an orientation visit to the client's
home at the time of initial assessment and shall make home visits to
supervise the personal care worker as needed but no less than once
every ninety (90) days.
The flat rate is an all inclusive rate which covers all visits made by
the nurse supervisor every ninety (90) days. No additional payment
will be forthcoming for visits made more frequently than once every
ninety (90) days. Payment of this rate is contingent upon approval of
said rate by the New York State Department of Social Services for the
indicated time period. The Department will not obligated to pay said
rate if it is not approved. If the NYSDSS fails to grant approval, the
Provider will have the option to renegotiate.
It shall be the responsibility of the Contractor to bill the local
department on the forms and according to the procedure stipulated by
the Department.
Unless otherwise stated, the rate of payment set forth shall be the
total gross amount of payment, and no additional reimbursement to the
provider will be made for any subsidiary or other services
supplementary or in addition to the terms herein set forth.
E. A copy of the authorization of the New York State Department of Social
Services for the exception to use a nurse supervisor from a voluntary or
proprietary agency pursuant to 18 NYCRR 505.14 (f)(3)(iii) shall be
appended hereto and its terms made a part hereof; this addendum shall be
effective no longer than any time period set forth in said exception and
shall not be effective unless said exception satisfies the annual
evaluation and approval requirements set forth in 18 NYCRR 505.14
(f)(3)(iii)(a). In the event that a modification of the exception is made
during the terms of this addendum or agreement, the Contractor(s) agree(s)
to be bound by the terms of said modified exception subsequent to being
notified of said modification.
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<PAGE>
F. This addendum shall be valid and binding for the time period set forth
in the agreement to which this addendum is appended unless a shorter period
of effectiveness is set forth below:
G. This addendum contains all the additional terms and conditions agreed
upon by the parties. All items incorporated by reference are to be
attached. No other understandings, oral or otherwise, regarding the subject
matter of this agreement, shall be deemed to exist, or bind any of the
parties hereto, and any amendments, modifications, or revisions shall be
subject to the terms and/or conditions set forth in the agreement to which
this addendum is appended.
IN WITNESS WHEREOF, the parties hereunto have signed and executed this
agreement on the date(s) indicated opposite their respective signatures.
ORANGE COUNTY
DATE: 2/16/96 /s/ Joseph G. Rampe
------- ----------------------------------------
JOSEPH G. RAMPE, COUNTY EXECUTIVE
NEW YORK HEALTH CARE, INC.
DATE: 2/1/96 /s/ Jerry Braun CEO
------- ----------------------------------------
BY: JERRY BRAUN C.E.O.
----------------------
27
<PAGE>
ADDENDUM
"Notwithstanding any other provisions in this contract, the licensed home
care services agency remains responsible for: (a) ensuring that any service
provided pursuant to this contract complies with all pertinent provisions of
Federal, State and local statutes, rules and regulations; (b) ensuring the
quality of all services provided by the agency; and (c) ensuring adherence by
agency staff to the agency plan of care established for patients."
IN WITNESS WHEREOF, the parties hereunto have signed and executed this
addendum on the date(s) indicated opposite their respective signatures.
ORANGE COUNTY
DATE: 2/16/96 /s/ Joseph G. Rampe
------- ----------------------------------------
JOSEPH G. RAMPE, COUNTY EXECUTIVE
NEW YORK HEALTH CARE, INC.
DATE: 2/1/96 /s/ Jerry Braun CEO
------- ----------------------------------------
BY: JERRY BRAUN C.E.O.
----------------------
28
NEW YORK METHODIST HOSPITAL
CERTIFIED HOME HEALTH AGENCY
AGREEMENT WITH AIDE ORGANIZATION
AGREEMENT dated February 28, 1996 between NEW YORK METHODIST HOSPITAL,
CERTIFIED HOME HEALTH AGENCY ("CHHA") located at 506 Sixth Street, Brooklyn, New
York 11215 and NEW YORK HEALTH CARE (AIDE ORGANIZATION) located at 175 Fulton
Avenue, Suite 501, Hempstead, New York, 11550.
WHEREAS, the Certified Home Health Agency (hereinafter "CHHA") licensed by
the State of New York; and
WHEREA8, the Aide Organization (hereinafter "AO") licensed to provide Home
Health Aide Services in the State of New York; and
WHEREAS, "AO" desires to provide Home Health Aide services to the CHHA and
CHHA desires to avail itself of such services.
NOW, THEREFORE, in consideration of the mutual covenants contained herein
the CHHA and AO agree as follows:
1. It shall be the sole responsibility of the CHHA to assess the need for
home health aide service and the resources of the patient and the
patient's family.
2. CHHA shall request the AO to provide health aide services. The number
of aides required is at the sole discretion of the CHHA. No
substitutions shall be made after assignments without permission of
the CHHA.
3. The patient is to be accepted for home health care only by the CHHA,
which will be responsible for the development and revision of the plan
of care. The AO shall receive a copy of the plan of care for all
patients. The AO and/or its aides will not alter the plan
unilaterally.
4. The CHHA shall maintain total responsibility for determining and
carrying out the discharge planning for each service provided to all
Home Care patients. Home Care shall notify all agencies and vendors of
the termination date of their service.
5. The CHHA shall determine the scope and duration of the aide's
activities on each assignment, provide orientation to the assigned
patient, on site instruction and orientation to keeping the necessary
records.
6. The CHHA shall supervise and evaluate the performance of the aide
during the hours of assignment to the CHHA patient. The CHHA shall
submit a copy of the written performance evaluation to the AO at least
yearly.
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<PAGE>
7. The aide shall document care rendered on a visit basis in accordance
with the plan of care set up by the CHHA. Such documentation shall be
submitted to the CHHA within one week of services provided. At a
minimum, such documentation shall consist of a checklist reflective of
the care provided as specified by the CHHA. In addition, as well as
being documented, any unusual situation or circumstance which impacts
on the safe care of the patient shall be transmitted verbally to the
registered nurse or other appropriate CHHA supervision personnel by
the aide as soon as is practical.
8. The AO shall make aide services available to the CHHA 24 hours a day,
seven days a week. The AO shall provide aide services to patients of
the CHHA in such patients' homes or places of residence.
9. The AO shall make aides providing patient care available to
participate in patient care conferences upon the request of the CHHA
at the usual hourly rate.
10. The CHHA shall have the right, at any time, to shorten, terminate,
lengthen or change the assignment of the aide on oral or written
notice to the AO.
11. The CHHA shall be responsible for the distribution of the Patient Bill
of Rights and Advance Directives.
12. Both the CHHA and the AO shall:
A. Designate a person within their respective organizations who
shall have the responsibility for coordinating the assignments of
aides.
B. Consult and cooperate with each other in establishing mutually
acceptable standards and procedures for handling employee
grievances and patient complaints, the selection and assignment
of aides, handling of requests, including requests for emergency
aide service, billing procedures and other matters incidental to
carrying out the provision and purposes of this agreement.
C. Not discriminate in the provision of home health aide services,
in regard to race, color, sex, creed, national origin or source
of payment, except for fiscal capability thereof.
13. The AO shall provide only such aide personnel as meet the requirements
specified in (a) the New York State Health and Hospital Code and/or
directives of the New York State Department of Health, and (b) the
policies and standards of the CHHA, state, city or county, and any
other government agency that might assert jurisdiction, as such
requirements are subject to revision.
2
<PAGE>
14. The AO shall maintain a record of assignments for each aide; complete
personnel records which shall include verifications of qualifications,
references, reports of medical examinations and tests, including
immunizations, performance evaluations; and documentation of required
in-service training annually. Copies of these will be forwarded to the
CHHA upon request.
15. The aides shall be deemed to be employees of the AO. The CHHA shall
have no direct or indirect responsibility for any of the incidents of
employment. The AO shall have the direct responsibility for all
incidents of employment including payment of wages and other
compensation, reimbursement of expenses, and compliance with federal,
state and local tax withholding requirements including those
pertaining to worker's compensation, social security and unemployment.
16. The AO shall, at its own cost and expense, procure and maintain
insurance to cover the aide personnel assigned under the terms of the
Agreement of at least the following types; Professional liability
insurance; Comprehensive general liability insurance relative to the
activities resulting from assignments under this Agreement, and any
other employee's liability insurance required by law for an employer
to carry with regard to its employees. CHHA reserves the right to
require the AO to obtain reasonable additional insurance from time to
time due to changes in economic conditions. The CHHA shall be listed
as certificate holder insured on the policies referred to above. The
Certificate of Insurance shall provide for at least thirty (30) days'
notice to the CHHA of cancellation of any of the insurance.
17. The AO agrees to hold free and harmless and to indemnify the CHHA, its
officers, directors, employees, agents and affiliates against any and
all claim, loss, damage and/or liability by reason for any acts or
acts of commission or omission by any officer, director, agent,
employee or affiliate of the AO. All injury, damage or loss to persons
or property caused in whole or in part by AO or anyone employed
directly or indirectly by it, or by anyone for whose acts it may be
liable, shall be the responsibility of the AO. The indemnification
obligation under this Agreement shall include the payment of
reasonable attorneys' fees and court costs incurred in contesting or
defending against any such claim or liability.
18. The AO shall submit a statement, each week, to the CHHA setting forth
at least the following on a per-visit or a per-patient care conference
basis: the aide services performed, the aide who performed the
services, the patient to whom services were performed, the hours
worked in performing the services and the amount due the AO. The CHHA
will pay to the AO an hourly fee for only the time the aide was
actually present in the patient's home or at a patient care
conference. Payment shall be made within ninety (90) days after
submission of such statement and upon verification of the items
contained therein.
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<PAGE>
19. Neither the AO nor the aide shall charge or accept any fee, gifts or
other remuneration from the patient or patient's family for aide
services provided under the CHHA's plan of treatment.
20. The AO shall give a two hour cancellation notice to the CHHA should
the client not be at home or refuse entry when the employee arrives.
The AO shall bill two hours show-up time to the CHHA.
21. The AO shall maintain records of all financial transactions with the
CHHA. Such records shall be kept in accordance with standard
accounting practices and each transaction shall be fully documented.
Such records shall be made available to the CHHA, the State Department
of Health or any other governmental agency as might assert
jurisdiction for inspection or audit upon request.
22. The parties agree that if, to the extent and for the times required by
Federal Regulations, 42 CFR Part 420, Subpart D entitled "Program
Integrity, Access to Books, Documents and Records of Subcontractors",
or any amendments or recodification thereof, the AO shall provide for
access by the Comptroller General of the United States and the
Secretary of Health and Human Services or their duly authorized
representatives, those books, documents and records of the AO, and
organizations related to the AO by control or common ownership
necessary to verify the nature and extent of the costs of the services
provided by the AO.
23. The CHHA in accordance with Section 766.2(2) of Licensed Home Care
Service Agency Organization and Administration agrees to maintain
the patient assessment, plan of care, clinical record entries,
supervisory notes, and medical orders, and to permit access to such
records to designated professional staff of the licensed agency
provided such access to clinical records and CHHA staff is on the
premises of the CHHA and at the discretion of the Administrator.
24. If the AO or an organization related to it by control or common
ownership is requested to provide access to its books and records
voluntarily or by compulsory process, the AO shall notify CHHA
within ten (10) days after receipt of the request for access and shall
provide a copy of any notice, demand, request or process received by
it. The CHHA shall have the right, at its own expense, to reject any
notice, demand or request and defend any process, if it deems the
information sought to be privileged.
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<PAGE>
25. The name New York Methodist Hospital or any portion thereof or any
statement which may implicitly refer directly or indirectly to New
York Methodist Hospital or impute any affiliation directly or
indirectly with New York Methodist Hospital shall not be used in any
manner by the AO without prior written consent in each instance.
26. Notwithstanding any other provisions in this contract, the licensed AO
and CHHA remain mutually and exclusively responsible for: (a) ensuring
that any service provided pursuant to this Agreement complies with all
pertinent provisions of federal, state and local statutes, rules and
regulations; (b) planning, coordinating and ensuring the quality of
all services provided; and (c) ensuring adherence to the Plan of Care
established for patients.
27. This Agreement may only be modified or amended by mutual consent of
the parties. Any such modification or amendment must be in writing
duly executed by all parties and shall be attached and become part of
this Agreement.
28. This is a non-exclusive agreement and the CHHA reserves the
unencumbered right to contract with other aide organizations to
provide aide services.
29. This Agreement shall be reviewed annually. Any modification of that
amendment must be in writing duly executed by all parties and shall be
attached and become part of this Agreement. This Agreement shall
remain in force during review and renegotiation.
30. This Agreement may be terminated on a least thirty (30) days written
notice by either party.
31. All notices under, pursuant to or in connection with this Agreement
must be delivered by certified or registered mail to the authorized
persons of the CHHA and/or AO.
32. It is understood that this Agreement constitutes the entire agreement
between the CHHA and the AO.
33. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York governing agreements made and to be
performed wholly within the State of New York.
34. The parties hereto each represent that they have full corporate power
to enter into the Agreement and that all corporate action required to
authorize this Agreement have been taken and that the individual
executing this Agreement on behalf of each party is authorized to do
so.
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<PAGE>
IN WITNE88 WHEREOF, this Agreement has been duly executed and signed by:
NEW YORK METHODIST HOSPITAL CHHA AIDE ORGANIZATION
By: /s/ BRIDGET HOLDEN By: /s/ JERRY BRAUN
------------------------ -------------------
Bridget Holden, MSN. RN.
Administrator/DPS Home Care
Date: 2/26/96 Date: 3/6/96
By: /s/ MAUREEN LINDIE
-------------------------------
Maureen Lindie, MA. RN.
Sr. Vice President for Nursing
Date: 3/4/96
EMPLOYMENT AGREEMENT
This Agreement made and entered into this 26th day of March 1996, by and
between New York Health Care, Inc., a New York corporation, with its principal
place of business at 1667 Flatbush Avenue, Brooklyn, New York 11210,
(hereinafter "Employer" or the "Company"), and Jacob Rosenberg, an individual
whose residential address is at 932 East 29th Street, Brooklyn, NY 11210
(hereinafter "Employee").
W I T N E S S E T H :
WHEREAS, Employer is engaged in the business of home health care;
WHEREAS, Employee possesses skills, knowledge, abilities and experience
which Employer wishes to continue to avail itself of; and
WHEREAS, Employer wishes to continue the employment of Employee;
NOW, THEREFORE, in consideration of the mutual covenants as set forth
herein:
THE PARTIES HERETO AGREE AS FOLLOWS:
1. Employment. Employer hereby shall employ Employee as the Vice President
and Chief Operating Officer of the Company and to perform such additional duties
and services as may be assigned to him pursuant to Paragraph 3 hereof. Employee
hereby accepts such employment, upon the terms and conditions hereinafter set
forth.
2. Term. The term of employment of Employee hereunder shall be for four
years commencing as of January 1, 1996, and ending at the close of business
December 31, 1999.
3. Duties.
(A) Employee's duties shall include assisting the overseeing and
directing of the Company, locating and developing new projects and other
business opportunities for it and generally
1
<PAGE>
promoting and facilitating the Company's business objectives. For purposes of
this paragraph, Employer's subsidiaries, if any, are also encompassed in the
term "Company".
(B) During the term of this Agreement, Employee shall perform such
additional services as shall from time to time be assigned to him by the Board
of Directors or the Executive Committee of Employer and which are consistent
with the duties reasonably assigned to the Vice President and Secretary of such
size Company.
(C) Employee shall devote the majority of his business time and
attention, energy, and skill to the business of Employer. The Employee may
devote a limited amount of time which is not devoted to the business of the
Company to the business of Heart to Heart Health Care Services, Inc., a New
Jersey corporation ("Heart to Heart"), provided that he does not participate in
any activities on behalf of Heart to Heart which compete with the Company's
business.
4. Annual Compensation; Bonus; Supplemental Compensation.
(A) For his services to Employer during the term of this Agreement,
Employer shall pay Employee all of the salary and benefits which the Employee
currently receives provided, however, that commencing on the effective date of
the Company's Initial Public Offering of its securities currently being
contemplated (the "Effective Date"), through December 31, 1999, Employee's
annual salary shall be One Hundred Forty Thousand Dollars ($140,000),
(hereinafter "Annual Base Compensation") with an annual increase in Annual Base
Compensation, commencing on the anniversary date of the Effective Date (the
"Anniversary Date") and continuing on the Anniversary Date in each year
thereafter during the term of this Agreement, equal to 10% of the prior year's
Annual Base Compensation, payable in accordance with the Company's normal
policies.
2
<PAGE>
(B) Employee shall be granted participation in the Company's 401(k)
Plan and Performance Incentive Plan normally allowed by the Company for its
senior executives, as well as all other benefits available to any other
employees of the Company.
5. Insurance; Other Benefits. As soon as practicable after the commencement
of Employee's services hereunder, Employer shall obtain and thereafter maintain
in effect at Employer's expense the insurance coverage for the benefit of
Employee normally maintained by the Company for its senior executives which
shall include, but not be limited to, medical insurance and dental insurance.
Employee shall receive an annual allowance of $3,500 towards the payment of
premiums on $500,000 of term life insurance, and long-term disability insurance,
which insurance may be payable to such beneficiaries as the Employee may direct.
6. Expenses. Employer will reimburse Employee or cause him to be reimbursed
for all ordinary and necessary traveling expenses and other disbursements
incurred by him for or on behalf of Employer in the performance of his duties
hereunder. For such purposes Employee shall submit to Employer periodic reports
of such expenses and other disbursements at least once in each calendar quarter.
Employee shall also receive a monthly allowance of $500 towards the lease cost
of an automobile, and reimbursement of the insurance cost of the automobile
during the term of this Agreement.
3
<PAGE>
7. Vacation Time.
(A) Employee shall be entitled to four (4) weeks vacation in each year
of the full four (4) years of this Agreement, which vacations shall be at such
time or times and for such periods as Employee shall choose, consistent with the
reasonable performance of his duties hereunder.
(B) Employee shall also be entitled to additional personal days for
all Jewish holidays on which work is prohibited in the Orthodox tradition.
8. Employer's Right to Terminate. Employer shall have the right to
terminate this Agreement for Cause at any time during the period of this
Agreement. "Cause," for all purposes for this Agreement, will be defined as
follows:
(i) the death of Employee;
(ii) the disability of Employee, said term being defined as Employee
becoming physically or mentally incapable of fully performing the
services required of him in accordance with his obligations
hereunder, and such incapacity continuing, or being reasonably
expected to continue, for more than three (3) consecutive months
during any period of twelve (12) consecutive months;
(iii) disloyal, dishonest, or illegal conduct of Employee;
(iv) knowing failure to substantially perform his material duties and
obligations under this Agreement; or
(v) any use of illegal drugs or abuse of substances involving alcohol
or prescription drugs.
In event of termination, the Employee's then Annual Compensation, as provided in
paragraph 4, above, shall be paid for a period of six months following
termination, except that in the case of a
4
<PAGE>
termination pursuant to paragraphs 8(iii), (iv) and (v), such compensation shall
be paid only to the date of termination plus all accrued expenses incurred by
him for and on its behalf. Except for those duties and obligations stated in
Subparagraph 10(B), any and all of Employer's other duties and obligations shall
immediately be extinguished and made null and void and of no further force and
effect.
9. Confidentiality.
(A) Employee understands and acknowledges that as a result of
Employee's employment with Employer and involvement with the business of
Employer, he shall necessarily become informed of and have access to,
confidential information of Employer including, without limitation, inventions,
trade secrets, technical information, know-how, plans, specifications, identity
of customers and identity of suppliers, and that such information, even though
it may have been or may be developed or otherwise acquired by Employee, is the
exclusive property of Employer to be held by Employee in trust and solely for
Employer's benefit and Employee shall not at any time, either during or
subsequent to his employment hereunder, reveal, report, publish, transfer or
otherwise disclose to any person, corporation or other entity or use any of
Employer's confidential information, without its written consent of the Board of
Directors, except for use on behalf of the Company in connection with its
business, and except for such information which legally and legitimately is or
becomes of general public knowledge from authorized sources other than Employer.
(B) Upon the termination of his employment with Employer for any
reason, Employee shall promptly deliver to it all drawings, manuals, letters,
notes, notebooks, reports and copies thereof and all other materials, including,
without limitation, those of a secret or confidential nature, relating to
Employer's business which are in Employee's possession or control. Employer
shall
5
<PAGE>
reimburse Employee for any packing or moving costs reasonably incurred by him in
connection with the foregoing delivery.
10. Non-Competition; Restrictive Covenants and Confidentiality; Injunctive
Relief.
(A) During the term of his employment with Employer pursuant to this
Agreement, or any renewal thereof, Employee shall not, directly or indirectly
whether as principal, agent, shareholder, employee, officer, director,
consultant, joint-venturer, partner or otherwise, own, manage, operate, join,
control or participate in the ownership, management, operation or control of,
render any services to or be connected in any manner with any business which is
in direct competition with or is of the type or character of any business
engaged in by Employer or which offers, sells or markets products, projects or
services that directly compete with products, projects or services offered by
Employer or any of its subsidiaries or affiliates, irrespective of whether
Employee's involvement shall be as an officer, owner, employee, partner,
joint-venturer, consultant, agent or other participant; provided, however, that
the foregoing shall not restrict Employee from rendering limited services as
permitted by this Agreement to Heart to Heart and from making an investment in
any company the securities of which are listed on a national securities exchange
or actively traded in the over-the-counter market, so long as such investment
does not equal or exceed five percent (5%) of the total number of outstanding
shares of common stock of such company.
(B) For a period of one year after the expiration or termination of
his employment with Employer for any reason, Employee shall not, directly or
indirectly, whether as principal, agent, shareholder, employee, officer,
director, joint-venturer, partner, consultant or otherwise, render any services
to or with any company, firm or individual which competes in any way with
Employer in a business actually engaged in or being actively developed by it.
Under this Agreement, Employer will
6
<PAGE>
have deemed to have been actively developing a business if, with regard to such
proposed business activity, there has been extensive discussion at Board of
Directors meetings, formal Board resolutions, corporate expenditures in excess
of $25,000, preparation of marketing studies, or comparable actions related
thereto.
(C) For a period of two years following the expiration or termination
of his employment with Employer for any reason, Employee shall not, directly or
indirectly, whether as principal, agent, shareholder, employee, officer,
director, joint-venturer, partner, consultant or otherwise, solicit, raid,
entice or induce any person who is, or was at the time of such termination or at
any time within the six-month period immediately preceding such termination, an
employee of Employer to terminate his or her employment with the Employer or
become employed by any other person, firm or corporation, and he will not
approach any such employee for such purpose or authorize or knowingly approve
the taking of such action by other persons to become employed in a business who
or which are actively engaged in a competitive business.
11. Assignability and Binding Effect. The rights and obligations arising
under this Agreement shall inure to the benefit of and shall be binding upon the
executors, administrators, successors and legal representatives of Employee and
shall inure to the benefit of and be binding upon Employer, upon its successors
and assigns, but neither this Agreement nor the rights or obligations of
Employee hereunder may be assigned, pledged, hypothecated or otherwise
transferred by Employee in whole or in part to another person, firm or
corporation nor may the obligations of Employee hereunder be delegated.
12. Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be delivered personally or sent by
registered or certified mail, prepaid and return
7
<PAGE>
receipt requested, to the other party hereto at his or its mailing address as
set forth at the beginning of this Agreement, and in the case of Employer with
copies to William J. Davis, Esq., Scheichet & Davis, P.C., 505 Park Avenue, New
York, New York 10022. Either party may change the address to which such
communications hereunder shall be sent by sending notice of such change to the
other party as herein provided.
13. Representations by Employee and Employer. Employee hereby represents
and warrants that he is not a party to any other agreement, contract or
understanding, whether of employment or otherwise, which would in any way
restrict or prohibit him from undertaking or performing employment with Employer
in accordance with the terms and conditions of this Agreement. Employer hereby
represents and warrants that this Agreement has been properly authorized by all
necessary corporate action and, when and if, fully executed, will be binding and
enforceable upon the Company in accordance with its terms except for the
application of the laws of insolvency and bankruptcy as they may otherwise
affect such Agreement. Employer further represents and warrants that no other
contract, agreement, provision of its certificate of incorporation or bylaws,
debt obligation, law, regulation or court or administrative order prevents it
from entering into, or conflicts with, this Agreement.
14. Waiver. The waiver by either party of any breach or violation of any
provision of this Agreement shall not operate or be construed as a waiver of any
subsequent breach or violation, whether singular in nature or not.
15. Prior Agreements; Complete Understanding; Amendment. This Agreement
cancels and supersedes any and all prior agreements and understandings, if any,
between the parties hereto regarding the services of Employee to Employer and
constitutes the complete understanding between
8
<PAGE>
the parties with respect to the employment of Employee hereunder and no
statement, representation, warranty or covenant has been made by either party
with respect thereto except as expressly set forth herein. Employee acknowledges
that he has been afforded the right to review this Agreement with legal counsel
prior to the execution of this Agreement, and that he has been encouraged to do
so. This Agreement shall not be altered, modified or amended except by written
instrument signed by each of the parties hereto.
16. Headings. The headings set forth in this Agreement are for convenience
only and shall not be considered as part of this Agreement in any respect nor
shall they in any way affect the substance of any provisions contained in this
Agreement.
17. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which shall
constitute but one and the same agreement.
18. Governing Law; Construction with Existing Law; Severability. This
Agreement shall be governed by, and construed and enforced in accordance with,
the internal laws of the State of New York. It is the intention of the parties
hereto that all terms and conditions of this Agreement are in compliance with
the laws and regulations of the State of New York, and nothing in this Agreement
shall be construed to be in derogation of the laws, rules and regulations
thereof. If for any reason any provision of this Agreement or any part hereof is
invalid, unlawful or incapable of being enforced by reason of any rule of law,
equity or public policy, all conditions and provisions of the Agreement which
can be given effect without such invalid, unlawful or unenforceable provision
shall, nevertheless, remain in full force and effect, and such invalid, unlawful
or irrevocable provision shall be carried out as nearly as possible according to
its original terms and intent, while eliminating such invalidity or
non-enforceability.
9
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the day and year first above written.
NEW YORK HEALTH CARE, INC.
By: /s/ Jerry Braun
---------------------------------
Title: President & CEO
/s/ Jacob Rosenberg
---------------------------------
Jacob Rosenberg
10
EMPLOYMENT AGREEMENT
This Agreement made and entered into this 26th day of March, 1996, by and
between New York Health Care, Inc., a New York corporation, with its principal
place of business at 1667 Flatbush Avenue, Brooklyn, New York 11210,
(hereinafter "Employer" or the "Company"), and Jerry Braun, an individual whose
residential address is at 929 East 28th Street, Brooklyn, NY 11210 (hereinafter
"Employee").
W I T N E S S E T H :
WHEREAS, Employer is engaged in the business of home health care;
WHEREAS, Employee possesses skills, knowledge, abilities and experience
which Employer wishes to continue to avail itself of; and
WHEREAS, Employer wishes to continue the employment of Employee;
NOW, THEREFORE, in consideration of the mutual covenants as set forth herein:
THE PARTIES HERETO AGREE AS FOLLOWS:
1. Employment. Employer hereby shall employ Employee as the President and
Chief Executive Officer of the Company and to perform such additional duties and
services as may be assigned to him pursuant to Paragraph 3 hereof. Employee
hereby accepts such employment, upon the terms and conditions hereinafter set
forth.
2. Term. The term of employment of Employee hereunder shall be for four
years commencing as of January 1, 1996, and ending at the close of business
December 31, 1999.
3. Duties.
(A) Employee's duties shall include overseeing and directing the Company,
locating and developing new projects and other business opportunities for it and
generally promoting and
<PAGE>
facilitating the Company's business objectives. For purposes of this paragraph,
Employer's subsidiaries, if any, are also encompassed in the term "Company".
(B) During the term of this Agreement, Employee shall perform such
additional services as shall from time to time be assigned to him by the Board
of Directors or the Executive Committee of Employer and which are consistent
with the duties reasonably assigned to the Chief Executive Officer of such size
Company.
(C) Employee shall devote the majority of his business time and of his
attention, energy, and skill to the business of Employer. The Employee may
devote a limited amount of time which is not devoted to the business of the
Company to the business of Heart to Heart Health Care Services, Inc., a New
Jersey corporation ("Heart to Heart"), provided that he does not participate in
any activities on behalf of Heart to Heart which compete with the Company's
business.
4. Annual Compensation; Bonus; Supplemental Compensation.
(A) For his services to Employer during the term of this Agreement,
Employer shall pay Employee all of the salary and benefits which the Employee
currently receives provided, however, that commencing on the effective date of
the Company's Initial Public Offering of its securities currently being
contemplated (the "Effective Date"), through December 31, 1999, Employee's
annual salary shall be One Hundred Seventy-Five Thousand Dollars ($175,000)
(hereinafter "Annual Base Compensation"), with an annual increase in Annual Base
Compensation, commencing on the anniversary date of the Effective Date (the
"Anniversary Date") and continuing on the Anniversary Date in each year
thereafter during the term of this Agreement, equal to 10% of the prior year's
Annual Base compensation, payable in accordance with the Company's normal
policies.
2
<PAGE>
(B) Employee shall be granted participation in the Company's 401(k)
Plan and Performance Incentive Plan normally allowed by the Company for its
senior executives, as well as all other benefits available to any other
employees of the Company.
5. Insurance; Other Benefits. As soon as practicable after the commencement
of Employee's services hereunder, Employer shall obtain and thereafter maintain
in effect at Employer's expense the insurance coverage for the benefit of
Employee normally maintained by the Company for its senior executives which
shall include, but not be limited to, medical insurance and dental insurance.
Employee shall receive an annual allowance of $3,500 towards the payment of
premiums on $500,000 of term life insurance, and long-term disability insurance,
which insurance may be payable to such beneficiaries as the Employee may direct.
6. Expenses. Employer will reimburse Employee or cause him to be reimbursed
for all ordinary and necessary traveling expenses and other disbursements
incurred by him for or on behalf of Employer in the performance of his duties
hereunder. For such purposes Employee shall submit to Employer periodic reports
of such expenses and other disbursements at least once in each calendar quarter.
Employee shall also receive a monthly allowance of $500 towards the lease cost
of an automobile, and reimbursement of the insurance cost of the automobile
during the term of this Agreement.
3
<PAGE>
7. Vacation Time.
(A) Employee shall be entitled to four (4) weeks vacation in each year
of the full four (4) years of this Agreement, which vacations shall be at such
time or times and for such periods as Employee shall choose, consistent with the
reasonable performance of his duties hereunder.
(B) Employee shall also be entitled to additional personal days for
all Jewish holidays on which work is prohibited in the Orthodox tradition.
8. Employer's Right to Terminate. Employer shall have the right to
terminate this Agreement for cause at any time during the period of this
Agreement. "Cause", for all purposes for this Agreement, will be defined as
follows:
(i) the death of Employee;
(ii) the disability of Employee, said term being defined as Employee
becoming physically or mentally incapable of fully performing the
services required of him in accordance with his obligations
hereunder, and such incapacity continuing, or being reasonably
expected to continue, for more than three (3) consecutive months
during any period of twelve (12) consecutive months;
(iii) disloyal, dishonest, or illegal conduct of Employee;
(iv) knowing failure to substantially perform his material duties and
obligations under this Agreement; or
(v) any use of illegal drugs or abuse of substances involving alcohol
or prescription drugs.
In event of termination, the Employee's then Annual Compensation, as provided in
paragraph 4, above, shall be paid for a period of six months following
termination, except that in the case of a
4
<PAGE>
termination pursuant to paragraphs 8(iii), (iv) and (v), such compensation shall
be paid only to the date of termination plus all accrued expenses incurred by
him for and on its behalf. Except for those duties and obligations stated in
Subparagraph 10(B), any and all of Employer's other duties and obligations shall
immediately be extinguished and made null and void and of no further force and
effect.
9. Confidentiality.
(A) Employee understands and acknowledges that as a result of
Employee's employment with Employer and involvement with the business of
Employer, he shall necessarily become informed of and have access to,
confidential information of Employer including, without limitation, inventions,
trade secrets, technical information, know-how, plans, specifications, identity
of customers and identity of suppliers, and that such information, even though
it may have been or may be developed or otherwise acquired by Employee, is the
exclusive property of Employer to be held by Employee in trust and solely for
Employer's benefit and Employee shall not at any time, either during or
subsequent to his employment hereunder, reveal, report, publish, transfer or
otherwise disclose to any person, corporation or other entity or use any of
Employer's confidential information, without its written consent of the Board of
Directors, except for use on behalf of the Company in connection with its
business, and except for such information which legally and legitimately is or
becomes of general public knowledge from authorized sources other than Employer.
(B) Upon the termination of his employment with Employer for any
reason, Employee shall promptly deliver to it all drawings, manuals, letters,
notes, notebooks, reports and copies thereof and all other materials, including,
without limitation, those of a secret or confidential nature, relating to
Employer's business which are in Employee's possession or control. Employer
shall
5
<PAGE>
reimburse Employee for any packing or moving costs reasonably incurred by him in
connection with the foregoing delivery.
10. Non-Competition; Restrictive Covenants and Confidentiality; Injunctive
Relief.
(A) During the term of his employment with Employer pursuant to this
Agreement, or any renewal thereof, Employee shall not, directly or indirectly
whether as principal, agent, shareholder, employee, officer, director,
consultant, joint-venturer, partner or otherwise, own, manage, operate, join,
control or participate in the ownership, management, operation or control of,
render any services to or be connected in any manner with any business which is
in direct competition with or is of the type or character of any business
engaged in by Employer or which offers, sells or markets products, projects or
services that directly compete with products, projects or services offered by
Employer or any of its subsidiaries or affiliates, irrespective of whether
Employee's involvement shall be as an officer, owner, employee, partner,
joint-venturer, consultant, agent or other participant; provided, however, that
the foregoing shall not restrict Employee from rendering limited services as
permitted by this Agreement to Heart to Heart and from making an investment in
any company the securities of which are listed on a national securities exchange
or actively traded in the over-the-counter market, so long as such investment
does not equal or exceed five percent (5%) of the total number of outstanding
shares of common stock of such company.
