<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
VENCOR, INC.
--------------
(Name of Issuer)
Common Stock, par value $.25 per share
---------------------------------------------------
(Title of Class of Securities)
922602107
---------------------------------------
(CUSIP Number of Class of Securities)
Scott M. Brown, Esq.
Tenet Healthcare Corporation
2700 Colorado Avenue
Santa Monica, California 90404
(310) 998-8000
--------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
with a copy to:
Brian J. McCarthy, Esq.
Skadden, Arps, Slate, Meagher & Flom
300 S. Grand Avenue
Los Angeles, California 90071
(213) 687-5070
September 28, 1995
--------------------------------------------------
(Date of Event which Requires
Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Statement because of Rule 13d-
1(b)(3) or (4), check the following:
/ /
Check the following box if a fee is being paid with this Statement:
/X /
Exhibit Index on Page
-----
<PAGE>
CUSIP No. 922602107 Schedule 13D Page 2 of pages
---
- --------------------------------------------------------------------------------
(1) NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
TENET HEALTHCARE CORPORATION 95-2557091
- --------------------------------------------------------------------------------
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP:
(a) / /
(b) /X /
- --------------------------------------------------------------------------------
(3) SEC USE ONLY
- --------------------------------------------------------------------------------
(4) SOURCE OF FUNDS*
00
- --------------------------------------------------------------------------------
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e)
/X /
- --------------------------------------------------------------------------------
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
Nevada
- --------------------------------------------------------------------------------
: (7) SOLE VOTING POWER
:
: 8,301,067
:--------------------------------------------
NUMBER OF SHARES BENEFICIALLY : (8) SHARED VOTING
OWNED BY EACH REPORTING :
PERSON WITH : 0
:--------------------------------------------
: (9) SOLE DISPOSITIVE
:
: 8,301,067
:--------------------------------------------
:(10) SHARED DISPOSITIVE
:
: 0
- --------------------------------------------------------------------------------
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
8,301,067
- --------------------------------------------------------------------------------
(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11
EXCLUDES CERTAIN SHARES* / /
- --------------------------------------------------------------------------------
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
12.9%
- --------------------------------------------------------------------------------
(14) TYPE OF REPORTING PERSON*
CO
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
CUSIP No. 922602107 Schedule 13D Page 3 of pages
---
- --------------------------------------------------------------------------------
(1) NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
NME PROPERTIES CORP. 62-0725891
- --------------------------------------------------------------------------------
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP:
(a) / /
(b) /X /
- --------------------------------------------------------------------------------
(3) SEC USE ONLY
- --------------------------------------------------------------------------------
(4) SOURCE OF FUNDS*
00
- --------------------------------------------------------------------------------
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e)
/ /
- --------------------------------------------------------------------------------
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
Tennessee
- --------------------------------------------------------------------------------
: (7) SOLE VOTING POWER
:
: 8,301,067
:--------------------------------------------
NUMBER OF SHARES BENEFICIALLY : (8) SHARED VOTING
OWNED BY EACH REPORTING :
PERSON WITH : 0
:--------------------------------------------
: (9) SOLE DISPOSITIVE
:
: 8,301,067
:--------------------------------------------
:(10) SHARED DISPOSITIVE
:
: 0
- --------------------------------------------------------------------------------
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
8,301,067
- --------------------------------------------------------------------------------
(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11
EXCLUDES CERTAIN SHARES* / /
- --------------------------------------------------------------------------------
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
12.9%
- --------------------------------------------------------------------------------
(14) TYPE OF REPORTING PERSON*
CO
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
CUSIP No. 922602107 Schedule 13D Page 4 of pages
---
- --------------------------------------------------------------------------------
(1) NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
NME PROPERTIES, INC. 91-0628039
- --------------------------------------------------------------------------------
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP:
(a) / /
(b) /X /
- --------------------------------------------------------------------------------
(3) SEC USE ONLY
- --------------------------------------------------------------------------------
(4) SOURCE OF FUNDS*
00
- --------------------------------------------------------------------------------
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e)
/ /
- --------------------------------------------------------------------------------
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------------
: (7) SOLE VOTING POWER
:
: 2,690,880
:--------------------------------------------
NUMBER OF SHARES BENEFICIALLY : (8) SHARED VOTING
OWNED BY EACH REPORTING :
PERSON WITH : 0
:--------------------------------------------
: (9) SOLE DISPOSITIVE
:
: 2,690,880
:--------------------------------------------
:(10) SHARED DISPOSITIVE
:
: 0
- --------------------------------------------------------------------------------
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,690,880
- --------------------------------------------------------------------------------
(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11
EXCLUDES CERTAIN SHARES* / /
- --------------------------------------------------------------------------------
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
4.2%
- --------------------------------------------------------------------------------
(14) TYPE OF REPORTING PERSON*
CO
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
ITEM 1. SECURITY AND ISSUER
This Statement on Schedule 13D (the "Schedule 13D") relates to shares
of common stock, par value $.25 per share (the "Common Stock") of Vencor, Inc.,
a Delaware corporation (the "Company"). The principal executive offices of the
Company are located at 3300 Providian Center, 400 West Market Street,
Louisville, Kentucky 40202.
The information set forth in the Exhibits hereto is hereby expressly
incorporated herein by reference and the responses to each item of this Schedule
13D are qualified in their entirety by the provisions of such exhibits.
ITEM 2. IDENTITY AND BACKGROUND
This Schedule 13D is being filed by Tenet Healthcare Corporation, a
Nevada corporation ("Tenet"); NME Properties Corp., a Tennessee corporation
("PropCorp"); and NME Properties, Inc., a Delaware corporation ("PropInc")
(collectively, the "Reporting Persons").
The principal business of Tenet is the operation of general hospitals.
The principal business of PropCorp is its investments in the healthcare
industry. Tenet owns all of the outstanding stock of PropCorp. The principal
business of PropInc is its investments in the healthcare industry. PropCorp
owns all of the outstanding stock of PropInc.
The address of the principal business and the principal office of each
of Tenet, PropCorp and PropInc is 2700 Colorado Avenue, Santa Monica, California
90404.
The name, business address, citizenship, present principal occupation
or employment, and the name, principal business and address of any corporation
or other organization in which each such employment is conducted, of each
executive officer and director of Tenet, PropCorp and PropInc are set forth on
Schedules A, B and C, respectively, attached hereto.
Except as set forth in the following two paragraphs, during the past
five (5) years none of the Reporting Persons nor any other person or entity
control-
<PAGE>
ling any of such persons, nor, to the best of any of their knowledge, any of the
other persons listed on Schedules A, B and C attached hereto, has been (i) con-
victed in a criminal proceeding (excluding traffic violations or similar
misdemeanors) or (ii) a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to United States
federal or state securities laws or finding any violation with respect to such
laws.
Various government agencies have conducted investigations concerning
whether Tenet and certain of its subsidiaries engaged in improper practices. As
a result of negotiations between Tenet and the Civil and Criminal Divisions of
the Department of Justice ("DOJ") and the Department of Health and Human
Services ("HHS"), Tenet entered into various agreements on June 29, 1994, which
brought to a close all open healthcare investigations of Tenet, its subsidiaries
and its facilities by the Federal government and its agencies. As a result of
those agreements, on July 12, 1994 the United States District Court for the
District of Columbia accepted a plea by a subsidiary operating Tenet's
psychiatric hospitals for violations relating to the payment of remuneration to
induce referrals and a conspiracy to make such payments. In addition, Tenet
agreed to pay $362.7 million to the Federal government. The court also accepted
a plea agreement relating to a single general hospital and activities that
occurred while an individual convicted of defrauding the hospital was its chief
executive, pursuant to which another subsidiary pleaded guilty to making illegal
payments concerning programs receiving Federal funds. On July 12, 1994, Tenet,
without admitting or denying liability, consented to the entry, by the United
States District Court for the District of Columbia, of a civil injunctive order
in response to a complaint by the Securities and Exchange Commission. The
complaint alleged that Tenet failed to comply with anti-fraud and recordkeeping
requirements of the Federal securities laws concerning the manner in which Tenet
recorded the revenues from the activities that were the subject of the Federal
government settlement relating to the psychiatric operations referred to above.
In the order, Tenet is directed to comply with such requirements
<PAGE>
of the Federal securities laws. In October 1994, Tenet also agreed with 26
states and the District of Columbia to pay an additional $16.3 million to settle
potential claims arising from matters involved in the Federal investigations.
The 26 states and the District of Columbia are all of the areas in which Tenet's
subsidiaries operated psychiatric facilities.
