UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
NATIONAL HEALTHCARE L.P.
------------------------
(Name of Issuer)
Limited Partnership Units
------------------------------
(Title of Class of Securities)
63633R 10 3
--------------
(CUSIP Number)
LAWRENCE C. TUCKER
Brown Brothers Harriman & Co.
59 Wall Street
New York, New York
(212) 483-1818
--------------------------------------
(Name, Address and Telephone Number of
Person Authorized to Receive Notices
and Communications)
December 9, 1997
---------------------------------------
(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 Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
<PAGE>
2
CUSIP No. 63633R 10 3
1 NAME OF REPORTING PERSON
THE 1818 FUND II, L.P.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) |_|
(b) |X|
3 SEC USE ONLY
4 SOURCE OF FUNDS
OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(D) OR 2(E)
6 CITIZENSHIP OR PLACE OR ORGANIZATION
DELAWARE
7 SOLE VOTING POWER
-0-
NUMBER OF
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 486,358
EACH
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON
WITH -0-
10 SHARED DISPOSITIVE POWER
486,358
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
486,358
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.3%
14 TYPE OF REPORTING PERSON
PN
<PAGE>
3
CUSIP No. 63633R 10 3
1 NAME OF REPORTING PERSON
BROWN BROTHERS HARRIMAN & CO.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) |_|
(b) |X|
3 SEC USE ONLY
4 SOURCE OF FUNDS
OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(D) OR 2(E)
6 CITIZENSHIP OR PLACE OR ORGANIZATION
NEW YORK
7 SOLE VOTING POWER
-0-
NUMBER OF
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 486,358
EACH
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON
WITH -0-
10 SHARED DISPOSITIVE POWER
486,358
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
486,358
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.3%
14 TYPE OF REPORTING PERSON
PN
<PAGE>
4
CUSIP No. 63633R 10 3
1 NAME OF REPORTING PERSON
T. MICHAEL LONG
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) |_|
(b) |X|
3 SEC USE ONLY
4 SOURCE OF FUNDS
OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(D) OR 2(E)
6 CITIZENSHIP OR PLACE OR ORGANIZATION
UNITED STATES
7 SOLE VOTING POWER
NUMBER OF -0-
SHARES
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
EACH 486,358
REPORTING
PERSON 9 SOLE DISPOSITIVE POWER
WITH
-0-
10 SHARED DISPOSITIVE POWER
486,358
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
486,358
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.3%
14 TYPE OF REPORTING PERSON
IN
<PAGE>
5
CUSIP No. 63633R 10 3
1 NAME OF REPORTING PERSON
LAWRENCE C. TUCKER
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) |_|
(b) |X|
3 SEC USE ONLY
4 SOURCE OF FUNDS
OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(D) OR 2(E)
6 CITIZENSHIP OR PLACE OR ORGANIZATION
UNITED STATES
7 SOLE VOTING POWER
NUMBER OF -0-
SHARES
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
EACH 486,358
REPORTING
PERSON 9 SOLE DISPOSITIVE POWER
WITH
-0-
10 SHARED DISPOSITIVE POWER
486,358
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
486,358
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.3%
14 TYPE OF REPORTING PERSON
IN
<PAGE>
6
Item 1. Security and Issuer.
--------------------
This Statement on Schedule 13D relates to the limited partnership
units (the "Units") of National HealthCare L.P., a Delaware limited partnership
(the "Company"), whose principal executive office is located at 100 Vine Street,
Murfreesboro, Tennessee 37130.
Item 2. Identity and Background.
------------------------
(a), (b), (c) and (f). This Statement on Schedule 13D is being filed
by The 1818 Fund II, L.P., a Delaware limited partnership (the "Fund"), Brown
Brothers Harriman & Co., a New York limited partnership and general partner of
the Fund ("BBH&Co."), T. Michael Long ("Long") and Lawrence C. Tucker ("Tucker")
(the Fund, BBH&Co., Long and Tucker are referred to collectively herein as the
"Reporting Persons").
The Fund was formed to provide a vehicle for institutional and
substantial corporate investors to acquire significant equity interests in
medium-sized publicly owned United States corporations. BBH&Co. is a private
bank. Pursuant to a resolution adopted by the partners of BBH&Co., BBH&Co. has
designated and appointed Long and Tucker, or either of them, the sole and
exclusive partners of BBH&Co. having voting power (including the power to vote
or to direct the voting) and investment power (including the power to dispose or
to direct the disposition) with respect to the Note (as defined below) and the
Units.
<PAGE>
7
The address of the principal business and principal offices of the
Fund and BBH&Co. is 59 Wall Street, New York, New York 10005.
The business address of each of Long and Tucker is 59 Wall Street,
New York, New York 10005. The present principal occupation or employment of each
of Long and Tucker is as a general partner of BBH&Co. Long and Tucker are
citizens of the United States.
The name, business address, present principal occupation or
employment (and the name, principal business and address of any corporation or
other organization in which such employment is conducted) and the citizenship of
each general partner of BBH&Co. is set forth on Schedule I hereto and is
incorporated herein by reference.
(d) and (e). During the last five years, neither any Reporting
Person nor, to the best knowledge of each Reporting Person, any person
identified on Schedule I has been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors) or was a party to a civil proceeding
of a judicial or administrative body of competent jurisdiction and as a result
of which any such person was or is subject to a judgement, decree or final order
enjoining future violations of, or prohibiting or mandating activities subject
to, federal or state securities laws or finding any violation with respect to
such laws.
<PAGE>
8
Item 3. Source and Amount of Funds or Other Consideration.
--------------------------------------------------
Pursuant to a Note Purchase Agreement (a copy of which is attached
hereto as Exhibit 1), dated as of October 15, 1997 (the "Note Purchase
Agreement"), by and between the Company and the Fund, the Company issued, and
the Fund acquired from the Company, $20,000,000 in principal amount of 5.75%
Subordinated Convertible Notes due June 30, 2004 (the "Note") (a copy of the
Note is attached hereto as Exhibit 2) for an aggregate purchase price (the "Note
Purchase Price") of $20,000,000, upon the terms and subject to the conditions
set forth in the Note Purchase Agreement.
On December 9, 1997 the Fund purchased 109,000 Units in open market
transactions for an aggregate purchase price (the "Units Purchase Price," and
together with the Note Purchase Price, the "Purchase Price") of $6,147,600.
The funds used by the Fund to pay the Purchase Price were obtained
by the Fund from capital contributions made by its partners pursuant to
pre-existing capital commitments.
<PAGE>
9
Item 4. Purpose of Transaction.
-----------------------
The Fund has acquired the Note and Units for investment purposes.
The Note Purchase Agreement and the Registration Rights Agreement (a copy of
which is attached as Exhibit 3), dated as of October 15, 1997 (the "Registration
Rights Agreement"), between the Company and the Fund, which are attached hereto
and incorporated herein by reference, contain, among other things, certain
provisions which relate to (i) the acquisition of additional securities of the
Company and (ii) the disposition of securities of the Company and other actions
which may impede the acquisition of control of the Company by any person.
The Fund has agreed in the Note Purchase Agreement that it will not
purchase additional Units without the consent of the Company at any time that
the Fund owns in excess of 23.2606249% of the total number of Units (on a
fully-diluted basis) outstanding at the time of such proposed purchase. Subject
to the above limitations, the Reporting Persons may from time to time acquire
additional Units in the open market or in privately negotiated transactions,
subject to availability of Units at prices deemed favorable, the Company's
business or financial condition and to other factors and conditions the
Reporting Persons deem appropriate. Alternatively, the Reporting Persons may
sell all or a portion of the Units in open market or in privately negotiated
transactions or the Note in privately negotiated transactions, in each case
subject to the factors and conditions referred to above and to the terms of the
Note Purchase Agreement.
Except as described in the Note Purchase Agreement and the
Registration Rights Agreement, and as set forth above in the immediately
preceding
<PAGE>
10
paragraph, no Reporting Person has any present plans or proposals which relate
to or would result in: (a) the acquisition by any person of additional
securities of the issuer, or the disposition of securities of the issuer; (b) an
extraordinary corporate transaction, such as a merger, reorganization or
liquidation, involving the Company or any of its subsidiaries; (c) a sale or
transfer or a material amount of assets of the Company or of any of its
subsidiaries; (d) 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; (e) any material
change in the present capitalization or dividend policy of the Company; (f) any
other material change in the Company's business or corporate structure; (g)
changes in the Company's charter, bylaws or instruments corresponding thereto or
other actions which may impede the acquisition of control of the Company by any
person; (h) 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;
(i) 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; or (j) any action similar to any of those enumerated
above.
<PAGE>
11
Item 5. Interest in Securities of the Issuer.
-------------------------------------
(a) through (c). As set forth above, on October 15, 1997, the
Company issued to the Fund, and the Fund acquired, the Note. The Note may be
converted at any time and from time to time on or after January 5, 1998 into
377,358 Units, subject to adjustment under certain circumstances. Accordingly,
the Fund may be deemed to beneficially own 486,358 Units (assuming the
conversion of the Note), which, based on calculations made in accordance with
Rule 13d-3(d) and there being 8,866,822 Units outstanding on October 31, 1997 as
disclosed by the Company in its Quarterly Report on Form 10-Q filed with the
Securities and Exchange Commission on November 14, 1997 (the "Form 10-Q"),
represents approximately 5.3% of the outstanding Units. The Note will be
automatically converted into shares of common stock of National HealthCare
Corporation, a Delaware corporation and a wholly-owned, newly-formed subsidiary
of the Company ("National HealthCare Corporation"), on the first business day
following the restructuring of the Company into several entities (the "Special
Reorganization"), including the ultimate merger of the Company into National
HealthCare Corporation. National HealthCare Corporation will assume the
obligations of the Company under the Note Purchase Agreement, the Note and the
Registration Rights Agreement.