(B) For a period of one year after the expiration or termination of
his employment with Employer for any reason, Employee shall not, directly or
indirectly, whether as principal, agent, shareholder, employee, officer,
director, joint-venturer, partner, consultant or otherwise, render any services
to or with any company, firm or individual which competes in any way with
Employer in a business actually engaged in or being actively developed by it.
Under this Agreement, Employer will
6
<PAGE>
have deemed to have been actively developing a business if, with regard to such
proposed business activity, there has been extensive discussion at Board of
Directors meetings, formal Board resolutions, corporate expenditures in excess
of $25,000, preparation of marketing studies, or comparable actions related
thereto.
(C) For a period of two years following the expiration or termination
of his employment with Employer for any reason, Employee shall not, directly or
indirectly, whether as principal, agent, shareholder, employee, officer,
director, joint-venturer, partner, consultant or otherwise, solicit, raid,
entice or induce any person who is, or was at the time of such termination or at
any time within the six-month period immediately preceding such termination, an
employee of Employer to terminate his or her employment with the Employer or
become employed by any other person, firm or corporation, and he will not
approach any such employee for such purpose or authorize or knowingly approve
the taking of such action by other persons to become employed in a business who
or which are actively engaged in a competitive business.
11. Assignability and Binding Effect. The rights and obligations arising
under this Agreement shall inure to the benefit of and shall be binding upon the
executors, administrators, successors and legal representatives of Employee and
shall inure to the benefit of and be binding upon Employer, upon its successors
and assigns, but neither this Agreement nor the rights or obligations of
Employee hereunder may be assigned, pledged, hypothecated or otherwise
transferred by Employee in whole or in part to another person, firm or
corporation nor may the obligations of Employee hereunder be delegated.
12. Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be delivered personally or sent by
registered or certified mail, prepaid and return
7
<PAGE>
receipt requested, to the other party hereto at his or its mailing address as
set forth at the beginning of this Agreement, and in the case of and in the case
of Employer with copies to William J. Davis, Esq., Scheichet & Davis, P.C., 505
Park Avenue, New York, New York 10022. Either party may change the address to
which such communications hereunder shall be sent by sending notice of such
change to the other party as herein provided.
13. Representations by Employee and Employer. Employee hereby represents
and warrants that he is not a party to any other agreement, contract or
understanding, whether of employment or otherwise, which would in any way
restrict or prohibit him from undertaking or performing employment with Employer
in accordance with the terms and conditions of this Agreement. Employer hereby
represents and warrants that this Agreement has been properly authorized by all
necessary corporate action and, when and if, fully executed, will be binding and
enforceable upon the Company in accordance with its terms except for the
application of the laws of insolvency and bankruptcy as they may otherwise
affect such Agreement. Employer further represents and warrants that no other
contract, agreement, provision of its certificate of incorporation or bylaws,
debt obligation, law, regulation or court or administrative order prevents it
from entering into, or conflicts with, this Agreement.
14. Waiver. The waiver by either party of any breach or violation of any
provision of this Agreement shall not operate or be construed as a waiver of any
subsequent breach or violation, whether singular in nature or not.
15. Prior Agreements; Complete Understanding; Amendment. This Agreement
cancels and supersedes any and all prior agreements and understandings, if any,
between the parties hereto regarding the services of Employee to Employer and
constitutes the complete understanding between
8
<PAGE>
the parties with respect to the employment of Employee hereunder and no
statement, representation, warranty or covenant has been made by either party
with respect thereto except as expressly set forth herein. Employee acknowledges
that he has been afforded the right to review this Agreement with legal counsel
prior to the execution of this Agreement, and that he has been encouraged to do
so. This Agreement shall not be altered, modified or amended except by written
instrument signed by each of the parties hereto.
16. Headings. The headings set forth in this Agreement are for convenience
only and shall not be considered as part of this Agreement in any respect nor
shall they in any way affect the substance of any provisions contained in this
Agreement.
17. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which shall
constitute but one and the same agreement.
18. Governing Law; Construction with Existing Law; Severability. This
Agreement shall be governed by, and construed and enforced in accordance with,
the internal laws of the State of New York. It is the intention of the parties
hereto that all terms and conditions of this Agreement are in compliance with
the laws and regulations of the state of New York, and nothing in this Agreement
shall be construed to be in derogation of the laws, rules and regulations
thereof. If for any reason any provision of this Agreement or any part hereof is
invalid, unlawful or incapable of being enforced by reason of any rule of law,
equity or public policy, all conditions and provisions of the Agreement which
can be given effect without such invalid, unlawful or unenforceable provision
shall, nevertheless, remain in full force and effect, and such invalid, unlawful
or irrevocable provision shall be carried out as nearly as possible according to
its original terms and intent, while eliminating such invalidity or
non-enforceability.
9
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the day and year first above written.
NEW YORK HEALTH CARE, INC.
By: /s/ Jacob Rosenberg
----------------------------
Title: C.O.O.
/s/ Jerry Braun
-----------------------------
Jerry Braun
10
STOCK OPTION AGREEMENT
THIS AGREEMENT, made as of this 26th day of March, 1996 by New York Health
Care, Inc., a New York Corporation (the "Company") and Jerry Braun residing at
929 East 28th Street, Brooklyn, NY 11210 (the "Optionee"):
In consideration for One Hundred Dollars ($100.00) by the Optionee, receipt
of which is hereby acknowledged, the Company hereby grants to the Optionee the
option (the "Option"), commencing on the effective date of the initial public
offering of New York Health Care, Inc. (the "Option Commencement Date"), to
purchase from the Company all or any part of an aggregate of Seventy-Five
Thousand (75,000) shares of the Common Stock of the Company, par value $.01 per
share (the "Shares"), at a price of $3.75 per share.
The following terms and conditions shall apply to the Option:
1. The Option and all rights of the Optionee to purchase shares of Common
Stock hereunder shall terminate on March 26, 2006 (hereinafter referred to as
the "Expiration Date"). On or prior to the Expiration Date such Option shall be
exercisable subject to the following terms:
(a) The Optionee may exercise the Option with respect to all or any
part of the shares then exercisable by giving the Company written notice, as
provided in paragraph 2 hereof, of such exercise. Such notice shall specify the
number of shares as to which the Option is being exercised and shall be
accompanied by payment of an amount equal to the option price of such shares
multiplied by the number of shares as to which the Option is being exercised.
Such payment shall be for the full amount of the exercise price in cash (by
check subject to collection) or in common stock of the Company.
(b) As soon as practicable after receipt of the notice and payment
referred to in subdivision (a) above, the Company shall deliver to the Optionee
at the office of the Company, or at such other place as may be mutually
acceptable to the Company and the Optionee, a certificate or certificates for
such shares; provided, however, that the time of such delivery may be postponed
by the Company for such period of time as the Company may require to comply with
any applicable registration requirements of any national securities exchange and
any other law or regulation applicable to the issuance or transfer of shares. If
the Optionee fails for any reason to accept delivery of or any part of the
number of shares specified in such notice upon tender of delivery thereof, his
or her right to purchase such undelivered shares may be terminated by the
Company by notice in writing to the Optionee and refund of the payment.
(c) Prior to or concurrently with delivery by the Company to the
Optionee of a certificate(s) representing such shares, the Optionee shall (i)
upon notification of the amount due,
3921
<PAGE>
pay promptly any amount necessary to satisfy applicable federal, state or local
tax requirements, and (ii) if such shares are not then registered under the
Securities Act of 1933, give assurance satisfactory to the Company and counsel
for the Company that such shares are being purchased for investment and not with
a view to the distribution thereof, and the Optionee shall give such other
assurance and take such other action as the Company and counsel for the Company
shall require to secure compliance with any federal or state securities law
applicable to the issuance of shares; provided that the out-of-pocket expense of
such registration or compliance shall be borne by the Company.
2. Any notice to the Company provided for in the Option shall be addressed
to the Company at its address as set forth above, with a copy to Scheichet &
Davis, P.C., 505 Park Avenue, New York, NY 10022, Attn: William J. Davis, Esq.,
and any notice to the Optionee shall be addressed to him at his address as set
forth above, or to such other address as either may last have designated to the
other by notice as provided herein. Any notice so addressed shall be deemed to
be given on the fourth business day after mailing, by registered or certified
mail, return receipt requested, at a post office or branch post office within
the United States.
3. In the event of any change in the Company's Common Stock subject to the
Option, by reason of any stock dividend, split-up, recapitalization, merger,
consolidation, combination or exchange of shares, spin-off, reorganization,
liquidation or the like, such adjustment shall be made in the number of shares
subject to the option and the price per share as the Company shall, in its sole
judgment, deem appropriate to give proper effect to such event.
4. The Option is not transferable and may not be exercised by any person
other than the Optionee or his executors, administrators, successors or heirs.
In the event the Optionee transfers, assigns, pledges, hypothecates or otherwise
disposes of the Option, other than as permitted herein, or of any right
hereunder, that transfer shall be void and shall not be recognized by the
Company nor vest in the transferee any rights hereunder. In the event of the
levy of any attachment, execution or similar process upon the rights or interest
hereby conferred, the Company may terminate the Option by notice to the Optionee
and it shall thereupon become null and void.
5. In the event one or more of the following events has occurred or is
about to occur: i.e. (i) the dissolution, liquidation, merger or consolidation
of the Company (where the Company is not the surviving corporation) or (ii) the
sale of all or substantially all the assets of the Company or (iii) the sale of
shares of the Company's Common Stock, in any case resulting in a change in
control of the Company, then the Option to the extent not then exercisable or
not exercisable upon the happening of the event described in such notice shall
terminate simultaneously with the happening of such event. The Company shall ten
(10) days prior to the scheduled happening of the event, give the Optionee
notice thereof.
For purposes of this section, the term (i) "a change in control" means an
event or series of events that would be required to be described as a change in
control of the Company in a proxy or information statement distributed by the
Company pursuant to Section 14 of the Securities Exchange
3921
2
<PAGE>
Act of 1934 in response to Item 6(e) of Schedule 14A promulgated thereunder, or
any substitute provision which may hereafter be promulgated thereunder or
otherwise adopted, as if the Company were subject to the proxy rules of such
Act, and (ii) "affiliate" shall have the same meaning as set forth in Rule 405
of the Rules and Regulations promulgated under the Securities Act of 1933, as
amended.
6. In the event that any question or controversy shall arise with respect
to the nature, scope or extent of any one or more rights conferred by the
Option, or any provision of this Agreement, it shall be settled under the laws
of the State of New York by arbitration in the City of New York before three
arbitrators, one chosen by each of the Company and the Optionee and the third
chosen by the other two, or appointed by a court if the other two are unable to
agree upon the third within 30 days of their selection. The determination by the
arbitrators shall be conclusive, final and binding upon the Company and the
Optionee and upon any other person who shall assert any right pursuant to this
Option.
7. The Optionee shall have no rights of a stockholder with respect to the
shares covered by the Option until he or she becomes the holder of record of
such shares. All shares issued upon exercise of the Option shall be fully paid
and non-assessable.
NEW YORK HEALTH CARE, INC.
By: /s/ Jacob Rosenberg, C.O.O.
-----------------------------------
ACCEPTED AND AGREED:
/s/ Jerry Braun
- -----------------------------
Jerry Braun
3921
3
<PAGE>
SUBSCRIPTION FORM III
(To Be Executed Only Upon Exercise of Option)
The undersigned, holder of an option (the "Option") pursuant to a Stock
Option Agreement dated March 26, 1996 between himself and New York Health Care,
Inc. hereby irrevocably exercises his option thereunder to purchase the number
of shares of Common Stock of New York Health Care, Inc. specified below and
herewith makes payment therefore, all at the price and on the terms and
conditions specified in this Option.
Dated: _________________
Number of Shares: _________________
Purchase Price: _________________
--------------------------------------
Signature of Registered Owner
--------------------------------------
Street Address
--------------------------------------
City, State, Zip
--------------------------------------
Social Security Number
3921
4
AGREEMENT BETWEEN
THE MOUNT SINAI HOSPITAL HOME HEALTH AGENCY
AND
NEW YORK HEALTH CARE
This agreement is made and entered into this 1st day of April, 1996 by and
between The Mount Sinai Hospital Home Health Agency (hereinafter referred to as
"CHHA") and New York Health Care (hereinafter referred to as "Aide
Organization").
Witnesseth:
Whereas, the purpose of this Agreement is to provide by the Aide Organization to
the CHHA home health aide services as the same are requested by the CHHA; and
Whereas, the services rendered hereunder shall be in compliance with the terms
of this Agreement, CHHA's policies, and all applicable government laws and
regulations.
Now, in consideration of the mutual promises herein contained, it is understood
and agreed by the parties hereto as follows:
Provision Of Services:
1. CHHA will call upon the Aide Organization to provide home health aide
personnel (hereinafter referred to as "aide or aides") for assignments to
provide home health aide services to CHHA's patients in their places of
residence.
2. The patient is accepted for home health care only by the CHHA, which will
be responsible for the development and revision of the plan of care in
accordance with applicable state and city policies and regulations. The
CHHA shall forward the plan of care to the Aide Organization at the time of
assignment of an aide. The Aide Organization will not alter the plan
unilaterally.
3. It will be sole responsibility of the CHHA to assess the need for home
health aide services and the resources of the patient and the patient's
family.
4. The CHHA is responsible for planning, coordinating, and insuring the
quality of services provided.
5. The CHHA will determine the scope and duration of the aide's activities on
each assignment and professionally supervise the performance of the aides
during the assignment to the CHHA's patient. Professional supervision shall
mean CHHA registered nurse supervision and where indicated, supervision by
other professional CHHA personnel.
6. Within 15 minutes of each request by the CHHA, the Aide Organization will
fax a response back to the CHHA Indicating assignment or lack of assignment
of a permanent aide to each request. Any aide assignments placed later than
15 minutes after CFHA request, must be confirmed with the CHHA. The CHHA
shall have the right at any time, to refuse the assignment of any aide
provided by the Aide Organization and to shorten, terminate, lengthen or
change the assignment of the aide on oral or written notice to the Aide
Organization.
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<PAGE>
Employment, Availability and Assignment of Aides.
7. The Aide Organization shall conduct and administer a program for the
employment of aides to serve on home health assignments of CHHA. All aides
shall meet the requirements specified in the New York State Hospital code
and other directives of the New York State Department of Health, New York
State Department of Social Services, and in the policies and standards of
the CHHA. These shall include, but not limited to the wearing of a uniform
acceptable to the CHHA, and assurance by the Aide Organization that the
aides are in good health, have completed the medical examinations and
immunizations specified in Parts 761 and 763 of the State Hospital Code,
have completed a training program approved by the New York State Department
of Health and have work and character references and other appropriate
proofs of satisfactory performance on file at the offices of the Aide
Organization. Aide Organization shall also conform to the requirements of
all other pertinent New York State Laws and regulations, and of such
federal laws and regulations as applicable, including but not limited to
those of the United State Department of Labor, and those requirements of
the Center of Disease Control which mandate the supply by an employer,
where appropriate of surgical gloves, masks and aprons.
8. The Aide Organization shall provide only qualified aides to the CHHA for
assignments. For each aide assigned to the CHHA, the Aide Organization
shall submit to the CHHA documentation of aide's qualifications. The Aide
Organization shall provide to the CHHA, on an ongoing basis, the following:
- Profiles for those aides assigned to CHHA's cases for the first time;
- Ongoing updates of current profiles of each aide already assigned to
CHHA's cases; and
- Information with respect to aides who have been terminated by the Aide
Organization within 2 weeks of any such termination.
9. The Aide Organization shall not assign aide trainees to the CHHA's cases.
10. The Aide Organization shall not permit the same aide to be assigned for
more than 5 (five) of seven consecutive days to any case requiring
continuous 24 hour home health aide service. As of June 1st, 1996 this
provision is applicable to all 24 hour cases including cases for which
services commenced before the date this Agreement was entered.
11. The Aide Organization shall maintain a record of assignments for each aide.
These records shall be subject to inspection by the state and local
government agencies and the CHHA at any time.
12. The Aide Organization shall maintain complete and current personnel records
in compliance with Section 763.4 of 10 NYCRR and with the requirements of
the Form 1-9 of the Federal Immigration and Naturalization Service. Such
records shall include, but not be limited to:
- Verification of employment history for the prior two years and
qualifications for the duties assigned;
- Verification of training;
- Applicable certificates;
- In the event of no work history during prior two years, the Aide
Organization shall obtain personal references with respect to that
period;
- Reports of medical examinations and tests, including immunizations
required by Section 763.4.
- Annual health assessment including, but not limited to a questionnaire
screening for the signs and symptoms of tuberculosis;
- Documentation of inservice education; and
- Proof of satisfactory performance and annual competency evaluation.
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<PAGE>
13. The Aide Organization is primarily responsible for conducting performance
evaluations, on at least an annual basis, of each of its aides furnished
pursuant to this Agreement.
14. The CHHA shall, on an ongoing basis, evaluate the home health aide's
clinical performance and competency specifically based on criteria
delineated in the Omnibus Budget Reconciliation Act of 1987.
15. Upon notification by the Aide Organization, the CHHA shall, where
appropriate, complete and submit to the Aide Organization a written
professional evaluation of any home health aide assigned to the CHHA's
cases.
The Aide Organization remains responsible for:
- Notifying the aide of the need for such evaluation;
- Furnishing the required evaluation form;
- Ensuring that the aide has had the form completed in a satisfactory
manner;
- Reviewing such evaluation with the aide; and
- Obtaining the aide's signature of the form.
16. The Aide Organization shall provide continuous inservice education to the
aides assigned to the CHHA's cases in accordance with a yearly plan
prepared by the Aide Organization which is to be based on needs identified
by the CHHA, the Aide Organization and the Aides. Such inservice education
shall at least consist of the total hours and scheduling as mandated by
State and Federal Law and Regulations, including but not limited to
requirements contained in Omnibus Budget Reconciliation Act of 1987.
In the event that additional or special inservice education is required
pursuant to regulation or accreditation, the CHHA shall convey such
requirement to the Aide Organization and the Aide Organization shall
include this as a part of its inservice education.
At least annually the Aide Organization's inservice education shall include
but not be limited to instruction concerning policy and procedure
implementation and updates concerning:
- Universal Precautions as mandated by the Center of Disease Control;
- Confidentiality of HIV related information as required by New York
State Law and Regulations;
- Exposure to bloodborne pathogens;
- Emergency and disaster planning; and
- Tuberculosis prevention protocols.
17. In the event an aide is assigned to a particular category of patients such
as: geriatric, psychiatric, pediatric or a case requiring continuous
paraprofessional service, the CHHA may request that such aide attend
additional inservice education sessions and the Aide Organization shall
comply with such request.
18. The Aide Organization shall maintain a program of drug testing of all aides
hired after the date of this Agreement, as well as yearly drug testing of
their current aides. The Aide Organization shall also establish a program
or drug testing of those aides who the Aide Organization has a reasonable
basis to believe are using, or are under the influence of drugs.
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<PAGE>
19. The Aide Organization shall maintain office hours to place cases seven days
per week between 8:00 AM and 6:00 PM. The Aide Organization shall maintain
availability for the CHHA to contact on an emergency basis at all times.
The Aide Organization shall immediately notify the CHHA in writing of any
changes in how the Aide Organization is to be contacted. The Aide
Organization shall make aides available to the CHHA upon request. Such
aides shall serve 1 to 24 hours per day, 1 to 7 days per week, except as
limited by Sec. 10 above, all as specified by the CHHA. The Aide
Organization shall provide coverage as designated by the CHHA including
weekends, holidays, and after normal work hours.
20. The Aide Organization shall make all efforts to assigning aides to patients
in such a way that switching and replacements of aides will not occur,
notwithstanding any other requirements and prohibitions of this Agreement.
In any instance where the Aide Organization learns of a case for which it
cannot provide coverage by the routinely assigned Aide, or for which there
is the need for an immediate change in the assignment of an Aide, or in
which an assigned Aide cannot complete all hours assigned to the patient,
the Aide Organization shall be responsible for sending a replacement Aide
to complete coverage of all hours of all scheduled shifts. For any and all
of the preceding conditions, the Aide Organization, immediately upon
learning of the problem and immediately upon assignment of a replacement
aide, must notify the CHHA. The CHHA at all times reserves the right to
place the assignment elsewhere, including with another Aide Organization.
21. In the event a problem or difficulty develops concerning the assignment or
service regarding the CHHA patient, the Aide Organization shall make its
staff available to the CHHA staff to discuss resolution of such problem or
difficulty.
22. Prior to starting care, the Aide Organization shall notify the patient of
the name of the aide assigned to the patient and the planned date and time
of the aide's arrival for first visit.
23. The initial visit will be made within twenty four hours of receipt and
acceptance of referral unless otherwise specified or agreed to by the CHHA.
24. Daily telephone contact shall be maintained between the Aide Organization
and the aide for verification of attendance at the patient's home. The time
of day of such contact shall be varied to monitor punctuality and
attendance. Records concerning such verification shall be made available by
the Aide Organization to the CHHA upon request. Any discrepancy greater
than 15 minutes shall be immediately communicated to the CHHA via fax,
within 30 minutes of the scheduled start time. Such information shall be
specific and include: patient's last and first name, patient's CHHA unit
number, team number that patient is assigned to, and Aide's schedule time
and actual time of arrival/departure.
25. The Aide Organization, as requested by the CHHA, shall make arrangements
for the aide to meet the nurse who is supervising the case either at the
appropriate CHHA's office prior to the first visit or on the first visit in
the patient's home in order to discuss the plan of care.
26. The Aide Organization shall designate a primary and secondary liason
representative for the CHHA.
27. The Aide Organization shall maintain plans for disasters and weather or
other emergencies that will provide for patient's safety. These plans and
any revisions to such plans must be documented and sent to the CHHA
immediately.
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<PAGE>
28. During the term of this Agreement, CHHA shall continue the development of
an order processing system which shall enable CHHA to electronically
transmit orders for aide services, and shall enable the Aide Organization
to electronically enter on such system aide profiles, as well as home
health aide hours of services from duty sheets, and/or electronic
attendance verification system, together with other appropriate data. The
parties will consult and cooperate with each other in establishing such an
information transmitted system which is integrated into the CHHA vendor
administration system. The cost of information terminals located at Aide
Organization's premises, and associated network and hardware costs in
connection therewith, shall be borne by the Aide Organization.
Incidents and Complaints
29. The Aide Organization shall immediately but not later than within the same
business day forward to the CHHA:
- A copy of the report of the Aide Organization's site visit from the
New York State Department of Health and a copy of any plan of
correction submitted in connection therewith;
- A copy of any patient or family complaint concerning a CHHA's patient
filed with the New York State Department of Health and the Aide
Organization's plan of correction submitted in connection therewith;
- Any information the Aide Organization learns from an aide, patient, or
any other source, of any accident in the patient's home, or any
complaint, unusual event or occurrence, including alleged theft of a
patient's property, which may have a significant impact on the health
or safety of the patient, or of any employee of the Aide Organization
or the CHHA. Such report shall contain all details of such accident,
event or occurrence, as well as any follow-up actions undertaken, and
shall be communicated to the CHHA as follows:
a) An immediate telephone report shall be made to the Quality
Assurance Manager;
b) A written report shall be made to the Quality Assurance Manager
within 24 hours from the time the Aide Organization learns of the
event or occurrence;
c) If a completion of a written report is not possible within the
time frame established in this section, the Aide Organization
shall submit a preliminary incident report within 24 hours of
receiving communication of the event requiring a report.
30. In the event of any allegation of theft by one of the aides servicing a
CHHA's patient, the Aide Organization shall fully investigate such
allegation. Restitution to the patient or family for any theft shall be
made accordingly based on the results of the investigation.
31. Any aide servicing CHHA's patients pursuant to this Agreement shall not be,
nor shall be considered to be, an employee of the CHHA. The Aides shall be
deemed to be employees of the Aide Organization. The Aide Organization
shall have the direct responsibility for payment of wages and other
compensation, reimbursement of expenses, and compliance with federal, state
and local tax requirements pertaining to withholding Worker's Compensation,
Social Security, Unemployment and other insurance requirements and
obligations imposed on the employer of the Aides. Except as may otherwise
be expressly provided by this Agreement, neither the Aide Organization nor
any of its Aides, employees or representatives shall have any right or
authority to assume or create any obligation or responsibility on behalf
of, or in the name of, the CHHA or to bind the CHHA in any manner
whatsoever, nor shall the CHHA have any obligation or responsibility for
any expenses or liabilities which may be incurred by or imposed upon any
such persons.
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<PAGE>
Insurance and Indemnification
32. The Aide Organization shall procure and maintain pursuant to the terms of
this Agreement, insurance to cover the personnel assigned under the terms
of this Agreement which are to include comprehensive general liability
insurance relative to the activities resulting from assignments under this
Agreement and any other employee's liability insurance required by law for
any employer to carry on its employees. Such coverage shall not be less
than $1,000,000 and $3,000,000 in the aggregate. The CHHA shall be listed
as additional insured, as their interest may appear, for any liability
arising out of or in connection with the contractual liability stated in
this Agreement between the CHHA and the Aide Organization.
33. The Aide Organization shall file a rider to this Agreement, which shall
have the same force and effect as if included in this Agreement providing a
copy of the certificate of insurance to demonstrate that it has obtained
the required insurance, specifying the types and amounts of insurance
coverage for each aide or group of aides provided under the terms of this
Agreement. Said copy of certificate of insurance shall provide for at least
thirty (30) days notice to the CHHA of cancellation of any of the
insurance.
34. The Aide Organization agrees to hold free and harmless and to indemnify The
Mount Sinai Hospital, its officers, directors, employees, agents and
affiliates against any and all loss, damage, liability or expense,
including reasonable attorneys' fees by reason for any act or acts of
commission or omission by the agent or employee of theirs.
35. The CHHA agrees to hold free and harmless and to indemnify the Aide
Organization, its officers, directors, employees, agents and affiliates
against any and all loss, damage, liability or expense, including
reasonable attorneys' fees by reason for any act or acts of commission or
omission by the agent or employee of theirs.
Duty Sheets and Payment
36. For all patients serviced by the Aide Organization, the Aide Organization
will be responsible for accurately completing Home Health Aide Duty Sheets
(hereinafter "Duty Sheets"). Such Duty Sheets shall contain information
pertaining to "whole visits" only and shall be in the format enclosed as
Exhibit 1 to this Agreement.
37. The Aide Organization shall submit a weekly invoice not later than 7 days
from the last date of service for the week being submitted. Such invoice
shall set forth: time and the aide services performed by the aide,
patient's last and first name, patient's CHHA unit number, and amounts due
to the Aide Organization from the CHHA. Corresponding original Duty Sheets
shall be attached to invoices.
Upon implementation of the Aide Information System, the Aide Organization
will be responsible for entering on the CHHA Order Processing System (OPS)
completed and accurate Home Health Aide Duty Sheets. Such duty sheets shall
contain information pertaining to "whole visits" only (i.e. portions of
visits will not be accepted).
38. The CHHA reserves the right to discount all invoices submitted later than
30 days from the last date of service for the week submitted. The CHHA
shall have the right to withhold the payment for invoices that the CHHA
will not get reimbursed based on the insurance payment agreements or
policies.
39. If all documentation submitted to the CHHA (i.e. Duty Sheets, invoices,
etc.) is in order, payment will be made by the CHHA to the Aide
Organization within 90 days from the date of receipt of
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<PAGE>
invoice.
40. The CHHA will pay the Aide Organization for properly documented hours of
service rendered pursuant to this agreement at:
Service Fee
Home Health Aide $ per hour
Live-in Aide $ per 24 hour
The fee for aides services rendered shall be effective 24 hours per day/365
days per year.
41. Neither the Aide Organization nor the Aide shall charge or accept any fee
from the patient or patient's family for aide services provided under the
CHHA's Plan of Care.
Cost Analysis, Records and Compliance
42. The Aide Organization, upon request of the CHHA, shall make available to
the CHHA a cost analysis of its services in a format procedure acceptable
to the CHHA. At the request of the CHHA, the Aide Organization shall
furnish appropriate documentation in support of such cost analysis.
43. The Aide Organization shall maintain records of all financial transactions
with the CHHA relevant to services govern by this Agreement. Such records
shall be kept in accordance with sound accounting practices and each
transaction shall be fully documented. Such records shall be made available
to the State Department of Health or CHHA for inspection or audit upon
request.
44. The Aide Organization and the CHHA, for services rendered pursuant to this
Agreement valued at $ 10,000. or more in a twelve (12) month period until
the expiration of four (4) years, from the termination of this Agreement,
shall comply with any and all requests by the Comptroller General of the
United States, the Secretary of HHS, and their duly authorized
representatives for access to agreements, books, documents and records
necessary to verify the cost of service.
45. The Aide Organization shall permit the CHHA representative to periodically
review Aide Organization's payroll records in order to verify that payment
made for hours of home health aide services match the actual hours billed
by the Aide Organization to the CHHA.
46. Nothing contained in this Paragraph shall be construed as a waiver by the
CHHA or the Aide Organization of any other legal rights that such party may
have including, without limitation, the right of confidentiality with
respect to patient records and proprietary information.
Procedures, Confidentiality and Non Discrimination:
47. Both the CHHA and the Aide Organization shall:
a. Designate a person within their respective organizations who shall
have the responsibility for coordinating aide assignments.
b. Consult and cooperate with each other in establishing mutually
acceptable standards and procedures for selection and assignments of
aides, handling of request including request for emergency aide
service, billing procedures and any other matters incidental to
carrying out the provisions and purposes of this Agreement.
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<PAGE>
c. Ensure that aide services shall be made available to all patients
without regard to race, sex, creed, national origin, sexual
orientation, affectional preference, handicap, diagnosis or source of
payment, except fiscal capability thereto.
d. Not discriminate against any aide because of age, race, color, sex,
creed, handicap, national origin, sexual orientation or affectional
preference.
48. In any instance where a policy or procedure of the Aide Organization
conflicts or is inconsistent with that of the CHHA the applicable policy or
procedure of the CHHA shall prevail.
49. The Aide Organization shall not carry out any of its duties under this
Agreement through a subcontract with another person or organization.
50. Pursuant to New York State Regulation and notwithstanding any other
provisions of this Agreement, the Aide Organization remains responsible
for:
a. Ensuring that any service provided pursuant to this Agreement complies
with all pertinent provisions of federal, state and local statutes,
rules and regulations;
b. Ensuring the quality of all services provided by the Aide Agency; and
c. Ensuring adherence by the Aide Organization's staff to the Plan of
Care established for patients.
51. Pursuant to New York State Regulations and notwithstanding any other
provisions of this Agreement, the CHHA remains responsible for:
a. Ensuring that any service provided pursuant to this Agreement complies
with all pertinent provisions of federal, state and local statutes,
rules and regulations;
b. Planning, coordinating and ensuring the quality of all services
provided; and
c. Ensuring adherence to the Plan of Care established for patients.
Terms of Agreement
52. This Agreement supersedes any prior agreements, oral or written between the
parties and it is understood that this Agreement constitutes the entire
agreement between the CHHA and the Aide Organization.
53. This Agreement may be modified or amended by mutual consent of the parties.
Any such modification or amendment shall be in writing duly executed by
both parties hereto, and shall be attached to and become part of this
Agreement.
54. This Agreement shall not be assigned by either party or assumed by another
entity without the prior written consent of the other party.
55. This Agreement does not imply that the CHHA will deal exclusively with the
Aide Organization, nor does the Agreement impose any obligation on the CHHA
to actually utilize the services of the Aide Organization.
56. This Agreement shall be effective April 1, 1996 and shall continue in full
force and effect through March 31, 1997.
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<PAGE>
57. This Agreement may be terminated with or without cause by either party on
at least thirty (30) days written notice to the other party. All written
notices affecting termination of Agreement shall be delivered by Certified
Mail with return receipt addressed to the person who executed this
Agreement.
58. This Agreement shall terminate immediately upon the revocation or
termination of the Aide Organization's license to provide home health aide
services, and any services provided pursuant to this Agreement shall cease
immediately. This agreement shall terminate immediately upon the lapse of
Insurance that the Aide Organization is mandated to carry according to Sec.
29 of this Agreement.
59. Any termination pursuant to Sec. 57 or 58 of this Agreement shall not
release either party of obligations which have occurred hereunder as of the
date of termination. Home health aide services provided hereunder to a
patient which have commenced prior to the effective termination date shall,
in conformity with applicable law and regulation, continue to be available
under the terms hereof for a period of up to three (3) months beyond the
actual termination date.
60. In the event of termination of this Agreement, the CHHA shall be entitled
to do the following:
a. Inform those patients to whom aides employed by the Aide Organization
are assigned:
- of the termination of this Agreement,
- that such patient cannot continue to be served by a home health
aide employed by the Aide Organization for more than three months
from the date of termination; and
- that in the event of patient's hospitalization and readmission to
the CHHA, another aide organization will be assigned to provide
home health aide services.
b. inform any home health aide assigned by the Aide Organization to the
CHHA patient that such aide, if he or she desires to continue beyond
three months from the date of termination to be assigned to such
patient or to any CHHA's patient, can do so only through employment by
an aide organization which has a current agreement with the CHHA; and
c. Take all other actions which the CHHA deems appropriate to effect the
smooth transition of services to other aide organization.
IN WITNESS WHEREOF, this Agreement has been duly executed signed by:
THE MOUNT SINAI HOSPITAL NEW YORK HEALTH CARE
HOME HEALTH AGENCY
BY: /s/ Ann Baxter BY: /s/ Jerry Braun
------------------------------------- -----------------------------------
ANN BAXTER
TITLE: ___________________________________ TITLE: ____________________________
ASSOCIATE HOSPITAL DIRECTOR
DATE: ____________________________________ DATE: _____________________________
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ABSOLUTE, UNCONDITIONAL, IRREVOCABLE AND
LIMITED CONTINUING GUARANTY OF PAYMENT
THIS ABSOLUTE. UNCONDITIONAL IRREVOCABLE AND LIMITED CONTINUING GUARANTY OF
PAYMENT ("Limited Guaranty") is made on this 9th day of May, 1996.