One component of Tenet's settlement with Federal agencies is the
adoption of a corporate compliance program under which Tenet has agreed, among
other things, to: complete the disposition of its psychiatric division
facilities (with the exception of four campus psychiatric facilities) no later
than November 30, 1995; not own or operate other psychiatric facilities (defined
for the purposes of the agreement to include residential treatment centers and
substance abuse facilities) for five years from the date of completion of the
disposition of its psychiatric division facilities; and divest any psychiatric
facilities acquired incidental to a corporate transaction within 180 days of
such acquisition. In addition, Tenet has agreed to implement certain oversight
procedures and to continue its ethics training program and ethics telephone
hotline. Should the oversight procedures or hotline reveal, after investigation
by Tenet, credible evidence of violations of criminal, or potential material
violations of civil, laws, rules or regulations governing federally funded
programs, Tenet is required to report any such violation to the DOJ and HHS.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
On September 28, 1995, The Hillhaven Company, a Nevada corporation
("Hillhaven"), merged with and into the Company (the "Merger"). In the Merger,
each outstanding share of Hillhaven common stock (other than shares held by
Hillhaven as treasury stock or owned by the Company or any subsidiary of the
Company) was converted into the right to receive 0.935 of a share of Common
Stock. Immediately prior to the Merger, the Reporting Persons beneficially
owned in the aggregate 8,878,147 shares of Hillhaven common Stock. As a result
of the Merger, such shares were converted into the right to receive 8,301,067
shares of Common Stock.
<PAGE>
ITEM 4. PURPOSE OF TRANSACTION
Tenet has reached a determination to focus its operations on its
domestic general hospital operations and the development of integrated
healthcare delivery systems. In that regard, Tenet continually analyzes whether
its assets and investments fit within its strategic plans, with a view of
determining ways in which such investments might best increase the value of
shareholders' investment in Tenet.
With respect to its investment in the Company, Tenet began on
October 2, 1995 to explore with the Company possible means by which Tenet may
monetize its investment in the Company, including, among others, by means of
subordinated debt securities of Tenet that would be convertible or exchangeable
into the shares of Common Stock owned by Tenet. Tenet expects that the proceeds
of any transaction that monetizes its shares of Common Stock would be used to
repay existing secured bank debt. In the event Tenet determines to proceed with
an offering of convertible or exchangeable subordinated debt securities, the
offering would be made by means of a prospectus. However, there can be no
assurance that such discussions will result in any transaction.
In connection with their discussions regarding the means by which
Tenet may monetize its investment in the Company, representatives of the Company
have indicated a willingness to cooperate with Tenet in any securities offering
involving shares of Common Stock and have raised with Tenet the possibility of
entering into an agreement with Tenet concerning the manner in which shares of
Common Stock owned by Tenet will be voted during the period and to the extent
that shares of Common Stock remain subject to such convertible or exchangeable
subordinated debt securities. Tenet is considering this request.
Except as otherwise described in this Item 4, none of Tenet, PropCorp
or PropInc has any present specific plans or proposals that relate to or would
result in any of the following: (i) the acquisition by any person of additional
securities of the Company or the disposition of securities of the Company,
(ii) an extraordinary corporate transaction, such as a merger, reorganization or
liquidation involving the Company or any of its subsidiaries, (iii) a sale or
transfer of a material amount of assets of the Company or
<PAGE>
any of its subsidiaries, (iv) any change in the present Board of Directors or
management of the Company, including any plans or proposals to change the number
or term of directors or to fill any existing vacancies on the Board of
Directors, (v) any material change in the present capitalization or dividend
policy of the Company, (vi) any other material change in the Company's business
or corporate structure, (vii) changes in the Company's Amended and Restated
Articles of Incorporation, Bylaws or other instruments corresponding thereto or
other actions that may impede the acquisition of control of the Company by any
person, (viii) causing a class of securities of the Company to be delisted from
a national securities exchange or to cease to be authorized to be quoted in an
inter-dealer quotation system of a registered national securities association,
(ix) a class of equity securities of the Company becoming eligible for
termination of registration pursuant to Section 12(g)(4) of the Securities
Exchange Act of 1934, as amended, or (x) any action similar to those enumerated
above.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
PropInc may be deemed to be the beneficial owner of the 2,690,880
shares of Common Stock owned by it (the "PropInc Shares"), or approximately 4.2%
of the shares of Common Stock outstanding. PropInc has the sole power to vote
and the sole power to dispose of the PropInc Shares.
PropCorp may be deemed to be the beneficial owner of the 5,610,187
shares of Common Stock owned by it (the "PropCorp Shares"), or approximately
8.7% of the shares of Common Stock outstanding. PropCorp has the sole power to
vote and the sole power to dispose of the PropCorp Shares. PropCorp, as the
sole shareholder of PropInc, may be deemed, for purposes of Rule 13d-3 under the
Act, to beneficially own indirectly the PropInc Shares, for an aggregate of
8,301,067 shares of Common Stock, or approximately 12.9% of the shares of Common
Stock outstanding.
Tenet, as the sole stockholder of PropCorp, may be deemed, for
purposes of Rule 13d-3 under the Act, to
<PAGE>
beneficially own indirectly the PropCorp Shares and the PropInc Shares, for an
aggregate of 8,301,067 shares of Common Stock, or approximately 12.9% of the
shares of Common Stock outstanding.
The Reporting Persons, in the aggregate, may be deemed to beneficially
own 8,301,067 shares of Common Stock, or approximately 12.9% of the shares of
Common Stock outstanding. The number of shares of Common Stock reported as
beneficially owned herein is based upon a conversion ratio of 0.935. The
percentage of shares of Common Stock outstanding reported as beneficially owned
herein is based upon 64,287,907 shares of Common Stock outstanding immediately
after the effective time of the Merger, based upon 28,384,046 shares of Common
Stock and 38,399,852 shares of Hillhaven common stock outstanding immediately
prior to the effective time of the Merger and a conversion ratio of 0.935.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER
Tenet, Hillhaven and the Company entered into an agreement dated as of
August 22, 1995, a copy of which is attached hereto as Exhibit 2 (the "August
Agreement"). Pursuant to the August Agreement, Tenet agreed, among other
things, that after any Request Event (as defined in the August Agreement),
subject to the terms and conditions of the August Agreement, for the period
ending seven years following the consummation of the Merger Tenet will not (a)
acquire any Common Stock, or any rights, securities or options to acquire any
shares of Common Stock, or advise, encourage or influence any person to acquire
any shares of Common Stock, (b) participate in the solicitation of proxies to
vote, or communicate with or seek to advise, encourage or influence a person to
vote any shares of Common Stock, (c) participate in a group in connection with
any shares of Common Stock, (d) deposit any shares of Common Stock into a voting
trust or subject any shares of Common Stock to any such arrangement or
agreement, except as provided for in the August Agreement, (e) otherwise seek,
or assist or encourage another person to seek, control or influence the
management, Board of Directors, policies or affairs of the Company, or (f)
request the Company to waive or
<PAGE>
amend any of (a) through (e) above. A Request Event occurred on September 29,
1995.
Tenet also agreed in the August Agreement that so long as it is the
beneficial owner of more than 5% of the issued and outstanding shares of Common
Stock, it will not dispose of any shares of Common Stock except pursuant to (i)
a bona fide public offering registered under the Securities Act of 1933, as
amended, (ii) a private placement exempt from registration under federal
securities laws, and (iii) the issuance by Tenet (or an affiliate of Tenet or an
entity established by or at the request of Tenet) of debt or equity securities
of Tenet (or an affiliate of Tenet or an entity established by or at the request
of Tenet) that would be exchangeable or convertible into shares of Common Stock;
PROVIDED, HOWEVER, that no sales or series of sales of more than 2.5% of the
voting power of the then outstanding Common Stock shall be made to any person or
related group of persons who would immediately thereafter own or have the right
to acquire more than 5% of the voting power of the then outstanding Common
Stock.
The August Agreement also provides that the Company will provide Tenet
with certain registration rights for all shares of Common Stock received in the
Merger (whether offered for sale directly or in connection with the issuance of
debt or equity securities of Tenet (or an affiliate of Tenet or an entity
established by or at the request of Tenet) that would be exchangeable or
convertible into shares of Common Stock) on (except as contemplated by the
preceding paragraph) the same terms and subject to the same conditions as exist
in the Warrant and Registration Rights Agreement, dated as of January 31, 1990,
among Hillhaven, Tenet and Manufacturers Hanover Trust Company of California,
Warrant Agent, a copy of which previously was filed as Exhibit 5 to the
Statement on Schedule 13D relating to the Hillhaven common stock filed by Tenet
on February 9, 1990. A copy of "Article II - Registration Rights" from such
agreement is attached hereto as Exhibit 3.