By virtue of BBH&Co.'s relationship with the Fund, BBH&Co. may be
deemed to own beneficially 486,358 Units (assuming the conversion of the Note),
representing approximately 5.3% of the outstanding Units (based on the number of
Units outstanding on October 31, 1997 as disclosed in the Form 10-Q). By virtue
of the resolution adopted by BBH&Co. designating Long and Tucker, or either of
them,
<PAGE>
12
as the sole and exclusive partners of BBH&Co. having voting power (including the
power to vote or to direct the voting) and investment power (including the power
to dispose or to direct the disposition) with respect to the Note and the Units,
each of Long and Tucker may be deemed to own beneficially 486,358 Units
(assuming the conversion of the Note), representing approximately 5.3% of the
outstanding Units (based on the number of Units outstanding on October 31, 1997
as disclosed in the Form 10-Q).
Except as set forth above, no Reporting Person nor, to the best
knowledge of each Reporting Person, any person identified on Schedule I,
beneficially owns any Units or has effected any transaction in Units during the
proceeding 60 days.
Paragraphs (d) and (e) of Item 5 of Schedule 13D are not applicable
to this filing.
Item 6. Contracts, Arrangements, Understandings or
Relationships with Respect to the Common
Stock of the Issuer.
------------------------------------------
The Company has entered into the Registration Rights Agreement with
the Fund, on the terms and conditions set forth therein, giving the Fund, among
other things, the right, on the terms and conditions set forth therein, to
require the Company to register for sale to the public the Units issuable upon
the conversion of the Note.
Except as described elsewhere in this Statement and as set forth in
the Note Purchase Agreement, the Note and the Registration Rights Agreement,
copies of
<PAGE>
13
which are attached hereto as Exhibits 1, 2 and 3, respectively, and incorporated
herein by reference, to the best knowledge of the Reporting Persons, there exist
no contracts, arrangements, understandings or relationships (legal or otherwise)
among the persons named in Item 2 and between such persons and any person with
respect to any securities of the Company, including but not limited to transfer
or voting of any securities of the Company, finder's fees, joint ventures, loan
or option arrangements, puts or calls, guarantees of profits, division of
profits or loss, or the giving or withholding of proxies.
Item 7. Material To Be Filed as Exhibits.
---------------------------------
1. Note Purchase Agreement, dated as of October 15, 1997, by and
between the Company and the Fund.
2. 5.75% Subordinated Convertible Note, dated October 15, 1997.
3. Registration Rights Agreement, dated as of October 15, 1997
between the Company and the Fund.
<PAGE>
14
SIGNATURE
---------
After reasonable inquiry and to the best of its knowledge and
belief, each of the undersigned certifies that the information set forth in this
statement is true, complete and correct.
Dated: December 18, 1997
THE 1818 FUND, L.P.
By: Brown Brothers Harriman & Co.,
General Partner
By: /s/ Lawrence C. Tucker
----------------------
Name: Lawrence C. Tucker
Title: Partner
BROWN BROTHERS HARRIMAN & CO.
By: /s/ Lawrence C. Tucker
----------------------
Name: Lawrence C. Tucker
Title: Partner
/s/ T. Michael Long
--------------------------
T. Michael Long
/s/ Lawrence C. Tucker
--------------------------
Lawrence C. Tucker
<PAGE>
15
SCHEDULE I
----------
Set forth below are the names and positions of all of the general
partners of BBH & Co. The principal occupation or employment of each person
listed below is private banker, and, unless otherwise indicated, the business
address of each person is 59 Wall Street, New York, New York 10005. Unless
otherwise indicated, each person listed below is a citizen of the United States.
Business Address
(if other than as
Name indicated above)
- ---- ----------------
Peter B. Bartlett
Brian A. Berris
Walter H. Brown
Douglas A. Donahue, Jr. 40 Water Street
Boston, Massachusetts 02109
Anthony T. Enders
Alexander T. Ercklentz
Terrence M. Farley
Elbridge T. Gerry, Jr.
Robert R. Gould
Kyosuko Kashimoto 8-14 Nihonbashi 30-Chome Chuo-ku
(citizen of Japan) Tokyo 103, Japan
Radford W. Klotz
Noah T. Herndon 40 Water Street
Boston, Massachusetts 02109
Landon Hilliard
<PAGE>
16
Business Address
(if other than as
Name indicated above)
- ---- ----------------
Michael Kraynak, Jr.
T. Michael Long
Hampton S. Lynch
Michael W. McConnell
William H. Moore III
Donald B. Murphy
John A. Nielsen
Eugene C. Rainis
A. Heaton Robertson 40 Water Street
Boston, Massachusetts 02109
Jeffrey A. Schoenfeld 40 Water Street
Boston, Massachusetts 02109
Stokley P. Towles 40 Water Street
Boston, Massachusetts 02109
Lawrence C. Tucker
Maarten van Hengel
Douglas C. Walker 1531 Walnut Street
Philadelphia, Pennsylvania 19102
Laurence F. Whittemore
Richard H. Witmer, Jr.
<PAGE>
17
INDEX TO EXHIBITS
-----------------
Page
Exhibit Description Number
------- ----------- ------
1 Note Purchase Agreement, dated as of
October 15, 1997, by and between the
Company and the Fund.
2 5.75% Subordinated Convertible Note,
dated October 15, 1997.
3 Registration Rights Agreement dated
May 12, 1992, between the Company
and the Fund.
================================================================================
NOTE PURCHASE AGREEMENT
By and Between
NATIONAL HEALTHCARE L.P.
And
THE 1818 FUND II, L.P.
------------------------------
Dated as of October 15, 1997
------------------------------
================================================================================
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE 1
DEFINITIONS..............................................................1
1.1 Definitions.....................................................1
1.2 Accounting Terms; Financial Statements..........................7
ARTICLE 2
PURCHASE AND SALE OF NOTES AND ADDITIONAL NOTES..........................7
2.1 Purchase and Sale of Notes......................................7
2.2 Fees............................................................7
2.3 Closing.........................................................7
2.4 Purchase and Sale of Additional Notes...........................8
2.5 Conditions to Closing of Sale of Additional Notes...............8
2.6 Second Closing..................................................9
ARTICLE 3
CONDITIONS TO THE OBLIGATION
OF THE PURCHASER TO CLOSE..............................................9
3.1 Representations and Warranties True.............................9
3.2 Compliance with this Agreement..................................9
3.3 Officer's Certificate...........................................9
3.4 Secretary's Certificate.........................................9
3.5 Documents......................................................10
3.6 Purchase Permitted by Applicable Laws; Legal Investment........10
3.7 Opinion of Counsel.............................................10
3.8 Approval of Counsel to the Purchaser...........................10
3.9 Consents and Approvals.........................................10
3.10 No Material Adverse Change.....................................10
3.11 Due Diligence..................................................10
3.12 Conduct of Business............................................10
3.13 Registration Rights Agreement..................................11
3.14 Partnership Agreement..........................................11
ARTICLE 4
CONDITIONS TO THE OBLIGATION
OF THE COMPANY TO CLOSE..............................................11
4.1 Representations and Warranties True............................11
4.2 Compliance with this Agreement.................................11
4.3 Issuance Permitted by Applicable Laws..........................11
4.4 Approval of Counsel to the Company.............................11
4.5 Consents and Approvals.........................................11
i
<PAGE>
PAGE
ARTICLE 5
REPRESENTATIONS AND
WARRANTIES OF THE COMPANY...............................................12
5.1 Partnership and Corporate Existence and Power..................12
5.2 Partnership and Corporate Authorization; No Contravention......12
5.3 Governmental Authorization; Third Party Consents...............13
5.4 Binding Effect.................................................13
5.5 No Legal Bar...................................................13
5.6 Litigation.....................................................13
5.7 No Default or Breach...........................................14
5.8 Use of Proceeds; Margin Regulations............................14
5.9 Title to Properties............................................14
5.10 Taxes..........................................................14
5.11 Financial Condition............................................15
5.12 No Material Adverse Change.....................................15
5.13 Commission Documents...........................................15
5.14 Environmental Matters..........................................15
5.15 Investment Company.............................................16
5.16 Subsidiaries...................................................16
5.17 Capitalization.................................................16
5.18 Regulatory Matters.............................................16
5.19 Solvency.......................................................17
5.20 Private Offering...............................................17
5.21 Broker's, Finder's or Similar Fees.............................17
5.22 Full Disclosure................................................17
5.23 Reorganization S-4.............................................17
5.24 Special Reorganization.........................................17
ARTICLE 6
REPRESENTATIONS, WARRANTIES,
COVENANTS AND AGREEMENTS OF THE PURCHASER...............................18
6.1 Existence and Power............................................18
6.2 Authorization; No Contravention................................18
6.3 Binding Effect.................................................18
6.4 No Legal Bar...................................................18
6.5 Purchase for Own Account.......................................19
6.6 ERISA..........................................................19
6.7 Broker's, Finder's or Similar Fees.............................19
6.8 Purchase of Additional Units...................................19
ARTICLE 7
INDEMNIFICATION.........................................................20
ii
<PAGE>
PAGE
7.1 Indemnification by the Company.................................20
7.2 Notification...................................................20
7.3 Registration Rights Agreement..................................21
ARTICLE 8
AFFIRMATIVE COVENANTS...................................................21
8.1 Financial Statements; Other Information........................22
8.2 Certificates...................................................23
8.3 Preservation of Existence......................................23
8.4 Payment of Obligations.........................................23
8.5 Compliance with Laws...........................................24
8.6 Notices........................................................24
8.7 Issue Taxes....................................................24
8.8 Payment and Conversion of NHC Notes............................24
8.9 Inspection.....................................................25
8.10 Registration and Listing.......................................25
8.11 Change of Control Offer........................................25
8.12 HSR Act Filing.................................................28
8.13 Redemption of NHC Notes........................................28
8.14 Information Relating to Special Reorganization.................28
8.15 Assignment of Company's Obligations............................29
8.16 Board Representation...........................................29
8.17 Special Reorganization.........................................31
ARTICLE 9
NEGATIVE COVENANTS......................................................31
9.1 Consolidations and Mergers.....................................31
9.2 Transactions with Affiliates...................................32
9.3 Use of Proceeds................................................32
9.4 No Inconsistent Agreements.....................................32
ARTICLE 10
DISPOSITIONS............................................................33
10.1 Dispositions by Adams..........................................33
10.2 Dispositions by the Purchaser..................................33
10.3 Legends........................................................35
ARTICLE 11
MISCELLANEOUS...........................................................35
11.1 Survival of Provisions.........................................35
11.2 Notices........................................................35
11.3 Successors and Assigns.........................................36
iii
<PAGE>
PAGE
11.4 Amendment and Waiver...........................................36
11.5 Counterparts...................................................37
11.6 Headings.......................................................37
11.7 Determinations.................................................37
11.8 Governing Law..................................................37
11.9 Jurisdiction...................................................37
11.10 Severability...................................................38
11.11 Rules of Construction..........................................38
11.12 Remedies.......................................................38
11.13 Entire Agreement...............................................38
11.14 Attorneys' Fees................................................38
11.15 Publicity......................................................38
11.16 Confidentiality................................................39
iv
<PAGE>
EXHIBITS
Exhibit A Form of 5.75% Subordinated Convertible Note
Exhibit B Form of Registration Rights Agreement
Exhibit C Form of Opinion of Counsel of Harwell, Howard, Hyne, Gabbert &
Manner, P.C., Counsel to Company
Exhibit D Form of Opinion of Richard F. LaRoche, Jr., Counsel to Company
SCHEDULES
Schedule 5.16 Subsidiaries
Schedule 5.17 Capitalization
v
<PAGE>
1
NOTE PURCHASE AGREEMENT, dated as of October 15, 1997, by and
between National HealthCare L.P., a Delaware limited partnership (the
"COMPANY"), and The 1818 Fund II, L.P., a Delaware limited partnership (the
"PURCHASER").