WITNESSETH:
WHEREAS, UNITED MIZRAHI BANK AND TRUST COMPANY, a bank chartered under the
laws of the State of New York (the "Bank") is or will be extending credit to New
York Health Care, Inc. (the "Borrower"), whose principal address is 1667
Flatbush Avenue, Brooklyn, New York 11210; and
WHEREAS, the undersigned (hereinafter referred to individually and
collectively as the "Guarantor" has represented and warranted to the Bank that
it will be benefitted if credit is extended to the Borrower, because such
Guarantor has an interest or relationship, directly or indirectly, in or with
the Borrower and/or in the transactions being funded with such credit; and
WHEREAS, the Bank has declined to extend credit to the Borrower unless each
Guarantor executes and delivers to the Bank this Limited Guaranty;
NOW, THEREFORE, in order to induce the Bank to extend or continue to extend
credit or grant financial accommodations to the Borrower and in consideration of
other good and valuable consideration the receipt of which each Guarantor hereby
acknowledges, each Guarantor agrees as follows:
1. Guaranteed Obligations. The Guarantor guarantees the payment to the Bank
of Nine Hundred Eighty Four Thousand Three Hundred Seventy Five ($984,375.00)
whether principal, interest or other, however arising, which may now or
hereafter be due to the Bank from the Borrower arising from, or relating to all
debts, liabilities and obligations, present or future, direct or indirect,
absolute or contingent, matured or not, joint or several, of the Borrower to the
Bank, and the timely and proper performance by the Borrower of all obligations,
covenants and agreements relating to the same (such debts, liabilities,
obligations, covenants and agreements, being hereinafter referred to as the
"Guaranteed Obligations"), including without limitation those Guaranteed
Obligations relating to or arising out of any loan documents entered into
pursuant to the currently contemplated transaction or any other transaction now,
previously or hereinafter entered into between the Borrower and the Bank (the
"Loan Documents").
2. Limited Guaranty Absolute, Unconditional, Irrevocable and Continuing.
Each Guarantor, as direct and joint and several obligor and not merely as
surety, hereby absolutely and unconditionally irrevocably guarantees to the
Bank, independently of the Borrower and of any other surety or guarantor
(including without limitation any other Guarantor), the full and complete
payment when due (by acceleration or at stated maturity) and the timely and
proper performance by the Borrower of all Guaranteed Obligations. The obligation
of each Guarantor hereunder in respect of the Guaranteed Obligations is absolute
and unconditional irrespective of the genuiness, legality, validity, regularity
or enforceability of any applicable Loan Document. This is an irrevocable and
continuing guaranty and shall remain in full force and effect until all
Guaranteed Obligations shall have been satisfied and all amounts due in respect
thereof shall have been paid to the Bank in full. Each Guarantor waives, to the
fullest extent permitted by law, the benefit of any statute of limitations
affecting its liability hereunder or the enforcement thereof, as well as any
other circumstance or provision of law which might otherwise constitute a
defense or discharge of a Guarantor or hinder prompt enforcement of this Limited
Guaranty. This Limited Guaranty shall be a continuing guaranty and shall cover
and secure any amount at any time owing in respect of the Guaranteed
Obligations. Each Guarantor hereby irrevocably waives any right to require that
the Bank proceed against the Borrower or any other person, or proceed against or
exhaust any collateral or security which the Bank may now or hereafter hold for
any of the Guaranteed Obligations prior to collecting from such Guarantor
hereunder. The Limited Guaranty of each Guarantor hereunder shall continue to be
effective, or shall be reinstated, as the case may be, if at any time any
payment to the Bank in respect of the Guaranteed Obligations shall be rescinded
or must otherwise be returned for any reason whatsoever, including without
limitation upon the insolvency, bankruptcy or reorganization of the person or
entity making such payment, all as though such payment had not been made. The
Guarantor acknowledges that no oral or other agreements, understandings,
representations or warranties exist with
REVISED 12/14/93
<PAGE>
respect to this Guaranty or with respect to the obligations of the Guarantor
under this Guaranty, except as specifically set forth in this Guaranty.
3. Payment. If the Borrower shall default in the payment of any Guaranteed
Obligation when due (by acceleration, upon maturity or otherwise), each
Guarantor shall pay to the Bank immediately upon demand the full amount of such
Guaranteed Obligation in lawful currency of the United States of America and in
immediately available funds. All such payments shall be made without setoff,
deduction or withholding for any reason whatsoever, and shall be final and free
from any claim or counterclaim of any other Guarantor or the Borrower. Demand
upon each Guarantor shall be made by the Bank by notice to such Guarantor as
provided herein, setting forth the amount due and demanding payment. All sums
payable by each Guarantor hereunder shall be paid to the Bank at 10 Rockefeller
Plaza, New York, NY 10020 (or at such other location as shall be designated by
the Bank in its notice to Guarantor) on the first working day in New York, New
York ("Business Day"), following the date notice is transmitted by telecopy or
by telex with confirmed answer back or is delivered personally to such
Guarantor, or three (3) days after notice is mailed to such Guarantor demanding
payment.
4. Enforcement. The Bank may neglect or forbear to enforce payment or to
take any other action or exercise any right hereunder or in respect of the
Guaranteed Obligations without in any way affecting or impacting the liability
of each Guarantor hereunder. No act or omission of any kind by the Bank shall
affect or impair this Limited Guaranty, and the Bank shall have no duties to any
Guarantor except as expressly provided herein. This Limited Guaranty contains
the full agreement of each Guarantor and is not subject to any oral conditions
or understandings. In proceeding under this Limited Guaranty, the Bank may act
against any Guarantor separately, or against two or more Guarantors jointly, or
against some separately and some jointly. In any action or proceeding to enforce
this Limited Guaranty against any Guarantor, the Bank shall not be required to
join the Borrower, or any other Guarantor, unless it shall elect to do so in its
sole discretion.
5. Waiver. Each Guarantor hereby irrevocably waives notice of the extension
and/or modification of the Loan Documents guaranteed by this Limited Guaranty,
or of the acceptance of this Limited Guaranty, as well as protest, presentment,
diligence, demand for payment (except as specified in Section 3 above), notice
of default, nonpayment or dishonor of any Guaranteed Obligation, and any other
notice whatsoever except as expressly provided in this Limited Guaranty.
6. Limited Guaranty Not Affected. No change in the name, objects, capital
stock, ownership, organic documents or charter of the Borrower or any Guarantor
or other guarantor or surety (if the same shall not be a natural person), or in
any law applicable to the Borrower or any Guarantor or other guarantor or
surety, shall in way affect the liability of any Guarantor to the Bank under
this Limited Guaranty, and the sums due in respect of the Guaranteed Obligations
shall be guaranteed by this Limited Guaranty notwithstanding that the obtaining
of any credit guaranteed hereby shall be in excess of the powers of the Borrower
or of its officers, directors or other agents, acting in or purporting to act on
its behalf, or be in way irregular, unlawful or defective. Each Guarantor agrees
that this Limited Guaranty is in addition to and not in substitution for any
other guaranties or other Security or collateral which are now or which may
hereafter be held by the Bank, and that such Guarantor's obligations under this
Limited Guaranty shall not be affected by any release or discharge granted any
other Guarantor or guarantor or surety or by the fact that any person requested
to guarantee or to give security or collateral for the Guaranteed Obligations
shall have failed to do so.
7. Consent to Certain Actions. Each Guarantor consents to, and without
notice to such Guarantor and without the necessity for any additional
endorsement, consent or guaranty from such Guarantor, and without in any way
impairing such Guarantor's obligations hereunder (a) any or all of the
Guaranteed Obligations may, from time to time, be renewed, extended, modified
(with respect to time for payment or the terms of indebtedness or otherwise),
compromised, settled, released or discharged by the Bank, whether by agreement
with the Borrower or pursuant to any insolvency, bankruptcy or similar
proceeding; (b) any security or collateral for the Guaranteed Obligations may be
assigned, exchanged, sold, released or surrendered by the Bank, and the Bank may
abstain from perfecting its security interest in any such security or collateral
or from taking up new security or collateral (c) the Bank may exercise or
refrain from exercising any right against the Borrower or any other person or
entity (including without limitation any Guarantor), or otherwise act or refrain
from acting; (d) the Bank may apply any sums whatsoever paid or howsoever
realized to any liabilities of the Borrower or any other person or entity to the
Bank, in such order as the Bank shall elect in its sole discretion, regardless
of what Guaranteed Obligations shall remain unpaid as a result of such
application; (e) the Bank may consent to or waive any breach of, any act,
omission or default in respect to, the Guaranteed Obligations: or (f) the Bank
may agree to any amendment or modification of, or any supplement to, any Loan
Document, credit document or agreement, instrument or document applicable to the
Guaranteed Obligations.
REVISED 12/14/93
<PAGE>
8. Successors and Assigns. No Guarantor may delegate any of its obligations
or liabilities hereunder. The Limited Guaranty shall be binding upon the heirs,
personal representatives, executors and successors of each Guarantor and shall
inure to the benefit of the Bank and its successors and assigns. The Bank may at
any time, without notice to any Guarantor, transfer or assign to any person or
entity any of the Guaranteed Obligations or any interest therein, and each and
every immediate and successive assignee or transferee of the Guaranteed
Obligations or any interest therein shall, to the extent of his or its interest,
be entitled to the benefits of this Limited Guaranty to the same extent as if
such assignee or transferee were the Bank.
9. Hold Harmless. Each Guarantor agrees to indemnify and hold the Bank
harmless upon demand for all expenses, losses, consequences or damages of the
Bank arising from or relating to any claim, demand, action or proceeding by
whomsoever brought in connection with or relating to this Limited Guaranty or
any of the Guaranteed Obligations, including without limitation the payment of
any court costs, the reasonable fees and expenses of legal counsel, whether
in-house or outside counsel, and any other costs of collection incurred by the
Bank. In addition, each Guarantor agrees to pay any documentary stamp taxes,
intangible taxes or other taxes (except for federal or New York franchise or
income taxes based on the Bank's net income) which may now or hereafter apply to
any Guaranteed Obligation or any applicable Loan Document, agreement or
instrument, or any security therefor, and each Guarantor agrees to indemnify and
hold the Bank harmless upon demand from and against any liability, costs,
attorney's fees, penalties, interest or expenses relating to any such taxes, as
and when the same may be incurred. Each Guarantor further agrees to pay the Bank
on demand, and to indemnify and hold the Bank harmless against, any and all
other present or future taxes, levies, imposts, deductions, charges and
withholdings imposed in connection with any Guaranteed Obligation or any
applicable credit document by the laws or governmental authorities of any
jurisdiction other than the State of New York or the United States of America,
and all payments to the Bank under this Limited Guaranty shall be made free and
clear thereof and without deduction therefor. All amounts payable to the Bank
hereunder shall bear interest from the date they are expended by the Bank until
payment in full at the highest lawful rate then permitted by applicable law in
the State of New York, or if no such rate then exists, at the highest lawful
rate permitted under such other applicable law of Bank's choice in effect on the
date thereof.
10. Notices. Any notice of demand required or permitted to be given
hereunder to any Guarantor shall be in writing and shall be: (a) personally
delivered; (b) transmitted by postage prepaid, first class mail, (first class
airmail if international); or (c) transmitted by telecopy or by telex with
confirmed answerback to the address for such Guarantor registered from time to
time on the Bank's books. Such notice shall be deemed effective at the time of
transmission; provided, however, that notice sent by mail shall be effective on
the third day after mailing.
11. Subordination and Subrogation. Each Guarantor hereby subordinates any
and all direct or indirect claims and rights that such Guarantor may have
against the Borrower or any other Guarantor (whether or not evidenced by
promissory notes or other evidences of indebtedness, whether for moneys
advanced, services performed or goods sold and delivered, whether for an
indeterminate amount, a sum certain or a contingent claim), now existing or
hereafter arising, to any and all claims by the Bank for amounts owing from the
Borrower to the Bank in respect of the Guaranteed Obligations. Each Guarantor
hereby assigns and transfers to the Bank, effective upon demand by the Bank for
payment of any Guaranteed Obligation by such Guarantor, all such claims and
rights and any proceeds thereof, and agrees that the Bank may, in its
discretion, make and present in any bankruptcy or other proceeding such proofs
or claims as the Bank may deem expedient or proper, and may vote such proofs or
claims in any such proceedings. Each Guarantor hereby undertakes to deliver upon
demand by the Bank such additional documents as the Bank may request to evidence
such subordination, assignment and transfer, including without limitation duly
executed assignments, and to collect or enforce any sums due from the Borrower
or any other Guarantor from and after notice from the Bank, as trustee for the
Bank, and to pay over to the Bank such sums immediately upon receipt, together
with interest on such sums from the date received by such Guarantor until paid
to the Bank, before or after judgment, at the interest rate provided herein for
amounts expended by the Bank, without reducing or affecting in any manner the
liability of such Guarantor under the other provisions of this Limited Guaranty.
Until all Guaranteed Obligations shall have been paid in full, each Guarantor
shall have no right of subrogation, and waives any right to enforce any remedy
which the Bank now has or may hereafter have against the Borrower, and waives
any benefit of, and any right to participate in, any security, collateral or
lien now or hereafter held by the Bank.
12. Borrower's Performance. Each Guarantor agrees not to take any action
which would prevent or interfere with the Borrower's performance of any of the
Guaranteed Obligations, and agrees to take or cause to be taken all action
necessary or appropriate (to the extent legally permissible) to cause and permit
the Borrower to perform all the Guaranteed Obligations.
REVISED 12/14/93
<PAGE>
13. Security. As security for all of its obligations hereunder, each
Guarantor hereby pledges and assigns to the Bank, and grants to the Bank a
security interest in, all property (whether tangible or intangible), monies,
instruments, documents of title and securities now or hereafter in the
possession of the Bank, by or for the account of such Guarantor, or in which
such Guarantor may have any interest (an such remittances, property,
instruments, documents of title and securities to be deemed in the possession or
custody of the Bank as soon as put in transit to it by mail or carrier and also
upon the balance, from time to time, of any deposits or accounts of such
Guarantor with the Bank, and the Bank is hereby irrevocably authorized and
empowered at its option and without prior notice to such Guarantor to
appropriate any and all thereof and apply the same or the proceeds thereof to
any amount past-due in respect of the Guaranteed Obligations. The security
interest granted hereby shall come into existence and continue whether or not
any such collateral is deposited to secure other obligations of such Guarantor
to the Bank, and the Bank is hereby irrevocably authorized to retain and keep
any such collateral until payment in full of all Guaranteed Obligations. Each
Guarantor agrees to pay upon demand any deficiency remaining after the Bank
realizes upon any such collateral, but the Bank shall not be required to proceed
first against any such collateral. In addition, the Bank may at any time set off
any deposits of any Guarantor with the Bank (whether or not matured), or any
monies of any Guarantor which may come into the possession of the Bank, against
any amount due to the Bank in respect of the Guaranteed Obligations.
Alternatively, the Bank may in its discretion, retain such monies as collateral
for the performance by the Borrower of the Guaranteed Obligations, by placing
such monies in a blocked account with the Bank pending the satisfaction in full
of such Guaranteed Obligations.
14. Representation and Warranties. To induce the Bank to fund the
Guaranteed Obligations to the Borrower, each Guarantor represents and warrants
that: (a) there are no actions, suits or proceeding pending or threatened
against or affecting such Guarantor before any court of law or equity or any
tribunal, administrative board or governmental authority, which, if adversely
determined, could materially affect the financial condition or business
operations of such Guarantor, and such Guarantor is not in default under any
other indebtedness or with respect to any order, writ, injunction, decree,
judgment or demand of any court or any governmental authority; (b) the execution
and delivery of this Limited Guaranty does not and shall not (i) violate any
provision of any law, rule, regulation, order, writ, judgment, injunction,
decree, decision or award applicable to such Guarantor, nor (ii) result in a
breach of, or constitute a default under, any indenture, bond, mortgage, lease,
instrument, credit agreement, undertaking, contract or other agreement to which
such Guarantor is a party or by which any of its properties may be bound or
affected; (c) this Limited Guaranty constitutes the legal valid and binding
obligation of such Guarantor, enforceable against such Guarantor in accordance
with its terms; (d) all financial statements of such Guarantor previously
delivered to the Bank have been prepared in accordance with generally accepted
accounting principles consistently applied and fairly present the correct
financial condition of such Guarantor as of their respective dates, and the
foregoing shall be true with respect to all financial statements of such
Guarantor delivered to the Bank hereafter; (e) such Guarantor has duly filed all
federal, state and local tax returns which are required to be filled, and has
paid all taxes as shown on said returns which have become due (except such taxes
as are being contested in good faith by appropriate proceedings diligently
pursued, adequate reserves having been set aside for the payment thereof); (f)
there is no fact that such Guarantor has not disclosed to the Bank in writing
that could materially adversely affect such Guarantor's properties, business or
financial condition; (g) the Guarantor has not guaranteed or stood as surety for
any other entity than previously disclosed to the Bank in writing nor will the
Guarantor guarantee or stand surety for any other transaction without first
obtaining the Bank's written consent; and (h) such Guarantor has duly obtained
all permits, licenses, approvals, and consents from, and made all filings with,
any governmental authority {and the same have not lapsed nor been rescinded or
revoked) which are necessary in connection with its execution and delivery of
this Limited Guaranty, the performance of such Guarantor's obligations under
this Limited Guaranty, or the enforcement of this Limited Guaranty.
If any Guarantor is a corporation, partnership or other business entity,
then the Guarantor hereby further represents and warrants that: (a) such
Guarantor is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its creation, and is duly licensed or qualified to
do business under the laws of such other jurisdictions where the nature of its
business requires that it be so qualified or licensed; {b) such Guarantor has
all requisite power and authority (corporate or otherwise) to conduct its
business, to own its properties, to execute and deliver this Limited Guaranty,
and to perform its obligations hereunder; (c) the execution, delivery and
performance of this Limited Guaranty have been duly authorized by all necessary
actions (corporate or otherwise) and do not require the consent or approval of
such Guarantor's stockholders (if a corporation) or of any other person or
entity whose consent has not been obtained; and (d) the execution, delivery and
performance of this Limited Guaranty do not and will not conflict with any
provision of such Guarantor's by-laws or articles of incorporation (if a
corporation), partnership agreement (if a partnership) or trust agreement (if a
trust), or other document pursuant to which such Guarantor was created. Each
Guarantor acknowledges and agrees that the Bank is relying on the
representations and warranties in this Limited Guaranty as a precondition to
funding the Guaranteed Obligations to the Borrower, and that all such
representations and warranties shall survive the extension of such credit and
any bankruptcy, insolvency liquidation or similar proceedings.
REVISED 12/14/93
<PAGE>
15. Exchange Rate. If for the purposes of obtaining judgment against any
Guarantor in any court it becomes necessary to convert a sum due hereunder in
U.S. dollars into another currency, then the rate of exchange used shall be that
at which the Bank could purchase U.S. dollars with such other currency in
accordance with normal banking procedures on the Business Day preceding the day
on which final judgment is obtained. Notwithstanding any judgment in such other
currency, the obligations of the Guarantor for any sum due hereunder shall be
discharged only to the extent that: (i) the Bank can purchase U.S. dollars with
such other currency in accordance with normal banking procedures on the Business
Day following the Bank's receipt of any such sum adjudged to be due hereunder in
such other currency; and (ii) the Bank can remit the purchased U.S. dollars to
the place where payment of the Guaranteed Obligations should have been made by
the Borrower.
If the U.S. dollars so purchased and remitted are less than the sum owing
to the Bank in U.S. dollars before the judgment, then each Guarantor agrees as a
separate obligation and notwithstanding any such judgment, to indemnify the Bank
on demand against such loss, together with interest from such demand at the rate
set forth in Section 11 above for amounts expended by the Bank; if the U.S.
dollars so purchased and remitted exceed the sum owing to the Bank in U.S.
dollars before the judgment, such excess shall be remitted to the Guarantor from
whom such other currency shall have been collected.
16. Legal Fees. Guarantor agrees to pay all legal fees (regardless if those
fees are to the Bank's retained counsel or to cover the cost of in-house
counsel), disbursements and related expenses incurred by the Bank in connection
with the enforcement and/or collection of the Guaranteed Obligations against
either the Borrower and/or the Guarantor. In the event that the Bank pays any
such legal fees, disbursements or expenses, Guarantor will promptly reimburse
the Bank therefor. Furthermore, the Bank may, at its election and in its sole
discretion, deduct all or part of any such amount from any account which
Guarantor now or hereafter maintains with the Bank or any of its affiliates.
Guarantor understands and acknowledges that the Bank may retain lawyers in
reliance upon the agreement of Guarantor set forth herein.
17. No Revocation. This Limited Guaranty may not be revoked by the
Guarantor for any reason while the Guaranteed Obligations remain unsatisfied
regardless of whether said Guaranteed Obligations are no longer the legal
obligations of the Borrower.
18. Statement of Account. Any statement of account maintained by the Bank
in the ordinary course of business and that is binding on the Borrower shall
also be binding upon the Guarantor. Said statement of account shall be
admissible as evidence against the Guarantor to the same extent that it would be
admissible against the Borrower but shall not be subject to any defenses that
Borrower might assert against the Bank.
19. Acceleration. In the event that there has been a default under the
terms of the Guaranteed Obligations by the Borrower, the Bank may, in its sole
discretion, accelerate the unpaid balance of the Guaranteed Obligations at any
time and declare said amount to be immediately due and owing.
20. Severability. Any provision of this Limited Guaranty which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction
only, be ineffective only to the extent of such prohibition or unenforceability,
without invalidating the remaining provisions hereof or affecting the validity
or enforceability of such other provision in any other jurisdiction. In the
event that any law invalidating such a provision may be waived, it is hereby
waived by each Guarantor to the fullest extent permitted by law in order that
this Limited Guaranty shall be deemed to be a valid and binding agreement
enforceable against such Guarantor in accordance with its terms.
21. Cumulative Rights. The rights of the Bank under this Limited Guaranty
may be waived only in a writing signed by at least two authorized officers of
the Bank on its behalf. The rights granted to the Bank hereunder are in addition
to, and not in substitution for, any rights available to the Bank against any
Guarantor at law or in equity, or under any other agreement, guaranty,
promissory note, contract or other document which such Guarantor may have
already executed and delivered or may hereafter execute and deliver to the Bank,
all of which are cumulative and may be exercised by the Bank in whole or in part
from time to time.
22. Governing Law; Jurisdiction. The provisions of this Limited Guaranty,
and all rights and obligations hereunder, shall be governed by and construed in
accordance with the laws of the State of New York without giving effect to the
conflicts of laws provisions thereof, which is the place of negotiation,
delivery and performance hereof. For any action or proceeding relating to or
arising from this Limited Guaranty, the Bank and each Guarantor hereby, to the
fullest extent permitted by law: (a) submits to the jurisdiction of the state
and federal courts in the State of New York; (b) waives any immunity or
exemption of any property, wherever located, from garnishment, levy,
REVISED 12/14/93
<PAGE>
execution, seizure or attachment prior to or in execution of judgment, or sale
under execution or other process for the collection of debts; (c) agrees that
the venue of any such action or proceeding may be laid in New York County (in
addition to any place in which any collateral for any Guaranteed Obligation
which is the subject of such action or proceeding is then located, or where
payment of such Guaranteed Obligations should have bean made by the Borrower)
and waives any claim that the same is in inconvenient forum; and (e) stipulates
that service of process in any such action or proceeding shall be properly made
if mailed by any form of registered or certified mail (airmail if
international), postage prepaid, to the address then registered in the Bank's
books for such Guarantor, and that any process so served shall be effective ten
days after mailing; provided, however, that the foregoing shall not limit the
Bank's right to serve legal process in any other manner permitted by law or to
bring any such action or proceeding in any other court of competent
jurisdiction.
23. Term. As to each Guarantor, this Limited Guaranty shall enter into
effect when signed by such Guarantor and delivered to the Bank and remain in
full force and effect until the Guaranteed Obligations shall have been paid in
full or until the Bank shall have released such Guarantor by a writing signed by
at least two duly authorized officers of the Bank (and no Guarantor shall be
released from such Guarantor's Obligations hereunder in any other manner).
24. Interpretation. Whenever used in this Limited Guaranty, words in the
singular include the plural, words in the plural include the singular, and
pronouns of any gender include the other genders, all as may be appropriate.
Captions and paragraph headings in this Limited Guaranty are for convenience of
reference only and shall not affect the interpretation of any provision of this
Limited Guaranty. Any reference in this Limited Guaranty to a sum expressed in
dollars or with the symbol "$" or "U.S.$" means the lawful currency of the
United States of America, unless such reference expressly identifies another
dollar-denominated currency.
25. Miscellaneous. Time shall be of the essence with respect to the terms
of this Limited Guaranty and to the obligations of the Guarantors hereunder.
This Limited Guaranty cannot be changed or modified orally. The Bank shall have
the right unilaterally to correct patent errors or omissions In this Limited
Guaranty. Upon request from the Bank from time to time, each Guarantor will
provide to the Bank such information regarding its financial condition and
business operations as the Bank shall request.
26. Counterparts. This Limited Guaranty may be signed in any number of
counterparts. Any counterpart signed by any Guarantor shall constitute a full
and original agreement with respect to that Guarantor for all purposes.
JURY TRIAL WAIVER.
EACH GUARANTOR HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT
(S)HE OR IT MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY LITIGATION BASED
HEREIN, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS ABSOLUTE,
UNCONDITIONAL AND CONTINUING Limited Guaranty OF PAYMENT, OR OUT OF ON IN
CONNECTION WITH ANY AGREEMENT CONTEMPLATED TO BE EXECUTED IN CONJUNCTION
THEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENT (WHETHER
VERBAL ON WRITTEN) ON ACTIONS OR OMISSIONS OF ANY PARTY. GUARANTOR FURTHER
ACKNOWLEDGES THAT THIS JURY TRIAL WAIVER PROVISION HAS BEEN EXPLAINED TO
IT/HIM/HER BY ITS/HIS/HER COUNSEL AND THAT IT/HE/SHE UNDERSTANDS AND AGREES TO
SAME.
REVISED 12/14/93
<PAGE>
IN WITNESS WHEREOF, each Guarantor has executed and delivered this Limited
Guaranty on the day and year first above written.
(Individuals complete and sign below) (Corporations, Partnerships
or other Entities complete and
sign below)
/s/ Jacob Rosenberg
- ----------------------------- ---------------------------------------
(Signature) (Name of corporation, partnership or
other entity)
Jacob Rosenberg By:
- ----------------------------- ------------------------------
Print Name Name and Title
###-##-#### By:
- ----------------------------- ------------------------------
Social Security No. Name and Title
932 E. 29th Street
- ----------------------------- ---------------------------------------
Street Address (Employer l.D. No.)
Brooklyn, New York 11210
- ----------------------------- ---------------------------------------
City, State, Zip Street Address of Business
- ----------------------------- ---------------------------------------
Telephone No. City, State, Zip
STATE OF NEW YORK
COUNTY OF QUEENS
The foregoing instrument was sworn to, subscribed and acknowledged before me
this 9 day of May, 1996 by Jacob Rosenberg, individually.
/s/ Doris Medina DORIS MEDINA
- --------------------------------- Notary Public, State of New York
Notary Public, State of New York No. 41-4898355
My Commission Expires: Qualified in Queens County
Commission Expires June 15, 1997
State of New York
County of New York
The foregoing instrument was sworn to, subscribed and acknowledged before me
this ________________________________________ day of _________, 19______, by
____________________________________, as ______________________________, of
__________________ a state chartered corporation, on behalf of said corporation.
- ---------------------------------
Notary Public, State of New York
REVISED 12/14/93
<PAGE>
State of New York
County of New York
The foregoing instrument was sworn to, subscribed and acknowledged before me
this ________________________________________ day of _________, 19______, by
____________________________________, as ______________________________, of
__________________ a state chartered corporation, on behalf of said corporation.
- ---------------------------------
Notary Public, State of New York
REVISED 12/14/93
ABSOLUTE, UNCONDITIONAL, IRREVOCABLE AND
LIMITED CONTINUING GUARANTY OF PAYMENT
THIS ABSOLUTE, UNCONDITIONAL IRREVOCABLE AND LIMITED CONTINUING GUARANTY OF
PAYMENT ("Limited Guaranty") is made on this 9th day of May, 1996.
W I T N E S S E T H :
WHEREAS, UNITED MIZRAHI BANK AND TRUST COMPANY, a bank chartered under the
laws of the State of New York (the "Bank") is or will be extending credit to New
York Health Care, Inc. (the "Borrower"), whose principal address is 1667
Flatbush Avenue, Brooklyn, New York 11210; and
WHEREAS, the undersigned (hereinafter referred to individually and
collectively as the "Guarantor" has represented and warranted to the Bank that
it will be benefitted if credit is extended to the Borrower, because such
Guarantor has an interest or relationship, directly or indirectly, in or with
the Borrower and/or in the transactions being funded with such credit; and
WHEREAS, the Bank has declined to extend credit to the Borrower unless each
Guarantor executes and delivers to the Bank this Limited Guaranty;
NOW, THEREFORE, in order to induce the Bank to extend or continue to extend
credit or grant financial accommodations to the Borrower and in consideration of
other good and valuable consideration the receipt of which each Guarantor hereby
acknowledges, each Guarantor agrees as follows:
1. Guaranteed Obligations. The Guarantor guarantees the payment to the
Bank of One Million Nine Hundred Sixty Eight Thousand Seven Hundred Fifty
($1,968,750.00) whether principal, interest or other, however arising, which may
now or hereafter be due to the Bank from the Borrower arising from, or relating
to all debts, liabilities and obligations, present or future, direct or
indirect, absolute or contingent, matured or not, joint or several, of the
Borrower to the Bank, and the timely and proper performance by the Borrower of
all obligations, covenants and agreements relating to the same (such debts,
liabilities, obligations, covenants and agreements, being hereinafter referred
to as the "Guaranteed Obligations"), including without limitation those
Guaranteed Obligations relating to or arising out of any loan documents entered
into pursuant to the currently contemplated transaction or any other transaction
now, previously or hereinafter entered into between the Borrower and the Bank
(the "Loan Documents").
2. Limited Guaranty Absolute, Unconditional, Irrevocable and
Continuing. Each Guarantor, as direct and joint and several obligor and not
merely as surety, hereby absolutely and unconditionally irrevocably guarantees
to the Bank, independently of the Borrower and of any other surety or guarantor
(including without limitation any other Guarantor), the full and complete
payment when due (by acceleration or at stated maturity) and the timely and
proper performance by the Borrower of all Guaranteed Obligations. The obligation
of each Guarantor hereunder in respect of the Guaranteed Obligations is absolute
and unconditional irrespective of the genuineness, legality, validity,
regularity or enforceability of any applicable Loan Document. This is an
irrevocable and continuing guaranty and shall remain in full force and effect
until all Guaranteed Obligations shall have been satisfied and all amounts due
in respect thereof shall have been paid to the Bank in full. Each Guarantor
waives, to the fullest extent permitted by law, the benefit of any statute of
limitations affecting its liability hereunder or the enforcement thereof, as
well as any other circumstance or provision of law which might otherwise
constitute a defense or discharge of a Guarantor or hinder prompt enforcement of
this Limited Guaranty. This Limited Guaranty shall be a continuing guaranty and
shall cover and secure any amount at any time owing in respect of the Guaranteed
Obligations. Each Guarantor hereby irrevocably waives any right to require that
the Bank proceed against the Borrower or any other person, or proceed against or
exhaust any collateral or security which the Bank may now or hereafter hold for
any of the Guaranteed Obligations prior to collecting from such Guarantor
hereunder. The Limited Guaranty of each Guarantor hereunder shall continue to be
effective, or shall be reinstated, as the case may be, if at any time any
payment to the Bank in respect of the Guaranteed Obligations shall be rescinded
or must otherwise be returned for any reason whatsoever, including without
limitation upon the insolvency, bankruptcy or reorganization of the person or
entity making such payment, all as though such payment had not been made. The
Guarantor acknowledges that no oral or other agreements, understandings,
representations or warranties exist with
REVISED 12/14/93
<PAGE>
respect to this Guaranty or with respect to the obligations of the Guarantor
under this Guaranty, except as specifically set forth in this Guaranty.
3. Payment. If the Borrower shall default in the payment of any
Guaranteed Obligation when due (by acceleration, upon maturity or otherwise),
each Guarantor shall pay to the Bank immediately upon demand the full amount of
such Guaranteed Obligation in lawful currency of the United States of America
and in immediately available funds. All such payments shall be made without
setoff, deduction or withholding for any reason whatsoever, and shall be final
and free from any claim or counterclaim of any other Guarantor or the Borrower.
Demand upon each Guarantor shall be made by the Bank by notice to such Guarantor
as provided herein, setting forth the amount due and demanding payment. All sums
payable by each Guarantor hereunder shall be paid to the Bank at 10 Rockefeller
Plaza, New York, NY 10020 (or at such other location as shall be designated by
the Bank in its notice to Guarantor) on the first working day in New York, New
York ("Business Day"), following the date notice is transmitted by telecopy or
by telex with confirmed answer back or is delivered personally to such
Guarantor, or three (3) days after notice is mailed to such Guarantor demanding
payment.