On January 25, 1995, Tenet entered into a letter agreement with
Horizon Healthcare Corporation ("Horizon"), copy of which is attached hereto as
Exhibit 4 (the "Horizon Letter Agreement"). Pursuant to the Horizon Letter
Agreement, Tenet agreed that if, prior to
<PAGE>
January 25, 1996, there is a merger, consolidation or other transaction between
Hillhaven and any party other than Horizon (an "Other Transaction") in which
Tenet receives consideration for any of its shares of Hillhaven common stock
equal to or greater than $27.50 per share, then Horizon shall be entitled to
receive (and Tenet shall cause Horizon to receive) upon consummation of an Other
Transaction an amount equal to the greater of (i) $5,000,000 or (ii) 50% of the
consideration received by Tenet in excess of $29 per share of Hillhaven common
stock. If the consideration received for Tenet's shares of Hillhaven common
stock in an Other Transaction includes securities or other assets or property
other than cash, such consideration shall be valued at fair market value at the
time of receipt, and Tenet, at its option, may distribute to Horizon the
payments required to be made under the foregoing sentence in cash or in kind.
Because Tenet will receive shares of Common Stock in the Merger, Tenet currently
is evaluating whether to pay Horizon the amount owing to Horizon in cash or
shares of Common Stock.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
Exhibit 1 Joint Filing Agreement
Exhibit 2 Agreement among Tenet, Hillhaven and the Company dated August 22,
1995
Exhibit 3 Article II - Registration Rights, from Warrant and Registration
Rights Agreement dated as of January 31, 1990, among National
Medical Enterprises, Inc., The Hillhaven Corporation and
Manufacturers Hanover Trust Company of California, Warrant Agent
Exhibit 4 Letter Agreement between Tenet and Horizon, dated January 25,
1995
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Date: October 2, 1995
TENET HEALTHCARE CORPORATION
By: /s/ Scott M. Brown
-----------------------------------
Scott M. Brown
Senior Vice President and
Secretary
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Date: October 2, 1995
NME PROPERTIES CORP.
By: /s/ Scott M. Brown
------------------------------------
Scott M. Brown
Vice President
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Date: October 2, 1995
NME PROPERTIES, INC.
By: /s/ Scott M. Brown
-----------------------------------
Scott M. Brown
Vice President
<PAGE>
SCHEDULE A
Executive Officers and Directors
of
Tenet Healthcare Corporation
The names of the Directors and the names and titles of the Executive
Officers of Tenet Healthcare Corporation ("Tenet") and their business addresses
and principal occupations are set forth below. Unless otherwise indicated, each
individual's business address is that of Tenet at 2700 Colorado Avenue, Santa
Monica, California 90404, each occupation set forth opposite an individual's
name refers to Tenet and each individual is a United States citizen.
Present Principal
Name, Business Address Occupation
- ---------------------- --------------------
Jeffrey C. Barbakow* Chairman of the Board and Chief
Executive Officer
Michael H. Focht, Sr.* President and Chief Operating
Officer
Maris Andersons Executive Vice President and
Treasurer
Scott M. Brown Senior Vice President, General
Counsel and Secretary
Raymond L. Mathiasen Senior Vice President and Chief
Financial Officer
Bernice B. Bratter* Executive Director, Senior Health
and Peer Counseling until her
retirement in March 1995
John T. Casey* Private Investor
Maurice J. DeWald* Chairman and Chief Executive
19100 Von Karman Avenue, Officer, Verity Financial
Suite 350 Group, Inc.
Irvine, CA 92715
<PAGE>
Present Principal
Name, Business Address Occupation
- ---------------------- --------------------
Peter de Wetter* Executive Vice President until his
retirement in May 1989
Edward Egbert, M.D.* Physician in private practice until
his retirement in January 1994
Raymond A. Hay* Chairman and Chief Executive
5956 Sherry Lane, Suite 902 Officer, Aberdeen Associates
Dallas, Texas 75225
Lester B. Korn* Chairman and Chief Executive
1800 Century Park East, Officer, Korn Tuttle Capital
Suite 1100 Group
Los Angeles, CA 90067
James P. Livingston* Private Investor; Executive Vice
President until his retirement
in June 1986
Robert W. O'Leary* Chairman and Chief Executive
12739 High Bluff Drive Officer, American Healthcare
Suite 300 Systems
San Diego, California 92130
Thomas J. Pritzker* Private Investor
Richard S. Schweiker* President, American Council of
Life Insurance until his
retirement in December 1994
____________________
* Director
<PAGE>
SCHEDULE B
Executive Officers and Directors
of
NME Properties Corp.
The names of the Directors and the names and titles of the Executive
Officers of NME Properties Corp., a Tennessee corporation, and their business
addresses and principal occupations are set forth below. Unless otherwise
indicated, each individual's business address is that of NME Properties Corp. at
2700 Colorado Avenue, Santa Monica, California 90404, each occupation set forth
opposite an individual's name refers to NME Properties Corp. and each individual
is a United States citizen.
Present Principal
Name, Business Address Occupation
- ---------------------- --------------------
Michael H. Focht, Sr. President; President of Tenet
Healthcare Corporation ("Tenet")
Terence P. McMullen Vice President and Treasurer;
Vice President and Assistant
Treasurer of Tenet
Scott M. Brown* Senior Vice President and
Secretary; Senior Vice
President, General Counsel
and Secretary of Tenet
____________________
* Director
<PAGE>
SCHEDULE C
Executive Officers and Directors
of
NME Properties, Inc.
The names of the Directors and the names and titles of the Executive
Officers of NME Properties, Inc. and their business addresses and principal
occupations are set forth below. Unless otherwise indicated, each individual's
business address is that of NME Properties, Inc. at 2700 Colorado Avenue, Santa
Monica, California 90404, each occupation set forth opposite an individual's
name refers to NME Properties, Inc. and each individual is a United States
citizen.
Present Principal
Name, Business Address Occupation
- ---------------------- --------------------
Michael H. Focht, Sr. President; President of Tenet
Healthcare Corporation ("Tenet")
Terence P. McMullen Vice President and Treasurer;
Vice President and Assistant
Treasurer of Tenet
Scott M. Brown* Senior Vice President and
Secretary; Senior Vice
President, General Counsel
and Secretary of Tenet
____________________
* Director
<PAGE>
EXHIBIT INDEX
Exhibit No. Description Page No.
- ----------- ----------- --------
Exhibit 1 Joint Filing Agreement
Exhibit 2 Agreement among Tenet, Hillhaven and the Company
dated August 22, 1995
Exhibit 3 Article II - Registration Rights, from Warrant and
Registration Rights Agreement dated as of
January 31, 1990, among National Medical
Enterprises, Inc., The Hillhaven Corporation and
Manufacturers Hanover Trust Company of California,
Warrant Agent
Exhibit 4 Letter Agreement between Tenet and Horizon, dated
January 25, 1995
<PAGE>
EXHIBIT 1
JOINT FILING AGREEMENT
In accordance with Rule 13d-1(f) under the Securities Exchange Act of 1934,
as amended, each of the persons named below agrees to the joint filing on behalf
of each of them of a Statement on Schedule 13D (including amendments thereto)
with respect to the common stock, par value $.25 per share, of Vencor, Inc., a
Delaware corporation, and further agrees that this Joint Filing Agreement be
included as an exhibit to such filings provided that, as contemplated by Section
13d-1(f)(l)(ii), no person shall be responsible for the completeness or accuracy
of the information concerning the other persons making the filing, unless such
person knows or has reason to believe that such information is inaccurate. This
Joint Filing Agreement may be executed in any number of counterparts, all of
which taken together shall constitute one and the same instrument.
Date: October 2, 1995
TENET HEALTHCARE
CORPORATION
By: /s/ Scott M. Brown
----------------------
Scott M. Brown
Senior Vice President
and Secretary
NME PROPERTIES CORP. NME PROPERTIES, INC.
By: /s/ Scott M. Brown By: /s/ Scott M. Brown
---------------------------- -----------------------------
Scott M. Brown Scott M. Brown
Vice President Vice President
<PAGE>
EXHIBIT 2
AGREEMENT
AGREEMENT (the "Agreement"), dated as of August 22, 1995, between
Tenet Healthcare Corporation, a Nevada corporation and stockholder
("Stockholder") of The Hillhaven Corporation, a Nevada corporation
("Hillhaven"), Hillhaven and Vencor, Inc., a Delaware corporation (the
"Company").