The Company proposes that the Company issue to the Purchaser, and
the Purchaser purchase, 5.75% Subordinated Convertible Notes due June 30, 2004
in the aggregate principal amount of $20,000,000 (the "NOTES"), upon the terms
and subject to the conditions set forth in this Agreement and in substantially
the form of Exhibit A hereto.
In addition, if so requested by the Company prior to November 15,
1997, the Company will issue, to the Purchaser, and the Purchaser will purchase,
5.75% Subordinated Convertible Notes due June 30, 2004 in the aggregate
principal amount of up to $10,000,000 (the "Additional Notes"), which will have
the same terms and conditions as the Notes, upon the terms and subject to the
conditions set forth in this Agreement.
In consideration of the mutual covenants and agreements set forth
herein and for good and valuable consideration, the receipt and adequacy of
which is hereby acknowledged, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
1.1 DEFINITIONS. As used in this Agreement, and unless the context
requires a different meaning, the following terms have the meanings indicated:
"ADAMS" means Mr. W. Andrew Adams.
"ADDITIONAL NOTES" has the meaning assigned to that term in the
third introductory paragraph of this Agreement.
"ADDITIONAL NOTES REQUEST" has the meaning assigned to that term in
Section 2.4.
"ADMINISTRATIVE GENERAL PARTNER" means National Health Corporation,
a Tennessee corporation.
"AFFILIATE" shall have the meaning ascribed to such term in Rule
12b-2 of the General Rules and Regulations under the Exchange Act.
"AGREEMENT" means this Agreement as the same may be amended,
supplemented or modified in accordance with the terms hereof.
"ASE" means the American Stock Exchange.
<PAGE>
2
"BANKRUPTCY LAW" means Title 11, U.S. Code or any other federal,
state or foreign law for the relief of debtors, as any such laws may be amended
from time to time.
"BUSINESS DAY" means any day other than a Saturday, Sunday or other
day on which commercial banks in the City of New York are authorized or required
by law or executive order to close.
"CHANGE OF CONTROL" has the meaning assigned to that term in
Section 8.11(a).
"CHANGE OF CONTROL OFFER" has the meaning assigned to that term in
Section 8.11(a).
"CLOSING" has the meaning assigned to that term in Section 2.3.
"CLOSING DATE" means the date specified in Section 2.3.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMISSION" means the Securities and Exchange Commission or any
similar agency then having jurisdiction to enforce the Securities Act.
"COMMISSION DOCUMENTS" has the meaning assigned to that term in
Section 5.13.
"COMPANY" means National HealthCare L.P., a Delaware limited
partnership, and any permitted successors and assigns; PROVIDED that upon the
occurrence of the Special Reorganization the term "Company" shall refer to NHC
and any permitted successors and assigns.
"CONDITION OF THE COMPANY" means the assets, business, properties,
operations or financial condition of the Company and its Subsidiaries, taken as
a whole.
"CONSOLIDATED NET WORTH" means, as of the date of determination with
respect to any Person, the consolidated stockholders' or partners' equity of
such Person and its Subsidiaries, determined in accordance with GAAP.
"CONTINGENT OBLIGATION" means, as applied to any Person, any direct
or indirect liability of that Person with respect to any Indebtedness, lease,
dividend, guaranty, letter of credit or other obligation (the "PRIMARY
OBLIGATION") of another Person (the "PRIMARY OBLIGOR"), including, without
limitation, any obligation of such Person, whether or not contingent, (a) to
purchase, repurchase or otherwise acquire such primary obligations or any
property constituting direct or indirect security therefor, or (b) to advance or
provide funds (i) for the payment or discharge of any such primary obligation,
or (ii) to maintain working capital or equity capital of the
<PAGE>
3
primary obligor or otherwise to maintain the net worth or solvency or any
balance sheet item, level of income or financial condition of the primary
obligor or (c) to purchase property, securities or services primarily for the
purpose of assuring the owner of any such primary obligation of the ability of
the primary obligor to make payment of such primary obligation or (d) otherwise
to assure or hold harmless the owner of any such primary obligation against loss
in respect thereof. The amount of any Contingent Obligation shall be deemed to
be an amount equal to the stated or determinable amount of the primary
obligation in respect of which such Contingent Obligation is made or, if not
stated or determinable, the maximum reasonably anticipated liability in respect
thereof as determined by the Company in good faith.
"CONTINUING DIRECTOR" has the meaning assigned to that term in
Section 8.11(a).
"CONTRACTUAL OBLIGATIONS" means as to any Person, any provision of
any security issued by such Person or of any agreement, undertaking, contract,
indenture, mortgage, deed of trust or other instrument to which such Person is a
party or by which it or any of its property is bound.
"CONVERSION UNITS" means the Units issued upon a conversion of the
NHC Notes.
"CURRENT MANAGEMENT" means Adams, the Administrative General
Partner, NHC, Inc. and each of the current shareholders of NHC, Inc.
"DOCUMENTS" has the meaning assigned to that term in Section 5.22.
"ENVIRONMENTAL LAWS" means any federal, state, territorial,
provincial or local law, common law doctrine, rule, order, decree, judgment,
injunction, license, permit or regulation relating to environmental matters,
including those pertaining to land use, air, soil, surface water, ground water
(including the protection, cleanup, removal, remediation or damage thereof),
public or employee health or safety or any other environmental matter, together
with any other laws (federal, state, territorial, provincial or local) relating
to emissions, discharges, releases or threatened releases of any contaminant
including, without limitation, medical, biological, biohazardous or radioactive
waste and materials, into ambient air, land, surface water, groundwater,
personal property or structures, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transportation,
discharge or handling of any contaminant, including, without limitation, the
Comprehensive Environmental Response, Compensation, and Liability Act (42 U.S.C.
ss. 9601 ET SEQ.), the Hazardous Material Transportation Act (49 U.S.C. ss. 1801
ET SEQ.), the Resource Conservation and Recovery Act (42 U.S.C. ss. 6901 ET
SEQ.), the Federal Water Pollution Control Act (33 U.S.C.ss. 1251 ET SEQ.), the
Clean Air Act (42 U.S.C. ss. 1251 ET SEQ.), the Toxic Substances Control Act (15
U.S.C. ss. 2601 ET SEQ.), and the Occupational Safety and Health Act (29 U.S.C.
ss. 651 ET SEQ.), as such laws have been amended or supplemented and any
analogous future federal, or present or future state or local laws, statutes and
regulations promulgated thereunder.
<PAGE>
4
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder.
"GAAP" means generally accepted accounting principles in the United
States in effect from time to time.
"GOVERNMENTAL AUTHORITY" means the government of any nation, state
or other political subdivision thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, and any corporation or other entity owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing.
"HAZARDOUS MATERIALS" means those substances which are regulated by
or form the basis of liability under any Environmental Laws.
"HOLDER" means the Purchaser and any subsequent direct or indirect
transferee of NHC Notes or Conversion Units pursuant to Section 11.3.
"HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the rules and regulations of the Federal Trade Commission
thereunder.
"INDEBTEDNESS" means as to any Person (a) all obligations of such
Person for borrowed money (including, without limitation, reimbursement and all
other obligations with respect to surety bonds, letters of credit and bankers'
acceptances, whether or not matured), (b) all obligations evidenced by notes,
bonds, debentures or similar instruments, (c) all obligations to pay the
deferred purchase price of property or services, except trade accounts payable
and accrued liabilities arising in the ordinary course of business, (d) all
interest rate and currency swaps and similar agreements under which payments are
obligated to be made, whether periodically or upon the happening of a
contingency, (e) all indebtedness created or arising under any conditional sale
or other title retention agreement with respect to property acquired by such
Person (even though the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession or sale of such
property), (f) all obligations under leases which have been or should be, in
accordance with GAAP, recorded as capital leases, (g) all indebtedness secured
by any Lien (other than Liens in favor of lessors under leases other than leases
included in clause (f)) on any property or asset owned or held by that Person
regardless of whether the indebtedness secured thereby shall have been assumed
by that Person or is non-recourse to the credit of that Person, and (h) any
Contingent Obligation for any of the foregoing.
"INFORMATION" has the meaning assigned to that term in
Section 11.16.
"LIEN" means any mortgage, deed of trust, pledge, hypothecation,
assignment, encumbrance, lien (statutory or other) or preference, priority or
other security interest or preferential arrangement of any kind or nature
whatsoever
<PAGE>
5
(including, without limitation, those created by, arising under or evidenced by
any conditional sale or other title retention agreement, the interest of a
lessor under a capitalized lease obligation, or any financing lease having
substantially the same economic effect as any of the foregoing).
"MANAGING GENERAL PARTNER" has the meaning assigned to that term in
the Amended and Restated Agreement of Limited Partnership of the Company, and,
as of the date hereof, is NHC, Inc.; PROVIDED that after National HealthCare
L.P. becomes NHC and NHR in the Special Reorganization all references to the
Managing General Partner in this Agreement shall become references to the
Company.