4. Enforcement. The Bank may neglect or forbear to enforce payment or
to take any other action or exercise any right hereunder or in respect of the
Guaranteed Obligations without in any way affecting or impairing the liability
of each Guarantor hereunder. No act or omission of any kind by the Bank shall
affect or impair this Limited Guaranty, and the Bank shall have no duties to any
Guarantor except as expressly provided herein. This Limited Guaranty contains
the full agreement of each Guarantor and is not subject to any oral conditions
or understandings. In proceeding under this Limited Guaranty, the Bank may act
against any Guarantor separately, or against two or more Guarantors jointly, or
against some separately and some jointly. In any action or proceeding to enforce
this Limited Guaranty against any Guarantor, the Bank shall not be required to
join the Borrower, or any other Guarantor, unless it shall elect to do so in its
sole discretion.
5. Waiver. Each Guarantor hereby irrevocably waives notice of the
extension and/or modification of the Loan Documents guaranteed by this Limited
Guaranty, or of the acceptance of this Limited Guaranty, as well as protest,
presentment, diligence, demand for payment (except as specified in Section 3
above), notice of default, nonpayment or dishonor of any Guaranteed Obligation,
and any other notice whatsoever except as expressly provided in this Limited
Guaranty.
6. Limited Guaranty Not Affected. No change in the name, objects,
capital stock, ownership, organic documents or charter of the Borrower or any
Guarantor or other guarantor or surety (if the same shall not be a natural
person), or in any law applicable to the Borrower or any Guarantor or other
guarantor or surety, shall in any way affect the liability of any Guarantor to
the Bank under this Limited Guaranty, and the sums due in respect of the
Guaranteed Obligations shall be guaranteed by this Limited Guaranty
notwithstanding that the obtaining of any credit guaranteed hereby shall be in
excess of the powers of the Borrower or of its officers, directors or other
agents, acting or purporting to act on its behalf, or be in any way irregular,
unlawful or defective. Each Guarantor agrees that this Limited Guaranty is in
addition to and not in substitution for any other guaranties or other security
or collateral which are now or which may hereafter be held by the Bank, and that
such Guarantor's obligations under this Limited Guaranty shall not be affected
by any release or discharge granted any other Guarantor or guarantor or surety
or by the fact that any person requested to guarantee or to give security or
collateral for the Guaranteed Obligations shall have failed to do so.
7. Consent to Certain Actions. Each Guarantor consents to, and without
notice to such Guarantor and without the necessity for any additional
endorsement, consent or guaranty from such Guarantor, and without in any way
impairing such Guarantor's obligations hereunder: (a) any or all of the
Guaranteed Obligations may, from time to time, be renewed, extended, modified
(with respect to time for payment or the terms of indebtedness or otherwise),
compromised, settled, released or discharged by the Bank, whether by agreement
with the Borrower or pursuant to any insolvency, bankruptcy or similar
proceeding; (b) any security or collateral for the Guaranteed Obligations may be
assigned, exchanged, sold, released or surrendered by the Bank, and the Bank may
abstain from perfecting its security interest in any such security or
collateral, or from taking up new security or collateral; (c) the Bank may
exercise or refrain from exercising any right against the Borrower or any other
person or entity (including without limitation any Guarantor), or otherwise act
or refrain from acting; (d) the Bank may apply any sums whatsoever paid or
howsoever realized to any liabilities of the Borrower or any other person or
entity to the Bank, in such order as the Bank shall elect in its sole
discretion, regardless of what Guaranteed Obligations shall remain unpaid as a
result of such application; (e) the Bank may consent to or waive any breach of,
any act, omission or default in respect to, the Guaranteed Obligations; or (f)
the Bank may agree to any amendment or modification of, or any supplement to,
any Loan Document, credit document or agreement, instrument or document
applicable to the Guaranteed Obligations.
REVISED 12/14/93
<PAGE>
8. Successors and Assigns. No Guarantor may delegate any of its
obligations or liabilities hereunder. The Limited Guaranty shall be binding upon
the heirs, personal representatives, executors and successors of each Guarantor
and shall inure to the benefit of the Bank and its successors and assigns. The
Bank may at any time, without notice to any Guarantor, transfer or assign to any
person or entity any of the Guaranteed Obligations or any interest therein, and
each and every immediate and successive assignee or transferee of the Guaranteed
Obligations or any interest therein shall, to the extent of his or its interest,
be entitled to the benefits of this Limited Guaranty to the same extent as if
such assignee or transferee were the Bank.
9. Hold Harmless. Each Guarantor agrees to indemnify and hold the Bank
harmless upon demand for all expenses, losses, consequences or damages of the
Bank arising from or relating to any claim, demand, action or proceeding by
whomsoever brought in connection with or relating to this Limited Guaranty or
any of the Guaranteed Obligations, including without limitation the payment of
any court costs, the reasonable fees and expenses of legal counsel, whether
in-house or outside counsel, and any other costs of collection incurred by the
Bank. In addition, each Guarantor agrees to pay any documentary stamp taxes,
intangible taxes or other taxes (except for federal or New York franchise or
income taxes based on the Bank's net income) which may now or hereafter apply to
any Guaranteed Obligation or any applicable Loan Document, agreement or
instrument, or any security therefor, and each Guarantor agrees to indemnify and
hold the Bank harmless upon demand from and against any liability, costs,
attorney's fees, penalties, interest or expenses relating to any such taxes, as
and when the same may be incurred. Each Guarantor further agrees to pay the Bank
on demand, and to indemnify and hold the Bank harmless against, any and all
other present or future taxes, levies, imposts, deductions, charges and
withholdings imposed in connection with any Guaranteed Obligation or any
applicable credit document by the laws or governmental authorities of any
jurisdiction other than the State of New York or the United States of America,
and all payments to the Bank under this Limited Guaranty shall be made free and
clear thereof and without deduction therefor. All amounts payable to the Bank
hereunder shall bear interest from the date they are expended by the Bank until
payment in full at the highest lawful rate then permitted by applicable law in
the State of New York, or if no such rate then exists, at the highest lawful
rate permitted under such other applicable law of Bank's choice in effect on the
date thereof.
10. Notices. Any notice of demand required or permitted to be given
hereunder to any Guarantor shall be in writing and shall be: (a) personally
delivered; (b) transmitted by postage prepaid, first class mail, (first class
airmail if international); or (c) transmitted by telecopy or by telex with
confirmed answerback to the address for such Guarantor registered from time to
time on the Bank's books. Such notice shall be deemed effective at the time of
transmission; provided, however, that notice sent by mail shall be effective on
the third day after mailing.
11. Subordination and Subrogation. Each Guarantor hereby subordinates
any and all direct or indirect claims and rights that such Guarantor may have
against the Borrower or any other Guarantor (whether or not evidenced by
promissory notes or other evidences of indebtedness, whether for moneys
advanced, services performed or goods sold and delivered, whether for an
indeterminate amount, a sum certain or a contingent claim), now existing or
hereafter arising, to any and all claims by the Bank for amounts owing from the
Borrower to the Bank in respect of the Guaranteed Obligations. Each Guarantor
hereby assigns and transfers to the Bank, effective upon demand by the Bank for
payment of any Guaranteed Obligation by such Guarantor, all such claims and
rights and any proceeds thereof, and agrees that the Bank may, in its
discretion, make and present in any bankruptcy or other proceeding such proofs
or claims as the Bank may deem expedient or proper, and may vote such proofs or
claims in any such proceedings. Each Guarantor hereby undertakes to deliver upon
demand by the Bank such additional documents as the Bank may request to evidence
such subordination, assignment and transfer, including without limitation duly
executed assignments, and to collect or enforce any sums due from the Borrower
or any other Guarantor from and after notice from the Bank, as trustee for the
Bank, and to pay over to the Bank such sums immediately upon receipt, together
with interest on such sums from the date received by such Guarantor until paid
to the Bank, before or after judgment, at the interest rate provided herein for
amounts expended by the Bank, without reducing or affecting in any manner the
liability of such Guarantor under the other provisions of this Limited Guaranty.
Until all Guaranteed Obligations shall have been paid in full, each Guarantor
shall have no right of subrogation, and waives any right to enforce any remedy
which the Bank now has or may hereafter have against the Borrower, and waives
any benefit of, and any right to participate in, any security, collateral or
lien now or hereafter held by the Bank.
12. Borrower's Performance. Each Guarantor agrees not to take any
action which would prevent or interfere with the Borrower's performance of any
of the Guaranteed Obligations, and agrees to take or cause to be taken all
action necessary or appropriate (to the extent legally permissible) to cause and
permit the Borrower to perform all the Guaranteed Obligations.
REVISED 12/14/93
<PAGE>
13. Security. As security for all of its obligations hereunder each
Guarantor hereby pledges and assigns to the Bank, and grants to the Bank a
security interest in, all Property {whether tangible or intangible), monies,
instruments, documents of title and securities now or hereafter in the
possession of the Bank, by or for the account of such Guarantor, or in which
such Guarantor may have any interest (all such remittances, property,
instruments, documents of title and securities to be deemed in the possession or
custody of the Bank as soon as put in transit to it by mail or carrier), and
also upon the balance, from time to time, of any deposits or accounts of such
Guarantor with the Bank, and the Bank is hereby irrevocably authorized and
empowered at its option and without prior notice to such Guarantor to
appropriate any and all thereof and apply the same or the proceeds thereof to
any amount past-due in respect of the Guaranteed Obligations. The security
interest granted hereby shall come into existence and continue whether or not
any such collateral is deposited to secure other obligations of such Guarantor
to the Bank, and the Bank is hereby irrevocably authorized to retain and keep
any such collateral until payment in full of all Guaranteed Obligations. Each
Guarantor agrees to pay upon demand any deficiency remaining after the Bank
realizes upon any such collateral, but the Bank shall not be required to proceed
first against any such collateral. In addition, the Bank may at any time set off
any deposits of any Guarantor with the Bank {whether or not matured), or any
monies of any Guarantor which may come into the possession of the Bank, against
any amount due to the Bank in respect of the Guaranteed Obligations.
Alternatively, the Bank may, in its discretion, retain such monies as collateral
for the performance by the Borrower of the Guaranteed obligations, by placing
such monies in a blocked account with the Bank pending the satisfaction in full
of such Guaranteed Obligations.
14. Representation and Warranties. To induce the Bank to fund the
Guaranteed Obligations to the Borrower, each Guarantor represents and warrants
that: (a) there are no actions, suits or proceeding pending or threatened
against or affecting such Guarantor before any court of law or equity or any
tribunal, administrative board or governmental authority, which, if adversely
determined, could materially affect the financial condition or business
operations of such Guarantor, and such Guarantor is not in default under any
other indebtedness or with respect to any order, writ, injunction, decree,
judgment or demand of any court or any governmental authority; (b) the execution
and delivery of this Limited Guaranty does not and shall not {i) violate any
provision of any law, rule, regulation, order, writ, judgment, injunction,
decree, decision or award applicable to such Guarantor, nor (ii) result in a
breach of, or constitute a default under, any indenture, bond, mortgage, lease,
instrument, credit agreement, undertaking, contract or other agreement to which
such Guarantor is a party or by which any of its properties may be bound or
affected; {c) this Limited Guaranty constitutes the legal valid and binding
obligation of such Guarantor, enforceable against such Guarantor in accordance
with its terms; {d} all financial statements of such Guarantor previously
delivered to the Bank have been prepared in accordance with generally accepted
accounting principles consistently applied and fairly present the correct
financial condition of such Guarantor as of their respective dates, and the
foregoing shall be true with respect to all financial statements of such
Guarantor delivered to the Bank hereafter; (e) such Guarantor has duly filed all
federal state and local tax returns which are required to be filed and has paid
all taxes as shown on said returns which have become due {except such taxes as
are being contested in good faith by appropriate proceedings diligently pursued,
adequate reserves having been set aside for the payment thereof); (f) there is
no fact that such Guarantor has not disclosed to the Bank in writing that could
materially adversely affect such Guarantor's properties, business or financial
condition; {g) the Guarantor has not guaranteed or stood as surety for any other
entity than previously disclosed to the Bank in writing nor will the Guarantor
guarantee or stand surety for any other transaction without first obtaining the
Bank's written consent; and {h) such Guarantor has duly obtained all permits,
licenses, approvals, and consents from, and made all filings with, any
governmental authority {and the same have not lapsed nor been rescinded or
revoked) which are necessary in connection with its execution and delivery of
this Limited Guaranty, the performance of such Guarantor's obligations under
this Limited Guaranty, or the enforcement of this Limited Guaranty.
If any Guarantor is a corporation, partnership or other business
entity, then the Guarantor hereby further represents and warrants that: {a) such
Guarantor is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its creation, and is duly licensed or qualified to
do business under the laws of such other jurisdictions where the nature of its
business requires that it be so qualified or licensed; {b) such Guarantor has
ail requisite power and authority {corporate or otherwise) to conduct its
business, to own its properties, to execute and delver this Limited Guaranty,
and to perform its obligations hereunder; (c) the execution, delivery and
performance of this Limited Guaranty have been duly authorized by all necessary
actions {corporate or otherwise) and do not require the consent or approval of
such Guarantor's stockholders (if a corporation) or of any other person or
entity whose consent has not been obtained; and {d) the execution, delivery and
performance of this Limited Guaranty do not and will not conflict with any
provision of such Guarantor's by-laws or articles of incorporation (if a
corporation), partnership agreement {if a partnership) or trust agreement (if a
trust), or other document pursuant to which such Guarantor was created. Each
Guarantor acknowledges and agrees that the Bank is relying on the
representations and warranties in this Limited GuarantY as a precondition to
funding the Guaranteed Obligations to the Borrower, and that all such
representations and warranties shall survive the extension of such credit and
any bankruptcy, insolvency liquidation or similar proceedings.
REVISED 12/14/93
<PAGE>
15. Exchange Rate. If for the purposes of obtaining judgment against
any Guarantor in any court it becomes necessary to convert a sum due hereunder
in U.S. dollars into another currency, then the rate of exchange used shall be
that at which the Bank could purchase U.S. dollars with such other currency in
accordance with normal banking procedures on the Business Day preceding the day
on which final judgment is obtained. Notwithstanding any judgment in such other
currency, the obligations of the Guarantor for any sum due hereunder shall be
discharged only to the extent that: (i) the Bank can purchase U.S. dollars with
such other currency in accordance with normal banking procedures on the Business
Day following the Bank's receipt of any such sum adjudged to be due hereunder in
such other currency; and (ii) the Bank can remit the purchased U.S. dollars to
the place where payment of the Guaranteed Obligations should have been made by
the Borrower.
If the U.S. dollars so purchased and remitted are less than the sum
owing to the Bank in U.S. dollars before the judgment, then each Guarantor
agrees as a separate obligation and notwithstanding any such judgment, to
indemnify the Bank on demand against such loss, together with interest from such
demand at the rate set forth in Section 11 above for amounts expended by the
Bank; if the U.S. dollars so purchased and remitted exceed the sum owing to the
Bank in U.S. dollars before the judgment, such excess shall be remitted to the
Guarantor from whom such other currency shall have been collected.
16. Legal Fees. Guarantor agrees to pay all legal fees, (regardless if
those fees are to the Bank's retained counsel or to cover the cost of in-house
counsel), disbursements and related expenses incurred by the Bank in connection
with the enforcement and/or collection of the Guaranteed Obligations against
either the Borrower and/or the Guarantor. In the event that the Bank pays any
such legal fees, disbursements or expenses, Guarantor will promptly reimburse
the Bank therefor. Furthermore, the Bank may, at its election and in its sole
discretion, deduct all or part of any such amount from any account which
Guarantor now or hereafter maintains with the Bank or any of its affiliates.
Guarantor understands and acknowledges that the Bank may retain lawyers in
reliance upon the agreement of Guarantor set forth herein.
17. No Revocation. This Limited Guaranty may not be revoked by the
Guarantor for any reason while the Guaranteed Obligations remain unsatisfied
regardless of whether said Guaranteed Obligations are no longer the legal
obligations of the Borrower.
18. Statement of Account. Any statement of account maintained by the
Bank in the ordinary course of business and that is binding on the Borrower
shall also be binding upon the Guarantor. Said statement of account shall be
admissible as evidence against the Guarantor to the same extent that it would be
admissible against the Borrower but shall not be subject to any defenses that
Borrower might assert against the Bank.
19. Acceleration. In the event that there has been a default under the
terms of the Guaranteed Obligations by the Borrower, the Bank may, in its sole
discretion, accelerate the unpaid balance of the Guaranteed Obligations at any
time and declare said amount to be immediately due and owing.
20. Severability. Any provision of this Limited Guaranty which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction
only, be ineffective only to the extent of such prohibition or unenforceability,
without invalidating the remaining provisions hereof or affecting the validity
or enforceability of such other provision in any other jurisdiction. In the
event that any law invalidating such a provision may be waived, it is hereby
waived by each Guarantor to the fullest extent permitted by law in order that
this Limited Guaranty shall be deemed to be a valid and binding agreement
enforceable against such Guarantor in accordance with its terms.
21. Cumulative Rights. The rights of the Bank under this Limited
Guaranty may be waived only in a writing signed by at least two authorized
officers of the Bank on its behalf. The rights granted to the Bank hereunder are
in addition to, and not in substitution for, any rights available to the Bank
against any Guarantor at law or in equity, or under any other agreement,
guaranty, promissory note, contract or other document which such Guarantor may
have already executed and delivered or may hereafter execute and deliver to the
Bank, all of which are cumulative and may be exercised by the Bank in whole or
in part from time to time.
22. Governing Law; Jurisdiction. The provisions of this Limited
Guaranty, and all rights and obligations hereunder, shall be governed by and
construed in accordance with the laws of the State of New York without giving
effect to the conflicts of laws provisions thereof, which is the place of
negotiation, delivery and performance hereof. For any action or proceeding
relating to or arising from this Limited Guaranty, the Bank and each Guarantor
hereby, to the fullest extent permitted by law: (a) submits to the jurisdiction
of the state and federal courts in the State of New York; (b) waives any
immunity or exemption of any property, wherever located, from garnishment, levy,
REVISED 12/14/93
<PAGE>
execution, seizure or attachment prior to or in execution of judgment, or sale
under execution or other process for the collection of debts; (c) agrees that
the venue of any such action or proceeding may be laid in New York County {in
addition to any place In which any collateral for any Guaranteed Obligation
which is the subject of such action or proceeding is then located, or where
payment of such Guaranteed Obligations should have been made by the Borrower)
and waives any claim that the same is in inconvenient forum; and (e) stipulates
that service of process in any such action or proceeding shall be properly made
if mailed by any form of registered or certified mail (airmail if
international), postage prepaid, to the address then registered in the Bank's
books for such Guarantor, and that any process so served shall be effective ten
days after mailing; provided, however, that the foregoing shall not limit the
Bank's right to serve legal process in any other manner permitted by law or to
bring any such action or proceeding in any other court of competent
jurisdiction,
23. Term. As to each Guarantor, this Limited Guaranty shall enter into
effect when signed by such Guarantor and delivered to the Bank and remain in
full force and effect until the Guaranteed Obligations shall have been paid in
full or until the Bank shall have released such Guarantor by a writing signed by
at least two duly authorized officers of the Bank {and no Guarantor shall be
released from such Guarantor's obligations hereunder in any other manner).
24. Interpretation. Whenever used in this Limited Guaranty, words in
the singular include the plural, words in the plural include the singular, and
pronouns of any gender include the other genders, all as may be appropriate.
Captions and paragraph headings in this Limited Guaranty are for convenience of
reference only and shall not affect the interpretation of any provision of this
Limited Guaranty. Any reference in this Limited Guaranty to a sum expressed in
dollars or with the symbol "$" or "U.S.$" means the lawful currency of the
United States of America, unless such reference expressly identifies another
dollar-denominated currency.
25. Miscellaneous. Time shall be of the essence with respect to the
terms of this Limited Guaranty and to the obligations of the Guarantors
hereunder. This Limited Guaranty cannot be changed or modified orally. The Bank
shall have the right unilaterally to correct patent errors or omissions in this
Limited Guaranty. Upon request from the Bank from time to time, each Guarantor
will provide to the Bank such information regarding its financial condition and
business operations as the Bank shall request.
26. Counterparts This Limited Guaranty may be signed in any number of
counterparts. Any counterpart signed by any Guarantor shall constitute a full
and original agreement with respect to that Guarantor for all purposes
JURY TRIAL WAIVER.
EACH GUARANTOR HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT
(S)HE OR IT MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY LITIGATION BASED
HEREIN, OR ARISING OUT Of, UNDER, OR IN CONNECTION WITH THIS ABSOLUTE,
UNCONDITIONAL AND CONTINUING Limited Guaranty Of PAYMENT, OR OUT OF OR IN
CONNECTION WITH ANY AGREEMENT CONTEMPLATED TO BE EXECUTED IN CONJUNCTION
THEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENT (WHETHER
VERBAL OR WRITTEN) OR ACTIONS OR OMISSIONS Of ANY PARTY. GUARANTOR FURTHER
ACKNOWLEDGES THAT THIS JURY TRIAL WAIVER PROVISION HAS BEEN EXPLAINED TO
IT/HIM/HER BY ITS/HIS/HER COUNSEL AND THAT IT/HE/SHE UNDERSTANDS AND AGREES TO
SAME.
REVISED 12/14/93
<PAGE>
IN WITNESS WHEREOF, each Guarantor has executed and delivered
this Limited Guaranty on the day and year first above written,
(Individuals complete and sign below} (Corporations, Partnerships
or other Entities complete and
sign below}
/s/ Jerry Braun
- -------------------------- ---------------------------------
(Signature) (Name of corporation, partnership
or other entity)
Jerry Braun By
- -------------------------- -----------------------------
Print Name Name and Title
###-##-#### By:
- -------------------------- -----------------------------
Social Security No. Name and Title
929 E. 28th Street
- -------------------------- ---------------------------------
Street Address (Employer l.D. No.)
Brooklyn, NY 11210
- -------------------------- ---------------------------------
City, State, Zip Street Address of Business
- -------------------------- ---------------------------------
Telephone No. City, State, Zip
STATE OF NEW YORK
COUNTY OF QUEENS
The foregoing instrument was sworn to, subscribed and acknowledged before me
this 9 day of May, 1996, by Jerry Braun, individually.
/s/ Doris Medina DORIS MEDINA
- --------------------------------- Notary Public, State of New York
Notary Public, State of New York No. 41-4898355
My Commission Expires: Qualified in Queens County
Commission Expires June 15, 1997
State of New York
County of New York
The foregoing instrument was sworn to, subscribed and acknowledged before me
this _____ day of ________, 19___, by _________________________, as
__________________________ of _______________________________, a state chartered
corporation, on behalf of said corporation.
- ---------------------------------
Notary Public, State of New York
REVISED 12/14/93
<PAGE>
State of New York
County of New York
The foregoing instrument was sworn to, subscribed and acknowledged before me
this _____ day of ________, 19___, by _________________________, as
__________________________ of _______________________________, a state chartered
corporation, on behalf of said corporation.
- ---------------------------------
Notary Public, State of New York
REVISED 12/14/93
United Mizrahi
Bank and Trust Company
CONTINUING GENERAL SECURITY AGREEMENT
(Including Floating Lien)
In consideration of financial accommodations (arising from loan, advance,
overdraft, letter of credit, acceptance and/or other credit transactions) given
or to be given or to be continued to the undersigned ("Debtor") by United
Mizrahi Bank and Trust Company ("Bank"), the Debtor hereby agrees with the Bank
that, whenever the Debtor shall be at any time or times directly or contingently
indebted, liable or obligated to the Bank in any manner whatsoever, the Bank
shall have the following rights:
1. As security for the due and punctual payment of any and all of the
present and future Obligations of the Debtor (as defined in Section 2 below),
the Debtor hereby grants to the Bank a continuing security interest in (a) all
of the Collateral (as defined in Section 3 below), whether now or hereafter
existing or acquired, and (b) all present and future products and proceeds of
the Collateral.
2. As used herein, the term "Obligations" means all liabilities, direct or
contingent, joint, several or independent, of the Debtor now or hereafter
existing, due or to become due to, or held or to be held by, the Bank for its
own account or as agent for another or others, whether created directly or
acquired by assignment or otherwise and howsoever evidenced.
3. As used herein, the term "Collateral" means the property described
opposite the box(es) checked below: (Check one or more of the following by an X
in the box provided.)
|X| A. All Personal Property. All of the Debtor's personal property and
fixtures now or hereafter existing or acquired, of any type or
description, wherever located, including but not limited to (a) all of
the inventory of the Debtor, now owned or hereafter acquired and
wherever located, whether raw, in process or finished, all materials
or equipment usable in processing the same; all documents of title
covering any inventory; all equipment, now owned or hereafter acquired
and wherever located, employed in the operation of the Debtor's
business; all of the Debtor's accounts, general intangibles,
instruments, investment securities, chattel paper, notes, drafts,
acceptances, together with all property of every description, now or
hereafter in the possession or custody of or in transit to the Bank,
for any purpose, including safekeeping, collection or pledge, for
account of the Debtor, or as to which the Debtor may have any right or
power, and property in the possession or custody of or in transit to
anyone for the account of the Bank; and (b) all substitutions
therefor, all additions thereto (including without limitation all cash
and dividends and other distributions and all rights, privileges and
options relating to, declared or granted in connection with such
property) and all proceeds thereof and products of each of the
foregoing in any form whatsoever.
|_| B. Equipment Described in Schedule(s). All equipment described in
Schedule 1 annexed hereto and in any separate schedule at any time
delivered by the Debtor to the Bank, including all present and future
additions, attachments and accessories thereto and all substitutions
therefor and replacements thereof.
|_| C. Inventory Collateral. All of the inventory of the Debtor, of every
type or description, now owned or hereafter acquired and wherever
located, whether raw, in process or finished, all materials or
equipment usable in processing the same and all documents of title
covering any inventory, including but not limited to inventory of the
type(s) described in Schedule 2 annexed hereto (if any) and in any
separate schedule at any time delivered by the Debtor to the Bank; (b)
all present and future substitutions therefor and all additions
thereto, and (c) all proceeds thereof and products of such inventory
in any form whatsoever, including but not limited to accounts and
chattel paper. Description of inventory in a schedule or schedules, if
any, is intended to describe more specifically certain types of
inventory described above more generally in this Clause C and shall
not be deemed to limit the generality of the foregoing description of
inventory contained in this Clause C.
|_| D. Accounts and Chattel Paper. All of the Debtor's present and future
accounts and chattel paper (hereinafter referred to in the plural as
"Accounts" and in the singular as "Account"), all proceeds thereof and
all liens, securities, guaranties, remedies, and privileges pertaining
thereto, together with all rights and liens of the Debtor in and to
the merchandise, including returned or repossessed merchandise, and
all rights and property of any kind forming the subject matter of any
of the Accounts, including the right of stoppage in transit; including
but not limited to Accounts set forth in Schedule 3 annexed hereto (if
any) and in any separate schedule at any time delivered by the Debtor
to the Bank. Description of Accounts in a schedule or schedules, if
any, is intended to describe more specifically certain Accounts
described above more generally in this Clause D and shall not be
deemed to limit the generality of the foregoing description of
Accounts contained in this Clause D.
If no box is checked, Clause A (All Personal Property) shall be deemed
applicable for all purposes of this Agreement. If the Clause A box is checked,
checking also the Clause B and/or Clause C and/or Clause D box(es) is not
intended, and shall not be construed, to limit the generality or legal effect of
the description contained in Clause A.
4. The balance of every account of the Debtor with, and each claim of the
Debtor against, the Bank existing from time to time, shall be subject to a lien
and a security interest in favor of the Bank and subject to be set off against
any and all Obligations; and the Bank may at any time or from time to time at
its option and without notice appropriate and apply toward the payment of any of
the Obligations the balance of each such account of the Debtor with, and each
such claim of the Debtor against, the Bank, and the Debtor will continue liable
to the Bank for any deficiency, with interest.
5. The Debtor represents and warrants that: (a) no Financing Statement
(other than any which may have been filed on behalf of the Bank) relating to any
of the Collateral is on file in any public office, and (b) the Chief Executive
Office (or Major Executive Office) of Debtor (if any), the books and records
relating to the Collateral and the Collateral are respectively located at the
address(es) set forth below and Debtor will not change such locations without
prior written notice to and consent of the Bank.
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<PAGE>
6. The Debtor assumes all liability and responsibility in connection with
all collateral acquired by Debtor; and the obligation of the Debtor to pay all
Obligations shall in no way be affected or diminished by reason of the fact that
any such Collateral may be lost, destroyed, stolen, damaged or for any reason
whatsoever unavailable to the Debtor.
7. So long as this Agreement shall remain in effect, the Debtor agrees: (a)
that, if the Bank so demands in writing at any time, (i) all proceeds of the
Collateral shall be delivered to the Bank promptly upon their receipt in a form
satisfactory to the Bank, and (ii) all chattel paper, instruments, and documents
pertaining to the Collateral shall be delivered to the Bank at the time and
place and in the manner in which specified in the Bank's demand; (b) in order to
enable the Bank to comply with the law of any jurisdiction, including state,
federal and foreign, applicable to any security interest granted hereby or to
the Collateral, to execute and deliver upon request, in form acceptable to the
Bank, any Financing Statement, notice, statement, instrument, document,
agreement or other paper and/or to perform any act requested by the Bank which
may be necessary to create, perfect, preserve, validate or otherwise protect
such security interest or to enable the Bank to exercise and enforce the Bank's
rights hereunder or with respect to such security interest; (c) promptly to pay
any filing fees or other costs in connection with (i) the filing or recordation
of such Financing Statements or any other papers described above and (ii) such
searches of the public records as the Sank in its sole discretion shall require;
(d) that the Bank is authorized to file or record and such Financing Statements
or other papers without the signature of the Debtor if permitted by applicable
law; (e) the Bank may file a carbon, photographic or other reproduction of this
Agreement in lieu of a Financing Statement in any filing office where it is
permissible to do so; (f) except for the security interest granted hereby, the
Debtor shall keep the Collateral and proceeds and products thereof free and
clear of any security interests, liens or encumberances of any kind; the Debtor
shall keep promptly pay, when due, all taxes and transportation, storage and
warehousing charges and fees affecting or arising out of the Collateral and
shall defend the Collateral against all claims and demands of all persons at any
time claiming the same or any interest therein adverse to the Bank; (g) at all
times to keep all insurable Collateral insured at the expense of the Debtor (i)
to the Bank's satisfaction against loss by fire, theft and any other risk to
which the Collateral may be subject and (ii) if the Bank so requests, in favor
of the Bank; any of the relative insurance policies or certificates shall, if
the Bank so requests, be deposited with the Bank; the Bank may apply any
proceeds of such insurance which may be received by it toward payment of the
Obligations, whether or not due, in such order of application as the Bank may
determine; (h) that the Bank's duty with respect to the Collateral shall be
solely to use reasonable care in the custody and preservation of Collateral in
its possession; the Bank shall not be obligated to take any steps necessary to
preserve any rights in any of the Collateral against prior parties, and the
Debtor hereby agrees to take such steps; the Debtor shall pay to the Bank all
costs and expenses, including filing and reasonable attorney's fees, incurred by
the Bank in connection with the custody, care, preservation or collection of the
Collateral, the Bank may, but is not obligated to, exercise any and all rights
of conversion or exchange or similar rights, privileges and options relating to
the Collateral; the Bank shall have no obligation to sell or otherwise realize
upon any of the Collateral as herein authorized and shall not be responsible for
any failure to do so or for any delay in so doing; in the event of any
litigation, with respect to any matter connected with this agreement, the
Obligations, the Collateral, or any other instrument, document or agreement
applicable thereto or to any one or more of them in any respect, Debtor hereby
waives the right to a trial by jury and all defences, rights of setoff and
rights to interpose counterclaims of any nature; (i) to provide the Bank with
such information as the Bank may from time to time request with respect to the
location of any of its places of business; (j) that the Bank will be notified
promptly in writing of any change in any office as set forth below; (k) that the
Debtor will permit the Bank, by its officers and agents, to have access to and
examine at all reasonable times, the properties, minute books and other
corporate records, and books of account and financial records of the Debtor; and
(1) that the Debtor will promptly notify the Bank upon the occurence of any
default, as provided in this Agreement, of which the Debtor has knowledge.
8. If the Clause A and/or D box(es) in Section 3 (All Personal Property
and/or Accounts and Chattel Paper) is (are) checked, the following provisions
shall also be applicable:
A. The Debtor agrees that the Debtor will not, without first obtaining the
written consent of the Bank, renew or extend the time of payment of any Account;
where new credit terms exceed 150 days, the Debtor will promptly notify the Bank
in writing of any compromise, settlement or adjustment with respect to an
Account and will forthwith account therefor to the Bank in cash for the amount
thereof without demand or notice; the Debtor will maintain accurate and complete
records of the Accounts and will make the same available to the Bank at any time
upon demand; the Debtor will stamp, in form and manner satisfactory to the Bank,
its accounts receivable ledger and other books and records pertaining to the
Accounts, with an appropriate reference to the security interest of the Bank in
the Accounts; upon request, the Debtor will furnish the Bank original or other
papers relating to the sale of merchandise or the performance of labor or
services which created any Account; the Debtor may collect the Accounts, subject
to the discretion and control of the Bank, but the Bank may, without cause or
notice, curtail or terminate such authority at any time; the proceeds of the
Accounts, when collected by the Debtor, whether consisting of cash, checks,
notes, drafts, money orders, commercial paper of any kind whatsoever, or other
documents, received in payment of the Accounts shall be promptly remitted by the
Debtor to the Bank, in precisely the form received, except for endorsement by
the Debtor when required; such proceeds until remitted to the Bank, as
aforesaid, shall be held in trust by the Debtor for, and as the property of, the
Bank and shall not be commingled with other funds, money or property; proceeds
of the Accounts will be received by the Bank subject to final collection and
receipt of proceeds in cash or by unconditional credit to and accepted by the
Bank; the Bank shall apply in its absolute discretion all collections received
by it on the Accounts toward the payment of any of the Obligations whether due
or not due; the Debtor will promptly notify the Bank in writing of the return or
rejection of any merchandise represented by the Accounts and the Debtor shall
forthwith account therefor to the Bank in cash without demand or notice and
until such payment has been received by the Bank, the Debtor will receive and
hold all such merchandise separate and apart, in trust for and subject to the
security interest in favor of the Bank; the Bank is authorized to sell, for the
Debtor's account and sole risk, all or any part of such merchandise in the
manner and under the terms and conditions hereinafter set forth.