WHEREAS, the Company and Hillhaven have entered into an Amended and
Restated Agreement and Plan of Merger, dated as of April 23, 1995 and as amended
and restated as of July 31, 1995 (as the same may be further amended from time
to time, the "Merger Agreement"), providing for the merger (the "Merger") of
Hillhaven with and into the Company pursuant to the terms and conditions of the
Merger Agreement, and setting forth certain representations, warranties,
covenants and agreements of the parties thereto in connection with the Merger;
and
WHEREAS, to facilitate the transactions contemplated by the Merger
Agreement, Stockholder, Hillhaven and the Company have agreed to the matters set
forth herein.
NOW, THEREFORE, for good and valuable consideration, the receipt,
sufficiency and adequacy of which is hereby acknowledged, the parties hereto
agree as follows:
1. REPRESENTATIONS OF THE PARTIES. (a) Stockholder represents and
warrants to the Company and Hillhaven that (i) Stockholder owns beneficially (as
such term is defined in the Securities Exchange Act of 1934, as amended (the
"1934 Act")) 8,878,147 shares of Hillhaven's Common Stock, par value $0.75 per
share (the "Hillhaven Common Stock"), 35,000 shares of Series C Preferred Stock,
par value $.15 per share (the "Series C Preferred Stock"), of Hillhaven and
65,430 shares of Series D Preferred Stock, par value $.15 per share (the "Series
D Preferred Stock"), of Hillhaven (collectively, the Series C Preferred Stock
and the Series D Preferred Stock the "Shares") free and clear of all liens,
claims, charges, security interests or other encumbrances and, except for this
Agreement and the Merger Agreement and except as set forth in publicly available
documents prior to the date hereof, there are no options, warrants or other
rights, agreements, arrangements or commitments of any character to which
Stockholder is a party relating to the pledge, disposition or voting of any
shares of capital stock of Hillhaven and there are no voting trusts or voting
agreements with respect to such Shares, (ii) Stockholder does not beneficially
own any shares of Hillhaven Common Stock or Shares other than as set forth
<PAGE>
above and does not have any options, warrants or other rights to acquire any
additional shares of capital stock of Hillhaven or any security exercisable for
or convertible into shares of capital stock of Hillhaven, and (iii) Stockholder
has full power and authority to enter into, execute and deliver this Agreement
and to perform fully its obligations hereunder. This Agreement has been duly
executed and delivered by Stockholder and constitutes the legal, valid and
binding obligation of Stockholder in accordance with its terms.
(b) The Company represents and warrants to Stockholder and Hillhaven
that the Company has full power and authority to enter into, execute and deliver
this Agreement and to perform fully its obligations hereunder. This Agreement
has been duly executed and delivered by the Company and constitutes the legal,
valid and binding obligation of the Company in accordance with its terms.
(c) Hillhaven represents and warrants to the Company and Stockholder
that (i) Hillhaven has full power and authority to enter into, execute and
deliver this Agreement and to perform its obligations hereunder and (ii)
Hillhaven has taken all action, including, without limitation, any action
required by its Board of Directors, so that this Agreement will not cause any
"fair price", "moratorium", "control share acquisition" or other similar
antitakeover statute or regulation enacted under any state or federal laws in
the United States applicable to Hillhaven (including, without limitation, the
Nevada Control Share Acquisition Act) to be applicable to the Merger or the
transaction contemplated by the Merger Agreement. This Agreement has been duly
executed and delivered by Hillhaven and constitutes the legal, valid and binding
obligation of Hillhaven in accordance with its terms.
2. AGREEMENT TO VOTE SHARES. Subject to the terms and conditions of
this Agreement, Stockholder agrees during the term of this Agreement to vote the
Shares, and to cause any holder of record of such Shares to vote, in favor of
adoption and approval of the Merger Agreement and the Merger at every meeting of
the stockholders of Hillhaven at which such matters are considered and at every
adjournment thereof. Notwithstanding the foregoing, Stockholder shall be free
to vote its Hillhaven Common Stock in its sole discretion in connection with the
Merger.
3. NO VOTING TRUSTS. Stockholder agrees that it will not, nor will
it permit any entity under its control to, deposit any of the Shares in a voting
trust or subject any of the Shares to any arrangement with respect to the
<PAGE>
voting of such Shares other than agreements entered into with the Company.
4. NO PROXY SOLICITATIONS. (a) Stockholder agrees that unless
Hillhaven receives a proposal for a merger or consolidation that Stockholder
concludes is superior in its sole discretion to the Merger to Stockholder,
Stockholder will not, nor will it permit any entity under its control to, (i)
solicit proxies or become a "participant" in a "solicitation" (as such terms are
defined in Regulation 14A under the 1934 Act) in opposition to or competition
with the consummation of the Merger or (ii) become a member of a "group" (as
such term is used in Section 13(d) of the 1934 Act) with respect to any voting
securities of Hillhaven for the purpose of opposing or competing with the
consummation of the Merger.
(b) In consideration for the undertaking in 4(a) above, Hillhaven
agrees (i) not to set a record date or meeting date for a meeting (whether
annual or special) of stockholders for the election of directors prior to the
meeting of Hillhaven stockholders to consider the Merger Agreement and the
Merger and (ii) if the Agreement is not approved by Hillhaven shareholders or
the Merger Agreement is terminated, at the option of Hillhaven, to (x) waive the
existing advance notice provisions of Sections 1.10 and 1.11 of Hillhaven's
Amended and Restated By-Laws in connection with the next annual meeting of
Hillhaven stockholders for the election of directors and apply the provisions
relating to advance notice in connection with a special meeting for the election
of directors to such annual meeting or (y) provide Stockholder with sufficient
advance notice (whether orally or in writing) of the date of the next annual
meeting of Hillhaven's stockholders to permit Stockholder to comply with such
By-law Sections.
5. TRANSFER AND ENCUMBRANCE. (a) Stockholder agrees not to
transfer, sell, offer, exchange, pledge or otherwise dispose of or encumber (i)
any of the Shares, or any shares of common stock, par value $.25 per share, of
the Company (or any security into which such stock is converted or exchanged)
(the "Company Common Stock"), from and after the date hereof or (ii) any shares
of Hillhaven Common Stock from and after the date 30 days prior to the meeting
of Hillhaven stockholders to consider the Merger Agreement and, in each case,
until such time following the Merger as results covering at least 30 days of
combined operations of Hillhaven and the Company (the "Combined Operations
Results") have been published by the Company in the form of a quarterly earnings
report, an effective registration statement filed with the Securities and
Exchange Commission (the "Commission"), a report to the Commission on Form 10-K,
<PAGE>
10-Q or 8-K, or any other public filing or announcement which includes such
combined results of operations (the "Expiration Date"). The Company agrees that
if requested to do so by Stockholder within five business days after the
Effective Date of the Merger, the Company will publish the Combined Operations
Results not later than 90 days after the Effective Date of the Merger (such
request shall be a "Request Event" for purposes of this agreement).
Notwithstanding the foregoing, Stockholder may tender its shares of Hillhaven
Common Stock into a tender offer that Stockholder concludes is superior in its
sole discretion to the Merger to Stockholder. Stockholder agrees not to
exercise in connection with the Merger any appraisal or similar rights with
respect to any Hillhaven Common Stock.
(b) Stockholder agrees that after the time of any Request Event and
for so long as it is the beneficial owner of more than 5% of the issued and
outstanding Company Common Stock it shall not transfer, sell, offer, exchange,
or otherwise dispose of any of the Company Common Stock except pursuant to (i) a
bona fide public offering of the Company Common Stock, registered under the
Securities Act of 1933, as amended (the "1933 Act"), with the lead manager of
such public offering being selected by Stockholder and the co-manager of such
public offering being selected by the Company, if such offering shall be an
underwritten offering; (ii) a private placement exempt from registration under
federal securities laws, and (iii) the issuance by Stockholder (or an affiliate
of Stockholder or an entity established by or at the request of Stockholder) of
debt or equity securities of Stockholder (or an affiliate of Stockholder or an
entity established by or at the request of Stockholder) that would be
exchangeable or convertible into shares of Company Common Stock in a transaction
in which the lead manager or lead placement agent is selected by the Stockholder
and the co-manager or co-placement agent shall be selected by the Company;
PROVIDED, HOWEVER, that no sales or series of sales of more than 2.5% of the
voting power of the then outstanding Company Common Stock shall be made to any
person or related group of persons who would immediately thereafter own or have
the right to acquire more than 5% of the voting power of the then outstanding
Company Common Stock. Stockholder agrees that after the time of any Request
Event it will not pledge or encumber any shares of Company Common Stock except
in a bona fide financing transaction with a person or persons who are regularly
engaged in the business of entering into such transaction.