"NHC" means National HealthCare Corporation, a Delaware corporation,
and any permitted successors and assigns, NHC being one of two entities to be
formed upon the restructuring of the Company in the Special Reorganization.
"NHC, INC." means NHC, Inc., a Tennessee corporation.
"NHR" means National Health Realty, Inc., a Maryland corporation,
and one of two entities to be formed in the restructuring of the Company in the
Special Reorganization, NHR being formed to hold substantially all of the
Company's real estate assets and certain related indebtedness.
"NHC NOTES" means the Notes and, upon the issuance and sale of the
Additional Notes in accordance with the terms and provisions of this Agreement,
the Additional Notes.
"NOTES" has the meaning assigned to that term in the second
introductory paragraph of this Agreement.
"PERSON" means any individual, firm, corporation, partnership,
trust, incorporated or unincorporated association, joint venture, joint stock
company, Governmental Authority or other entity of any kind, and shall include
any successor (by merger or otherwise) of such entity.
"PURCHASER" means The 1818 Fund II, L.P., a Delaware limited
partnership.
"PURCHASER DESIGNEE" has the meaning assigned to that term in
Section 10.4.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement in the form attached hereto as Exhibit B.
"REORGANIZATION S-4" has the meaning assigned to that term in
Section 5.23.
<PAGE>
6
"REQUIREMENTS OF LAW" means as to any Person, the Certificate of
Incorporation and By-laws or other organizational or governing documents of such
Person, and any law, treaty, rule, regulation, right, privilege, qualification,
license or franchise or determination of an arbitrator or a court or other
Governmental Authority, in each case applicable or binding upon such Person or
any of its property or to which such Person or any of its property is subject.
"SECOND CLOSING" has the meaning assigned to that term in
Section 2.7.
"SECOND CLOSING DATE" means the date specified in Section 2.7.
"SECOND TIME OF PURCHASE" has the meaning assigned to that term in
Section 2.7.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and
the rules and regulations of the Commission thereunder.
"SOLVENT" means, with respect to any Person, that the fair saleable
value of the assets and property of such Person is, on the date of
determination, greater than the total amount of liabilities (including
contingent and unliquidated liabilities) of such Person as of such date and
that, as of such date, such Person is able to pay all liabilities of such Person
as such liabilities mature. In computing the amount of contingent or liquidated
liabilities at any time, such liabilities will be computed as the amount which,
in light of all the facts and circumstances existing at such time, represents
the amount that is probable to become an actual or matured liability.
"SPECIAL REORGANIZATION" means the restructuring of the Company into
NHC and NHR.
"SUBSIDIARY" means, with respect to any Person, a corporation or
other entity of which 50% or more of the voting power of the voting equity
securities or equity interest is owned, directly or indirectly, by such Person.
Unless otherwise qualified, all references to a "Subsidiary" or to
"Subsidiaries" in this Agreement shall refer to a Subsidiary or Subsidiaries of
the Company.
"TIME OF PURCHASE" has the meaning assigned to that term in
Section 2.3.
"UNITS" means the limited partnership units of the Company or the
securities of a Person which are issued in respect of, or in exchange for, the
limited partnership units of the Company if such Person is the successor to the
business or assets of the Company as the result of a merger, consolidation,
combination, reclassification, recapitalization or otherwise (including, without
limitation, any shares of capital stock of NHC issued in connection with the
conversion of the Company from a limited partnership into a corporation);
PROVIDED that, except as otherwise
<PAGE>
7
provided in the NHC Notes, Units will not include any interests of NHR
distributed to holders of Units in connection with the Special Reorganization.
"25% THRESHOLD" has the meaning provided therefor in
Section 10.2(c).
"1996 FINANCIALS" has the meaning ascribed to that term in
Section 5.11.
1.2 ACCOUNTING TERMS; FINANCIAL STATEMENTS. All accounting terms
used herein not expressly defined in this Agreement shall have the respective
meanings given to them in accordance with sound accounting practice. The term
"sound accounting practice" shall mean such accounting practice as, in the
opinion of the independent accountants regularly retained by the Company,
conforms at the time to GAAP in the United States applied on a consistent basis
except for changes with which such accountants concur. If any changes in
accounting principles are hereafter occasioned by promulgation of rules,
regulations, pronouncements or opinions by or are otherwise required by the
Financial Accounting Standards Board or the American Institute of Certified
Public Accountants (or successors thereto or agencies with similar functions),
and any of such changes results in a change in the method of calculation of, or
affect the results of such calculation of, any of the financial covenants,
standards or terms found herein, then the parties hereto agree to enter into and
diligently pursue negotiations in order to amend such financial covenants,
standards or terms so as to reflect fairly and equitably such changes, with the
desired result that the criteria for evaluating the Company's financial
condition and results of operations shall be the same after such changes as if
such changes had not been made.
ARTICLE 2
PURCHASE AND SALE OF NOTES AND ADDITIONAL NOTES
2.1 PURCHASE AND SALE OF NOTES. Subject to the terms and conditions
herein set forth, the Company agrees that it will issue to the Purchaser, and
the Purchaser agrees that it will acquire from the Company, at the Time of
Purchase one or more Notes for an aggregate purchase price of $20,000,000 (the
"PURCHASE PRICE"), in cash, by wire transfer of immediately available funds to
an account previously designated by the Company in a notice delivered to the
Purchaser one day prior to the Closing Date; PROVIDED that the Purchaser shall
deduct from such payment the facility fee payable to the Purchaser at the Time
of Purchase pursuant to Section 2.2.
2.2 FEES. At the Closing (as defined below), the Company shall pay
to the Purchaser a facility fee equal to $350,000, which payment shall be made
by way of deduction from the Purchase Price as provided in Section 2.1 hereof.
2.3 CLOSING. The purchase and issuance of the Notes shall take place
at the closing (the "CLOSING") to be held at the offices of Paul, Weiss,
Rifkind,
<PAGE>
8
Wharton & Garrison, 1285 Avenue of the Americas, New York, New York 10019- 6064
on October 15, 1997, at 10:00 a.m., New York City time, or at such other place
or such other time or date as the Company and the Purchaser may agree upon (the
"CLOSING DATE"). The time at which such Closing shall be concluded is herein
called the "TIME OF PURCHASE."
2.4 PURCHASE AND SALE OF ADDITIONAL NOTES. Subject to the terms and
conditions herein set forth, the Company, at its sole option and upon twenty
Business Days' written notice to the Purchaser (the "ADDITIONAL NOTES REQUEST"),
may require Purchaser to purchase and will issue to the Purchaser, and the
Purchaser agrees that it will acquire from the Company, at the Second Time of
Purchase one or more Additional Notes for the aggregate purchase price equal to
the principal amount specified in such Additional Notes Request (the "ADDITIONAL
PURCHASE PRICE"), which in no event shall be greater than $10,000,000; PROVIDED,
HOWEVER, that such Additional Notes Request must be given by the Company to the
Purchaser on or prior to November 14, 1997. The Additional Purchase Price will
be paid in cash, by wire transfer of immediately available funds to an account
previously designated by the Company in a notice delivered to the Purchaser one
day prior to the Second Closing Date.
2.5 CONDITIONS TO CLOSING OF SALE OF ADDITIONAL NOTES. (a) If the
Purchaser is requested to purchase Additional Notes pursuant to Section 2.4,
then the Purchaser's obligation to purchase such Additional Notes shall be
subject to the satisfaction or waiver of the following conditions: (i) the
representations and warranties contained in Articles 5 and 6 shall be true and
correct in all material respects as of the Second Closing Date as if made on and
as of such date and as if all references to the Notes include the Additional
Notes, all references to the Closing Date refer to the Second Closing Date, and
all references to the Time of Purchase refer to the Second Time of Purchase,
(ii) the conditions in Article 3 (other than Section 3.11) shall have been
satisfied or waived on or before the Second Closing Date as if all references to
the Notes include the Additional Notes, all references to the Purchase Price
refer to the Additional Purchase Price, all references to the Closing Date refer
to the Second Closing Date, all references to the Closing refer to the Second
Closing and all references to the Time of Purchase refer to the Second Time of
Purchase, (iii) no breach of a covenant contained in Articles 8 and 9 shall have
occurred and be continuing, and (iv) any other conditions reasonably requested
by the Purchaser and agreed to by the Company in writing.
(b) The Company's obligation to issue and sell any Additional Notes
shall be subject to the satisfaction or waiver of the following conditions: (i)
the representations and warranties contained in Article 6 shall be true and
correct in all material respects as of the Second Closing Date as if made on and
as of such date and as if all references to the Notes include the Additional
Notes and all references to the Time of Purchase refer to the Second Time of
Purchase, and (ii) the conditions in Article 4 shall have been satisfied or
waived on or before the Second Closing Date as if all references to the Notes
include the Additional Notes, all references to the
<PAGE>
9
Closing Date refer to the Second Closing Date and all references to the Time of
Purchase refer to the Second Time of Purchase.
2.6 SECOND CLOSING. The purchase and issuance of the Additional
Notes shall take place at the closing (the "SECOND CLOSING") to be held at the
offices of Paul, Weiss, Rifkind, Wharton & Garrison, 1285 Avenue of the
Americas, New York, New York 10019-6064, or at such other place as the Company
and the Purchaser may agree upon, at a time and date as the Company and the
Purchaser may agree upon which, subject to the terms and provisions of this
Agreement, shall be no later than December 4, 1997 (the "SECOND CLOSING DATE").
The time at which such Second Closing shall be concluded is herein called the
"SECOND TIME OF PURCHASE."
ARTICLE 3
CONDITIONS TO THE OBLIGATION
OF THE PURCHASER TO CLOSE
The obligation of the Purchaser to purchase the Notes, to pay the
Purchase Price at the Closing and to perform any obligations hereunder shall be
subject to the satisfaction or waiver of the following conditions on or before
the Closing Date:
3.1 REPRESENTATIONS AND WARRANTIES TRUE. The representations and
warranties of the Company contained in Article 5 hereof shall be true and
correct in all material respects at and as of the Time of Purchase as if made at
and as of such date.