B. The Debtor represents and warrants to the Bank that the Debtor is the
sole owner of the Accounts and no one has or claims to have an interest of any
kind therein or thereto; each of the debtors named in every such Account is
indebted to the Debtor in the amount and on the terms indicated in the invoice
and schedule of Accounts; each Account is bona fide and arises out of the
performance of labor or services or the sale and delivery of merchandise or
both; and none of the Accounts is now, nor will at any time in the future
become, contingent upon the fulfillment of any contract or condition whatsoever,
nor subject to any defense, offset or counterclaim.
9. Upon non-payment when due of any of the Obligations, or upon failure of
the Debtor to perform any agreement on its part to be performed hereunder, or by
the terms of any other or related agreement covering the Obligations, or in case
the Bank deems itself
2
<PAGE>
insecure, or if it appears at any time that any representation in any financial
or other statement of the Debtor (delivered to the Bank by or on behalf of the
Debtor) is untrue or omits any material fact, or if a material adverse change
shall occur in the financial condition of the Debtor, or if the Debtor (or any
endorser, guarantor or surety of or upon any of the Obligations) shall die or
(being a partnership or corporation) shall be dissolved or shall become
insolvent (however evidenced), or upon the suspension of business of the Debtor,
or upon the issuance of any warrant, process, or order of attachment,
garnishment or other lien and/or the filing of a lien as a result thereof
against any of the property of the Debtor (or any endorser, guarantor or surety
of or upon any of the Obligations), or upon the commencement of any proceeding
under (or the use of any of the provisions of) Article 52 of the New York Civil
Practice Law and Rules (or any other applicable law in any jurisdiction) by any
judgment creditor against the Debtor or with respect to any property of the
Debtor, or upon the making by the Debtor (or any endorser, guarantor or surety
of or upon any of the Obligations) of an assignment for the benefit of
creditors, or upon the application for the appointment or the appointment of a
trustee or receiver or similar officer for the Debtor (or any endorser,
guarantor or surety of or upon any of the Obligations) or for any of the
property of the Debtor (or any such endorser, guarantor or surety), or upon any
proceedings being commenced by or against the Debtor (or any such endorser,
guarantor or surety) under any bankruptcy, reorganization, arrangement of debt,
insolvency, readjustment of debt, composition, receivership, liquidation or
dissolution law or statute of any jurisdiction, - then and in any such event:
(a) all Obligations shall become at once due and payable, without notice,
presentation, demand of payment or protest, which are hereby expressly waived;
(b) the Bank is authorized to take possession of the Collateral and, for that
purpose, may enter, with the aid and assistance of any person or persons, any
premises where the Collateral, or any part thereof is, or may be, placed and
remove the same; (c) the Bank may require the Debtor to assemble the Collateral
and to make it available to the Bank at a place designated by the Bank which is
reasonably convenient to the Bank and the Debtor; (d) the Bank shall have the
right from time to time to sell, resell, assign, transfer and deliver all or any
part of the Collateral, at any brokers' board or exchange, or at public or
private sale or otherwise, at the option of the Bank, for cash or on credit for
future delivery, in such parcel or parcels and at such time or times and at such
place or places, and upon such terms and conditions as the Bank, may deem
proper, and in connection therewith may grant options and may impose reasonable
conditions such as requiring any purchaser to represent that any stock
constituting part of the Collateral is being purchased for investment purposes
only, all without (except as shall be required by applicable statute and cannot
be waived) advertisement or demand upon or notice to the Debtor or right of
redemption of the Debtor, which are hereby expressly waived; (e) the Bank shall,
upon mailing notice to the Debtor that it so elects, have from the date of such
mailing the right from time to time to vote any shares of stock securing any of
the Obligations; (f) the Bank's obligation, if any, to give additional (or to
continue) financial accommodations of any kind to the Debtor shall immediately
terminate; (g) upon each such sale, the Bank may, unless prohibited by
applicable statute which cannot be waived, purchase all or any part of the
Collateral being sold, free from and discharged of all trusts, claims, rights of
redemption and equities of the Debtor, which are hereby waived and released, and
(h) in addition to the rights and remedies given to the Bank hereunder or
otherwise, the Bank shall have all of the rights and remedies of a secured party
under the New York Uniform Commercial Code; and (i) all Obligations of the
Debtor shall continue to accrue interest at the contract rate.
10. In the case of such sale or of any proceedings to collect any of the
Obligations, the Debtor shall pay all costs and expenses of every kind for
collection, sale or delivery, including reasonable attorneys' fees, and after
deducting such costs and expenses from the proceeds of sale or collection, the
Bank may apply any residue to pay any of the Obligations and the Debtor will
continue liable to the Bank for any deficiency with interest.
11. The Bank may, but is not obligated to: (a) demand, sue for, collect or
receive any money or property at any time due, payable or receivable on account
of or in exchange for any obligation securing any of the Obligations; (b)
compromise and settle with any person liable on such obligation, and/or (c)
extend the time of payment or otherwise change the terms thereof, as to any part
liable thereon; all without incurring responsibility to the undersigned or
affecting any of the Obligations.
12. Solely in order to effectuate the terms and provisions hereof, Debtor
hereby designates and appoints Bank and its designees or agents as
attorney-in-fact of Debtor, irrevocably and with power of substitution with
authority to receive, open and dispose of all mail addressed to Debtor, to
notify the Post Office authorities to change the address for delivery of mail
addressed to Debtor to such address as Bank may designate; to endorse the name
of Debtor on any notes, acceptances, checks, drafts, money orders, instruments
or other evidence of payment or proceeds of the Collateral that may come into
the Bank's possession; to sign the name of Debtor on any invoices, documents
drafts against and notices (which also may direct, among other things, that
payment be made directly to the Bank) to Account debtors or obligors of Debtor,
assignments and requests for verification of Accounts; to execute proofs of
claim and loss; to execute any endorsements, assignments, or other instruments
of conveyance or transfer, to adjust and compromise any claims under insurance
policies; to execute releases: and to do all other acts and things necessary and
advisable in the sole discretion of Bank to carry out and enforce this
Agreement. All acts of said attorney or designee are hereby ratified and
approved and said attorney or designee shall not be liable for any acts of
commission or omission, nor for any error or judgment or mistake of fact or law.
This power of attorney being coupled with an interest is irrevocable while any
of the Obligations shall remain unpaid.
13. All options, powers and rights granted to the Bank hereunder or under
any promissory note, instrument, document or other writing delivered to the Bank
shall be cumulative and shall be in addition to any other options, powers or
rights which the Bank may now or hereafter have as a secured party under the New
York Uniform Commercial Code or under any other applicable law or otherwise.
14. No delay on the part of the Bank in exercising any of its options,
powers or rights, or partial or single exercise thereof, shall constitute a
waiver thereof. Neither this Agreement nor any provision hereof may be modified,
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against whom enforcement of the modification,
change, waiver, discharge or termination is sought. The Bank shall have the
right, for and in the name, place and stead of the Debtor, to execute
endorsements, assignments or other instruments of conveyance or transfer with
respect to any of the Collateral.
15. Notice of acceptance of this agreement by the Bank is hereby waived.
This Agreement shall be immediately binding upon the Debtor and its successors
and assigns, whether or not the Bank signs this Agreement.
16. It is the intention of the parties (a) that, subject to Section 17
below, this Agreement shall constitute a continuing agreement applying to any
and all future, as well as existing, transactions between the Debtor and the
Bank; and (b) that the security interest provided for herein shall attach to
after-acquired as well as existing Collateral, and the Obligations covered by
this Agreement shall include future advances and other value, as well as
existing advances and other value, whether or not similar to prior or existing
advances or other value, and whether or not the advances or value are or shall
be given pursuant to commitment, all to the maximum extent permitted by the
Uniform Commercial Code.
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<PAGE>
17. This agreement may be terminated by the Debtor upon delivery of written
notice of the Bank of such intention and payment in full of all outstanding
obligations; provided, however, that (a) such notice and payment shall in no way
affect, and this Agreement shall remain fully operative as to, any transactions
entered into or rights granted or liabilities incurred prior to receipt of such
notice by the Bank, and (b) prior to such termination, this Agreement shall be a
continuing agreement in every respect.
18. Unless the context otherwise requires, all terms used herein which are
defined in the New York Uniform Commercial Code shall have the meanings therein
stated.
19. If this Agreement is signed by two or more parties as debtors they
shall be jointly and severally liable hereunder, and the term "Debtor" wherever
used in this Agreement shall mean the parties who have signed this Agreement and
each of them.
20. Mailing Address of Debtor and Address of Secured Party. For the purpose
of Section 9-402(1) of the Uniform Commercial Code, the address of the Debtor
specified below under the caption "Chief Executive Office" (or "Major Executive
Office" address whenever the Chief Executive Office is located outside of the
United States) shall be the Debtor's mailing address and the address of the Bank
specified below shall be the Bank's address from which information concerning
the Bank's security interest hereunder may be obtained.
21. This Agreement shall be construed in accordance with and governed by
the law of the State of New York.
IN WITNESS WHEREOF, the Debtor has executed this agreement or has caused
these presents to be executed and delivered by its proper corporate officer or
officers and caused its proper corporate seal to be hereto affixed, this 9th day
of 1996.
New York Health Care Inc.
(CORPORATE SEAL) -----------------------------------
Debtor
By /s/ Jerry Braun
--------------------------------
Title: Chief Executive Officer
|X| Chief Executive Officer
Address: (Check One)
|X| Major Executive Officer
By /s/ Jacob Rosenberg
--------------------------------
Title: Secretary
UNITED MIZRAHI BANK and TRUST COMPANY
Secured Party
By: /s/ Peter W. Blake, SVP
--------------------------
By /s/ David Barsion
--------------------------
Title: David Barsion
Vice President
Address of Location of Books and Address: One Rockefeller Plaza
Records Relating to Collateral: New York, NY 10020
1667 Flatbush Avenue
Brooklyn, NY 11210
Other Business Addresses:
(if none, state "None"} (Bank need sign only if this Agreement
is to be filed as a Financing Statement
or to meet the requirement of
another State.)
See attached
- --------------------------
- --------------------------
LENDING OFFICER: IF SCHEDULES ARE
COMPLETED, PLEASE INSURE THAT THEY
ARE ATTACHED HERETO.
<PAGE>
New York Health Care Inc
1) 175 Fulton Avenue
Hempstead, NY 11550
(516) 481-7500
2) 105 Stevens Avenue
Mt. Vernon, NY 10550
(914) 699-6810
3) 49 South Main Street
Spring Valley, NY 10977
(914) 352-3500
4) 45 Grand Street
Newburgh, NY 12550
<PAGE>
Addendum to the Continuing General Security Agreement between United Mizrahi
Bank And Trust Company and New York Health Care, Inc. dated May 9, 1996.
Debtor warrants that all federal, state, and local payroll taxes, due and
payable of date indicated, of all employees, full and part time, have been paid
to date. Debtor warrants that taxes as outlined will be kept current and
notification, certified by corporate secretary, will be supplied to the Bank on
a monthly basis, along with the borrowing base certificate.
Agreed: New York Health Care, Inc.
by /s/ Jerry Braun
------------------------------
by /s/ Jacob Rosenberg
------------------------------
dated May 9, 1996
------------------------------
AGREEMENT
This Agreement made and entered into this 8th day of July, 1996, by and
between New York Health Care, Inc., a New York corporation, with its principal
place of business at 1667 Flatbush Avenue, Brooklyn, New York 11210,
(hereinafter the "Company"), and 1667 Flatbush Avenue, LLC (hereinafter "1667
Flatbush"), a New York limited liability company with its principal place of
business at 1667 Flatbush Avenue, Brooklyn, NY 11210.
1. Definitions. As used herein, the words:
(a) "Account" or "Accounts" shall mean and include all accounts
receivable, notes, drafts, acceptances, and all other debts, obligations,
and liabilities set forth on Schedule A, annexed hereto, in whatever form
owing to the Company from any person, firm, or corporation or any other
legal entity (the "Debtors").
(b) "Agreement" shall mean and include this agreement, all amendments
and supplements, and all assignments, instruments, documents, and Accounts
submitted to 1667 Flatbush in connection with any transaction between the
Company and 1667 Flatbush.
2. Sale of Accounts. The Company hereby sells, assigns and transfers to
1667 Flatbush all of the Accounts of the Company as of the close of business on
June 30, 1996, set forth on Schedule A, annexed hereto, in consideration for a
purchase price of $3,150,000, which is to be paid to the Company pursuant to the
secured promissory note of 1667 Flatbush, a copy of which is annexed as Schedule
B. 1667 Flatbush shall have no recourse to the Company with respect to any of
the Accounts which prove to be uncollectible, other than as specifically set
forth in this Agreement.
3. Company's Warranties and Covenants. For the purpose of inducing 1667
Flatbush to purchase the accounts from the Company, the Company warrants,
represents, covenants, and guarantees as follows:
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(a) Corporate authority The Company is a corporation and the
execution, delivery, and performance of this agreement are within the
Company's corporate powers, have been duly authorized and are not in
contravention of law or the terms of the Company's charter, bylaws, or
other incorporation papers, or any indenture, agreement, or undertaking to
which the Company is a party or by which it is bound.
(b) Bona fide accounts. To the best of the Company's knowledge at this
time, every Account sold by the Company to 1667 Flatbush is a good and
valid Account representing an undisputed bona fide indebtedness of a Debtor
to the Company; there are no reductions, defenses, set-offs, contraclaims,
or counterclaims of any nature whatsoever against any Account, and no
agreement under which any deduction or discount may be claimed has been or
will be made with the Debtor on any Account, except as shown on Schedule A,
annexed hereto. In the event an Account which is payable with funds derived
from Medicare or Medicaid is paid for less than the value of the Account
set forth on Schedule A, annexed hereto, the Company will promptly
reimburse 1667 Flatbush in the amount of the difference between the Account
set forth on Schedule A, annexed hereto, and the payment actually received.
(c) Ownership. The Company is the lawful owner of the Accounts and has
the right to pledge, sell, assign, and transfer the same to 1667 Flatbush,
and to create a security interest therein free of any and all claims of
third parties, except for financing arrangements which the Company has had
with United Mizrahi Bank and Trust Company. 1667 Flatbush acknowledges that
it has made or will make all appropriate arrangements which, in its view,
are required to satisfy any conditions of that bank with respect to the
transaction set forth in this Agreement.
(d) Goods and Services. All representations made by the Company to
1667 Flatbush with reference to the description, content, or valuation of
any and all of the Accounts are true and correct;
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<PAGE>
all services which give rise to an Account have actually been performed;
all invoices, records, notes, documents, receipts, and any and all other
instruments, memoranda, and documents presented or delivered to 1667
Flatbush are valid, genuine and not subject to any dispute or defense.
(e) Account Debtors. The Company and, to the best of its current
knowledge, each Debtor owing each Account, are solvent. The Company will
promptly notify 1667 Flatbush of any change from the present in the
Company's own financial status or, to the extent it obtains knowledge, in
the collectability of each Account, including all claims, rejections,
reductions, adjustments by Debtors.
(f) Defenses. To the best of the Company's knowledge at this time, no
Debtor named in any Account will object to the payment for, or to the
quality of work and labor done or services rendered by the Company.
(g) Collection. Upon request, the Company will assist 1667 Flatbush in
the collection of the funds due or to become due from Debtors. The Company
will forthwith pay 1667 Flatbush the amount received by it on any Account.
The Company will likewise reimburse 1667 Flatbush promptly for any
allowance or credit given to Debtors without the written consent of 1667
Flatbush.
4. Collection of Accounts. 1667 Flatbush authorizes and appoints the
Company to collect, as Trustee for 1667 Flatbush, at and through the offices of
the Company, the Accounts from the Debtors, with the explicit duty hereby
assumed by the Company to turn over or to mail and deliver to the office of 1667
Flatbush, on the day of receipt thereof, all cash, original checks, drafts,
notes, and other evidences of payment received in full or part payment of any
Accounts, with full right in 1667 Flatbush to endorse and deposit the original
Debtor's checks and remittances in its own banking depositories, whether the
remittances are made payable to 1667 Flatbush or the Company. The privileges of
collecting as Trustee for 1667 Flatbush may be terminated by 1667 Flatbush at
any time, and shall automatically terminate upon the suspension of business,
request for extension of time, appointment of a creditors'
3
<PAGE>
committee, assignee, receiver, or trustee, filing of a petition in bankruptcy,
arrangement, reorganization, or receivership, or any other act or event
amounting to a business failure, by or against the Company or upon the Company's
breach of any covenant, condition, or warranty of this agreement, or default in
respect to any other transaction with 1667 Flatbush. The Company shall submit to
1667 Flatbush with all remittances a report in such form as 1667 Flatbush may
require; and, further, shall submit original remittance advice in the form as
received by the Company from Debtors.
5. Books and Records. The Company shall make clear and suitable entries and
notations on the Company's books and records, which shall reflect all facts
giving rise to the Account (and in a case where the Account arises by reason of
a sale or delivery of merchandise, the notation shall clearly reflect the
absolute sale of the merchandise), all payments, credits, and adjustments
applicable to the Account. The Company shall deliver to, and sign for 1667
Flatbush as it shall require, any statements and letters to be directed to
Debtors, and to execute and deliver to 1667 Flatbush any and all instruments
determined by 1667 Flatbush to be necessary or convenient to carry into effect
the terms, provisions, and conditions of this Agreement and to facilitate
collection of Accounts. Any agent of 1667 Flatbush shall have the right to call
at the Company's place of business and, without hindrance or delay, inspect,
audit, check, and make abstracts from the books, records, receipts,
correspondence, memoranda, and other papers or data relating to the Obligations,
or any other transaction between the Company and 1667 Flatbush, or generally to
audit all books and records of the Company. The Company shall at all times
maintain a complete set of books and records, containing up-to-date posting of
all of the Company's cash and accrual transactions of any nature.
6. Reports to Buyer. The Company shall deliver to 1667 Flatbush, daily, or
at such other periods as 1667 Flatbush shall determine, such reports in form
satisfactory to 1667 Flatbush as may be reasonably required. If the Company
shall, at any time, with the consent of 1667 Flatbush, grant to any
4
<PAGE>
Debtor a credit, the Company shall forthwith give notice to 1667 Flatbush, in
writing, of the issuance of such credit.
7. Dealing With Debtors. 1667 Flatbush may, at any time, without notice to
the Company, notify Debtors on any Account and shall be paid directly to 1667
Flatbush. Upon request of 1667 Flatbush, at any time, the Company shall so
notify Debtors and shall indicate on all billings to Debtors that all moneys due
thereon are payable to 1667 Flatbush. 1667 Flatbush shall further have the right
at any time, directly or through its agents, to collect any or all of the
Accounts, and, in its own name, or in the Company's name, to sell, transfer, set
over, compromise, discharge, or extend the whole or any part of the Accounts,
and for that purpose to do all acts and things necessary or incidental thereto,
including the right of suit. The Company ratifies all that 1667 Flatbush shall
do by virtue of this paragraph. Granting extensions to Debtors or to the
Company, suffering any delay, or permitting any breach by the Company or Debtors
in connection with any transactions between the parties shall in no way be
construed as a waiver of any subsequent breach or delay or of the rights of 1667
Flatbush against the Company and the Debtors, and the Company's liability shall
in no way be restricted, limited, diminished, or abated by virtue of any
extension or privileges granted. The Company shall not, without the express
written consent of 1667 Flatbush, release, compromise, or adjust any Account, or
any guaranty, security, or lien therefor, or grant any discounts, allowances, or
credits thereon, or bring any suit to enforce payment thereof, and, upon the
granting of any such discounts, allowances, or credits, the Company shall
forthwith pay to 1667 Flatbush a sum equal thereto. 1667 Flatbush shall not,
under any circumstances, or in any event whatsoever, have any liability for any
error, omission, or delay of any kind occurring in the settlement, collection,
or payment of any Account or of any instrument received in full or part payment
thereof or in dealing with any lien, security, or guaranty of any Account.
5
<PAGE>
8. Tax lien. In the event that any lien against the Company shall arise in
favor of any taxing authority, whether or not notice of such lien shall be filed
or recorded as may be required by law, 1667 Flatbush shall have the right, but
shall not be obligated nor shall 1667 Flatbush hereby assume, the duty to pay
any such tax by virtue of which such lien will have arisen. Any sum or sums
which 1667 Flatbush shall have paid for the discharge of a tax lien shall be
paid by the Company to 1667 Flatbush with interest at the legal rate upon
demand.
9. Waiver, Notice, etc. 1667 Flatbush shall not be deemed to have waived
any of 1667 Flatbush's rights hereunder or under any other agreement,
instrument, or paper signed by the Company unless such waiver is in writing and
signed by 1667 Flatbush. No delay or omission on the part of 1667 Flatbush in
exercising any right shall operate as waiver of such right or any other right. A
waiver on any one occasion shall not be construed as a bar to or waiver of any
right or remedy on any future occasion. All 1667 Flatbush's rights and remedies,
whether evidenced hereby or by any other agreement, instrument, or paper, shall
be cumulative and may be exercised separately or concurrently. Any demand upon
or notice to the Company that 1667 Flatbush may elect to give shall be effective
when deposited in the mails or delivered by fax, electronic mail, or other
communication company addressed to the Company at the address shown in this
Agreement, as modified by any notice given pursuant thereto. Demands or notices
addressed to the Company's address at which 1667 Flatbush customarily
communicates with the Company shall be also effective.
10. Power of Attorney. The Company makes, constitutes, and appoints any
officer or agent of 1667 Flatbush as the Company's true and lawful
attorney-in-fact, with power to endorse the name of the Company or any of the
Company's officers or agents upon any notes, checks, drafts, money orders, or
other instruments of payment or collateral that may come into possession of 1667
Flatbush in full or part payment of any amounts owing to 1667 Flatbush; to sign
and endorse the name of the Company or
6
<PAGE>
any of the Company's officers or agents upon any notices in connection with
Accounts, and any instrument or document relating thereto or to the Company's
rights therein. The Company ratifies all that the attorney shall lawfully do or
cause to be done by virtue hereof. This power of attorney shall be irrevocable
for all transactions hereunder.
11. Credit Insurance. 1667 Flatbush may cover Accounts and transactions
with the Company with general or specific credit, fraud, and fidelity insurance
policies or bonds, with any indemnity companies, and 1667 Flatbush shall be
first and primary beneficiary thereof or of any similar policies or bonds
carried by the Company. The Company shall abide by all terms, conditions, and
stipulations of such policies or bonds obtained by 1667 Flatbush, premiums on
which are included in 1667 Flatbush's compensation provided herein. The Company
shall indemnify at all times whatever companies may issue such policies or bonds
against any losses, damages, costs, charges, and other expenses whatsoever that
such companies may for any cause sustain or incur by reason or in consequence of
the Company's acts or omissions.
12. Benefit. All provisions herein shall inure to, and become binding upon,
the heirs, executors, administrators, successors, representatives, receivers,
trustees, and assigns of the parties.
13. Construction. Neither the Company nor 1667 Flatbush shall be bound by
any undertaking not expressed in writing. This agreement, all amendments
thereto, all supplements thereof, and all acts, transactions, agreements,
certificates, assignments, and transfers thereunder, and all rights of the
parties, shall be governed as to their validity, enforcement, construction, and
effect, and in all other respects, by the law of the State of New York.
14. Invalid Provision. If any of the provisions of this Agreement shall
contravene, or be invalid under, the laws of the particular state, country, or
jurisdiction where used, such contravention or invalidity shall not invalidate
the whole agreement, but it shall be construed as if not containing the
7
<PAGE>
particular provision or provisions held to be invalid in such particular state,
country, or jurisdiction, and the rights and obligations of the parties shall be
construed and enforced accordingly.
15. Headings. The headings set forth in this Agreement are for convenience
only and shall not be considered as part of this Agreement in any respect nor
shall they in any way effect the substance of any provisions contained in this
Agreement.
16. Multiple Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which shall
constitute but one and the same agreement.
IN WITNESS WHEREOF, this Agreement has been duly executed as of the day and
year first written above.
NEW YORK HEALTHCARE, INC.
By: /s/_____________________________
Gilbert Barnett
Chief Financial Officer
1667 Flatbush Avenue LLC
By: /s/____________________________
Jacob Rosenberg, Member
Attest:
8
<PAGE>
NEW YORK HEALTH CARE, INC.
CENTRAL OFFICE
BROOKLYN, NY 11210
(718) 421-0500
M E M O
===================
TO: Jacob Rosenberg
FROM: Gil Barnett
DATE: July 10, 1996
RE: Sale of Receivables
The following is an analysis of the New York Health Care, Inc. receivables
sold to 1667 Flatbush Avenue LLC as of July, 1996.
Detailed Accounts, as per
report attached $ 3,414,080.49
Unbilled Medicaid 56,090.48
Unbilled (Monthly, Combined) 5,334.00
Unbilled (Monthly, Individuals) 24,535.40
--------------
Total Sold $ 3,500,040.37
==============
SCHEDULE "A"
<PAGE>
OFFICE 01
BILL-TO TOTAL
BR2000 VICTORY MEMORIAL L/T 53896.50
BR2200 VICTORY MEMORIAL S/T 21080.50
BR2554 CENTER FOR NURSING 101310.50
BR3355 BROOKDALE HOSP. MED. CTR. 95963.26
BR3805 INTERFAITH HOME CARE 154665.00
CHCO1B CORAM RESOURCE NETWORK 17745.00
CHC11B CORAM HEALTH CARE 17433.00
HV0001 REVIVAL HOME CARE 3672.00
KJM100 KINGSBROOK JEWISH MEDCTR 50240.00
MSB001 MOUNT SINAI MEDICAL CTR. 79667.13
OKQC11 OLSTEN KIMBERLY QLTYCARE 5547.00
RHC423 REVIVAL HOME CARE BR 12413.61
SBM001 REVIVAL HOME CARE 36022.00
TNE001 THE NEW ENGLAND 12183.00
USHC01 U.S. HEALTHCARE 3276.00
WECC01 WE CARE CERTIFIED HH SRV 1341.00
111111 PRIVATE PAY PATIENT 15444.27
222223 DSS BROOKLYN NURSING 19734.00
333360 METHODIST HOSPITAL S/T 38520.31
444444 U.S. HEALTHCARE 0452037 527.00
444446 ADAP 484.48
OFFICE TOTAL 741165.56
<PAGE>
OFFICE 02
BILL-TO TOTAL
AT4312 AMERICAN TRAVELORS 2108.37
BR7341 ERIN MANALANG 5000.00
CHC02N CORAM RESOURCE NETWORK 2061.00
CHC22N CORAM HEALTH CARE 315.00
FHMC02 FLUSHING HOSP. HHA 63290.32
HE1146 FRANKLIN GENERAL LTHHC 371561.74
HE1147 FRANKLIN GENERAL ST CHHA 22027.58
HE1168 DSS TITLE 20 .00
HSM002 HILLSIDE MANOR 7001.50
MSN002 MOUNT SINAI MEDICAL CTR. 9734.16
OKQC03 OLSTEN KIMBERLY QLTYCARE 1472.00
OSQC02 OSTEN/KIMBERLY QULTY CR 16.00
OVG OVERAGES 9113.73
R44444 UA HEALTHCARE 0452037 529.92
R44445 U.S. HEALTHCARE 0452037 1742.00
SCH002 NYC DOH FMLY W/SPEC NEED 25316.00
USHC01 U.S. HEALTHCARE 344.00
VNA001 VNA OF LONG ISLAND, INC. 6836.75
WUHST2 WINTHROP UNIVERSITY HOSP 17701.37
090768 INTERN'L LIFE INVESTORS 700.00
111111 PRIVATE PAY PATIENT 24275.87
222220 DSS NASSAU NURSING 44892.00
222221 DSS TITLE 19 NASSAU .00
444442 US HEALTHCARE 0452037 100.00
444444 U.S. HEALTHCARE 0452037 1711.00
444445 U.S. HEALTHCARE 0452037 3147.00
444446 ADAP .58
444447 U.S. HEALTHCARE 0452037 3320.00
444449 U.S. HEALTHCARE 0452037 420.00
OFFICE TOTAL 624737.89
<PAGE>
OFFICE 03
BILL-TO TOTAL
BACHC3 BETH ABRAHAM LTHCP CCMP 867.35
CHC01B CORAM RESOURCE NETWORK 1512.00
CHC03W CORAM RESOURCE NETWORK 756.00
CHC11B CORAM HEALTH CARE 540.00
CHC33W CORAM HEALTH CARE 540.00
MP0003 MIDPOINT 2274.00
MSW003 MOUNT SINAI MEDICAL CTR. 6385.94
RACE01 RACE 120.00
RCH003 REVIVAL HOME CARE WE 903.00
R44445 U.S. HEALTHCARE 0452037 728.00
USHC01 U.S. HEALTHCARE 13552.00
VNSW01 VISITING NURSE SRVCS WC 1034.00
WE1111 BETH ABRAHAM SHORT TERM 240.00
WE1151 MONTEFIORE HOME CARE L/T 56367.00
WE1153 HEBREW HOSPITAL LTHHC 9836.40
WE1326 MORNINGSIDE LTHHCP 57183.84
WE1343 BETH ABE DAY HEALTH CARE 507.45
WE2451 BETH ABE LONG TERM 129988.81
WE2673 LINGSBRIDGE HTS REHAB 496053.00
WE2771 BETH ABE SHORT TERM 175522.72
WE3139 BETH ABE CLUSTER 77631.80
WE3475 BETH ABE CLUSTER ESCORT 1407.67
WE3740 ISABELLA NURSING HOME 220959.42
WE4446 ADAP 1045.15
WE7140 NEW ROCHELLE MEDICAL CTR 29603.75
111111 PRIVATE PAY PATIENT 23876.13
444445 U.S. HEALTHCARE 0452037 400.00
444446 ADAP 1026.02
OFFICE TOTAL 1310861.45
<PAGE>
OFFICE 04
BILL-TO TOTAL
AT5312 AMERICAN TRAVELERS 1718.24
BO5557 BOCES EDUCATIONAL CENTER 6384.00
CHC04R CORAM RESOURCE NETWORK 90.00
CHC44R CORAM HEALTH CARE 261.00
OVG OVERAGES 18476.68
RCH500 REVIVAL HOME HEALTH CARE 11085.75
RO0907 D O H ROCKLAND CHHA 1076.62
R01306 UNITED HOSPICE OF ROCK. 16375.27
R01310 GOOD SAM. LTCH ROCKLAND 20181.55
RO1311 GOOD SAM. CHHA ROCKLAND 16360.61
RO1312 NYACK HOSPITAL SHORT TERM 50143.90
R01313 EISEP 3249.96
R01314 NYACK HOSPITAL LONG TERM 61450.50
RO1329 DSS HOMEMAKING .00
RO1968 EISEP CLUSTER 4735.35
RO3188 TRANSPORT LIFE INSURANCE 9390.74
R07117 ROCK ARC 2376.00
RO8956 TAMMY BERGER 125.00
R09010 D O H ROCKLAND LTHC 26625.83
R09515 AUGUSTA CERVINI 1427.47
TRAVO1 THE TRAVELERS 3772.00
111111 PRIVATE PAY PATIENT 81948.13
222222 DSS TITLE 19 ROCKLAND .00
222229 DSS CARE AT HOME IV .00
444446 ADAP 1325.43
OFFICE TOTAL 338580.03
<PAGE>
OFFICE 05
BILL-TO TOTAL
CHC002 CORAM RESOURCE NETWORK 672.00
CHC050 CORAM RESOURCE NETWORK 9985.50
CHC550 CORAM HEALTH CARE 6297.00
CIGNA1 CIGNA CHC OF NEW YORK 324.00
GL4309 GERBER LIFE INSURANCE 247.18
HVNC01 HUDSON VALLEY NRSNG CTR 6272.03
JH2697 JOHN HANCOCK MUT.LIF.INS 450.00
NE1333 D O H ORANGE LTCH 12606.74
NE1334 D O H ORANGE CHHA 6707.69
NE1339 HOSPICE OF ORANGE COUNTY 1541.00
NE1350 CONTINUING CARE CHP 2425.74
NE2222 GOOD SAM. LTCH ORANGE 98446.06
OR2099 GOOD SAM. LTCH GOSHEN 22130.65
OR5150 GOOD SAM. CHHA GOSHEN 1074.00
OR6430 MID POINT SERVICES 540.00
OVG OVERAGES 948.15
R02223 GOOD SAM. CHHA ORANGE 13474.99
VAMC05 VAMC MEDICAL CENTER 4584.75
WC6426 CNA 30.00
111111 PRIVATE PAY PATIENT 36410.25
222222 DSS TITLE 19 ROCKLAND .00
222224 DSS TITLE 19 ORANGE .00
444444 U.S. HEALTHCARE 0452037 48.00
OFFICE TOTAL 225215.73
<PAGE>
BILL-TO TOTAL
CHC001 CORAM HEALTHCARE 10899.00
CHC002 CORAM RESOURCE NETWORK 630.00
CHC06S CORAM RESOURCE NETWORK 636.00
JI0006 JOINT INDSTRY ELECTRICAL 1050.00
LAH100 REVIVAL HOME CARE 560.00
MSSD01 MOUNT SINAI MEDICAL CTR. 15425.00
OKQC17 OLSTEN KIMBERLY QLTYCARE 70.00
R44446 U.S. HEALTHCARE 0452037 120.00
USHC01 U.S. HEALTHCARE 53230.40
VNSW01 VISITING NURSE SRVCS WC 240.00
WE2771 BETH ABE SHORT TERM 60.00-
111111 PRIVATE PAY PATIENT 71.00-
111115 CIGNA INSURANCE COMPANY 225.00
444439 U.S. HEALTHCARE 0452037 82.00
444442 US HEALTHCARE 0452037 335.00
444443 U.S. HEALTHCARE 0452037 802.00
444444 U.S. HEALTHCARE 0452037 720.00
444445 U.S. HEALTHCARE 0452037 25388.00
444446 ADAP 120.00
444447 U.S. HEALTHCARE 0452037 13872.00
444448 U.S. HEALTHCARE 0452037 326.00
444449 U.S. HEALTHCARE 0452037 1640.00
OFFICE TOTAL 126239.40
<PAGE>
OFFICE 08
BILL-TO TOTAL
LAH100 REVIVAL HOME CARE 3016.00
OFFICE TOTAL 3016.00
<PAGE>
OFFICE 09
BILL-TO TOTAL
111111 PRIVATE PAY PATIENT 44264.43
OFFICE TOTAL 44264.43
GRAND TOTAL 3414080.49
<PAGE>
SECURED PROMISSORY NOTE
$3,150,000 Brooklyn, New York
July 8, 1996
FOR VALUE RECEIVED, the undersigned, 1667 Flatbush Avenue LLC, a New York
limited liability company, hereinafter called the "Maker", promises to pay to
the order of NEW YORK HEALTH CARE, INC., a New York corporation, hereinafter
called the "Payee", at 1667 Flatbush Avenue, Brooklyn, New York 11230, the sum
of Three Million One Hundred Fifty Thousand Dollars ($3,150,000), together with
accrued interest thereon at a rate equal to twelve percent (12%) per annum, as
follows:
1. One Million One Hundred Thousand Dollars ($1,100,000) shall be paid by
the Maker to the Payee on August 1, 1996;
2. One Million One Hundred Thousand Dollars ($1,100,000) shall be paid by
the Maker to the Payee on September 1, 1996; and
3. Nine Hundred Fifty Thousand Dollars ($950,000) shall be paid by the
Maker to the Payee on October 1, 1996, or on the date that the Payee's
Registration Statement on Form SB-2 filed with the United States Securities and
Exchange Commission is declared "effective," whichever occurs first.