6. ADDITIONAL PURCHASES. Stockholder agrees that it will not
purchase or otherwise acquire (except for shares of Series D Preferred Stock
acquired as a dividend from Hillhaven in accordance with the terms hereof)
<PAGE>
beneficial ownership of any shares of Series C Preferred Stock or Series D
Preferred Stock after the execution of this Agreement ("New Shares").
Stockholder also agrees that any New Shares acquired or purchased by it shall be
subject to the terms of this Agreement to the same extent as if they constituted
Shares.
7. LITIGATION. Stockholder and Hillhaven are parties to Stipulation
re: Stay of Present Action in NATIONAL MEDICAL ENTERPRISES, INC. v. THE
HILLHAVEN CORPORATION (Case No. BC 122083, Los Angeles County Superior Court),
filed March 24, 1995 (the "Stipulation"). Stockholder and Hillhaven agree to
extend the Stipulation during the term of this Agreement, provided that all
parties in all actions pending against Hillhaven and certain of its directors in
other courts in other jurisdictions as well as an action by Hillhaven pending
against Horizon Healthcare Corporation in Nevada Federal District Court agree to
stay all litigation against and by Hillhaven and its directors on the terms set
forth in the Stipulation. Stockholder and Hillhaven further agree that upon
consummation of the Merger each shall voluntarily dismiss with prejudice any and
all pending claims, litigation or court proceedings it may have against the
other or any of its respective subsidiaries, directors or executive officers
with respect to the matters relating to the acquisition proposal of Horizon
Healthcare Corporation or the Merger.
8. CERTAIN ACTIONS. Stockholder agrees that after any Request
Event, subject to the terms and conditions of this Agreement, for the period
ending seven years following the consummation of the Merger neither it nor any
of its Affiliates (as such term is defined in Rule 12b-2 under the 1934 Act) at
such time, regardless of whether such person or entity is an Affiliate on the
date hereof, will, directly or indirectly, alone or in concert with others (a)
acquire, offer to acquire, or agree to acquire, by purchase, gift or otherwise,
any Company Common Stock or direct or indirect rights, securities or options to
acquire (through purchase, exchange, conversion or otherwise) any Company Common
Stock (collectively, including such rights, securities and options, the "Voting
Securities") or seek to advise, encourage or influence any person or entity with
respect to the acquisition of Voting Securities of the Company, (b) make, or in
any way participate in, any "solicitation" of "proxies" (as such terms are
defined in Regulation 14A promulgated by the Commission pursuant to Section 14
of the 1934 Act) to vote, or communicate with or seek to advise, encourage or
influence any person or entity with respect to the voting of, any Voting
Securities, (c) form, join or in any way participate in a "group" within the
meaning of Section 13(d)(3) of the 1934 Act with respect to
<PAGE>
any Voting Securities, (d) deposit any Voting Securities into a voting trust or
subject any such securities to any arrangement or agreement with respect to the
voting thereof, except as provided herein, (e) otherwise act to seek, or to
assist or encourage in any respect any other person or entity to seek, to
control or influence in any manner the management, Board of Directors, policies
or affairs of the Company, or (f) request that the Company waive or amend any
provisions of this Section 8. Notwithstanding the foregoing, if Stockholder
acquires Voting Securities as a result of the acquisition of an entity that
beneficially owns Voting Securities, then Stockholder shall be permitted to
dispose of such Voting Securities as promptly as is practicable.
9. CONSENT. (a) At the effective time of the Merger (the
"Effective Time"), (i) the Company hereby agrees to assume all of the
obligations of Hillhaven under the Guarantee Reimbursement Agreement, dated as
of January 31, 1990, as amended from time to time, between Stockholder and
Hillhaven (the "Guarantee Agreement") and to deliver to Stockholder a
certificate of the Chief Financial Officer of the Company to the effect that no
Default (as such term is defined in the Guarantee Agreement) or Event of Default
(as such term is defined in the Guarantee Agreement) has occurred or is
continuing or shall have occurred after giving effect to the Merger, and (ii)
Stockholder hereby agrees (A) to consent to the assignment of the Guarantee
Agreement to the Company, (B) that such assignment will not constitute an Event
of Default under the Guarantee Agreement, (C) to waive any rights it may have to
terminate the Guarantee Agreement as a consequence of the Merger or such
assignment and (D) to consent to the Company's entering into a credit facility
pursuant to which the Company will incur indebtedness secured by a first lien on
certain assets and properties of the Company, as described in the Registration
Statement on Form S-4 (File No. 33-59345).
(b) At the Effective Time, (i) the Company hereby agrees to assume
all of the obligations of Hillhaven under the Services Agreement, dated as of
January 31, 1990, as amended from time to time, between Stockholder and
Hillhaven (the "Services Agreement") and (ii) Stockholder hereby agrees (A) to
consent to the assignment of the Services Agreement to the Company and (B) to
waive any rights it may have to terminate the Services Agreement as a
consequence of the Merger or such assignment.
10. SPECIFIC PERFORMANCE. Each party hereto acknowledges that it
will be impossible to measure in money the damage to the other party if a party
hereto fails to comply with any of the obligations imposed by this Agree-
<PAGE>
ment, that every such obligation is material and that, in the event of any such
failure, the other party will not have an adequate remedy at law or damages.
Accordingly, each party hereto agrees that injunctive relief or any other
equitable remedy, in addition to remedies at law or damages, is the appropriate
remedy for any such failure and will not oppose the granting of such relief on
the basis that the other party has an adequate remedy at law.
11. OTHER AGREEMENTS. (a) TAX MATTERS. (i) With respect to the Tax
Sharing Agreement between Stockholder and Hillhaven dated as of January 31, 1990
(the "Tax Sharing Agreement"), Stockholder agrees that:
(A) Sections 2.1, 2.2 3.2(b) and 4.1 of the Tax Sharing Agreement
shall have no effect with respect to any Taxes or Tax Returns (as such
terms are defined in the Tax Sharing Agreement) for any taxable period
that ends after the closing date of the Merger Agreement,
(B) anything in the Tax Sharing Agreement to the contrary
notwithstanding, the Tax Sharing Agreement shall not restrict the
Surviving Corporation (as defined in the Merger Agreement) from taking
or omitting to take any action with respect to the Surviving
Corporation's Taxes or Tax Returns for any taxable period that ends
after the closing date of the Merger Agreement,
(C) unless otherwise required by applicable law or pursuant to a
settlement with any Tax authority, Stockholder shall not, on or after
the date hereof, change any election referred to in Section 2.1 of the
Tax Sharing Agreement or make any additional elections thereunder,
(D) to the extent that any refund claim or suit referred to in
Section 3.2(b) of the Tax Sharing Agreement as modified by
Section 11(a)(i)(A) hereof, effects any material Tax Item (as defined
in the Tax Sharing Agreement) of the Surviving Corporation,
Stockholder agrees to consult in good faith with, and keep reasonably
informed, the Surviving Corporation and the Company, in regard to such
refund claims, or suits; PROVIDED, HOWEVER, that any such refund
claims or suits shall be contested, negotiated, and settled under the
control, and at the sole discretion, of Stockholder, and
<PAGE>
(E) anything in Section 4.1(b) of the Tax Sharing Agreement to the
contrary notwithstanding, the Company or Surviving Corporation shall
not be liable for any outside professional fees or similar third party
costs reasonably incurred in the course of any Tax controversy which
is controlled by Stockholder, provided that (w) Surviving Corporation
shall, and the Company shall cause Surviving Corporation to, make its
records available to Stockholder during normal business hours and
permit Stockholder to make copies thereof to the extent reasonably
necessary to contest, negotiate, and settle such Tax controversy,
(x) the Company and Surviving Corporation shall make their employees
available to render any assistance during normal business hours that
may be reasonably requested by Stockholder in preparation for or
during the course of such Tax controversy at no charge to Stockholder,
(y) Stockholder shall have the opportunity to review and approve any
material outside professional fees or similar third party costs, as
described above, that are proposed to be incurred by the Company or
Surviving Corporation, which approval shall not be unreasonably
withheld, and (z) the Company and Surviving Corporation shall not be
entitled to any reimbursement from Stockholder pursuant to this
Section 11(a)(i)(E) for any outside professional fees or similar third
party costs incurred in connection with services that could be
reasonably rendered by employees of the Company or Surviving
Corporation.