3.2 COMPLIANCE WITH THIS AGREEMENT. The Company shall have performed
and complied with all of its agreements and conditions set forth or contemplated
herein that are required to be performed or complied with by the Company on or
before the Closing Date.
3.3 OFFICER'S CERTIFICATE. The Purchaser shall have received a
certificate, dated the Closing Date and signed by the President or a Senior Vice
President of the Managing General Partner, certifying that the conditions set
forth in Sections 3.1 and 3.2 hereof have been satisfied on and as of such date.
3.4 SECRETARY'S CERTIFICATE. The Purchaser shall have received a
certificate, dated the Closing Date and signed by the Secretary or an Assistant
Secretary of the Managing General Partner, certifying the truth and correctness
of an attached copy of the Amended and Restated Agreement of Limited Partnership
of the Company and evidence reasonably satisfactory to the Purchaser that all
necessary or advisable action has been taken by the Managing General Partner and
the Company approving this Agreement and the transactions contemplated hereby.
<PAGE>
10
3.5 DOCUMENTS. The Purchaser shall have received copies of such
documents as it reasonably may request in connection with the sale of the Notes
and the transactions contemplated hereby, all in form and substance reasonably
satisfactory to the Purchaser.
3.6 PURCHASE PERMITTED BY APPLICABLE LAWS; LEGAL INVESTMENT. The
acquisition of and payment for the Notes to be acquired by the Purchaser
hereunder and the consummation of the transactions contemplated hereby (a) shall
not be prohibited by any applicable law or governmental regulation, (b) shall
not subject the Purchaser to any penalty or, in its reasonable judgment, other
onerous condition under or pursuant to any applicable law or governmental
regulation and (c) shall be permitted by the laws and regulations of the
jurisdictions to which it is subject.
3.7 OPINION OF COUNSEL. The Purchaser shall have received the
opinions of Harwell, Howard, Hyne, Gabbert & Manner, P.C. and Richard F.
LaRoche, Jr., counsel to the Company, dated the Closing Date, in the forms
attached hereto as Exhibits C and D, respectively.
3.8 APPROVAL OF COUNSEL TO THE PURCHASER. All actions and
proceedings hereunder and all documents required to be delivered by the Company
hereunder or in connection with the consummation of the transactions
contemplated hereby, and all other related matters, shall have been reasonably
acceptable to Paul, Weiss, Rifkind, Wharton & Garrison, counsel to the
Purchaser, as to their form and substance.
3.9 CONSENTS AND APPROVALS. All consents, exemptions,
authorizations, or other actions by, or notices to, or filings with,
Governmental Authorities and other Persons, including with respect to
Contractual Obligations of the Company, necessary or required in connection with
the execution, delivery or performance (including, without limitation, the
issuance of the Notes and the issuance of the Conversion Units) by the Company
or enforcement against the Company of this Agreement, the Notes or the
Registration Rights Agreement shall have been obtained and be in full force and
effect, and the Purchaser shall have been furnished with appropriate evidence
thereof.
3.10 NO MATERIAL ADVERSE CHANGE. There shall have been no material
adverse change, nor shall any such change be threatened, in the Condition of the
Company since December 31, 1996.
3.11 DUE DILIGENCE. The Purchaser shall have completed its due
diligence review of the Condition of the Company and shall be reasonably
satisfied with the results of such review.
3.12 CONDUCT OF BUSINESS. The Company shall have conducted its
business in the ordinary course from the date hereof to the Closing Date.
<PAGE>
11
3.13 REGISTRATION RIGHTS AGREEMENT. The Company shall have duly
executed and delivered to the Purchaser the Registration Rights Agreement.
3.14 PARTNERSHIP AGREEMENT. No amendments to the Amended and
Restated Agreement of Limited Partnership of the Company as in effect on the
date hereof shall have been effected.
ARTICLE 4
CONDITIONS TO THE OBLIGATION
OF THE COMPANY TO CLOSE
The obligations of the Company to issue and sell the Notes, and to
perform any other obligations hereunder, shall be subject to the satisfaction or
waiver of the following conditions on or before the Closing Date:
4.1 REPRESENTATIONS AND WARRANTIES TRUE. The representations and
warranties of the Purchaser contained in Section 6 hereof shall be true and
correct in all material respects at and as of the Time of Purchase as if made at
and as of such date.
4.2 COMPLIANCE WITH THIS AGREEMENT. The Purchaser shall have
performed and complied with all of its agreements and conditions set forth or
contemplated herein that are required to be performed or complied with by the
Purchaser on or before the Closing Date.
4.3 ISSUANCE PERMITTED BY APPLICABLE LAWS. The issuance of the Notes
to be issued by the Company hereunder and the consummation of the transactions
contemplated hereby (a) shall not be prohibited by any applicable law or
governmental regulation, (b) shall not subject the Company to any penalty or, in
its reasonable judgment, other onerous condition under or pursuant to any
applicable law or governmental regulation and (c) shall be permitted by the laws
and regulations of the jurisdictions in which is it subject.
4.4 APPROVAL OF COUNSEL TO THE COMPANY. All actions and proceedings
hereunder and all documents required to be delivered by the Purchaser hereunder
or in connection with the consummation of the transactions contemplated hereby,
and all other related matters, shall have been reasonably acceptable to Harwell,
Howard, Hyne, Gabbert & Manner, P.C. and Richard P. LaRoche, Jr., counsel to the
Company, as to their form and substance.
4.5 CONSENTS AND APPROVALS. All consents, exemptions,
authorizations, or other actions by, or notices to, or filings with,
Governmental Authorities and other Persons necessary or required in connection
with the execution, delivery or performance by the Purchaser or enforcement
against the Purchaser of this
<PAGE>
12
Agreement shall have been obtained and be in full force and effect, and the
Company shall have been furnished with appropriate evidence thereof.
ARTICLE 5
REPRESENTATIONS AND
WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Purchaser as
follows:
5.1 PARTNERSHIP AND CORPORATE EXISTENCE AND POWER. The Company and
each of its Subsidiaries:
(a) is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization;
(b) has (i) full partnership or corporate power and authority
and (ii) all governmental licenses, franchises, permits, certificates,
authorizations, consents and approvals to own and operate its property, to lease
the property it operates as lessee and to conduct the business in which it is
currently, or is currently proposed to be, engaged;
(c) is duly qualified as a foreign partnership or corporation,
licensed and in good standing under the laws of each jurisdiction where its
ownership, lease or operation of property or the conduct of its business
requires such qualification; and
(d) is in compliance with all Requirements of Law;
except, in the case of (b)(ii), (c) or (d) of this Section 5.1, to the extent
that the failure to do so would not have a material adverse effect on the
Condition of the Company.
5.2 PARTNERSHIP AND CORPORATE AUTHORIZATION; NO CONTRAVENTION. The
execution, delivery and performance by the Company of this Agreement, the Notes,
the Registration Rights Agreement and the transactions contemplated hereby and
thereby, including without limitation the issuance of the Notes and the
Conversion Units:
(a) is within the Company's power and authority and has
been duly authorized by all necessary action;
(b) does not contravene the terms of the Company's Amended and
Restated Agreement of Limited Partnership, or any amendment thereof;
<PAGE>
13
(c) will not violate, conflict with or result in any breach or
contravention of or any order or decree directly relating to the Company or any
of its Subsidiaries; and
(d) will not violate, conflict with or result in any breach or
contravention of or the creation of any Lien under, any Contractual Obligation
of the Company or any of its Subsidiaries,
except, in the case of (d) of this Section 5.2, to the extent that the
occurrence of any such violation, conflict, or breach or the creation of any
Lien would not have a material adverse effect on the Condition of the Company.
5.3 GOVERNMENTAL AUTHORIZATION; THIRD PARTY CONSENTS. Except for (i)
compliance with the HSR Act to the extent referred to in the Notes, (ii) the
exemption from the registration requirements of the Securities Act with respect
to the issuance of the Notes pursuant hereto and (iii) in the case of the
Registration Rights Agreement, the filings with the Securities and Exchange
Commission contemplated thereby, no approval, consent, exemption, authorization,
or other action by, or notice to, or filing with, any Governmental Authority or
any other Person, is necessary or required in connection with the execution,
delivery or performance by the Company or enforcement against the Company of
this Agreement, the Notes, the Registration Rights Agreement or the transactions
contemplated hereby or thereby.
5.4 BINDING EFFECT. This Agreement has been duly executed and
delivered by the Company, and at the Time of Purchase each of the Registration
Rights Agreement and the Notes will be duly executed and delivered by the
Company, and this Agreement constitutes the legal, valid and binding obligations
of the Company enforceable against the Company in accordance with its terms, and
at the Time of Purchase each of the Registration Rights Agreement and the Notes
will constitute the legal, valid and binding obligations of the Company
enforceable against the Company in accordance with their respective terms,
except as enforceability may be limited by applicable bankruptcy, insolvency or
other similar laws affecting the enforcement of creditors' rights generally and
by general principles of equity relating to enforceability.
5.5 NO LEGAL BAR. Neither the execution, delivery and performance of
this Agreement, the Notes and the Registration Rights Agreement nor the
borrowings under the Notes and the use of the proceeds thereof will violate any
Requirement of Law or any rule or regulation of the ASE. Neither the Company nor
any of its Subsidiaries has previously entered into any agreement granting any
registration rights to any Person which is inconsistent with the rights to be
granted to the Purchaser in the Registration Rights Agreement.
5.6 LITIGATION. There are no actions, suits, proceedings, claims or
disputes pending, or to the best knowledge of the Company, threatened, at law,
in equity, in arbitration or before any Governmental Authority against the
Company or any of its Subsidiaries:
<PAGE>
14
(a) with respect to this Agreement, the Notes or the
Registration Rights Agreement or any of the transactions contemplated hereby or
thereby; or
(b) which would, if adversely determined, (i) have a material
adverse effect on the Condition of the Company or (ii) have a material adverse
effect on the ability of the Company to perform its obligations under this
Agreement, the Notes or the Registration Rights Agreement. No injunction, writ,
temporary restraining order, decree or any order of any nature has been issued
by any court or other Governmental Authority purporting to enjoin or restrain
the execution, delivery and performance of this Agreement, the Notes or the
Registration Rights Agreement.