Every payment required to be made pursuant to this Secured Promissory Note
shall be accompanied by payment of the then accrued interest, in arrears. If any
payment is due on a Saturday, Sunday or legal or religious holiday, such payment
shall be made on the next succeeding day not a Saturday, Sunday or legal or
religious holiday, with any extension of the due date to be reflected in the
calculation of interest paid.
This Note may be prepaid at any time without penalty. All prepayments shall
be applied first to principal and then to interest.
At the option of the Payee, this Promissory Note shall be accelerated and
become immediately due and payable together with interest accrued thereon upon
the occurrence of any of the following events:
1. failure by the Maker to pay this Promissory Note when due;
2. filing of a petition for dissolution of the Maker or the filing of a
certificate of dissolution of the Maker or the Subsidiary;
3. filing of a voluntary or involuntary petition (unless, in the case of
an involuntary petition, it is dismissed within 30 days) under any
provision of any bankruptcy or similar law relating to the assets and
liabilities of the Maker (whether for bankruptcy, reorganization,
arrangement, composition, extension or otherwise);
4. application for the appointment of a receiver, custodian, trustee,
fiscal agent, liquidator or similar person for the properties of the
Maker, which is not dismissed within 30 days or which is made by the
Maker;
<PAGE>
5. assignment of all of the Maker's assets for the benefit of creditors;
6. entry of total judgments or issuance of warrants of attachment against
money of the Maker after the date hereof in the aggregate amount of
One Hundred Thousand Dollars ($100,000) or more, which sum is not
fully satisfied or bonded for appeal of any such judgment or for
vacatur of any such warrant of attachment within thirty (30) days
after the issuance of any such warrant of attachment or the entry of
any such judgment;
7. appointment of a committee of creditors or a liquidating agent for the
Maker or an offer by the Maker to creditors of composition or
extension of debts;
8. sale by the Maker of all or substantially all assets;
9. Maker admits in writing its inability, or is generally unable, to pay
its debts as they become due;
10. Maker shall default in the performance of or compliance with any
material term of any secured loan agreement to which the Maker is a
party;
11. any material representation or warranty made by or on behalf of the
Maker in the Secured Loan Agreement shall prove to have been
materially false or incorrect in any material respect on the date as
of which it was made.
This Secured Promissory Note is issued and is secured pursuant to a
Security Agreement entered into between the Maker and Payee and dated as of even
date herewith, and is entitled to the benefits and is subject to the provisions
of that agreement.
Should the indebtedness represented by this Secured Promissory Note be
placed in the hands of an attorney for collection after an uncured event of
default as defined herein, the Maker agrees to pay, in addition to the principal
and interest which may be due to the Payee, all costs of collection of this
Secured Promissory Note and execution upon the collateral, including, but not
limited to, reasonable attorneys fees and expenses.
Neither the failure nor any delay in exercising any right, power or
privilege hereunder shall operate as a waiver thereof or of any similar future
right, power or privilege.
This Promissory Note is being made in the City and State of New York and
shall be governed by and construed in accordance with the laws of the State of
New York. The provisions of this Promissory Note shall be binding upon all
successors or assigns of the Maker and shall survive the payment, cancellation
or surrender of this Secured Promissory Note.
MAKER: 1667 Flatbush Avenue, LLC
By: /s/
---------------------------------------
Jacob Rosenberg, Member
<PAGE>
GUARANTY
As inducement to and in consideration of NEW YORK HEALTH CARE, INC., a New York
corporation having its principal place of business at 1667 Flatbush Avenue,
Brooklyn, NY 11210 (the "Company"), agreeing to accept a secured promissory note
in the face amount of $3,150,000 made by 1667 Flatbush Avenue LLC, a New York
limited liability company (the"Borrower"), Jerry Braun, (the "Guarantor"),
hereby guarantees the prompt payment and performance of all obligations of the
Borrower under its secured promissory note payable to the order of the Company
dated July 8, 1996 in the principal amount of $3,150,000 (the "Note") in
accordance with the terms thereof and all amendments, modifications, renewals
and extensions thereof and changes therein (the "Obligations").
1. Extensions, renewals or changes in form of the Obligations may be made
by the Company and the Borrower from time to time without notice of any kind,
which extensions, renewals or changes in form shall be binding on Guarantor and
shall in no way reduce the Guarantor's liabilities hereunder.
2. Presentment, demand, protest, notice of protest and notice of dishonor
of the Obligations and also notice of acceptance by the Company of this guaranty
are hereby expressly waived.
3. The Company may, without notice and without affecting the liability of
the Guarantor hereunder, take and hold security for the payment of the
Obligations guaranteed and may exchange, enforce, waive, add to or release
security and may apply such security and direct the order or manner of sale
thereof as the Company, in its discretion, may determine.
4. Before proceeding hereunder against the Guarantor, the Company is not
required to: (a) proceed against the Borrower or any other guarantor or party
whether a party to this guaranty or otherwise; (b) proceed against or exhaust
any security securing the Obligations; or (c) pursue any other remedy
whatsoever.
5. The Guarantor shall not have any right of subrogation, reimbursement,
exoneration, contribution, indemnification or participation in any claim, right
or remedy of the Company against the Borrower or any security now or hereafter
held by the Company until all Obligations have been paid in full.
6. This guaranty is binding upon the successors and assigns of Guarantor.
<PAGE>
7. The obligations of the Guarantor hereunder shall constitute a present
and continuing guaranty of payment and not of collectibility only, shall be
absolute and unconditional, shall not be subject to any counterclaim, setoff,
deduction or defense the Guarantor may at any time have against the Company or
any other person, and shall remain in full force and effect without regard to
any event whatsoever (whether or not the Guarantor shall have any knowledge or
notice thereof or shall have consented thereto), including without limitation:
(a) Any extensions, renewals or changes in the Note, any assignment or
transfer of any part thereof, any renewal, extension or modification of or
in the terms of payment provided in the Obligations or the granting of time
in respect of the payment thereof, or any furnishing or acceptance of
security or any release of any security so furnished or accepted for the
Obligations;
(b) Any waiver, consent, extension, forbearance or other action or
inaction under or in respect of this guaranty or the Obligations, or any
exercise of or failure to exercise any right, remedy or power in respect
hereof or thereof;
(c) Any failure, neglect or omission of the Company to protect, in any
manner, the collection of the Obligations, or any portion thereof, or any
security given therefor;
(d) Any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or similar proceedings with respect
to the Borrower or the Guarantor;
(e) Any default by the Borrower, the Guarantor, or any invalidity or
any unenforceability of or any misrepresentation, irregularity or other
defect in, the Obligations or this guaranty.
8. The Guarantor agrees to pay all reasonable fees and expenses, including
attorney fees which may be incurred in enforcing or attempting to enforce this
Guaranty, to collect the Obligations or to enforce any agreement granting a
security interest in collateral to secure payment of the Obligations.
9. This guaranty may be signed in any number of counterparts and each
counterpart shall have the same force and effect as an original instrument and
as if all of the signers of the aggregate counterparts had signed the same
instrument.
Dated this 8th day of July, 1996.
/s/_______________________________
Jerry Braun, Guarantor
<PAGE>
GUARANTY
As inducement to and in consideration of NEW YORK HEALTH CARE, INC., a New York
corporation having its principal place of business at 1667 Flatbush Avenue,
Brooklyn, NY 11210 (the "Company"), agreeing to accept a secured promissory note
in the face amount of $3,150,000 made by 1667 Flatbush Avenue LLC, a New York
limited liability company (the"Borrower"), Jacob Rosenberg, (the "Guarantor"),
hereby guarantees the prompt payment and performance of all obligations of the
Borrower under its secured promissory note payable to the order of the Company
dated July 8, 1996 in the principal amount of $3,150,000 (the "Note") in
accordance with the terms thereof and all amendments, modifications, renewals
and extensions thereof and changes therein (the "Obligations").
1. Extensions, renewals or changes in form of the Obligations may be made
by the Company and the Borrower from time to time without notice of any kind,
which extensions, renewals or changes in form shall be binding on Guarantor and
shall in no way reduce the Guarantor's liabilities hereunder.
2. Presentment, demand, protest, notice of protest and notice of dishonor
of the Obligations and also notice of acceptance by the Company of this guaranty
are hereby expressly waived.
3. The Company may, without notice and without affecting the liability of
the Guarantor hereunder, take and hold security for the payment of the
Obligations guaranteed and may exchange, enforce, waive, add to or release
security and may apply such security and direct the order or manner of sale
thereof as the Company, in its discretion, may determine.
4. Before proceeding hereunder against the Guarantor, the Company is not
required to: (a) proceed against the Borrower or any other guarantor or party
whether a party to this guaranty or otherwise; (b) proceed against or exhaust
any security securing the Obligations; or (c) pursue any other remedy
whatsoever.
5. The Guarantor shall not have any right of subrogation, reimbursement,
exoneration, contribution, indemnification or participation in any claim, right
or remedy of the Company against the Borrower or any security now or hereafter
held by the Company until all Obligations have been paid in full.
6. This guaranty is binding upon the successors and assigns of Guarantor.
<PAGE>
7. The obligations of the Guarantor hereunder shall constitute a present
and continuing guaranty of payment and not of collectibility only, shall be
absolute and unconditional, shall not be subject to any counterclaim, setoff,
deduction or defense the Guarantor may at any time have against the Company or
any other person, and shall remain in full force and effect without regard to
any event whatsoever (whether or not the Guarantor shall have any knowledge or
notice thereof or shall have consented thereto), including without limitation:
(a) Any extensions, renewals or changes in the Note, any assignment or
transfer of any part thereof, any renewal, extension or modification of or
in the terms of payment provided in the Obligations or the granting of time
in respect of the payment thereof, or any furnishing or acceptance of
security or any release of any security so furnished or accepted for the
Obligations;
(b) Any waiver, consent, extension, forbearance or other action or
inaction under or in respect of this guaranty or the Obligations, or any
exercise of or failure to exercise any right, remedy or power in respect
hereof or thereof;
(c) Any failure, neglect or omission of the Company to protect, in any
manner, the collection of the Obligations, or any portion thereof, or any
security given therefor;
(d) Any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or similar proceedings with respect
to the Borrower or the Guarantor;
(e) Any default by the Borrower, the Guarantor, or any invalidity or
any unenforceability of or any misrepresentation, irregularity or other
defect in, the Obligations or this guaranty.
8. The Guarantor agrees to pay all reasonable fees and expenses, including
attorney fees which may be incurred in enforcing or attempting to enforce this
Guaranty, to collect the Obligations or to enforce any agreement granting a
security interest in collateral to secure payment of the Obligations.
9. This guaranty may be signed in any number of counterparts and each
counterpart shall have the same force and effect as an original instrument and
as if all of the signers of the aggregate counterparts had signed the same
instrument.
Dated this 8th day of July, 1996.
/s/_________________________
Jacob Rosenberg, Guarantor
<PAGE>
GUARANTY
As inducement to and in consideration of NEW YORK HEALTH CARE, INC., a New York
corporation having its principal place of business at 1667 Flatbush Avenue,
Brooklyn, NY 11210 (the "Company"), agreeing to accept a secured promissory note
in the face amount of $3,150,000 made by 1667 Flatbush Avenue LLC, a New York
limited liability company (the"Borrower"), Samson Soroka, (the "Guarantor"),
hereby guarantees the prompt payment and performance of all obligations of the
Borrower under its secured promissory note payable to the order of the Company
dated July 8, 1996 in the principal amount of $3,150,000 (the "Note") in
accordance with the terms thereof and all amendments, modifications, renewals
and extensions thereof and changes therein (the "Obligations").
1. Extensions, renewals or changes in form of the Obligations may be made
by the Company and the Borrower from time to time without notice of any kind,
which extensions, renewals or changes in form shall be binding on Guarantor and
shall in no way reduce the Guarantor's liabilities hereunder.
2. Presentment, demand, protest, notice of protest and notice of dishonor
of the Obligations and also notice of acceptance by the Company of this guaranty
are hereby expressly waived.
3. The Company may, without notice and without affecting the liability of
the Guarantor hereunder, take and hold security for the payment of the
Obligations guaranteed and may exchange, enforce, waive, add to or release
security and may apply such security and direct the order or manner of sale
thereof as the Company, in its discretion, may determine.
4. Before proceeding hereunder against the Guarantor, the Company is not
required to: (a) proceed against the Borrower or any other guarantor or party
whether a party to this guaranty or otherwise; (b) proceed against or exhaust
any security securing the Obligations; or (c) pursue any other remedy
whatsoever.
5. The Guarantor shall not have any right of subrogation, reimbursement,
exoneration, contribution, indemnification or participation in any claim, right
or remedy of the Company against the Borrower or any security now or hereafter
held by the Company until all Obligations have been paid in full.
6. This guaranty is binding upon the successors and assigns of Guarantor.
<PAGE>
7. The obligations of the Guarantor hereunder shall constitute a present
and continuing guaranty of payment and not of collectibility only, shall be
absolute and unconditional, shall not be subject to any counterclaim, setoff,
deduction or defense the Guarantor may at any time have against the Company or
any other person, and shall remain in full force and effect without regard to
any event whatsoever (whether or not the Guarantor shall have any knowledge or
notice thereof or shall have consented thereto), including without limitation:
(a) Any extensions, renewals or changes in the Note, any assignment or
transfer of any part thereof, any renewal, extension or modification of or
in the terms of payment provided in the Obligations or the granting of time
in respect of the payment thereof, or any furnishing or acceptance of
security or any release of any security so furnished or accepted for the
Obligations;
(b) Any waiver, consent, extension, forbearance or other action or
inaction under or in respect of this guaranty or the Obligations, or any
exercise of or failure to exercise any right, remedy or power in respect
hereof or thereof;
(c) Any failure, neglect or omission of the Company to protect, in any
manner, the collection of the Obligations, or any portion thereof, or any
security given therefor;
(d) Any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or similar proceedings with respect
to the Borrower or the Guarantor;
(e) Any default by the Borrower, the Guarantor, or any invalidity or
any unenforceability of or any misrepresentation, irregularity or other
defect in, the Obligations or this guaranty.
8. The Guarantor agrees to pay all reasonable fees and expenses, including
attorney fees which may be incurred in enforcing or attempting to enforce this
Guaranty, to collect the Obligations or to enforce any agreement granting a
security interest in collateral to secure payment of the Obligations.
9. This guaranty may be signed in any number of counterparts and each
counterpart shall have the same force and effect as an original instrument and
as if all of the signers of the aggregate counterparts had signed the same
instrument.
Dated this 8th day of July, 1996.
/s/__________________________
Samson Soroka, Guarantor
<PAGE>
GUARANTY
As inducement to and in consideration of NEW YORK HEALTH CARE, INC., a New York
corporation having its principal place of business at 1667 Flatbush Avenue,
Brooklyn, NY 11210 (the "Company"), agreeing to accept a secured promissory note
in the face amount of $3,150,000 made by 1667 Flatbush Avenue LLC, a New York
limited liability company (the"Borrower"), Hirsch Chitrik, (the "Guarantor"),
hereby guarantees the prompt payment and performance of all obligations of the
Borrower under its secured promissory note payable to the order of the Company
dated July 8, 1996 in the principal amount of $3,150,000 (the "Note") in
accordance with the terms thereof and all amendments, modifications, renewals
and extensions thereof and changes therein (the "Obligations").
1. Extensions, renewals or changes in form of the Obligations may be made
by the Company and the Borrower from time to time without notice of any kind,
which extensions, renewals or changes in form shall be binding on Guarantor and
shall in no way reduce the Guarantor's liabilities hereunder.
2. Presentment, demand, protest, notice of protest and notice of dishonor
of the Obligations and also notice of acceptance by the Company of this guaranty
are hereby expressly waived.
3. The Company may, without notice and without affecting the liability of
the Guarantor hereunder, take and hold security for the payment of the
Obligations guaranteed and may exchange, enforce, waive, add to or release
security and may apply such security and direct the order or manner of sale
thereof as the Company, in its discretion, may determine.
4. Before proceeding hereunder against the Guarantor, the Company is not
required to: (a) proceed against the Borrower or any other guarantor or party
whether a party to this guaranty or otherwise; (b) proceed against or exhaust
any security securing the Obligations; or (c) pursue any other remedy
whatsoever.
5. The Guarantor shall not have any right of subrogation, reimbursement,
exoneration, contribution, indemnification or participation in any claim, right
or remedy of the Company against the Borrower or any security now or hereafter
held by the Company until all Obligations have been paid in full.
6. This guaranty is binding upon the successors and assigns of Guarantor.
<PAGE>
7. The obligations of the Guarantor hereunder shall constitute a present
and continuing guaranty of payment and not of collectibility only, shall be
absolute and unconditional, shall not be subject to any counterclaim, setoff,
deduction or defense the Guarantor may at any time have against the Company or
any other person, and shall remain in full force and effect without regard to
any event whatsoever (whether or not the Guarantor shall have any knowledge or
notice thereof or shall have consented thereto), including without limitation:
(a) Any extensions, renewals or changes in the Note, any assignment or
transfer of any part thereof, any renewal, extension or modification of or
in the terms of payment provided in the Obligations or the granting of time
in respect of the payment thereof, or any furnishing or acceptance of
security or any release of any security so furnished or accepted for the
Obligations;
(b) Any waiver, consent, extension, forbearance or other action or
inaction under or in respect of this guaranty or the Obligations, or any
exercise of or failure to exercise any right, remedy or power in respect
hereof or thereof;
(c) Any failure, neglect or omission of the Company to protect, in any
manner, the collection of the Obligations, or any portion thereof, or any
security given therefor;
(d) Any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or similar proceedings with respect
to the Borrower or the Guarantor;
(e) Any default by the Borrower, the Guarantor, or any invalidity or
any unenforceability of or any misrepresentation, irregularity or other
defect in, the Obligations or this guaranty.
8. The Guarantor agrees to pay all reasonable fees and expenses, including
attorney fees which may be incurred in enforcing or attempting to enforce this
Guaranty, to collect the Obligations or to enforce any agreement granting a
security interest in collateral to secure payment of the Obligations.
9. This guaranty may be signed in any number of counterparts and each
counterpart shall have the same force and effect as an original instrument and
as if all of the signers of the aggregate counterparts had signed the same
instrument.
Dated this 8th day of July, 1996.
/s/_______________________________
Hirsch Chitrik, Guarantor
<PAGE>
GUARANTY
As inducement to and in consideration of NEW YORK HEALTH CARE, INC., a New York
corporation having its principal place of business at 1667 Flatbush Avenue,
Brooklyn, NY 11210 (the "Company"), agreeing to accept a secured promissory note
in the face amount of $3,150,000 made by 1667 Flatbush Avenue LLC, a New York
limited liability company (the"Borrower"), Sid Borenstein, (the "Guarantor"),
hereby guarantees the prompt payment and performance of all obligations of the
Borrower under its secured promissory note payable to the order of the Company
dated July 8, 1996 in the principal amount of $3,150,000 (the "Note") in
accordance with the terms thereof and all amendments, modifications, renewals
and extensions thereof and changes therein (the "Obligations").
1. Extensions, renewals or changes in form of the Obligations may be made
by the Company and the Borrower from time to time without notice of any kind,
which extensions, renewals or changes in form shall be binding on Guarantor and
shall in no way reduce the Guarantor's liabilities hereunder.
2. Presentment, demand, protest, notice of protest and notice of dishonor
of the Obligations and also notice of acceptance by the Company of this guaranty
are hereby expressly waived.
3. The Company may, without notice and without affecting the liability of
the Guarantor hereunder, take and hold security for the payment of the
Obligations guaranteed and may exchange, enforce, waive, add to or release
security and may apply such security and direct the order or manner of sale
thereof as the Company, in its discretion, may determine.
4. Before proceeding hereunder against the Guarantor, the Company is not
required to: (a) proceed against the Borrower or any other guarantor or party
whether a party to this guaranty or otherwise; (b) proceed against or exhaust
any security securing the Obligations; or (c) pursue any other remedy
whatsoever.
5. The Guarantor shall not have any right of subrogation, reimbursement,
exoneration, contribution, indemnification or participation in any claim, right
or remedy of the Company against the Borrower or any security now or hereafter
held by the Company until all Obligations have been paid in full.
6. This guaranty is binding upon the successors and assigns of Guarantor.
<PAGE>
7. The obligations of the Guarantor hereunder shall constitute a present
and continuing guaranty of payment and not of collectibility only, shall be
absolute and unconditional, shall not be subject to any counterclaim, setoff,
deduction or defense the Guarantor may at any time have against the Company or
any other person, and shall remain in full force and effect without regard to
any event whatsoever (whether or not the Guarantor shall have any knowledge or
notice thereof or shall have consented thereto), including without limitation:
(a) Any extensions, renewals or changes in the Note, any assignment or
transfer of any part thereof, any renewal, extension or modification of or
in the terms of payment provided in the Obligations or the granting of time
in respect of the payment thereof, or any furnishing or acceptance of
security or any release of any security so furnished or accepted for the
Obligations;
(b) Any waiver, consent, extension, forbearance or other action or
inaction under or in respect of this guaranty or the Obligations, or any
exercise of or failure to exercise any right, remedy or power in respect
hereof or thereof;
(c) Any failure, neglect or omission of the Company to protect, in any
manner, the collection of the Obligations, or any portion thereof, or any
security given therefor;
(d) Any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or similar proceedings with respect
to the Borrower or the Guarantor;
(e) Any default by the Borrower, the Guarantor, or any invalidity or
any unenforceability of or any misrepresentation, irregularity or other
defect in, the Obligations or this guaranty.
8. The Guarantor agrees to pay all reasonable fees and expenses, including
attorney fees which may be incurred in enforcing or attempting to enforce this
Guaranty, to collect the Obligations or to enforce any agreement granting a
security interest in collateral to secure payment of the Obligations.
9. This guaranty may be signed in any number of counterparts and each
counterpart shall have the same force and effect as an original instrument and
as if all of the signers of the aggregate counterparts had signed the same
instrument.
Dated this 8th day of July, 1996.
/s/________________________________
Sid Borenstein, Guarantor
Flexible Nonstandardized 401(k) Adoption Agreement (#O07) 062493
SMITH BARNEY SHEARSON FLEXIBLE PROTOTYPE
NONSTANDARDIZED 401(K) PLAN
ADOPTION AGREEMENT #007
Adoption of a qualified plan has important legal and tax implications. Failure
to properly fill out the Adoption Agreement may result in disqualification of
the Plan. Employers should consult with their counsel concerning the adoption of
this Plan. To obtain further information about the Plan, contact Smith Barney
Shearson through your Financial Consultant.
NOTE: Under the terms of the Plan, options marked "STANDARD" automatically will
apply unless another option is selected. If additional space is needed to
provide information requested in this Adoption Agreement, the information may be
provided in an addendum attached to this Adoption Agreement which contains a
reference to the appropriate Part(s) of the Adoption Agreement.
Adoption Agreement #007 may only be used in conjunction with the SMITH BARNEY
SHEARSON FLEXIBLE PROTOTYPE DEFINED CONTRIBUTION PLAN - Plan Document # 05.
Capitalized terms refer to defined terms in Plan Document # 05. "ss." refers to
sections of Plan Document # 05; "Part" refers to provisions in this Adoption
Agreement. The instructions and descriptions in this Adoption Agreement
generally summarize the Plan Document provisions, but the Plan Document terms
will be controlling in the event of any conflict.
- --------------------------------------------------------------------------------
TO BE COMPLETED BY SMITH BARNEY SHEARSON
FINANCIAL CONSULTANT:____________________________________________________
Address:_________________________________________________________________
Telephone #:____________________ SBS Account # for Plan:________________
- --------------------------------------------------------------------------------
<PAGE>
Flexible Nonstandardized 401(k) Adoption Agreement (#007) 062493
I. EMPLOYER INFORMATION.
A. Name: New York Health Care, Inc.
B. Address: 1667 Flatbush Avenue
Brooklyn, NY 11210
C. Taxable Year: December 31
D. EIN: 11-2636089
II. PLAN INFORMATION.
A. Plan Name: New York Health Care 401(k) Plan & Trust
B. Plan Year: the period which ends on 12/31.
C. Construction. Except as provided in ss. 1.2, the Plan and the Trust
Agreement will be subject to the laws of the State of New York.
D. Plan Adoption. The Plan is hereby adopted as [Check one. See ss. 14.1.]
1. [ ] a new profit sharing plan (with cash or deferred arrangement).
2. [X] an amendment and restatement of the New York Health Care 401(k)
Plan & Trust ("Pre-Existing Plan") which was originally
effective January 1, 1994.
E. Effective Date of this Adoption Agreement: January 1, 1996.
III. ELIGIBILITY AND PARTICIPATION.
A. Eligible Employees. All Employees of the Employer and all Employees of the
Participating Affiliates who satisfy the Participation Requirement
generally will be eligible to participate in the Plan except certain
nonresident aliens and: [Check one. See ss. 2.19.]
1. [ ] STANDARD: no other exclusions.
2. [X] the following additional categories of Employees: [The Plan must
satisfy the nondiscrimination, minimum coverage and minimum
participation rules on a continuing basis. See ss. 2.19(b).]
non-professional staff of Newburg, NY office (PCA's and HHA's)
See Addendum XIII.C. for special effective date.
However, notwithstanding any contrary language participation in this Plan
by Employees who are covered by a collective bargaining agreement and the
extent of such participation, if any, will be determined by collective
bargaining.
B. Participation Requirement. In order to participate in this Plan, an
Eligible Employee must [Check one. See ss. 2.46, ss. 4 and Part V.B.1.
Enter "N/A" if there will be no minimum age or no waiting period, as
applicable.]
-2-
<PAGE>
Flexible Nonstandardized 401(k) Adoption Agreement (#O07) 062493
1. [x] STANDARD: reach minimum age of 21 and complete waiting period of 1 Year
of Service.
2. [ ] no minimum age or waiting period.
3. [ ] reach minimum age of ____ [not to exceed 21] and complete waiting period
of ____ Year of Service [not to exceed 1].
4. [ ] reach minimum age of ____ [not to exceed 21] and complete waiting period
of ____ Year of Service [not to exceed 1]; however, each Employee who is
an Eligible Employee on the Effective Date will be deemed to satisfy the
Participation Requirement on the Effective Date regardless of such
Employee's actual age or service.
C. Entry Date: [Check one. See ss. 2.26 and ss. 4.]
1. [x] STANDARD: the first day of each Plan Year and the first day of the
seventh month of each Plan Year.
2. [ ] the date on which the Participant satisfies the Participation
Requirement.
3. [ ] other: __________________ [Specify date(s). If a single Entry Date is
entered, the minimum age in Part III.B cannot exceed 20-1/2 and the
maximum waiting period in Part III.B cannot exceed 1/2 year.]
IV. VESTING.
A. Death Disability or Retirement. [See ss. 8.1(b).]
1. [x] STANDARD: A Participant's Employer Account and Matching Account
will be 100% vested if, while an Employee, that Participant dies,
becomes Disabled, or reaches Normal Retirement Age or, if
applicable, Early Retirement Age.
2. [ ] A Participant's Employer Account and Matching Account will be 100%
vested if, while an Employee, that Participant reaches Normal
Retirement Age or if the Participant satisfies the following
condition: [Check one or more only if desired.]
a. [ ] dies while an Employee
b. [ ] becomes Disabled while an Employee
c. [ ] reaches Early Retirement Age while an Employee.
B. General Vesting Schedule. [See 8.1 and ss. 14.3(c). Generally, the
vesting schedule under this Plan must be at least as favorable at the
completion of each year as the vesting schedule under the Pre-Existing
Plan. The Top-Heavy Vesting Schedule selected in Part XI.A will apply for
all Plan Years in which the Plan is a Top-Heavy Plan. See ss. 12.4.]
1. Matching Account. [Check one. "Full and Immediate Vesting" must be
selected if the 2-year requirement for Matching Contributions is
selected in Part VII.A.2.b.5.]
-3-
<PAGE>
Flexible Nonstandardized 401(k) Adoption Agreement (#O07) 062493
a. [ ] STANDARD: Full and Immediate Vesting. 100% at all times.
b. [x] Cliff Vesting. 100% after completion of 5 Years of Service [not
to exceed 5].
SEE SECTION XIIIA
c. [ ] Graded Vesting.
Years of Service Nonforfeitable Percentage
---------------- -------------------------
Less than 1 _____%
1 _____%
2 _____%
3 _____% [at least 20%]
4 _____% [at least 40%]
5 _____% [at least 60%]
6 _____% [at least 80%]
7 or more 100%
d. [ ] Top-Heavy. The Top-Heavy Vesting Schedule in Part XI.A will
apply for all Plan Years.
2. Employer Account. [Check one. "Full and Immediate Vesting" must be
selected if the 2-year requirement for Employer Contributions is
selected in Part VII.D.2.b.5.]
a. [ ] STANDARD: Full and Immediate Vesting. 100% at all times.
b. [ ] Cliff Vesting. 100% after completion of Years of Service [not
to exceed 5].
c. [ ] Graded Vesting.
Years of Service Nonforfeitable Percentage
---------------- -------------------------
Less than 1 _____%
1 _____%
2 _____%
3 _____% [at least 20%]
4 _____% [at least 40%]
5 _____% [at least 60%]
6 _____% [at least 80%]
7 or more 100%
d. [ ] Top-Heavy. The Top-Heavy Vesting Schedule in Part XI.A will
apply for all Plan Years.
C. Normal Retirement Age: [Check one. See ss. 2.43 and Part XIII.B.]
1. [X] STANDARD: age 65
2. [ ] age _____ [not to exceed 65]
3. [ ] the later of age [not to exceed 65] or the _____ [not to exceed 5th]
anniversary of the date on which the Participant commenced
participation in the Plan.
-4-
<PAGE>
Flexible Nonstandardized 401(k) Adoption Agreement (#007) 062493
D. Early Retirement Age: [The designation of an Early Retirement Age may
accelerate vesting and distribution. Early Retirement Age cannot exceed
Normal Retirement Age. Check one. See ss. 2.13 and ss. 9.1.]
1. [ ] STANDARD: No Early Retirement Age.
2. [X] age 55
3. [ ] the later of age ___ or the completion of ___ Years of Service
(for vesting purposes).
V. SERVICE FOR PARTICIPATION AND VESTING.
A. Method for Crediting Service. [Check one. See ss. 3.]
1. [x] STANDARD: "Hour of Service" method. [See ss. 3.1.]
a. Crediting Hours. Hours will be credited during each Computation
Period [Check one. See ss. 3.1(c).]
(1) [x] STANDARD: by maintaining records of the actual hours
worked. [See ss. 3.1(c)(2)(i).]
(2) [ ] by using the following equivalency [Check one. See
ss. 3.1(c)(2)(ii).]
[ ] 10 Hours of Service for each day.
[ ] 45 Hours of Service for each week.
[ ] 95 Hours of Service for each semi-monthly payroll
period.
[ ] 190 Hours of Service for each month.
b. Vesting Computation Period. The Computation Period for vesting
purposes will be [Check one. See ss. 3.1(b)(2).]
(1) [x] STANDARD: the Plan Year
(2) [ ] the 12 month period beginning on the Participant's hire
date and each anniversary of that hire date.
c. Participation Computation Period. The initial Computation Period
for participation purposes will be the 12 month period beginning
on the Participant's hire date. Each subsequent Computation
Period after the initial 12 months of employment will be [Check
one. See ss. 3.1(b)(3).]
(1) [x] STANDARD: Plan Years beginning after the Participant's
hire date.
(2) [ ] subsequent 12 month periods beginning on the
anniversaries of the Participant's hire date.
d. Year of Service for Vesting. For vesting purposes, an Employee
will be credited with a Year of Service if, during a Computation
Period, the Employee completes at least [Check one. See ss.
3.1(d).]
(1) [x] STANDARD: 1,000 Hours of Service.
(2) [ ] _____ [not more than 1,000] Hours of Service.