(ii) Stockholder agrees to permit the Surviving Corporation and its
representatives reasonable access to the records (other than records that are
subject to an attorney-client privilege) of Stockholder to facilitate an
understanding of matters relating to the spin-off of Hillhaven from Stockholder,
provided that the Surviving Corporation executes a customary form of
confidentiality agreement.
(b) REGISTRATION RIGHTS. The Company agrees after the Effective Time
of the Merger to provide Stockholder with registration rights for all shares of
Company Common Stock received by Stockholder (or its subsidiaries) in the Merger
(whether offered for sale directly or in connection with the issuance of debt or
equity securities of Stockholder (or an affiliate of Stockholder or an entity
established by or at the request of Stockholder) that would be exchangeable or
convertible into shares of Company Common Stock) on (except as contemplated by
Section 5(b) of this
<PAGE>
Agreement) the same terms and subject to the same conditions as exist in the
Warrant and Registration Rights Agreement, dated as of January 30, 1990, between
Hillhaven and Stockholder. In addition to its obligations under the Warrant and
Registration Rights Agreement, the Company agrees upon the request of
Stockholder to cause its executive officers to be available for a reasonable
period of time for meetings with investors and potential investors in any such
offering of Company Common Stock and to otherwise use its reasonable efforts to
assist in the orderly distribution of Company Common Stock received in the
Merger (any such request shall be a "Request Event" for purposes of this
Agreement).
12. REPRESENTATION LETTER. Stockholder agrees to provide the Company
and Hillhaven, at or before the Effective Time of the Merger, with the
representation letter previously agreed upon between the parties stating that
Stockholder has no present plan or intention to dispose of any Company Common
Stock which Stockholder receives in the Merger, if such letter will be required
in order for the Company's or Hillhaven's counsel to provide the tax opinion
required under Section 8 of the Merger Agreement.
13. ENTIRE AGREEMENT. This Agreement supersedes all prior
agreements, written or oral, among the parties hereto with respect to the Merger
Agreement and the Merger and contains the entire agreement among the parties
with respect to the Merger Agreement and the Merger. This Agreement may not be
amended, supplemented or modified, and no provisions hereof may be modified or
waived, except by an instrument in writing signed by all the parties hereto. No
waiver of any provisions hereof by any party shall be deemed a waiver of any
other provisions hereof by any such party, nor shall any such waiver be deemed a
continuing waiver of any provision hereof by such party.
14. NOTICES. All notices, requests, claims, demands or other
communications hereunder shall be in writing and shall be deemed given when
delivered personally, upon receipt of a transmission confirmation if sent by
telecopy or like transmission and on the next business day when sent by Federal
Express, Express Mail or other reputable overnight courier service to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
<PAGE>
If to the Company:
Vencor, Inc.
1300 Providian Center
4000 West Market Street
Louisville, Kentucky 40202
Attention: Jill L. Force
Telecopy: (502) 569-1104
With a copy to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attention: Joseph B. Frumkin
Telecopy: (212) 558-3588
If to Stockholder:
Tenet Healthcare Corporation
2700 Colorado Avenue
Santa Monica, California 90404
Attention: General Counsel
Telecopy: (310) 998-6956
With a copy to:
Skadden, Arps, Slate, Meagher & Flom
300 South Grand Avenue
Los Angeles, California 90071
Attention: Brian J. McCarthy
Telecopy: (213) 687-5600
If to Hillhaven:
1148 Broadway Plaza
Tacoma, Washington 98402
Attention: Richard P. Adcock, Sr. V.P. and
General Counsel
Telecopy: (206) 502-3623
<PAGE>
With a copy to:
Fried, Frank, Harris, Shriver & Jacobson
1 New York Plaza
New York, New York 10004
Attention: Peter Golden
Telecopy: (212) 859-4000
15. MISCELLANEOUS.
(a) This Agreement shall be deemed a contract made under, and
for all purposes shall be construed in accordance with, the laws of the State of
Delaware.
(b) If any provision of this Agreement or the application of
such provision to any person or circum-stances shall be held invalid or
unenforceable by a court of competent jurisdiction, such provision or
application shall be unenforceable only to the extent of such invalidity or
unenforceability and the remainder of the provision held invalid or
unenforceable and the application of such provision to persons or circumstances,
other than the party as to which it is held invalid, and the remainder of this
Agreement, shall not be affected.
(c) This Agreement may be executed in one or more counterparts,
each of which shall be deemed to be an original but all of which together shall
constitute one and the same instrument.
(d) This Agreement shall terminate upon the earlier to occur of
(i) termination of the Merger Agreement in accordance with its terms, (ii) by
Stockholder, if the Merger has not been consummated by December 31, 1995, (iii)
by Stockholder, if the product of the Parent Average Price (as defined in the
Merger Agreement) times the Conversion Number (as defined in the Merger
Agreement) is less than $31 per share, provided, however, that Stockholder may
not terminate if Hillhaven has been advised in writing by the Company that the
Conversion Number shall be determined by dividing $31 by the Parent Average
price (without regard to any maximum imposed on the Conversion Number absent
this clause by Section 1.02(b) of the Merger Agreement), (iv) when Stockholder
no longer owns Voting Securities, and (v) the date specified in a written
agreement duly executed and delivered by the Company, Hillhaven and Stockholder;
provided that Sections 8 and 11(a) of this Agreement shall survive any
termination of this Agreement pursuant to clause (iv) above.
<PAGE>
(e) All Section headings herein are for convenience of reference
only and are not part of this Agreement, and no construction or reference shall
be derived therefrom.
(f) The parties agree that there is not and has not been any
other agreement, arrangement or understanding between the parties hereto with
respect to the matters set forth herein.
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the date first written above.
VENCOR, INC.
By: /s/ W. EARL REED, III
--------------------------
W. Earl Reed, III
Vice President, Finance
and Development
TENET HEALTHCARE CORPORATION
By: /s/ RAYMOND L. MATHIASEN
--------------------------
Raymond L. Mathiasen
Senior Vice President
THE HILLHAVEN CORPORATION
By: /s/ BRUCE L. BUSBY
---------------------------
Bruce L. Busby
Chairman and Chief
Executive Officer
<PAGE>
EXHIBIT 3
ARTICLE II
REGISTRATION RIGHTS
Section 1. DEMAND REGISTRATIONS. (a) At any time from the
Distribution Date through the fifteenth anniversary thereof, upon the written
request of NME that New Hillhaven register all or part of the Covered Common
Stock then held by NME or any affiliate of NME (which request shall satisfy the
requirements of paragraph (c) of this Section 1) under the Act, New Hillhaven
shall, subject in all cases to the provisions of paragraph (b) of this Section
1, thereupon cause the Covered Common Stock specified in such request to be so
registered.
(b) New Hillhaven's obligation to register all or part of the Covered
Common Stock pursuant to paragraph (a) of this Section 1 shall in all cases be
subject to the following limitations and qualifications:
(i) New Hillhaven shall not be obligated to file more than one
registration statement during any six-month period, or to file a
registration statement with respect to less than 100,000 shares of Covered
Common Stock, or to file a registration statement at any time if a special
audit of New Hillhaven would be required by the rules and regulations of
the Securities and Exchange Commission (the "Commission") in connection
therewith (for purposes of the preceding sentence, "special audit" shall
mean an audit other than a fiscal year-end audit, requiring an opinion of
New Hillhaven's independent public accountants); and
(ii) New Hillhaven shall be entitled to postpone for a
reasonable period of time not to exceed 90 days the filing of any
registration statement otherwise required to be prepared and filed by it
if, at the time it receives a request for registration, New Hillhaven
determines, in its reasonable judgment, that such registration would
materially interfere with any financing, acquisition, corporate
reorganization or other material transaction then being contemplated by its
Board of Directors, involving New Hillhaven or any of its affiliates (other
than NME), and promptly gives NME written notice of such determination and
the reasons therefor. In such event, NME shall have the right to withdraw
the request for registration by giving written notice to New Hillhaven
within 30 days after receipt of the notice of postponement (and, in the
event of such withdrawal, such request shall be
<PAGE>
ignored for purposes of determining the number of registrations to which
NME is entitled to have New Hillhaven pay all out-of-pocket expenses
pursuant to Section 4(a)).