5.7 NO DEFAULT OR BREACH. No event has occurred and is continuing or
would result from the incurring of obligations by the Company under this
Agreement or under the Registration Rights Agreement which constitutes, or would
with notice or the passage of time constitute, a default under or breach of any
of the provisions of Article 8 or 9 or an Event of Default under the Notes.
Neither the Company nor any of its Subsidiaries is in default under or with
respect to any Contractual Obligation in any respect, which, individually or
together with all such defaults, would be materially adverse to the Condition of
the Company, or which could materially adversely affect the ability of the
Company to perform its obligations under this Agreement, the Notes or the
Registration Rights Agreement.
5.8 USE OF PROCEEDS; MARGIN REGULATIONS. No portion of the proceeds
of the issuance of the Notes has been or will be used, directly or indirectly,
(a) to purchase or carry margin stock as defined in Regulation G of the Federal
Reserve Board, (b) to repay or otherwise refinance Indebtedness of the Company,
any of its Subsidiaries or others incurred to purchase or carry margin stock or
(c) to extend credit for the purpose of purchasing or carrying any margin stock.
5.9 TITLE TO PROPERTIES. The Company and each of its Subsidiaries
have good record and marketable title in fee simple to, or hold leases in full
force and effect in all their real property, except for such defects in title as
could not, individually or in the aggregate, have a materially adverse effect on
the Condition of the Company, or the ability of the Company to perform its
obligations under this Agreement, the Notes or the Registration Rights
Agreement.
5.10 TAXES. The Company is a publicly traded partnership, as defined
in Section 7704(b) of the Code. In accordance with transition rules currently
applicable to Section 7704 of the Code, the Company will be treated as a
partnership for Federal income tax purposes for taxable years beginning (i) on
or before December 31, 1997 and (ii) before any date upon which the Company adds
a new line of business, as described in the applicable transition rules. For
taxable years beginning after the earlier of the dates described above in (i)
and (ii), the Company will be treated as a corporation for Federal income tax
purposes.
<PAGE>
15
As of the date hereof the Company has (i) timely filed with the
appropriate federal, state, local, foreign and other governmental agencies all
tax returns, estimates and reports that are required to be filed by it and (ii)
timely paid or discharged all taxes, assessments and governmental charges levied
or imposed upon the Company or upon the income, profits or property of the
Company. Following the date hereof, the Company will (i) timely file with the
appropriate federal, state, local, foreign and other governmental agencies all
tax returns, estimates and reports that are required to be filed by it and (ii)
timely pay or discharge all taxes, assessments and governmental charges levied
or imposed upon the Company or upon the income, profits or property of the
Company.
5.11 FINANCIAL CONDITION. The Company heretofore has delivered to
the Purchaser true and correct copies of (x) audited consolidated financial
statements of the Company and its Subsidiaries dated as of December 31, 1996
(the "1996 FINANCIALS") and (y) unaudited consolidated financial statements of
the Company and its Subsidiaries for the six-month period ended June 30, 1997
(the "1997 SIX-MONTH FINANCIALS"). The 1996 Financials and the 1997 Six-Month
Financials have been prepared in accordance with GAAP applied consistently, and
present fairly the consolidated financial condition of the Company as of the
dates thereof and the consolidated results of operations of the Company or the
period, or portion thereof, then ended.
5.12 NO MATERIAL ADVERSE CHANGE. Since December 31, 1996, there has
not been any material adverse change in the Condition of the Company, nor in the
opinion of the Company's senior management is any such change probable.
5.13 COMMISSION DOCUMENTS. The Company has filed all registration
statements, proxy statements, reports and other documents required to be filed
by it under the Securities Act and the Exchange Act, and all amendments thereto
(collectively, the "COMMISSION DOCUMENTS"); and the Company has furnished the
Purchaser correct and complete copies of all Commission Documents, each as filed
with the Commission, for the past five years. Each Commission Document was true
and accurate in all material respects when filed with the Commission and in
compliance in all material respects with the requirements of its respective
report form.
5.14 ENVIRONMENTAL MATTERS.
(a) The property, assets and operations of the Company and its
Subsidiaries comply in all material respects with all applicable Environmental
Laws (except to the extent that failure to comply with such Environmental Laws
would not have a material adverse effect on the Condition of the Company).
(b) To the best knowledge of the Company after reasonable
inquiry, none of the property, assets or operations of the Company or its
Subsidiaries is the subject of any federal, state or local investigation
evaluating whether any remedial action is needed to respond to a release of any
Hazardous Materials into the environment or that is in contravention of any
federal, state or local law, order or
<PAGE>
16
regulation that is likely to have a materially adverse effect on the Condition
of the Company.
(c) Neither the Company nor its Subsidiaries has received any
notice or claim, nor are there pending, threatened or reasonably anticipated
lawsuits against them, with respect to violations of an Environmental Law or in
connection with any release of any Hazardous Materials into the environment.
(d) Neither the Company nor any of its Subsidiaries has any
material contingent liability (material to the Condition of the Company) in
connection with any release of any Hazardous Materials into the environment.
5.15 INVESTMENT COMPANY. Neither the Company nor any Person
controlling the Company is an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
5.16 SUBSIDIARIES. Schedule 5.16 sets forth a complete and accurate
list of all of the Subsidiaries of the Company together with their respective
jurisdictions of incorporation or organization. Except as set forth on Schedule
5.16, each such Subsidiary is directly or indirectly wholly owned by the
Company.
5.17 CAPITALIZATION. As of the Time of Purchase, there is no
limitation on the number of Units that may be issued by the Company. As of
September 30, 1997, 8,866,822 Units were issued and outstanding. The general
partners of the Company are the Administrative General Partner, the Managing
General Partner and Adams, which own, in the aggregate, Units representing at
least a 1% interest in the profits, losses and distributions of the Company.
Except as set forth on Schedule 5.17, there are no Units or other partnership
interests of the Company authorized or reserved for issuance. All of the
outstanding Units have been duly authorized and are fully paid and
non-assessable. The Units to be issued upon conversion of the Notes are duly
authorized, and, when issued, will be fully paid and nonassessable. Except as
set forth on Schedule 5.17, there are no options, warrants or other rights to
purchase Units or other securities of the Company, nor is the Company obligated
in any manner to issue Units or other securities. Except as contemplated hereby
and for relevant state and federal securities laws, there are no restrictions on
the transfer of Units.
5.18 REGULATORY MATTERS. Each of the Company and each of its
Subsidiaries possesses and is in compliance with all permits, licenses or other
approvals and accreditations (including, without limitation, certificate of need
approvals) as may be required under applicable federal, state or local laws and
regulations necessary to conduct its business, including without limitation as a
"Medicare" and "Medicaid" provider, except for such permits, licenses, approvals
and accreditations, the failure to possess which or to be in compliance with
which would not have a material adverse effect on the Condition of the Company.
<PAGE>
17
5.19 SOLVENCY. On and as of the Closing Date, after giving effect to
the transactions contemplated in this Agreement, the Company will be Solvent.
5.20 PRIVATE OFFERING. No form of general solicitation or general
advertising was used by the Company or, to its knowledge, its representatives in
connection with the offer or sale of the Notes and the Company has offered the
Notes solely to the Purchaser. No registration of the Notes pursuant to the
provisions of the Securities Act or any state securities or "blue sky" laws will
be required by the offer, sale or issuance of the Notes pursuant to this
Agreement. The Company agrees that neither it, nor anyone acting on its behalf,
will offer or sell the Notes or any other security so as to require the
registration of the Notes pursuant to the provisions of the Securities Act or
any state securities or "blue sky" laws, unless such Notes are so registered.
5.21 BROKER'S, FINDER'S OR SIMILAR FEES. Except as set forth herein,
there are no brokerage commissions, finder's fees or similar fees or commissions
payable in connection with the transactions contemplated hereby based on any
agreement, arrangement or understanding with the Company or any of its
Subsidiaries, or any action taken by any such entity.
5.22 FULL DISCLOSURE. No statement by the Company contained in this
Agreement, in any Commission Documents, or in the Notes or the Registration
Rights Agreement, or by the Company in any documents, certificates, notices or
consents (collectively, "DOCUMENTS") delivered to the Purchaser in connection
with the purchase and sale of the Notes at or prior to the Closing, contains (or
will contain) an untrue statement of a material fact or omits (or will omit) to
state a material fact required to be stated therein or necessary to make the
statements made, in the light of the circumstances in which made, not materially
false or misleading.
5.23 REORGANIZATION S-4. The Registration Statement on Form S-4
relating to the Special Reorganization filed with the Commission on October 3,
1997 (the "REORGANIZATION S-4") does not 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 not misleading. The Reorganization
S-4 is in compliance in all material respects with the requirements of Form S-4
under the Securities Act.
5.24 SPECIAL REORGANIZATION. The Company heretofore has delivered to
the Purchaser true and correct copies of (x) the Company's business plan
relating to the Special Reorganization, (y) pro forma consolidated financial
statements of NHC and NHR giving effect to the Special Reorganization (the
"SPECIAL REORGANIZATION INFORMATION") and (z) the Reorganization S-4.
<PAGE>
18
ARTICLE 6
REPRESENTATIONS, WARRANTIES,
COVENANTS AND AGREEMENTS OF THE PURCHASER
The Purchaser represents and warrants to, and covenants and agrees
with, the Company as follows:
6.1 EXISTENCE AND POWER.
The Purchaser:
(a) is duly organized and validly existing under the laws of
Delaware and has its principal place of business in the State of New York; and
(b) has the power and authority to own and operate its
property, to lease the property it operates as lessee and to conduct the
business in which it is currently, or is currently proposed to be, engaged.
6.2 AUTHORIZATION; NO CONTRAVENTION. The execution, delivery and
performance by the Purchaser of this Agreement:
(a) is within the Purchaser's power and authority and has
been duly authorized by all necessary action;
(b) does not contravene the terms of the Purchaser's Amended
and Restated Agreement of Limited Partnership, or any amendment thereof; and
(c) will not violate, conflict with or result in any breach or
contravention of or the creation of any Lien under, any Contractual Obligation
of the Purchaser, or any order or decree directly relating to the Purchaser.