-5-
<PAGE>
Flexible Nonstandardized 401(k) Adoption Agreement (#O07) 062493
e. Year of Service for Participation. For participation purposes, an
Employee will be credited with a Year of Service [Check one. See
ss. 3.1(b)(3) and ss. 3.1(d).]
(1) [x] STANDARD: at the end of the Computation Period in which
the Employee completes at least 1,000 Hours of Service.
(2) [ ] on the date on which the Employee completes at least ____
[not more than 1,000] Hours of Service.
(3) [ ] at the end of the Computation Period on which the
Employee completes at least ____ [not more than 1,000]
Hours of Service.
Notwithstanding the foregoing, if a partial Year of Service is
selected in Part III.B, no minimum number of Hours of Service
will be required.
2. [ ] "Elapsed Time" method. [See ss. 3.2.]
For purposes of determining whether a Participant is entitled to
an allocation of contributions or forfeitures, the Participant
will be deemed to have completed more than 500 Hours of Service
in a Plan Year if the Participant completes the following period
of employment in the Plan Year: [Check one. See ss. 2.2(d) and
Part VII.]
a. [ ] STANDARD: more than 91 consecutive calendar days.
b. [ ] more than 3 consecutive months.
B. Special Rules.
1. Vesting Service Exclusions. [See ss. 3.8.] In addition to any service
that is disregarded under the Break in Service rules described below
and in ss. 3.7(c), the following service will be excluded for vesting
purposes:
a. [ ] STANDARD: No other exclusions.
b. [x] Years of Service before age 18.
c. [ ] Years of Service before the Employer or an Affiliate
maintained this Plan or a predecessor plan.
d. [ ] Years of Service during a period for which the Employee made
no mandatory contributions under a Pre-Existing Plan.
2. Predecessor Employer Service (Vesting and Participation). Generally,
unless the Employer maintains the plan of a predecessor employer (for
example, an acquired company), service for a predecessor employer will
not be credited as service under this Plan. [Check and attach
appropriate addendum only if desired. See ss. 3.4.]
[ ] Service credit will be given under this Plan for certain
predecessor employers for participation and/or vesting purposes to the
extent provided in Addendum V.B.2.
3. Break in Service Rules. [See ss. 3.7 and ss. 8.2.] Generally, all
service completed before a Break in Service will be credited upon
reemployment. Certain service may be excluded under the following
rules:
-6-
<PAGE>
Flexible Nonstandardized 401(k) Adoption Agreement (#O07) 062493
a. [ ] STANDARD: No exclusions. [See ss. 3.7(a).]
b. [ ] "One Year Hold Out Rule." [See ss. 3.7(b)(1).] This rule,
generally, requires rehired Employees to complete a Year of
Service before prior vesting and participation service is
restored.
c. [X] "Rule of Parity". [See ss. 3.7(b)(3).] This rule, generally,
disregards vesting and participation service completed before
5 uninterrupted Breaks in Service.
d. [ ] "Alternative Maternity/Paternity Rule." [Not applicable if
"Elapsed Time" is selected. See ss. 3.7(b)(4).] This rule,
generally, increases the number of Breaks in Service from 5
to 6 for all Employees in lieu of crediting service for
maternity/paternity leave.
e. [ ] Alternative to "Buy Back Rule". [See ss. 8.2(b).] This rule,
generally, does not require former participants (less than
100% vested) to pay back previous distributions upon
reemployment (vesting only). A rehired Participant's vested
interest in restored amounts will be determined under:
[Check one. See ss.8.2(a), ss.8.2(b) and ss.8.2(c).]
(1) [ ] STANDARD: Formula A
(2) [ ] Formula B
VI. EMPLOYEE CONTRIBUTIONS.
A. Elective Deferrals. Elective Deferrals [See ss. 5.3(f). Check one.]
1. [X] STANDARD: will be allowed. [Complete formula below; enter "N/A"
if not applicable.]
a. Minimum Amount. Not less than 1 % of a Participant's Compensation
or $______ .
b. Maximum Amount. For Plan Years ending on and before____, not more
than __% of a Participant's Compensation or $_____ , and for each
Plan Year thereafter, not more than 15 % of a Participant's
Compensation or $ N/A .
2. [ ] will not be allowed.
B. Employee Contributions. Employee Contributions [See ss. 5.3(g). Check one.]
1. [x] STANDARD: will not be allowed.
2. [ ] will be allowed. [Complete formula below; enter "N/A" if not
applicable.]
a. Minimum Amount. Not less than _____% of a Participant's
Compensation or $_____.
b. Maximum Amount. For Plan Years ending on and before __________,
not more than _____% of a Participant's Compensation or $_____ ,
and for each Plan Year thereafter, not more than _____% of a
Participant's Compensation or $_____ .
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Flexible Nonstandardized 401(k) Adoption Agreement (#007) 062493
C. Election Rules. [Check one. See ss. 5.3(h).]
1. [ ] STANDARD: If a Participant does not elect to begin Elective Deferrals
or Employee Contributions on the Participant's Entry Date, the
Participant may elect to begin such contributions as of any following
pay date. A Participant's election can be revised (prospectively only)
as of any pay date. A Participant who terminates contributions may
elect to resume contributions prospectively as of any pay date.
2. [ ] Alternatives to Standard: A Participant's elections may be made as
follows: [Must include at least one day in each calendar year.]
a. [x] Commencement. [See ss. 5.3(h)(2).] effective only as of any first
day of each semiannual period following the Participant's Entry
Date.
b. [x] Revision. [See ss. 5.3(h)(3).] effective only as of any following
first day of each month.
c. [x] Resumption. [See ss. 5.3(h)(5).] effective only as of any
following first day of each month.
D. Rollover Contributions. Rollover Contributions [Check one. See ss. 5.5.]
1. [X] STANDARD: will be allowed and may be made by [Check one.]
a. [ ] STANDARD: any Eligible Employee.
b. [x] any Eligible Employee who is a Participant.
2. [ ] will not be allowed.
E. Limitations on Elective Deferrals.
1. Claims. Claims for a refund of Excess Elective Deferrals must be made
no later than [See ss. 7.3(f). Check one.]
a. [x] STANDARD: March 1.
b. [ ] ____________ [no earlier than March 1 and no later than
April 15.]
2. Deemed Claims. Corrections of Excess Elective Deferrals will be made
[See ss. 7.3(f)(2). Check one.]
a. [x] STANDARD: from this Plan.
b. [ ] from the following plan(s): _______________________
3. "Gap Period" Income. The income or loss allocable to the "gap period"
[Check one. See ss. 7.3(e), ss. 7.4(d)(2) and ss. 7.5(d)(2).]
a. [x] STANDARD: shall not be distributed.
b. [ ] shall be distributed.
4. Highly Compensated Employees. The following special rules in the
temporary Code ss. 414(q) regulations and in Code ss. 414(q)(12) will
apply: [Check one. See ss. 7.4(a)(5)(v).]
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Flexible Nonstandardized 401(k) Adoption Agreement (#007) 062493
a. [x] STANDARD: no special rules.
b. [ ] The special rules set forth in Addendum V.E.3.
5. Recharacterization. Recharacterization of Excess Contributions as
Employee Contributions [See ss. 7.4(e). Check one.]
a. [X] Standard: will not be allowed.
b. [ ] [Do not check this option 2 if Employee Contributions are not
allowed in Part VI.B.] will be allowed.
VII. EMPLOYER CONTRIBUTIONS.
A. Matching Contributions. [See ss. 5.3(b) and Part VII.F.]
1. Formula. [Check one.]
a. [ ] STANDARD: No Matching Contributions will be made.
b. [x] Matching Contributions will be made on account of: [Check one
or both.]
[x] Elective Deferrals
[ ] Employee Contributions
under the following formula: [Check and complete one. Enter
"N/A" if not applicable. The formula specified and completed
must not provide a higher rate of Matching Contributions for
Participants who make a higher amount of contributions.]
[ ] _____% of the Participant's contributions which do
not exceed $_____ or _____% of the Participant's
Compensation plus _____% of the Participant's
contributions which exceed $_____ or _____%, but
contributions in excess of $_____ or _____% of the
Participant's Compensation will not be matched.
[x] such percentage of the Participant's contributions as
determined by the Employer in its discretion for each
Plan Year.
[ ] in an amount equal to _______________________________
_____________________________________________________.
2. Eligible Participant. The Matching Contribution for any Allocation
Date will be made only for each Participant who makes Elective
Deferrals or Employee Contributions, as applicable, during the period
ending on the Allocation Date and who satisfies all of the following
requirements: [Check one.]
a. [x] STANDARD no additional requirements.
b. [ ] Alternative: [Check one or more.]
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Flexible Nonstandardized 401(k) Adoption Agreement (#007) 062493
(1) [ ] the Participant is employed (or on an authorized leave of absence)
on the Allocation Date.
(2) [ ] the Participant is credited with at least 1,000 Hours of Service
in the Plan Year ending on such Allocation Date. [Do not check if
"Elapsed Time" is selected or Allocation Date is not Standard
Option.]
(3) [ ] the Participant is a Nonhighly Compensated Employee.
(4) [ ] the Participant is not employed as of the last day of the Plan
Year but is credited with more than 500 Hours of Service in the
Plan Year. [Do not check if Allocation Date is not Standard
Option. Special Hour of Service equivalencies apply if "Elapsed
Time" is selected. See Part V.A.2.]
(5) [ ] the Participant is credited with at least 2 Years of Service (for
participation purposes) on such Allocation Date.
(6) [ ] notwithstanding anything to the contrary in clause (1), (2) or (4)
of this Part VII.A.2.b, a Participant who died, retired or became
disabled during the period ending on the Allocation Date will be
eligible [Check one.]
[ ] without regard to the number of Hours of Service.
[ ] only if he completes the Hours of Service specified in
clause (2) or (4), as applicable. [Do not check if
Allocation Date is not Standard Option.]
3. Allocation Date. Matching Contributions will be made and allocated as of
[Check one.]
a. [ ] STANDARD: the last day of each Plan Year.
b. [x] each last day of each month.
4. Forfeitures. Forfeitures attributable to Matching Accounts [Check one. See
ss. 6.3(c)(2)(ii).]
a. [ X] STANDARD: will be applied to reduce Matching Contributions as of
the Allocation Date: [Check one. See ss. 8.2(e).]
(1) [x] STANDARD: which immediately follows the date the Forfeiture
occurs.
(2) [ ] which immediately follows the last day of the Plan Year in
which the Forfeiture occurs.
b. [ ] will be reallocated to Active Participants as of the
last day of each Plan Year. [Complete Part VII.D.2 to
specify who is an Active Participant for this purpose.]
c. [ ] will be allocated in accordance with the formula set
forth in Addendum VII.A.4.c. [The addendum should
describe Allocation Date, eligible Participants and
allocation formula.]
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Flexible Nonstandardized 401(k) Adoption Agreement (#007) 062492
B. Qualified Matching Contributions. [See ss. 5.3(c) and Part VII.F.]
1. Formula. [Check one.]
a. [ ] STANDARD: No Qualified Matching Contributions will be made.
b. [x] Qualified Matching Contributions will be made on account of:
[Check one or both.]
[x] Elective Deferrals
[ ] Employee Contributions
under the following formula: [Check and complete one. Enter
"N/A" if not applicable. The formula specified and completed
must not provide a higher rate of Qualified Matching
Contributions for Participants who make a higher amount of
contributions.]
[ ] _____% of the Participant's contributions which do
not exceed $_____ or _____% of the Participant's
Compensation plus _____% of the Participant's
contributions which exceed $_____ or _____%, but
contributions in excess of $_____ or _____% of the
Participant's Compensation will not be matched.
[x] such percentage of the Participant's contributions as
determined by the Employer in its discretion for each
Plan Year.
[ ] in an amount equal to ______________________________
____________________________________________________
2. Eligible Participant. The Qualified Matching Contribution for any
Allocation Date will be made only for each Participant who makes
Elective Deferrals or Employee Contributions, as applicable, during
the period ending on the Allocation Date and who satisfies all of the
following requirements: [Check one.]
a. [ ] STANDARD: no additional requirements.
b. [x] Alternative: [Check one or more.]
(1) [x] the Participant is employed (or on an authorized leave
of absence) on the Allocation Date.
(2) [ ] the Participant is credited with at least 1,000 Hours of
Service in the Plan Year ending on such Allocation Date.
[Do not check if "Elapsed Time" is selected or
Allocation Date is not Standard Option.]
(3) [ ] the Participant is a Nonhighly Compensated Employee.
(4) [ ] the Participant is not employed as of the last day of
the Plan Year but is credited with more than 500 Hours
of service in the Plan Year. [Do not check if Allocation
Date is not Standard Option. Special Hour of Service
equivalencies apply if "Elapsed Time" is selected. See
Part V.A.2.]
(5) [ ] the Participant is credited with at least 2 Years of
Service (for participation purposes) on such Allocation
Date.
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Flexible Nonstandardized 401(k) Adoption Agreement (#007) 062493
(6) [ ] notwithstanding anything to the contrary in clause (1),
(2) or (4) of this Part VII.B.2.b, a Participant who
died, retired or became disabled during the period
ending on the Allocation Date will be eligible
[Check one.]
[ ] without regard to the number of Hours of Service.
[ ] only if he completes the Hours of Service specified
in clause (2) or (4), as applicable. [Do not check
if Allocation Date is not Standard Option.]
3. Allocation Date. Qualified Matching Contributions will be made and
allocated as of [Check one.]
a. [x] STANDARD: the last day of each Plan Year.
b. [ ] each ________________.
C. Qualified Nonelective Contributions. [See ss. 5.3(d) and Part VII.F.]
1. Formula. In addition to the Qualified Nonelective Contributions which
may be made for Nonhighly Compensated Employees to satisfy the ADP or
ACP limits, [Check one.]
a. [X] STANDARD: no additional Qualified Nonelective Contributions
will be made.
b. [ ] additional Qualified Nonelective Contributions will be made
in an amount equal to _____________________________________
___________________________________________________________.
2. Eligible Participant. The Additional Qualified Nonelective
Contribution described in this Part VII.C for any Allocation Date will
be made only for each Participant who is an Eligible Employee at any
time during the period ending on the Allocation Date and who satisfies
all of the following requirements: [Check one.]
a. [ ] STANDARD: no additional requirements.
b. [ ] Alternative: [Check one or more.]
(1) [ ] the Participant is employed (or on an authorized leave
of absence) on the Allocation Date.
(2) [ ] the Participant is credited with at least 1,000 Hours of
Service in the Plan Year ending on such Allocation Date.
[Do not check if "Elapsed Time" is selected or
Allocation Date is not Standard Option.]
(3) [ ] the Participant is a Nonhighly Compensated Employee.
(4) [ ] the Participant is not employed as of the last day of
the Plan Year but is credited with more than 500 Hours
of Service in the Plan Year. [Do not check if Allocation
Date is not Standard Option. Special Hour of Service
equivalencies apply if "Elapsed Time" is selected. See
Part V.A.2.]
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Flexible Nonstandardized 401(k) Adoption Agreement (#007) 062493
(5) [ ] the Participant is credited with at least 2 Years of
Service (for participation purposes) on such Allocation
Date
(6) [ ] notwithstanding anything to the contrary in clause (1),
(2) or (4) of this Part VII.C.2.b, a Participant who
died, retired or became disabled during the period
ending on the Allocation Date will be eligible
[Check one.]
[ ] without regard to the number of Hours of Service.
[ ] only if he completes the Hours of Service specified
in clause (2) or (4), as applicable. [Do not check
if Allocation Date is not Standard Option.]
3. Allocation Date. The Qualified Nonelective Contributions described in
this Part VII.C will be made and allocated as of [Check one.]
a. [ ] STANDARD: the last day of each Plan Year.
b. [ ] each __________________________.
D. Discretionary Employer Contributions.
1. Allocation Formula. The discretionary Employer Contributions will be
allocated among Active Participants as follows: [Check one. See ss.
5.3(e), ss. 6.3(a), ss. 6.3(c)(4) and Part VII.F. Do not select an
integrated formula for Plan Years beginning on and after the Final
Compliance Date if the Employer also maintains another integrated plan
for such Plan Year.]
a. STANDARD: Nonintegrated. [See ss. 6.3(a)(1) and ss.
6.3(c)(4)(i)(A).]
b. Integrated. [See ss. 6.3(a)(2), ss. 6.3(c)(4)(i)(B) and ss.
12.3(h).]
(1) Integration Percentage. [Check one. If the Integration Level
is less than the Taxable Wage Base, the Maximum Disparity
Rate must be reduced. See ss. 2.39.]
[ ] STANDARD: the Maximum Disparity Rate.
[ ] _____% [not to exceed the Maximum Disparity Rate.]
(2) Integration level. [Check one. See ss. 2.35.]
[ ] STANDARD: the Taxable Wage Base.
[ ] $_____ or _____% of the Taxable Wage Base [not to
exceed the Taxable Wage Base.]
2. Active Participant. The discretionary Employer Contributions and
Forfeitures, if applicable, will only be allocated to: [Check one. See
ss. 2.2, ss. 5.3(e) and Part VII.E.]
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Flexible Nonstandardized 401(k) Adoption Agreement (9007) 062493
a. [ ] STANDARD: each Participant who is an Eligible Employee at any
time during the Plan Year and (1) who is employed (or on an
authorized leave of absence) on the last day of the Plan Year
and (if the "Hours of Service" method is selected) who is
credited with more than 1,000 Hours of Service during the
Plan Year or (2) who terminated employment during the Plan
Year due to death, disability or retirement.
b. [ ] Alternatives to standard: [Check one or more.]
(1) [ ] The last day employment requirement will not apply.
(2) [ ] The 1,000 hours requirement will not apply.
(3) [ ] The exceptions for death, disability and retirement will
not apply.
(4) [ ] Each Participant who is not employed on the last day of
the Plan Year but is credited with more than 500 Hours
of Service during the Plan Year will be an Active
Participant. [Special equivalencies apply if "Elapsed
Time" is selected. See Part V.A.2.]
(5) [ ] The Participant must also be credited with at least 2
Years of Service on the last day of the Plan Year.
3. Forfeitures. Forfeitures attributable to Employer Accounts [Check one.
See ss. 5.3(i) and ss. 6.3(c)(4)(ii).]
a. [ ] STANDARD: will be reallocated to Active Participants as of the
last day of each Plan Year in the same manner as Employer
Contributions.
b. [ ] will be applied to reduce Matching Contributions, Qualified
Matching Contributions and/or Qualified Nonelective Contributions.
c. [ ] will be allocated in accordance with the formula set forth in
Addendum VII.D.3.c. [The addendum should describe Allocation Date,
eligible Participants and allocation formula.]
E. Net Profits.
1. General. [Check one. See ss. 5.3(a).]
a. [ ] STANDARD: All Employer contributions other than Elective
Deferrals will be made out of Net Profits.
b. [x] Alternatives to Standard: In addition to Elective Deferrals,
the following contributions will be made without regard to
Net Profits: [Check one or more.]
1. [x] Matching Contributions
2. [x] Qualified Matching Contributions
3. [ ] Qualified Nonelective Contributions
4. [ ] Discretionary Employer Contributions
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Flexible Nonstandardized 401(k) Adoption Agreement (#O07) 062493
2. Definition. For this purpose, Net Profits will be as defined [Check
one. See ss. 2.41.]
a. [x] STANDARD: in ss. 2.41(a).
b. [ ] in the attached Addendum VII.E.2.
F. Minimum Allocations. Each Active Participant (determined without regard to
the Participant's completed Hours of Service) who is not a Key Employee,
generally, will receive the minimum top-heavy allocation if the Plan is
top-heavy. [See ss. 6.3(e) and ss. 12.] Requiring a Participant to complete
a minimum number of hours or to be employed on the last day of a period may
result in a failure to satisfy the nondiscrimination rules, minimum
coverage rules and minimum participation rules. [See ss. 2.2 and ss. 2.19.]
VIII. COMPENSATION. Compensation for any Plan Year generally means total
compensation (not to exceed $200,000 indexed for inflation after 1989)
actually paid to a Participant during such Plan Year (unless another
determination period is selected). [See ss. 2.10.]
A. Basic Definition: Total compensation means: [Check one. See ss. 2.10(a).]
1. [X] STANDARD: wages, tips and other compensation reportable on Form
W-2. [See ss. 2.10(a)(1).]
2. [ ] wages subject to federal income tax withholding. [See ss.
2.10(a)(2)(i).]
3. [ ] general Code ss. 415 compensation. [See ss.2.10(a)(2)(ii) and ss.
7.2(a)(2)(ii)(B).]
4. [ ] regular or base salary or wages, including [This option may not be
selected if the integrated formula is selected in Part VII.D.1.b.
Check one or more only if desired.]
a. [ ] overtime
b. [ ] bonuses
c. [ ] commissions
d. [ ] other:_________________________
Reimbursements or other expense allowances, fringe benefits (cash and
noncash), moving expenses; deferred compensation and welfare benefits (even
if includible in gross income): [Check one. See ss. 2.10(a)(2)(iv).]
[ ] STANDARD: will [ x ] will not
be included in Compensation as determined in accordance with the definition
selected above.
B. Determination Period: [Check one. See ss. 2.10(d).]
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Flexible Nonstandardized 401(k) Adoption Agreement (#007) 062493
1. [x] STANDARD: the Plan Year.
2. [ ] the calendar year ending in the Plan Year.
3. [ ] a period beginning each ____________ [Enter the day and month the
period begins. The determination period must end with or within
the Plan Year, must be at least 12 consecutive months in duration
and must apply uniformly to all Employees in the Plan.]
C. Salary Reductions. Participant salary reduction contributions (for example,
ss. 401(k) or flexible benefit plan contributions) [Check one. See ss.
2.10(f).]
1. [x] STANDARD: will
2. [ ] will not
be included in total compensation.
D. Special Rules. [Complete only if desired. See ss. 2.10(g).]
1. [X] Compensation for periods ending before the Entry Date on which an
Eligible Employee becomes a Participant will be excluded. [See
2. [ ] If this is an amendment to a Pre-Existing Plan, the definition of
Compensation will be effective as of ___________ [No later than the
first day of the first Plan Year after this Plan is adopted.
See ss. 2.10(93(2). The definition in the Pre-Existing Plan will
continue to apply until that date.]
3. [ ] Compensation for any Plan Year in excess of $_____ will be excluded.
[See ss. 2.10(9)(3).]
4. [ ] The following shall be excluded when determining Compensation of Highly
Compensated Employee: [See ss. 2.10(g)(4).]
IX. DISTRIBUTIONS.
A. Timing. Vested Plan benefits, generally, will be distributed as follows:
[Check one. See ss. 9.1(a).]
1. [x] STANDARD: as soon as practical after the Participant separates
from service subject to the Participant's consent, if required.
2. [ ] no earlier than the Participant's Normal Retirement Age, Early
Retirement Age or Disability, whichever is earlier.
B. Elections to Defer. A Participant whose Account is more than $3500 may
elect that distribution of vested Plan benefits be deferred until: [Check
one. See ss. 9.1(e).]
1. [ ] STANDARD: the Participant's Required Beginning Date (generally
age 70-1/2)
2. [x] the later of the Participant's Normal Retirement Age or age 62.
C. In-Service Distributions [See ss. 9.2(b).]
1. Elective Deferral Accounts. In-service distributions from Elective
Deferral Accounts will be allowed as follows: [Check applicable box(es).]
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Flexible Nonstandardized 401(k) Adoption Agreement (#007) 062493
a. [ ] STANDARD: no distributions before separation from service.
b. [X] on or after age 59 1/2. [See ss. 9.2(b)(4).]
c. [X] for the following financial hardship(s): [See ss. 9.2(b)(3).
Check one or more.]
(1) [x] medical expenses [See ss. 9.2(b)(3)(ii)(A).]
(2) [x] purchase of principal residence [See
ss. 9.2(b)(3)(ii)(B).]
(3) [x] tuition [See ss. 9.2(b)(3)(ii)(C).]
(4) [x] foreclosure or eviction [See ss. 9.2(b)(3)(ii)(D).]
(5) [x] other IRS "deemed" financial hardship [See
ss. 9.2(b)(3)(ii)(E)]
2. Matching Accounts. In-service distributions from Matching Accounts
will be allowed as follows: [Check applicable box(es).]
a. [ ] STANDARD: no distributions before separation from service.
b. [x] on or after age 59 1/2 .
c. [ ] after the anniversary of Plan participation.
d. [x] for a financial hardship under the safe harbor tests. [See
ss. 9.2(b)(3).]
e. [ ] in accordance with the rules set forth in Addendum IX.C.2.
[See ss. 9.2(b)(5). The addendum should describe
nondiscriminatory objective standards for an in-service
distribution after a fixed number of years or upon the prior
occurrence of some event such as layoff, illness or
hardship.]
3. Employer Accounts. In-service distributions from Employer Accounts
will be allowed as follows: [Check applicable box(es).]
a. [x] STANDARD: no distributions before separation from service.
b. [ ] on or after age 59 1/2.
c. [ ] after the __________ anniversary of Plan participation.
d. [ ] for a financial hardship under the safe harbor tests. [See
ss. 9.2(b) (3).]
e. [ ] in accordance with the rules set forth in Addendum IX.C.3.
[See ss. 9.2(b)(5). The addendum should describe
nondiscriminatory objective standards for an in-service
distribution after a fixed number of years or upon the prior
occurrence of some event such as layoff, illness or
hardship.]
4. Qualified Nonelective and Qualified Matching Accounts. In-service
distributions from Qualified Nonelective and Qualified Matching
Accounts will be allowed as follows: [Check applicable box(es).]
a. [x] STANDARD: no distributions before separation from service.
b. [ ] on or after age 59 1/2
c. [ ] for financial hardship (pre-89 amounts only). [See
ss. 9.2(b)(3).]
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Flexible Nonstandardized 401(k) Adoption Agreement (#O07) 062493
5. Employee Accounts. Withdrawals from Employee Accounts [See ss. 9.2(d).
Check one.]
a. [ ] STANDARD: will be allowed.
b. [ ] will not be allowed.
D. Joint and Survivor Annuity Rules. [Check one. See ss. 10.]
1. [ ] STANDARD: The entire vested balance will be paid (a) to married
Participants as a 50% joint and survivor annuity, (b) to single
Participants as a 100% life annuity and (c) to the surviving
Spouse of a married Participant who dies before retirement as a
100% preretirement survivor annuity.
2. [ ] The entire vested balance will be paid under the standard joint
and survivor annuity rules except the percentages will be:
[Percentages must be not less than 50% nor more than 100%.]
a. Qualified Joint and Survivor Annuity: ____% [See ss. 10.1(f).]
b. Qualified Preretirement Survivor Annuity: _____ % [See ss.
l0.l(g).]
3. [x] The standard joint and survivor annuity rules will not apply.
[Check only if the safe harbor rule described in ss. 10.5 will be
satisfied. This option generally is not available if this Plan or
a Pre-Existing Plan provides annuities and separate accounts are
not maintained for such Pre-Existing Plan balances. Under this
option, the entire vested balance eligible for the safe harbor
will be paid to the surviving Spouse of a married Participant who
dies before retirement. See ss. 10.5.]
E. Optional Distribution Forms. [See ss. 10.6(c).] In addition to single sum
distributions in cash, Participants may also request:
1. [ ] Installments [See ss. 10.6(c)(2)(ii).]
2. [ ] Annuity contracts [See ss. 10.6(c)(2)(iii).]
3. [ ] The optional forms or in kind distributions offered under a
Pre-Existing Plan as described in Addendum XIII.A.
4. [ ] Single sum distributions in kind [See ss. 10.6(e).]
X. INVESTMENT PROVISIONS.
A. Individually Directed Investments. An individual's direction of the
investment of that individual's Account [Check one. See ss. 13.2.]
1. [ ] STANDARD: will not be allowed
2. [x] will be allowed and will apply: [Check one.]
a. [x] STANDARD: to the entire Account
b. [ ] only to the following:___________________________
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Flexible Nonstandardized 401(k) Adoption Agreement (#007) 062493
B. Participant Loans. Participant loans [Check one. See ss. 13.3.]
1. [ ] STANDARD: will not be allowed.
2. [X] will be allowed.
a. Accounting. Loans will be treated as an asset of [See ss.
13.3(e). Check one.]
(1) [X] STANDARD: the Participant's Account.
(2) [ ] the Fund.
b. Amounts. The $10,000 exception for loans in excess of 50% of
Account value [Check one. See ss. 13.3(f)(2).]
(1) [x] STANDARD: shall not apply.
(2) [ ] shall apply. [Note: Loans under this exception must be
secured by collateral in addition to the Participant's
vested Account.]
C. Insurance. A Participant's direction to purchase insurance contracts [Check
one. See ss. 13.1.]
1. [X] STANDARD: will not be allowed.
2. [ ] will be allowed.
XI. TOP-HEAVY RULES. [SEE ss. 12.]
A. Top-Heavy Vesting Schedule. The vesting schedule for any Plan Year in which
this Plan is a Top-Heavy Plan will be: [Check one. See ss. 12.4.]
1. [ ] STANDARD: Full and Immediate. 100% of all times.
2. [ ] Cliff. 100% after completion of _____ Years of Service [not to
exceed 3].
3. [X] Graded.
Years of Service Nonforfeitable Percentage
---------------- -------------------------
Less than 1 __0__%
1 __0__%
2 __20_% [at least 20%]
3 __40_% [at least 40%]
4 __60_% [at least 60%]
5 _100_% [at least 80%]
6 or more 100%
B. Other Plans. [Complete only if the Employer maintains or has ever
maintained another plan.]
1. Minimum Allocation. The minimum top-heavy contributions or benefit, if
any, will be made under [Check one. See ss. 12.3(d) and (g).]
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Flexible Nonstandardized 401(k) Adoption Agreement (#007) 062493
a. [ ] STANDARD: this Plan.
b. [ ] the following plan(s):__________________________.
2. Present Value. [See ss. 12.2(f)(3)(iii). Complete only if Employer
maintains a defined benefit plan.] "Present value" will be determined
using an interest rate of _____% and the following mortality table:
_________________________.
3. Valuation Date. The Top-Heavy Valuation Date for each other plan will
be: [See ss. 12.2(g). Check one.]
a. [ ] STANDARD: the most recent valuation date.
b. [ ] Other:
XII. LIMITATIONS ON ALLOCATIONS (CODE ss. 415). [See ss. 7.2.]
A. Compensation; For Code ss. 415 purposes, Compensation means: [Check one.
See ss. 7.2(a)(2).]
1. [x] STANDARD: wages, tips and other compensation reportable on Form
W-2. [See ss. 7.2(a)(2)(i).]
2. [ ] wages subject to federal income tax withholding. [See ss.
7.2(a)(2)(ii)(A) and ss. 2.10(a)(2)(i).]
3. [ ] general Code ss. 415 compensation. [See ss. 7.2(a)(2)(ii)(B).]
B. Limitation Year. The Limitation Year will be: [Check one. See ss.
7.2(a)(9).]
1. [x] STANDARD: the Plan Year.
2. [ ] the 12 consecutive month period which ends on each
___________________ .
C. Other Plans. [Complete only if the Employer maintains or has ever
maintained another plan.]
1. Other Defined Contribution Plan. The Annual Additions attributable to
this Plan will be determined: [Check one. See ss. 7.2(d).]
a. [ ] STANDARD: by treating the other plan as a Master or Prototype
Plan.
b. [ ] by using the method described in Addendum XII.C.1.b.
2. Defined Benefit Plan. [Check and attach appropriate addendum only if
applicable. See ss. 7.2(a)(3), ss. 7.2(a)(11), ss. 7.2(e) and ss.
12.3(g).]
[ ] The Annual Additions attributable to this Plan will be limited
by using the method described in Addendum XII.C.2.
XIII. SPECIAL PROVISIONS FOR AMENDMENT AND RESTATEMENT OF PRE-EXISTING PLAN,
MERGERS OR TRANSFERS.
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Flexible Nonstandardized 401(k) Adoption Agreement (#007) 062493
A. Vesting or Distribution Rules. [Check and attach appropriate description
only if applicable. See ss. 10.6, ss. 14.1(b) and ss. 14.5.]
[x] The special vesting or distribution rules which must be preserved
under Code ss. 411 are described in Addendum XIII.A.
B. Normal Retirement Age. [Check only if the normal retirement age under the
Pre-Existing Plan was determined with reference to the participation
commencement date and the special transitional rule in ss. 2.43 is desired.
See ss. 2.43.]
[ ] The Normal Retirement Age of a Participant who commenced
participation in the Pre-Existing Plan in a Plan Year beginning before
1988 will be determined under the transitional rule described in ss.
2.43.
C. Effective Dates. [Check and attach appropriate addendum only if any of the
selections made in this Adoption Agreement will become effective as of a
date other than the Effective Date set forth in Part II.E. However, the
addendum shall in no event delay the effective date of any Plan provisions
beyond the latest effective date required for such provision under TRA 86
or other applicable law or regulations.]
[X] Certain elections in this Adoption Agreement shall be effective as of
the date(s) specified in Addendum XIII.C.
XIV. TRUSTEE APPOINTMENT AND TRUST AGREEMENT. [Check one. See ss. 2.66 and ss.
2.68.]
A. [ ] Standard Trust Agreement. The standard Trust Agreement will apply and
the Trustee will be the following individual(s), bank(s) or other
person(s) who can serve as a fiduciary and trustee under the laws of
the State shown in Part II.C.
[If Smith Barney Shearson Trust Company ("SBSTC") is the Trustee,
SBSTC will charge a fee and may require the Employer to complete other
documents prior to accepting its appointment as Trustee. Further,
SBSTC will act only as a nondiscretionary Trustee and the investment
of the Fund will be made as directed by the Plan Administrator or the
Employer. See ss. 15 and the Trust Agreement.]
B. [x] Alternate Trust Agreement. The alternate Trust Agreement for 401(k)
Plans will apply and the Trustee will be Frontier Trust Co., which is a
bank or trust company organized under the laws of the State of North
Dakota and which is authorized to serve as a fiduciary and trustee
under the laws of such State.