(c) Any written request of NME made pursuant to paragraph (a) of this
Section 1 shall:
(i) specify the number of shares of Covered Common Stock which
NME or any affiliate of NME intends to offer and sell;
(ii) state the intention of NME or such affiliate to offer such
shares for sale;
(iii) describe the intended method of distribution of such
shares; and
(iv) contain an undertaking on the part of NME to provide all
such information and materials concerning NME or such affiliate and take
all such action as may be required on NME's part to permit New Hillhaven to
comply with all applicable requirements of the Commission and to obtain
acceleration of the effective date of the registration statement.
Section 2. PARTICIPATION REGISTRATIONS. (a) If, at any time from the
Distribution Date through the fifteenth anniversary thereof, New Hillhaven shall
propose to register under the Act an offering by New Hillhaven or any
stockholder(s) of New Hillhaven (other than NME) of any New Hillhaven
securities, it shall give written notice of such proposed registration to NME as
promptly as possible and shall, subject in all cases to paragraph (b) of this
Section 2, include in such registration (and offering if so requested by NME)
such number of shares of Covered Common Stock then owned by NME or any affiliate
of NME as NME shall request, within 10 days after the receipt of such notice.
(b) New Hillhaven's obligation to include Covered Common Stock owned by
NME or any affiliate of NME in any offering pursuant to paragraph (a) of this
Section 2 shall in all cases be subject to the following limitations and
qualifications:
(i) New Hillhaven shall not be required to give notice to NME
or include such shares in any such registration if the proposed
registration is (A) a registration of a stock option or compensation plan
or of New Hillhaven securities issued or issuable pursuant to any such plan
or (B) a registration of New Hillhaven securities proposed to be issued in
exchange for
<PAGE>
securities or assets of, or in connection with a merger or consolidation
with, another corporation;
(ii) New Hillhaven may, in its sole discretion and without the
consent of NME, withdraw such registration statement and abandon the
proposed offering in which NME had requested to participate; and
(iii) If the proposed registration is to be underwritten
(whether on a "best efforts" or a "firm commitment" basis), the managing
underwriter shall have the right to exclude shares of Covered Common Stock
from such registration if such underwriter advises New Hillhaven in writing
that such exclusion is necessary to avoid interfering with the successful
marketing of the underwritten portion of the offering, PROVIDED THAT (A)
such exclusion applies on a proportional basis not only to the shares of
Covered Common Stock but also to all other shares of New Hillhaven Common
Stock proposed to be included other than those for which New Hillhaven
initiated the registration and which are being sold by New Hillhaven and
(B) in no event shall any shares of Covered Common Stock be excluded if,
following such exclusion, the number of shares of Covered Common Stock
included in the registration would be less than 10% of the total number of
shares of New Hillhaven Common Stock covered by the registration.
(c) There shall be no limit on the number of registrations in which NME or
any affiliates of NME may participate pursuant to Section 2.
Section 3. CERTAIN COVENANTS OF NEW HILLHAVEN. (a) In connection
with any registration of Covered Common Stock undertaken by New Hillhaven
pursuant to Section 1 and, if and to the extent appropriate, Section 2, New
Hillhaven shall:
(i) prepare and file with the Commission a registration
statement with respect to such shares and use its best efforts to cause
such registration statement to become effective;
(ii) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement current for such period not to exceed 90 days as NME shall
request and to comply with the provisions of the Act with respect to the
sale of all New Hillhaven Common Stock covered by such registration
statement during such period;
<PAGE>
(iii) provide NME and its counsel a reasonable opportunity to
review and, in the case of registrations effected pursuant to Section 1,
approve prior to filing (A) any registration statement filed by New
Hillhaven in connection with a registration effected pursuant to Section 1
or in which NME or any affiliate is participating pursuant to Section 2 and
(B) any amendments or supplements to such registration statement and any
prospectus used in connection therewith;
(iv) furnish to NME and its counsel such number of conformed
copies of such registration statement and of each such amendment and
supplement thereto (in each case including all exhibits), such number of
copies of the prospectus included in such registration statement (including
each preliminary prospectus and prospectus supplement), in conformity with
the requirements of the Act, and such other documents as NME or its counsel
may reasonably request in order to facilitate the sale of the Covered
Common Stock covered by such registration statement;
(v) use its best efforts to register or qualify the Covered
Common Stock to which such registration statement relates under such other
securities or blue sky laws of such jurisdictions as NME or its counsel
shall reasonably request, and do any and all other acts and things which
may be reasonably necessary or advisable to enable NME to consummate the
sale in such jurisdictions of such shares; PROVIDED that New Hillhaven
shall not for any such purpose be required to qualify generally to do
business as a foreign corporation in any jurisdiction wherein it would not
but for the requirements of this paragraph (v) be obligated to be so
qualified, to subject itself to taxation in any such jurisdiction or to
consent to general service of process in any such jurisdiction;
(vi) notify NME, at any time when a prospectus relating to the
Covered Common Stock to which such registration statement relates is
required to be delivered under the Securities Act, of New Hillhaven's
becoming aware that the prospectus included in such registration statement,
as then in effect, includes an untrue statement of a material fact or omits
to state any material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the circumstances
then existing, and at the request of NME promptly prepare and furnish to
NME a reasonable number of copies of a prospectus supplemented or amended
so that, as thereafter
<PAGE>
delivered to the purchasers of such shares, such prospectus shall not
include an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing;
(vii) use its best efforts to cause all the Covered Common Stock
to which such registration statement relates to be listed on each
securities exchange on which such stock is then listed or, if there shall
then be no such listing, to be accepted for quotation on NASDAQ;
(viii) provide a transfer agent and registrar for the Covered
Common Stock to which such registration statement relates not later than
the effective date of such registration statement; and
(ix) enter into such agreements (including an underwriting
agreement in customary form) and take such other actions as NME reasonably
requests in order to expedite or facilitate the disposition of such shares;
PROVIDED that (A) in respect of a registration effected pursuant to Section
1, New Hillhaven and NME shall each select one managing underwriter (with
NME determining which of such managing underwriters shall "run the books")
and (B) in respect of a registration in which NME or any affiliate
participates pursuant to Section 2, New Hillhaven shall select the managing
underwriter or underwriters.
(b) For as long as NME or any affiliate of NME shall continue to hold
any Covered Common Stock, New Hillhaven shall use reasonable efforts to file, on
a timely basis, all annual, quarterly and other reports required to be filed by
it under Sections 13 and 15(d) of the Securities Exchange Act of 1934 and the
rules and regulations of the Commission thereunder, as amended from time to
time. In the event of any proposed sale of Covered Common Stock by NME or any
affiliate of NME pursuant to Rule 144 (or any successor rule) promulgated under
the Act, New Hillhaven shall cooperate with NME or such affiliate so as to
enable such sales to be made in accordance with applicable laws, rules and
regulations, the requirements of New Hillhaven's transfer agents, and the
reasonable requirements of the broker through which the sales are proposed to be
executed.
Section 4. EXPENSES. (a) New Hillhaven shall pay all out-of-pocket
expenses incurred by it in connection with any three registrations of Covered
Common Stock pursuant to Section 1 which are designated by NME as a registration
with respect to which New Hillhaven's obli-
<PAGE>
gations in this sentence shall apply. As to any other registrations of Covered
Common Stock pursuant to Section 1, NME or any transferee of Warrants from NME
shall reimburse New Hillhaven for all its out-of-pocket expenses in connection
therewith. For the purposes of this Section 4, out-of-pocket expenses shall
include, without limitation, all registration and filing fees, printing expenses
and expenses, fees and disbursements of New Hillhaven's legal counsel and
accountants, transfer agents' and registrars' fees, and expenses incidental to
any post-effective amendment to any such registration statement. For purposes
of this Section 4, "out-of-pocket expenses" shall not include salaries of New
Hillhaven employees or expenses attributable to New Hillhaven's corporate
overhead.
(b) In connection with any registration pursuant to Section 2, New
Hillhaven shall pay all registration and filing fees, underwriting discounts,
commissions and expenses (other than those attributable to Covered Common Stock
proposed to be sold by NME or any affiliate of NME), printing expenses, fees and
disbursements of New Hillhaven's legal counsel and accountants, transfer agents'
and registrars' fees and expenses incidental to any post-effective amendment to
any such registration statement. NME shall pay all other out-of-pocket expenses
attributable to the inclusion in the registration of the Covered Common Stock
being registered on its behalf, including, without limitation, registration and
filing fees and underwriting discounts, commissions and expenses attributable
thereto and fees and disbursements of NME's legal counsel and accountants.