6.3 BINDING EFFECT. This Agreement has been duly executed and
delivered by the Purchaser, and at the Time of Purchase each of the Registration
Rights Agreement and the Notes will be duly executed and delivered by the
Purchaser, and this Agreement constitutes the legal, valid and binding
obligation of the Purchaser enforceable against it in accordance with its terms,
and at the Time of Purchase each of the Registration Rights Agreement and the
Notes will constitute the legal, valid and binding obligations of the Purchaser
enforceable against the Purchaser in accordance with their respective terms,
except as enforceability may be limited by applicable bankruptcy, insolvency, or
similar laws affecting the enforcement of creditors' rights generally or by
equitable principles relating to enforceability.
6.4 NO LEGAL BAR. The execution, delivery and performance of this
Agreement will not violate any Requirement of Law or any Contractual Obligation
of the Purchaser.
<PAGE>
19
6.5 PURCHASE FOR OWN ACCOUNT. The Notes to be acquired by the
Purchaser pursuant to this Agreement are being acquired for its own account and
with no intention of distributing or reselling the Notes or any part thereof in
any transaction that would be in violation of the securities laws of the United
States of America, or any state, without prejudice, however, to the rights of
such Purchaser at all times to sell or otherwise dispose of all or any part of
the Notes under an effective registration statement under the Securities Act, or
under an exemption from such registration available under the Securities Act,
and subject, nevertheless, to the disposition of the Purchaser's property being
at all times within its control. If the Purchaser should in the future decide to
dispose of any of the Notes, the Purchaser understands and agrees that it may do
so only in compliance with the Securities Act and applicable state securities
laws, as then in effect, and that stop-transfer instructions to that effect,
where applicable, will be in effect with respect to the Notes. If the Purchaser
should decide to dispose of the Notes, the Purchaser will have the obligation in
connection with such disposition, at the Purchaser's expense, of delivering an
opinion of counsel of recognized standing in securities law, in connection with
such disposition to the effect that the proposed disposition of the Notes would
not be in violation of the Securities Act or any applicable state securities
laws and, assuming such opinion is required and is otherwise appropriate in form
and substance under the circumstances, the Company will accept, and will
recommend to any applicable transfer agent or trustee for any of the Notes that
it accepts, such opinion. The Purchaser agrees to the imprinting, so long as
required by law, of a legend on all of the Notes to the following effect: "THIS
NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND
APPLICABLE STATE SECURITIES LAWS OR AN APPLICABLE EXEMPTION TO THE REGISTRATION
REQUIREMENTS OF SUCH ACT OR SUCH LAWS."
6.6 ERISA. No part of the funds used by the Purchaser to purchase
the Notes hereunder constitutes "plan assets" (within the meaning of the
regulations promulgated under ERISA) of any employee benefit plan subject to
Title I of ERISA or Section 4975 of the Code.
6.7 BROKER'S, FINDER'S OR SIMILAR FEES. There are no brokerage
commissions, finder's fees or similar fees or commissions payable in connection
with the transactions contemplated hereby based on any agreement, arrangement or
understanding with the Purchaser or any action taken by the Purchaser.
6.8 PURCHASE OF ADDITIONAL UNITS. The Purchaser hereby covenants and
agrees that it will not, independently or as a member of a "group" (within the
meaning of Section 13(d)(3) of the Exchange Act), purchase any Units (or
securities convertible into Units) that, in the aggregate with (i) all other
Units held by the Purchaser at the time of such proposed purchase, and (ii) the
number of Units into which the NHC Notes held by the Purchaser are convertible
at the time of such
<PAGE>
20
proposed purchase represent a number of Units in excess of 23.2606249% of the
total Units (on a fully-diluted basis) outstanding at the time of such proposed
purchase.
6.9 ACCESS TO INFORMATION. The Purchaser acknowledges that it has
been given the opportunity to obtain information from the Company in connection
with the purchase of the Notes.
ARTICLE 7
INDEMNIFICATION
7.1 INDEMNIFICATION BY THE COMPANY. In addition to all other sums
due hereunder or provided for in this Agreement, the Company agrees to indemnify
and hold harmless the Purchaser and its Affiliates (including, without
limitation, Brown Brothers Harriman & Co.) and their respective officers,
directors, agents, employees, subsidiaries, partners and controlling persons
(each, an "indemnified party") to the fullest extent permitted by law from and
against any and all losses, claims, damages, expenses (including reasonable
fees, disbursements and other charges of counsel) or other liabilities
("LIABILITIES") resulting from any legal, administrative or other actions
(including actions brought by the Company or any equity holders of the Company
or derivative actions brought by any Person claiming through the Company or in
the Company's name), proceedings or investigations (whether formal or informal),
or written threats thereof, based upon, relating to or arising out of this
Agreement, the NHC Notes, the Registration Rights Agreement, the transactions
contemplated hereby or thereby, or any indemnified person's role therein or in
the transactions contemplated hereby or thereby; PROVIDED, HOWEVER, that the
Company shall not be liable under this Section 7.1: (a) for any amount paid in
settlement of claims without the Company's consent (which consent shall not be
unreasonably withheld) or (b) to the extent that it is finally judicially
determined that such Liabilities resulted primarily from the willful misconduct,
bad faith or negligence of such indemnified party; PROVIDED, FURTHER, that if
and to the extent that such indemnification is unenforceable for any reason, the
Company shall make the maximum contribution to the payment and satisfaction of
such indemnified liability which shall be permissible under applicable laws. In
connection with the obligation of the Company to indemnify for expenses as set
forth above, the Company further agrees to reimburse each indemnified party for
all such expenses (including reasonable fees, disbursements and other charges of
counsel) as they are incurred by such indemnified party; PROVIDED, HOWEVER, that
if an indemnified party is reimbursed hereunder for any expenses, such
reimbursement of expenses shall be refunded to the extent it is finally
judicially determined that the Liabilities in question resulted primarily from
the willful misconduct, bad faith or negligence of such indemnified party.
7.2 NOTIFICATION. Each indemnified party under this Article 7 will,
promptly after the receipt of notice of the commencement of any action or other
proceeding against such indemnified party in respect of which indemnity may be
<PAGE>
21
sought from the Company under this Article 7, notify the Company in writing of
the commencement thereof. The omission of any indemnified party so to notify the
Company of any such action shall not relieve the Company from any liability
which it may have to such indemnified party (i) other than pursuant to this
Article 7 or (ii) under this Article 7 unless, and only to the extent that, such
omission results in the Company's forfeiture of substantive rights or defenses.
In case any such action or other proceeding shall be brought against any
indemnified party and it shall notify the Company of the commencement thereof,
the Company shall be entitled to participate therein and, to the extent that it
may wish, to assume the defense thereof, with counsel reasonably satisfactory to
such indemnified party; PROVIDED, HOWEVER, that any indemnified party may, at
its own expense, retain separate counsel to participate in such defense.
Notwithstanding the foregoing, in any action or proceeding in which both the
Company and an indemnified party is, or is reasonably likely to become, a party,
such indemnified party shall have the right to employ separate counsel at the
Company's expense and to control its own defense of such action or proceeding
if, in the reasonable opinion of counsel to such indemnified party, (a) there
are or may be legal defenses available to such indemnified party or to other
indemnified parties that are different from or additional to those available to
the Company or (b) any conflict or potential conflict exists between the Company
and such indemnified party that would make such separate representation
advisable; PROVIDED, HOWEVER, that in no event shall the Company be required to
pay fees and expenses under this Section 7 for more than one firm of attorneys
in any jurisdiction in any one legal action or group of related legal actions.
The Company agrees that the Company will not, without the prior written consent
of the Purchaser, settle, compromise or consent to the entry of any judgment in
any pending or threatened claim, action or proceeding relating to the matters
contemplated hereby (if any indemnified party is a party thereto or has been
actually threatened to be made a party thereto) unless such settlement,
compromise or consent includes an unconditional release of the Purchaser and
each other indemnified party from all liability arising or that may arise out of
such claim, action or proceeding. The rights accorded to indemnified parties
hereunder shall be in addition to any rights that any indemnified party may have
at common law, by separate agreement or otherwise.
7.3 REGISTRATION RIGHTS AGREEMENT. Notwithstanding anything to the
contrary in this Article 7, the indemnification and contribution provisions of
the Registration Rights Agreement shall govern any claim made with respect to
registration statements filed pursuant thereto or sales made thereunder.
ARTICLE 8
AFFIRMATIVE COVENANTS
The Company hereby covenants and agrees (a) with the Purchaser, with
respect to all of this Article 8, and (b) with any other Holder, with respect to
all of this Article 8 except Sections 8.1(c), 8.1(f), 8.9 and 8.16, that, unless
the Purchaser or any other Holder, as the case may be, waives compliance in
writing:
<PAGE>
22
8.1 FINANCIAL STATEMENTS; OTHER INFORMATION. The Company shall
deliver to the Purchaser and any other Holder, in form and substance reasonably
satisfactory to the Purchaser and such other Holder:
(a) as soon as available, but not later than one hundred (100)
days after the end of each fiscal year of the Company, a copy of the audited
consolidated balance sheet of the Company and its Subsidiaries as of the end of
such year and the related consolidated statements of income and cash flows for
such fiscal year, setting forth in each case in comparative form the figures for
the previous year, all in reasonable detail and accompanied by a management
summary and analysis of the operations of the Company and its Subsidiaries for
such fiscal year and by the opinion of Arthur Andersen & Co. (or any successor
thereto) or another nationally recognized independent public accounting firm,
which report shall state that such consolidated financial statements present
fairly the financial position for the periods indicated in conformity with GAAP
applied on a basis consistent with prior years; PROVIDED, HOWEVER, that the
delivery of a copy of the Company's Annual Report on Form 10-K shall satisfy the
requirements of this Section 8.1(a);
(b) commencing with the fiscal period ending on September 30,
1997, as soon as available, but in any event not later than fifty (50) days
after the end of each of the first three fiscal quarters of each year, the
unaudited consolidated balance sheet of the Company and its Subsidiaries, and
the related consolidated statements of income and cash flow for such quarter and
for the period commencing on the first day of the fiscal year and ending on the
last day of such quarter, all certified by the Managing General Partner;
PROVIDED, HOWEVER, that the delivery of a copy of the Company's Quarterly Report
on Form 10-Q shall satisfy the requirements of this Section 8.1(b);
(c) annual budgets and such other financial and operating data
of the Company and its Subsidiaries, as the Purchaser reasonably may request, to
the extent that such information is formally prepared for the Managing General
Partner's Chairman, President, Board of Directors and/or the Company's banks or
other lenders;
(d) at any time when it is not subject to Section 13 or 15(d)
of the Exchange Act, upon request, to the Purchaser and prospective purchasers
of the NHC Notes, information of the type that would satisfy the requirement of
subsection (d)(4)(i) of Rule 144A (or any similar successor provision) under the
Securities Act;
(e) except as otherwise provided in Sections 8.1(a) and (b),
promptly after the same are filed, copies of all Commission Documents; and
(f) at any time when there is not a Purchaser Designee on the
Board of Directors of The Managing General Partner (even though the Purchaser is
entitled to such a Purchaser Designee) and Purchaser owns at least 50% of the
aggregate outstanding principal of the NHC Notes or 50% of the Conversion Units,
<PAGE>
23
promptly when it is first available, information with respect to any proposed
corporate merger, consolidation, combination, reclassification,
recapitalization, material financing or similar event.