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Flexible Nonstandardized 401(k) Adoption Agreement (#O07) 062493
[The Trustee will charge a fee and will require the Employer to
complete other documents, including execution of the alternate Trust
Agreement, prior to accepting its appointment as Trustee. Except as
described in the Trust Agreement, the Trustee will act only as a
nondiscretionary Trustee and will be subject to the directions of the
Plan Administrator as a named fiduciary under the Plan in the control
and management of the assets of the fund. Such directions will be
communicated to the Trustee by the Recordkeeper as described in the
Trust Agreement.]
XV. IRS APPROVAL.
This Plan is a "nonstandardized" plan and an adopting Employer may not rely on
the opinion letter issued to the Prototype Sponsor by the National Office of the
Internal Revenue Service as evidence that this Plan is qualified under Code ss.
401.
Any Employer who wishes to obtain reliance that this Plan as adopted by the
Employer is qualified must apply to the appropriate Key District Office for a
favorable determination letter on this Plan.
Smith Barney Shearson will notify each adopting Employer of any amendments that
have been made to the Plan by Smith Barney Shearson as Prototype Sponsor or of
any intention to discontinue or abandon its sponsorship of the Plan as a
prototype plan.
S I G N A T U R E S
IMPORTANT:
In order to have a valid plan and trust, this Adoption Agreement must
be signed by individuals authorized to sign for the Employer and, if
applicable, the Trustee and each Participating Affiliate. If the
alternate Trust Agreement is specified in Part XIV.B, the Trust
Agreement must be signed by the Employer, the Trustee and, if
applicable, each Participating Affiliate.
This Adoption Agreement will not become effective as a prototype plan
unless and until it is accepted by Smith Barney Shearson as the
Prototype Sponsor but, upon such acceptance, will be effective as a
prototype plan retroactive to the Effective Date.
An Affiliate (i e., a member of a controlled group of corporations,
commonly controlled group of trades or businesses, or an affiliated
service group within the meaning of Code ss. 414) may adopt this Plan
as a Participating Affiliate.
EMPLOYER REPRESENTATIONS. The undersigned hereby certifies that the adoption of
the Plan and the Trust Agreement is authorized by (1) a Board of Directors'
resolution for an Employer which is a corporation, or (2) a written
authorization by the person or persons duly authorized to act on behalf of an
Employer which is not a corporation. If this Adoption Agreement amends and
restates a Pre-Existing Plan, the undersigned hereby certifies that such
amendment is duly authorized by the Employer. The undersigned hereby
acknowledges that the Prototype Sponsor (1) is not responsible for the elections
made in this Adoption Agreement, (2) shall have no responsibility whatsoever
with respect to the Fund or the operation and
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Flexible Nonstandardized 401(k) Adoption Agreement (#007) 062493
administration of this Plan, and (3) has advised the Employer to consult with
legal counsel for the Employer regarding the adoption and operation of this
Plan. The undersigned further acknowledges that the Employer is solely
responsible for the elections made in this Adoption Agreement and for the
operation and administration of this Plan. Finally, the undersigned acknowledges
that the Prototype Sponsor will charge an annual prototype maintenance fee and
hereby authorizes the Prototype Sponsor to charge such fees against any
brokerage account maintained for the Plan.
EMPLOYER EXECUTION. Subject to the terms and conditions of the Plan, the Trust
Agreement and this Adoption Agreement, the undersigned hereby has executed this
Adoption Agreement to evidence its adoption (or, if applicable, amendment) of
the Plan and the Trust Agreement.
Signature: /s/ Jerry Braun
------------------------------
Title: CEO Date: 6/14/96
-------------------------- -----------
TRUSTEE EXECUTION. Subject to the terms and conditions of the Plan, the Trust
Agreement and this Adoption Agreement, the undersigned hereby accepts its
appointment as Trustee and has executed this Adoption Agreement to evidence its
adoption of the Trust Agreement. [Attach additional signature pages if there are
more than three Trustees. If the alternate Trust Agreement is specified in Part
XIV.B, the Trustee should execute the alternate Trust Agreement in lieu of
executing the Adoption Agreement in this section.]
Signature: Date:
------------------------------ ----------------------------------
Signature: Date:
------------------------------ ----------------------------------
Signature: Date:
------------------------------ ----------------------------------
PARTICIPATING AFFILIATES EXECUTION. [Attach additional signature pages if there
are more than three Participating Affiliates. An Affiliate which adopts this
Plan after this Adoption Agreement is executed should evidence its adoption of
this Plan by executing and attaching to this Adoption Agreement a signature page
which includes the information set forth below.]
Subject to the terms and conditions of the Plan, the Trust Agreement and this
Adoption Agreement, the undersigned hereby has executed this Adoption Agreement
to evidence its adoption (or, if applicable, amendment) of the Plan and the
Trust Agreement.
AFFILIATE NAME:
---------------------------------------------------------
Signature: Date:
------------------------------ ----------------------------------
Effective Date of Adoption of Plan by Affiliate (if different from the Effective
Date in Part II.E.): ______________________
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Flexible Nonstandardized 401(k) Adoption Agreement (#007) 062493
AFFILIATE NAME:
---------------------------------------------------------
Signature: Date:
------------------------------ ----------------------------------
Effective Date of Adoption of Plan by Affiliate (if different from the Effective
Date in Part II.E.):
AFFILIATE NAME:
---------------------------------------------------------
Signature: Date:
------------------------------ ----------------------------------
Effective Date of Adoption of Plan by Affiliate (if different from the Effective
Date in Part II.E.):
PROTOTYPE SPONSOR ACCEPTANCE. Subject to the terms and conditions of the Plan,
the Trust Agreement and this Adoption Agreement, this Adoption Agreement is
accepted by the Prototype Sponsor.
Authorized Signature: Date:
----------------- ----------------------------------
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<PAGE>
SMITH BARNEY SHEARSON FLEXIBLE PROTOTYPE
NONSTANDARDIZED 401(k) PLAN
ADOPTION AGREEMENT #007
ADDENDUMS XIII.A. and C. To Adoption Agreement
A. The five year cliff vesting schedule provided in IV.B.1.b. of the Adoption
Agreement shall apply only to those Employers first hired by the Employer
after December 31, 1994; provided, however, that the nonforfeitable
percentage, determined as of the date this restated Plan is adopted, of
each Employee who is a Participant as of such adoption date shall not be
less than the nonforfeitable percentage computed under the Plan without
regard to this restatement.
Effective January 1, 1996, all other Employees who are credited with
at least one Hour of Service after December 31, 1995 shall be subject to
the vesting schedule described in XI.A.3. of the Adoption Agreement.
C. The exclusions from Plan coverage described in III.A.2. of the Adoption
Agreement shall be effective July 1, 1996.
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<PAGE>
Internal Revenue Service Department of the Treasury
Plan Description: Prototype Non-standardized Profit Sharing Plan with CCOA
FFN: 50370630005-007 Case: 9307147 EIN: 13 l9l2900 Washington, DC 20224
SPD: 05 Plan: 007 Letter Serial No: 0361035a
Person to Contact: Mr. Dua
SMITH BARNEY SHEARSON INC
Telephone Number:
(202) 622-8380
RETIREMENT PLAN SERVICES 37TH FLOOR
388 GREENWICH STREET Refer Reply to: E:EP:Q:3
NEW YORK, NY 10013
Date: 08/02/93
Dear Applicant:
In our opinion, the form of the plan identified above is acceptable under
section 401 of the Internal Revenue Code for use by employers for the benefit of
their employees. This opinion relates only to the acceptability of the form of
the plan under the Internal Revenue Code. It is not an opinion of the effect of
other Federal or local statutes.
You must furnish a copy of this letter to each employer who adopts this plan.
You are also required to send a copy of the approved form of the plan, any
approved amendments and related documents to each Key District Director of
Internal Revenue Service in whose jurisdiction there are adopting employers.
Our opinion on the acceptability of the form of the plan is not a ruling or
determination as to whether and employer's plan qualifies under Code section
401(a). Therefore, an employer adopting the form of the plan should apply for a
determination letter by filing an application with the Key District Director of
Internal Revenue Service on Form 5307, Short Form Application for Determination
for Employee Benefit Plan.
Because you submitted this plan for approval after March 31, 1991, the
continued, interim and extended reliance provision of section 13 and 17.03 of
Rev. Proc. 89-9, 1989-1 C.B. 780, are not applicable.
If you, the sponsoring organization, have any questions concerning the IRS
processing of this case, please call the above telephone number. This number is
only for use of the sponsoring organization. Individual participants and/or
adopting employers with questions concerning the plan should contact the
sponsoring organization. The plan's adoption agreement must include the
sponsoring organization's address and telephone number for inquiries by adopting
employers.
If you write to the IRS regarding this plan, please provide your telephone
number and the most convenient time for us to call in case we need more
information. Whether you call or write, please refer to the Letter Serial Number
and File Folder Number shown in the heading of this letter.
You should keep this letter as a permanent record. Please notify us if you
modify or discontinue sponsorship of this plan.
Sincerely yours,
/s/ Signature on File
Chief, Employee Plans Qualifications Branch
EXHIBIT 10.33
NEW YORK HEALTH CARE, INC.
Performance Incentive Plan
1. Definitions: As used herein, the following definitions shall apply:
(a) "Committee" shall mean a Committee meeting the standards of Rule 16b-3
of the Rules and Regulations under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), or any similar successor rule, appointed by the
Board of Directors of the Company to administer the Plan or, if no such
Committee is appointed the Board of Directors as a whole shall be the Committee.
All members of the Committee shall be "disinterested directors" as defined by
Rule 16b-3 of the Exchange Act.
(b) "Common Stock" means the Common Stock, par value $.01 per share, of the
Company.
(c) "Company" shall mean New York Health Care, Inc., a New York
corporation, or any successor thereof.
(d) "Eligible Person" means any individual who performs services for the
Company or a Subsidiary, who is a key employee, officer or director of the
Company or a Subsidiary and is included on the regular payroll of the Company or
a Subsidiary.
(e) "Incentive Option" shall mean an option to purchase Common Stock which
meets the requirements set forth in the Plan and also meets the definition of an
incentive stock option set forth in Section 422 of the Internal Revenue Code of
1986, as amended (the "Code"). The stock option agreement for an Incentive
Option shall state that the option is intended to be an Incentive Option.
(f) "Nonqualified Option" shall mean an option to purchase Common Stock
which meets the requirements set forth in the Plan but does not meet the
definition of an incentive stock option set forth in Section 422 of the Code.
The stock option agreement for a Nonqualified Option shall state that the option
is intended to be a Nonqualified Option.
(g) "Participant" shall mean any Eligible Person designated by the
Committee under Paragraph 6 for participation in the Plan.
(h) "Plan" shall mean this Performance Incentive Plan for the Company.
(i) "Subsidiary" shall mean any Company in which the Company owns directly
or indirectly, stock possessing more than twenty-five percent of the combined
voting power of all classes of stock; provided however, that an Incentive Option
may be granted to a key employee of a
<PAGE>
Subsidiary only if the Company owns, directly or indirectly, 50% or more of the
total combined voting power of all classes of stock of the Subsidiary.
2. Purpose of Plan: The purpose of the Plan is to provide key employees with
incentives to make significant and extraordinary contributions to the long-term
performance and growth of the Company and its Subsidiaries and to increase their
personal interest in the continued success and progress of the Company and its
Subsidiaries.
3. Administration: The Plan shall be administered by the Committee. Subject to
the provisions of the Plan, the Committee shall determine, from those eligible
to be Participants under the Plan, the persons to be granted stock options, the
amount of stock to be optioned or granted to each such person, and the terms and
conditions of any stock options. Subject to the provisions of the Plan, the
Committee is authorized to interpret the Plan, to promulgate, amend and rescind
rules and regulations relating to the Plan and to make all other determinations
necessary or advisable for its administration. Interpretation and construction
of any provision of the Plan by the Committee shall be final and conclusive.
Acts approved by either a majority of the members present at any meeting at
which a quorum is present, or without a meeting by the unanimous written
approval of the members of the Committee, shall be the acts of the Committee.
4. Indemnification of Committee Members: In addition to such other rights of
indemnification as they may have, the members of the Committee shall be
indemnified by the Company against the reasonable expenses, including attorneys'
fees, actually and necessarily incurred in connection with the defense of any
action, suit or proceeding, or in connection with any appeal therein, to which
they or any of them may be a party by reason of any action taken or failure to
act under or in connection with the Plan or any option granted hereunder, and
against all amounts paid by them in settlement thereof (provided such settlement
is approved by the Board of Directors of the Company) or paid by them in
satisfaction of a judgment in any such action, suit or proceeding, except in
relation to matters as to which it shall be adjudged in such action, suit or
proceeding that such Committee member has acted in bad faith; provided, however,
that within sixty days after receipt of notice of institution of any such
action, suit or proceeding a Committee member shall offer the Company in writing
the opportunity, at its own cost, to handle and defend the same.
5. Maximum Number of Shares Subject to Plan: The maximum number of shares of
Common Stock with respect to which stock options may be granted under the Plan
shall be 210,000 shares. Shares of Common Stock shall be made available for
issuance pursuant to the Plan either from shares of Common Stock reacquired by
the Company or from authorized but unissued shares. Any shares of Common Stock
with respect to which stock options have expired for any reason other than
exercise of such stock options or which are forfeited back to the Company, shall
not be available for issuance pursuant to the Plan.
The number of shares of Common Stock subject to each outstanding stock option,
the option price with respect to outstanding stock options, and the aggregate
number of shares available at any time under the Plan shall be subject to such
adjustment as the Committee, in its discretion, deems
2
<PAGE>
appropriate to reflect such events as stock dividends, stock splits,
recapitalization, mergers, consolidations or reorganizations of or by the
Company; provided however, that no fractional shares shall be issued pursuant to
the Plan, no rights may be granted under the Plan with respect to fractional
shares, and any fractional shares resulting from such adjustments shall be
eliminated from any outstanding stock option.
6. Participants: The Committee shall determine and designate from time to time,
in its sole discretion, those Eligible Persons to whom stock options are to be
granted or awarded and who thereby become Participants under the Plan.
Notwithstanding the foregoing, Incentive Options may be granted (i) to key
employees of a Subsidiary only if the Company owns, directly or indirectly, 50%
or more of the total combined voting power of all classes of stock of the
Subsidiary, and (ii) in all circumstances, only to key employees eligible to
receive Incentive Options pursuant to Section 422 of the Code.
7. Written Agreement: Each stock option shall be evidenced by a written
agreement between the Company and the Participant and shall contain such
provisions as may be approved by the Committee. Such agreements shall constitute
binding contracts between the Company and the Participant, and every
Participant, upon acceptance of such agreement, shall be bound by the terms and
restrictions of the Plan and of such agreement. The terms of each such agreement
shall be in accordance with the Plan, but the agreements may include such
additional provisions and restrictions determined by the Committee, provided
that such additional provisions and restrictions are not inconsistent with the
terms of the Plan.
8. Allotment of Shares: The Committee shall determine and fix the number of
shares of Common Stock with respect to which each Participant may be granted
stock options provided however, that no Incentive Option may be granted under
the Plan to any one Participant which would result in the aggregate fair market
value, determined as of the date the option is granted, of Common Stock with
respect to which Incentive Options are exercisable for the first time by such
Participant during any calendar year under any plan maintained by the Company
(or any parent or subsidiary Company of the Company) exceeding $100,000.
9. Stock Options: Subject to the terms of the Plan the Committee may grant to
Participants either Incentive Options, Nonqualified Options or any combination
thereof. Each option granted under the Plan shall designate the number of shares
covered thereby, if any, with respect to which the option is an Incentive
Option, and the number of shares of Common Stock covered thereby, if any, with
respect to which the option is a Nonqualified Option.
10. Stock Option Price: Subject to the rules set forth in this Paragraph 10, at
the time any stock option is granted, the Committee shall establish the price
per share for which the shares of Common Stock covered by the option may be
purchased. With respect to an Incentive Option or Nonqualified Option, such
option price shall not be less than 100% of the fair market value of a share of
Common Stock on the date on which such option is granted; provided, however,
that with respect to an Incentive Option granted to an employee who at the time
of the grant owns (after applying the
3
<PAGE>
attribution rules of Section 424(d) of the Code) more than 10% of the total
combined voting power of all classes of the stock of the Company or of any
parent or subsidiary, the option price shall not be less 110% of the fair market
value of a share of Common Stock on the date such Incentive Option is granted.
For purposes of the Plan, the "fair market value" of a share of Common Stock
means the closing sale price on a specified date of a share on the principal
United States securities exchange registered under the Exchange Act on which
such stock is listed, or, if such stock is not listed on any such exchange, on
the National Association of Securities Dealers, Inc. Automated Quotations
Systems or any system then in use, or, if no such Quotations are available, the
fair market value on a specified date of a share as determined by the Committee
in good faith. The option price shall be subject to adjustment in accordance
with the provisions of Paragraph 5 of the Plan.
11. Payment of Stock Option Price: At the time of the exercise in whole or in
part of any stock option granted hereunder, payment of the option price in full
in cash or in Common Stock, shall be made by the Participant for all shares so
purchased. In the discretion of and subject to such conditions as may be
established by the Committee, payment of the option price may also be made by
the Company retaining from the shares of Common Stock to be delivered upon
exercise of the stock option that number of shares having a fair market value on
the date of exercise equal to the option price of the number of shares with
respect to which the Participant exercises the stock option. Such payment may
also be made in such other manner as the Committee determines is appropriate, in
its sole discretion. No Participant shall have any of the rights of a
shareholder of the Company under any stock option until the actual issuance of
shares to said Participant, and prior to such issuance no adjustment shall be
made for dividends, distributions or other rights in respect of such shares,
except as provided in Paragraph 5.
12. Granting and Exercise of Stock Options: Each stock option granted hereunder
shall be exercisable in three equal annual installments; provided, however, that
no stock option granted in conjunction therewith may be exercisable prior to the
expiration of six months from the date of grant unless the Participant dies or
becomes disabled prior thereto. If a Participant who is granted a stock option
is a person who is regularly required to report his ownership and changes in
ownership of Common Stock to the Securities and Exchange Commission, then any
election to exercise, as well as any actual exercise of his stock option, shall
be made only during the period beginning on the third business day and ending on
the twelfth business day following the release for publication by the Company of
quarterly or annual summary statements of sales and earnings. Notwithstanding
anything contained in the Plan to the contrary, stock options shall always be
granted and exercised in such a manner as to conform to the provisions of Rule
l6b-3(e), or any replacement rule, adopted pursuant to the provisions of the
Exchange Act. In addition, the value (determined at the time the option is
granted) of Common Stock with respect to which Incentive Options are exercisable
for the first time by a Participant during any calendar year shall not exceed
$100,000.
A Participant may exercise a stock option, if then exercisable, in whole or in
part by delivery to the Company of written notice of the exercise, in such form
as the Committee may prescribe, accompanied by (i) full payment for the shares
with respect to which the stock option is exercised, or (ii) in the sole
discretion of the Committee and subject to the requirements of Regulation T (as
in
4
<PAGE>
effect from time to time) under the Exchange Act, irrevocable instructions to a
stockbroker to promptly deliver to the Company full payment for the shares with
respect to which the stock option is exercised from the proceeds of the
stockbroker's sale of or loan against the shares. Except as provided in
Paragraph 17, stock options may be exercised only while the Participant is an
employee of, or performing service to, the Company or a Subsidiary.
Successor stock options may be granted to the same Participant whether or not
the stock option(s) previously granted to such Participant remain unexercised. A
Participant may exercise a stock option, if then exercisable, notwithstanding
that stock options previously granted to such Participant remain unexercised.
13. Non-Transferability of Stock Options: No stock option granted under the Plan
to a Participant shall be transferable by such Participant otherwise than by
will, or by the laws of descent and distribution, and such option shall be
exercisable, during the lifetime of the Participant, only by the Participant.
14. Term of Stock Options: If not sooner terminated, each stock option granted
hereunder shall expire not more than ten (10) years from the date of the
granting thereof.
15. Continuation of Employment: The Committee may require, in its discretion,
that any Participant under the Plan to whom a stock option shall be granted
shall agree in writing as a condition of the granting of such stock option to
remain in the employ of, or continue to provide services to, the Company or a
Subsidiary for a designated minimum period from the date of the granting of such
stock option as shall be fixed by the Committee.
16. Termination of Employment: If a Participant's employment by, or provision of
services to, the Company or a Subsidiary shall be terminated, the Committee may,
in its discretion, permit the exercise of stock options granted to such
Participant (i) for a period not to exceed one year following such termination
of employment with respect to Incentive Options, and (ii) for a period not to
extend beyond the expiration date with respect to Nonqualified Options;
provided, however, that no Incentive Option may be exercised after three months
following a Participant's termination of employment, unless such termination of
employment is due to the Participant's death or permanent disability, in which
event the Incentive Option may be permitted to be exercised for up to one year
following the Participant's termination of employment for such reason. In no
event, however, shall a stock option be exercisable subsequent to its expiration
date and, furthermore, unless the Committee otherwise determines, a stock option
may only be exercised after termination of a Participant's employment or service
to the extent exercisable on the date of termination of employment or as a
result of termination of employment.
17. Investment Purpose: If the Committee in its discretion determines that as a
matter of law such procedure is or may be desirable, it may require a
Participant, upon any acquisition of Common Stock hereunder and as a condition
to the Company's obligation to deliver certificates representing such shares, to
execute and deliver to the Company a written statement, in form satisfactory to
the
5
<PAGE>
Committee, representing and warranting that the Participant's acquisition of
shares of Common Stock shall be for such person's own account, for investment
and not with a view to the resale or distribution thereof and that any
subsequent offer for sale or sale of any such shares shall be made either
pursuant to (a) a Registration Statement on an appropriate form under the
Securities Act of 1933, as amended (the "Securities Act"), which Registration
Statement has become effective and is current with respect to the shares being
offered and sold, or (b) a specific exemption from the registration requirements
of the Securities Act, but in claiming such exemption the Participant shall,
prior to any offer for sale or sale of such shares, obtain a favorable written
opinion from counsel for or approved by the Company as to the availability of
such exemption. The Company may endorse an appropriate legend referring to the
foregoing restriction upon the certificate or certificates representing any
shares issued or transferred to the Participant under this Plan.
18. Rights to Continued Employment: Nothing contained in the Plan or in any
stock option granted or awarded pursuant to the Plan, nor any action taken by
the Committee hereunder, shall confer upon any Participant any right with
respect to continuation of employment by, or the provision of services to, the
Company or a Subsidiary nor interfere in any way with the right of the Company
or a Subsidiary to terminate such person's employment or service at any time
with or without cause.
19. Withholding Payments: If upon the exercise of a Nonqualified Option, or upon
a disqualifying disposition (within the meaning of Section 422 of the Code) of
shares acquired upon exercise of an Incentive Option, there shall be payable by
the Company or a Subsidiary any amount of income tax withholding, in the
Committee's sole discretion, either the Company shall appropriately reduce the
amount of Common Stock or cash to be paid to the Participant or the Participant
shall pay such amount to the Company or Subsidiary to reimburse it for such
income tax withholding. The Committee may, in its sole discretion, permit
Participants to satisfy such withholding obligations, in whole or in part, by
electing to have the amount of Common Stock delivered or deliverable by the
Company upon exercise of a stock option appropriately reduced or by electing to
tender Common Stock back to the Company subsequent to exercise of a stock option
to reimburse the Company for such income tax withholding, subject to the rules
and regulations as the Committee may adopt. The Committee may make such other
arrangements with respect to income tax withholding as it shall determine.
20. Effectiveness of Plan: The Plan shall be effective as of March 26, 1996, the
date the Board of Directors of the Company and a majority of the shareholders of
the Company adopted the Plan.
21. Termination, Duration and Amendment of Plan: The Plan shall terminate on
March 26, 2006, and no stock options may be granted or awarded thereafter. The
termination of the Plan shall not affect the validity of any stock option
outstanding on the date of termination.
For the purpose of conforming to any changes in applicable law or governmental
regulations, or for any other lawful purpose, the Board of Directors shall have
the right, with or without approval of the shareholders of the Company, to amend
or revise the terms of the Plan or terminate the Plan at any time; provided,
however, that no such amendment or revisions or termination shall (i) increase
the
6
<PAGE>
maximum number of shares of Common Stock in the aggregate which are subject to
the Plan (except as provided under the provisions of Paragraph 5), change the
class of persons eligible to be Participants under the Plan or materially
increase the benefits accruing to Participants under the Plan, without approval
or ratification of the shareholders of the Company; or (ii) change the stock
option price (except as contemplated by Paragraph 5) or alter or impair any
stock option which shall have been previously granted or awarded under the Plan,
without the consent of the holder thereof.
22. Interpretation: If any provision of the Plan should be held invalid or
illegal for any reason, such determination shall not affect the remaining
provisions hereof, but instead the Plan shall be construed and enforced as if
such provision had never been included in the Plan. Without limiting the
generality of the foregoing, transactions under the Plan are intended to comply
with all applicable conditions of Rule 16b-3 or its successors promulgated under
the Exchange Act. To the extent any provision of the Plan or any action by the
Committee or the Board of Directors hereunder is inconsistent with the foregoing
requirements, it shall be deemed null and void, to the extent permitted by law
and deemed advisable by the Committee or the Board of Directors. This Plan shall
be governed by laws of the State of New York. Headings contained in the Plan are
for convenience only and shall in no manner be construed as part of the Plan.
Any reference to the masculine, feminine, or neuter gender shall be a reference
to such other gender as is appropriate.
7
SERVICES AGREEMENT
This Agreement made and entered into this 1st day of January 1996, by and
between New York Health Care, Inc., a New York corporation, with its principal
place of business at 1667 Flatbush Avenue, Brooklyn, New York 11210,
(hereinafter the "Company"), and Heart to Heart Health Care Services, Inc.
(hereinafter "HTH"), a New Jersey corporation with its principal place of
business at 7 Glenwood Avenue, East Orange, NJ 07017.
W I T N E S S E T H :
WHEREAS, HTH is engaged in the business of providing home health care in
the Northern New Jersey area; and
WHEREAS, the Company has in the past provided administrative services to
HTH including payroll, benefits management and data processing; and
WHEREAS, HTH wishes to obtain the continued services of the Company to
provide its current services to HTH in accordance with the terms and conditions
of this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants as set forth
herein:
THE PARTIES HERETO AGREE AS FOLLOWS:
1. Retention. HTH hereby retains the services of the Company to perform
administrative services to HTH. The Company hereby accepts such retention, upon
the terms and conditions hereinafter set forth.
2. Term. The term of this Agreement shall be for eighteen (18) months
commencing as of January 1, 1996, and ending at the close of business June 30,
1997.
3. Duties. The Company's duties hereunder shall be limited to providing
administrative services to HTH regarding payroll, benefits management and data
processing.
<PAGE>
4. Compensation. The Company shall be paid one thousand two hundred fifty
dollars ($1,250) per month ("Compensation") by HTH for its services. The Company
may submit to HTH, periodic reports of its expenses and other disbursements to
be reviewed by HTH to determine the necessity of an increase in the Compensation
so that Compensation always equals not less than the expenses of the Company in
performing this Agreement.
5. Right to Terminate. The Company shall have the right to terminate this
Agreement at any time during the period of this Agreement for (i) dishonest or
illegal conduct of HTH or (ii) actions by HTH to contact customers of the
Company to perform services already being performed by the Company.
6. Assignability and Binding Effect. The rights and obligations arising
under this Agreement shall inure to the benefit of and shall be binding upon the
successors and assigns of the Company, and shall inure to the benefit of and be
binding upon HTH, upon its successors and assigns, but neither this Agreement
nor the rights or obligations of the Company hereunder may be assigned, pledged,
hypothecated or otherwise transferred by the Company in whole or in part to
another person, firm or corporation nor may the obligations of the Company
hereunder be delegated.
7. Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be delivered personally or sent by
registered or certified mail, prepaid and return receipt requested, to the other
party hereto at his or its mailing address as set forth at the beginning of this
Agreement, and in the case of the Company with copies to William J. Davis, Esq.,
Scheichet & Davis, P.C., 505 Park Avenue, New York, New York 10022. Either party
may change the address to which such communications hereunder shall be sent by
sending notice of such change to the other party as herein provided.
2
<PAGE>
8. Representations by HTH and the Company. The Company hereby represents
and warrants that it is not a party to any other agreement, contract or
understanding which would in any way restrict or prohibit it from undertaking or
performing these services to HTH in accordance with the terms and conditions of
this Agreement. HTH hereby represents and warrants that this Agreement has been
properly authorized by all necessary corporate action and, when and if, fully
executed, will be binding and enforceable upon HTH in accordance with its terms
except for the application of the laws of insolvency and bankruptcy as they may
otherwise affect such Agreement. HTH further represents and warrants that no
other contract, agreement, provision of its certificate of incorporation or
bylaws, debt obligation, law, regulation or court or administrative order
prevents it from entering into, or conflicts with, this Agreement.
9. Waiver. The waiver by either party of any breach or violation of any
provision of this Agreement shall not operate or be construed as a waiver of any
subsequent breach or violation, whether singular in nature or not.
10. Prior Agreements; Complete Understanding; Amendment. This Agreement
cancels and supersedes any and all prior agreements and understandings, if any,
between the parties hereto regarding the services of the Company to HTH, and
constitutes the complete understanding between the parties with respect to the
services to be provided by the Company hereunder, and no statement,
representation, warranty or covenant has been made by either party with respect
thereto except as expressly set forth herein. HTH acknowledges that it has been
afforded the right to review this Agreement with legal counsel prior to the
execution of this Agreement, and that it has been encouraged to do so. This
Agreement shall not be altered, modified or amended except by written instrument
signed by each of the parties hereto.
3
<PAGE>
11. Headings. The headings set forth in this Agreement are for convenience
only and shall not be considered as part of this Agreement in any respect nor
shall they in any way affect the substance of any provisions contained in this
Agreement.
12. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which shall
constitute but one and the same agreement.
13. Governing Law; Construction with Existing Law; Severability. This
Agreement shall be governed by, and construed and enforced in accordance with,
the internal laws of the State of New York. It is the intention of the parties
hereto that all terms and conditions of this Agreement are in compliance with
the laws and regulations of the State of New York, and nothing in this Agreement
shall be construed to be in derogation of the laws, rules and regulations
thereof. If for any reason any provision of this Agreement or any part hereof is
invalid, unlawful or incapable of being enforced by reason of any rule of law,
equity or public policy, all conditions and provisions of the Agreement which
can be given effect without such invalid, unlawful or unenforceable provision
shall, nevertheless, remain in full force and effect, and such invalid, unlawful
or irrevocable provision shall be carried out as nearly as possible according to
its original terms and intent, while eliminating such invalidity or
non-enforceability.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the day and year first above written.
NEW YORK HEALTH CARE, INC.
/s/
-----------------------------------------
By:
Title:
4
<PAGE>
HEART TO HEART HEALTH CARE SERVICES, INC.
/s/
-----------------------------------------
By:
Title:
5
New York Health Care, Inc.
Computation of Earnings Per Common Share
Exhibit 11
<TABLE>
<CAPTION>
Year Ended Three Months
December 31, Ended March 31,
1995 1996
---------- ----------
(unaudited)
<S> <C> <C>
Earnings
Pro forma net income applicable to common stock $ 689,011 $ 119,350
========== ==========
Shares
Weighted average number of
common shares outstanding 2,265,000 2,265,000
Additional shares assuming:
Exercise of options with an exercise price of
$5 or less 18,750 18,750
Shares whose proceeds would be necessary to
pay declared dividend 459,725 459,725
---------- ----------
Pro forma weighted average number of common
shares and common share equivalents
outstanding 2,743,475 2,743,475
========== ==========
Pro forma net income per common share and
common share equivalents $ 0.25 $ 0.04
========== ==========
</TABLE>
CONSENT OF ATTORNEYS FOR THE REGISTRANT
We hereby consent to all references to our firm included in or made a part
of this Form SB-2 Registration Statement.
Dated: New York, New York
July 16, 1996
/s/ Scheichet & Davis, P.C.
-----------------------------
Scheichet & Davis, P.C.
CONSENT OF ATTORNEYS FOR THE REGISTRANT
We hereby consent to all references to our firm included in or made a part
of this Form SB-2 Registration Statement.
Dated: New York, New York
July 16, 1996
/s/ Halpern & Pasternack, P.C.
-----------------------------
Halpern & Pasternack, P.C.
CONSENT OF INDEPENDENT CERTIFIED
PUBLIC ACCOUNTANTS
We consent to the use in this registration statement on Form SB-2 of our report
dated January 26, 1996, on our audit of the financial statements of New York
Health Care, Inc. as of December 31, 1995 and for the years ended December 31,
1994 and 1995. We also consent to the reference to our firm under the captions
"Selected Financial Data" and "Experts".
/s/ M.R. WEISER & CO. LLP
------------------------------
M.R. WEISER & CO. LLP
New York, NY
July 16, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 318,541
<SECURITIES> 0
<RECEIVABLES> 3,400,998
<ALLOWANCES> 74,000
<INVENTORY> 0
<CURRENT-ASSETS> 34,619
<PP&E> 211,458
<DEPRECIATION> 112,729
<TOTAL-ASSETS> 4,000,980
<CURRENT-LIABILITIES> 1,494,437
<BONDS> 0
0
0
<COMMON> 22,650
<OTHER-SE> 7,350
<TOTAL-LIABILITY-AND-EQUITY> 4,000,980
<SALES> 2,987,065
<TOTAL-REVENUES> 2,987,065
<CGS> 0
<TOTAL-COSTS> 2,753,157
<OTHER-EXPENSES> (7,839)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 31,397
<INCOME-PRETAX> 210,350
<INCOME-TAX> (38,000)
<INCOME-CONTINUING> 248,350
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 248,350
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