Section 5. INDEMNIFICATION. (a) In the case of each registration
effected by New Hillhaven pursuant to Section 1 or Section 2, New Hillhaven
agrees to indemnify and hold harmless NME, its affiliates, its officers and
directors, each underwriter of the Covered Common Stock so registered and each
person who controls any such underwriter within the meaning of Section 15 of the
Act, against any and all losses, claims, damages or liabilities to which they or
any of them may become subject under the Act or any other statute or common law,
including any amount paid in settlement of any litigation, commenced or
threatened, if such settlement is effected with the written consent of New
Hillhaven, which consent shall not be unreasonably withheld, and to reimburse
them for any legal or other expenses incurred by them in connection with
investigating any claims and defending any actions, insofar as any such losses,
claims, damages, liabilities or actions arise out of or are based upon (i) any
untrue statement or alleged untrue statement of a material fact contained in the
registration statement relating to the sale of Covered Common Stock, or
<PAGE>
any post-effective amendment thereto, or the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading or (ii) any untrue statement or alleged
untrue statement of a material fact contained in any preliminary prospectus, if
used prior to the effective date of such registration statement, or contained in
the final prospectus (as amended or supplemented if Hillhaven shall have filed
with the Commission any amendment thereof or supplement thereto) if used within
the period during which New Hillhaven is required to keep the registration
statement to which such prospectus relates current pursuant to the terms of
Section 3(a)(ii), or the omission or alleged omission to state therein (if so
used) a material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading; PROVIDED,
HOWEVER, that the indemnification agreement contained in this paragraph (a)
shall not (x) apply to such losses, claims, damages, liabilities or actions
arising out of, or based upon, any such untrue statement or alleged untrue
statement, or any such omission or alleged omission, if such statement or
omission was made in reliance upon and in conformity with information furnished
in writing to New Hillhaven by NME or such underwriter for use in connection
with the preparation of the registration statement, any preliminary prospectus
or final prospectus contained in the registration statement, or any amendment or
supplement thereto, or (y) inure to the benefit of any underwriter or any person
controlling such underwriter, if such underwriter failed to send or give a copy
of the final prospectus to the person asserting the claim at or prior to the
written confirmation of the sale of Covered Common Stock to such person and if
the untrue statement or omission concerned had been corrected in such final
prospectus.
(b) In the case of each registration effected by New Hillhaven
pursuant to Section 1 or Section 2, NME, any affiliate of NME participating in
any such registration and each underwriter of the Covered Common Stock to be
registered (each such party and such underwriters being referred to severally in
this paragraph (b) as the "indemnifying party") shall agree in the same manner
and to the same extent as set forth in paragraph (a) of this Section 5 to
indemnify and hold harmless New Hillhaven, each person who controls Hillhaven,
the directors of New Hillhaven and those of its officers who shall have signed
any such registration statement, with respect to any untrue statement or alleged
untrue statement in, or omission or alleged omission from, such registration
statement or any post-effective amendment thereto or any preliminary prospectus
or final prospectus (as amended or as
<PAGE>
supplemented, if amended or supplemented as aforesaid) contained in such
registration statement, if such statement or omission was made in reliance upon
and in conformity with information furnished to New Hillhaven by such
indemnifying party for use in connection with the preparation of such
registration statement or any preliminary prospectus or final prospectus
contained in such registration statement or any such amendment or supplement
thereto.
(c) Each indemnified party shall, with reasonable promptness after
its receipt of written notice of the commencement of any action against such
indemnified party in respect of which indemnity may be sought from an
indemnifying party on account of an indemnity agreement contained in this
Section 5, notify the indemnifying party in writing of the commencement thereof.
In case any such action shall be brought against any indemnified party and it
shall so notify an indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate therein and, to the extent
it may wish, jointly with any other indemnifying party similarly notified, to
assume the defense thereof with counsel reasonably satisfactory to such
indemnified party; PROVIDED, HOWEVER, if the defendants in any such action
include both the indemnified party and the indemnifying and the indemnified
party shall have reasonably concluded that there are likely to be substantial
legal defenses available to it and/or the other indemnified parties which are
different from or additional to those available to the indemnifying party, the
indemnified party or parties shall have the right to select separate counsel to
assert such legal defenses and to otherwise participate in the defense of such
action on behalf of such indemnified party or parties. Upon receipt of notice
from the indemnifying party to such indemnified party of its election so to
assume the defense thereof and the approval of such counsel, the indemnifying
party shall (except as provided in the preceding sentence) not be liable to such
indemnified party under this Section 5 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation. The indemnity agreements
in this Section 5 shall be in addition to any liabilities which the indemnifying
parties may have pursuant to law.
Section 6. MODIFICATION OF CERTAIN REGISTRATION RIGHTS. If NME shall
transfer to any entity other than in a public offering all or any part of (i)
the Covered Common Stock or (ii) the Warrants, the transferee of such Covered
Common Stock and/or Warrants shall be entitled to the same registration rights
as NME is entitled to under this Agreement unless the number of shares of New
Hillhaven Common Stock held by such transferee, or the number of
<PAGE>
shares of New Hillhaven Common Stock issuable upon the exercise of Warrants held
by such transferee, is less than 100,000 shares; PROVIDED, HOWEVER, that New
Hillhaven shall not be obligated to effect in the aggregate more than three
registrations pursuant to Section 1 without reimbursement for its out-of-pocket
expenses.
<PAGE>
EXHIBIT 4
HORIZON HEALTHCARE CORPORATION
6001 Indian School Road, N.E.
Albuquerque, New Mexico 87190
(505) 881-4961
January 25, 1995
National Medical Enterprises, Inc.
2700 Colorado Avenue
Santa Monica, California 90404
Attention: Mr. Jeff Barbakow
Chairman of the Board of Directors
Re: The Hillhaven Corporation
-------------------------
Gentlemen:
As you are aware, Horizon Healthcare Corporation ("Horizon") has made
a business combination proposal to The Hillhaven Corporation ("Hillhaven"), as
outlined in the letter previously delivered to National Medical Enterprises,
Inc. ("NME") (the "Transaction"). In the Transaction, shareholders of
Hillhaven would receive $28 in value of shares of common stock of a newly
formed holding company ("Newco") for each outstanding share of Hillhaven
common stock (the "Shares") and shareholders of Horizon would receive one
share of Newco common stock for each outstanding share of Horizon common stock.
In addition, as part of the Transaction, each outstanding share of Hillhaven's
Series C and Series D Preferred Stock would be redeemed at $1,000 per share in
cash, plus any accrued and unpaid dividends, whether or not declared, to the
date of redemption. In consideration of the mutual covenants contained herein,
NME and Horizon have agreed as follows:
1. If prior to consummating a Transaction but within 12 months of the
date hereof there is a merger, consolidation or other transaction with any
party other than Horizon (an "Other Transaction") in which NME receives
consideration for any of its Shares equal to or greater than $27.50 per Share,
then Horizon shall be entitled to receive (and NME shall cause Horizon to
receive) upon consummation of an Other Transaction an amount equal to the
greater of (i) $5,000,000 or (ii) 50% of the consideration received by NME in
excess of $29 per Share. If the consideration re-
<PAGE>
ceived for NME's Shares in an Other Transaction includes securities or other
assets or property other than cash, such consideration shall be valued at fair
market value at the time of receipt, and NME, at its option, may distribute to
Horizon the payments required to be made under the foregoing sentence in cash
or in kind. It is intended that each of NME and Horizon will be responsible
for the income tax liability attributable to the portion of the consideration
received by each party, respectively, in an Other Transaction.
2. Horizon agrees to actively pursue the Transaction in good faith.
3. This letter agreement shall terminate upon the termination or
abandonment of Horizon's efforts to consummate the Transaction. Notwithstanding
the foregoing sentence, the provisions of Section 1 hereof shall survive such
termination, provided that Horizon shall have complied with the terms of
Section 2 hereof.
4. Nothing in this letter agreement shall be construed to impose any
requirement or restriction on NME with respect to its right to acquire or
dispose of any Shares from or to any party, or to vote any Shares, and all
decisions with respect thereto shall be made by NME in its sole discretion.
5. This letter agreement shall be governed by and construed in
accordance with the laws of the State of New York.
If NME agrees to the terms set forth in this letter, please execute and return
the enclosed copy of this letter agreement, at which time this letter agreement
shall constitute a binding agreement between the parties hereto.
Very truly yours,
HORIZON HEALTHCARE CORPORATION
/s/ Neal Elliott
Neal Elliott
Chairman of the Board
AGREED AND ACCEPTED:
NATIONAL MEDICAL ENTERPRISES, INC.
By: /s/ Scott M. Brown
------------------------