8.2 CERTIFICATES. The Company shall furnish to the Purchaser and to
any other Holder:
(a) concurrently with the delivery of the financial statements
referred to in Section 8.1(a), a certificate of the Managing General Partner's
Chief Financial Officer or any Senior Vice President of the Managing General
Partner stating that to the best of his or her knowledge no default under or
breach of Articles 8 and 9 shall have occurred subsequent to the delivery of the
previous such certificate, except as specified in such certificate; and
(b) concurrently with the delivery of the financial statements
referred to in Sections 8.1(a) and (b), a certificate of an officer of the
Managing General Partner including calculations set forth in reasonable detail
showing the Company's compliance with the financial covenants contained herein.
8.3 PRESERVATION OF EXISTENCE. The Company, except in connection
with the Special Reorganization, shall, and shall cause each of its Subsidiaries
to:
(a) preserve and maintain in full force and effect its
partnership or corporate existence and good standing under the laws of its
jurisdiction of organization except as permitted by Section 9.1;
(b) preserve and maintain in full force and effect all
material rights, privileges, qualifications, licenses and franchises necessary
in the normal conduct of its business; and
(c) use its reasonable efforts to preserve its business
organization.
8.4 PAYMENT OF OBLIGATIONS. The Company shall, and shall cause its
Subsidiaries to, pay and discharge as the same shall become due and payable, all
their respective obligations and liabilities, except as such would not have a
material adverse effect on the Condition of the Company, including without
limitation:
(a) all tax liabilities, assessments and governmental charges
or levies upon it or its properties or assets, unless the same are being
contested in good faith by appropriate proceedings and adequate reserves in
accordance with GAAP are being maintained by the Company or such Subsidiary;
(b) all lawful claims which the Company and each of its
Subsidiaries is obligated to pay, which are due and which, if unpaid, might by
law become a Lien upon its property; and
<PAGE>
24
(c) all payments of principal and interest when due (giving
effect to any grace periods relating thereto) on Indebtedness.
8.5 COMPLIANCE WITH LAWS. The Company shall comply, and shall cause
each Subsidiary to comply, in all material respects with all Requirements of Law
and with the directions of any Governmental Authority having jurisdiction over
it or its business, except such as to which such failure to comply would not
have a material adverse effect on the Condition of the Company.
8.6 NOTICES. Upon knowledge of any general partner of the Company or
of the Chief Executive Officer, the President or the Chief Financial Officer of
the Managing General Partner of the events described below, the Company shall
give written notice within ten days to the Purchaser:
(a) of the occurrence of any default under, or breach of, any
provision of Article 8 or 9 accompanied by a certificate specifying the nature
of such default or breach, the period of existence thereof and the action that
the Company has taken or proposes to take with respect thereto; and
(b) of any (i) material default or event of default under any
material Contractual Obligation of the Company or any of its Subsidiaries, or
(ii) material dispute, litigation, investigation, proceeding or suspension which
may exist at any time between the Company or any of its Subsidiaries and any
Governmental Authority.
Each notice pursuant to this Section 8.6 shall be accompanied by a
statement by the Chief Executive Officer, President or Chief Financial Officer
of the Managing General Partner setting forth details of the occurrence referred
to therein and stating what action the Company proposes to take with respect
thereto.
8.7 ISSUE TAXES. The Company shall pay, or cause to be paid, all
documentary and similar taxes levied under the laws of any applicable
jurisdiction in connection with the issuance of the Notes and the Additional
Notes and the execution and delivery of the other agreements and documents
contemplated hereby and any modification of the Notes and the Additional Notes
or such other agreements and documents and will hold the Purchaser harmless,
without limitation as to time, against any and all liabilities with respect to
all such taxes.
8.8 PAYMENT AND CONVERSION OF NHC NOTES. The Company shall pay the
principal of and interest on the NHC Notes on the dates and in the manner
provided therein. The Company shall at all times reserve and keep available out
of its authorized Units, solely for the purpose of issue or delivery upon
conversion of the NHC Notes as provided therein, such number of Units shall then
be issuable or deliverable upon the conversion of all outstanding principal
amount of the NHC Notes. Such Units shall, when issued or delivered in
accordance with the NHC Notes, be duly and validly issued and fully paid and
non-assessable. The Company shall issue the Units into which the NHC Notes are
convertible upon the proper
<PAGE>
25
surrender of the NHC Notes in accordance with the provisions of such NHC Notes
and shall otherwise comply with the terms thereof.
8.9 INSPECTION. The Company will permit, and will cause each of its
Subsidiaries to permit, representatives of the Purchaser to visit and inspect
any of its properties, to examine its partnership, corporate, financial and
operating records and make copies thereof or abstracts therefrom, and to discuss
its affairs, finances and accounts with their respective general partners,
directors, officers and independent public accountants, all at such reasonable
times during normal business hours and as often as may be reasonably requested,
upon reasonable advance notice to the Company.
8.10 REGISTRATION AND LISTING. If any Units required to be reserved
for purposes of conversion of the NHC Notes as provided in the NHC Notes require
registration with or approval of any Governmental Authority under any Federal or
state or other applicable law before such Units may be issued or delivered upon
conversion, the Company will in good faith and as expeditiously as possible
endeavor to cause such Units to be duly registered or approved, as the case may
be, unless such registration or approval is required solely because of a breach
of the Purchaser's representation contained in Section 6.5. So long as the Units
are listed on the ASE or quoted or listed on any other national securities
exchange, the Company will, if permitted by the rules of such system or
exchange, quote or list and keep quoted or listed on such exchange, upon
official notice of issuance, all Units issuable or deliverable upon conversion
of the NHC Notes.
8.11 CHANGE OF CONTROL OFFER. (a) In the event of a Change of
Control (as defined below) that occurs prior to the occurrence of the Special
Reorganization, the Company shall within 15 Business Days thereafter offer to
redeem from each Holder (a "CHANGE OF CONTROL OFFER"), and upon receipt by the
Company of written notice of acceptance of such Change of Control Offer by a
Holder the Company shall thereafter redeem all (but not less than all),
outstanding NHC Notes owned by such Holder pursuant to such Change of Control
Offer at a redemption price of 125% of the principal amount of the NHC Notes
outstanding on the redemption date plus accrued and unpaid interest to the
redemption date, whether or not currently payable, on a date to be specified in
a "NOTICE OF OFFER" (as hereinafter provided) not sooner than 30 days and not
later than 60 days after the date of such notice (subject to compliance with
applicable securities laws). Notwithstanding the foregoing, in the event of a
Change of Control of the types set forth in clauses (iii), (iv) and (vi) below,
the Company shall make the Change of Control Offer not later than ten Business
Days prior to the consummation of the transaction contemplated by clause (iii),
(iv) or (vi) below, as the case may be, and the Company shall not be required to
purchase any NHC Notes unless such transaction shall be consummated, in which
case the Company shall be required to purchase such NHC Notes immediately prior
to the consummation of such transaction.
<PAGE>
26
A "CHANGE OF CONTROL" of the Company shall be deemed to have
occurred:
(i) At such time as any Person or "group" (within the
meaning of Section 13(d)(3) of the Exchange Act) not including any member
of Current Management is or becomes the beneficial owner, directly or
indirectly, of outstanding Units of the Company or of shares of capital
stock of the Managing General Partner, as the case may be, entitling such
Person or Persons to exercise 50% or more of the total votes entitled to
be cast at a regular or special meeting, or by action by written consent,
of the Unit holders of the Company or of the shareholders of the Managing
General Partner, as the case may be (the term "beneficial owner" shall be
determined in accordance with Rule 13d-3, as in effect on the date of the
execution of this Agreement, promulgated by the Commission under the
Exchange Act);
(ii) If a majority of the Board of Directors of the
Managing General Partner shall consist of Persons other than Continuing
Directors. The term "CONTINUING DIRECTOR" shall mean any member of the
Board of Directors of the Managing General Partner on the Closing Date and
any other member of the Board of Directors of the Managing General Partner
who shall be recommended or elected to succeed or become a Continuing
Director by a majority of Continuing Directors who are then members of the
Board of Directors of the Managing General Partner.
(iii) At such time as the Unit holders of the Company or
holders of shares of capital stock of the Managing General Partner, as the
case may be, shall have approved a reorganization, merger or
consolidation, in each case, with respect to which all or substantially
all the Persons who were the respective beneficial owners of the
outstanding Units of the Company or, of the outstanding shares of capital
stock of the Managing General Partner, as the case may be, immediately
prior to such reorganization, merger or consolidation, beneficially own,
directly or indirectly, less than 50% of the combined voting power of the
then outstanding shares of capital stock of the Company or the Managing
General Partner, as the case may be, resulting from such reorganization,
merger or consolidation;
(iv) At the earlier of the approval by (A) the Unit
holders of the Company, (B) the holders of shares of capital stock of the
Managing General Partner or (C) the Board of Directors of the Managing
General Partner of the sale or other disposition of all or substantially
all the assets of the Company or the Managing General Partner, as the case
may be, in one transaction or in a series of related transactions, other
than (1) a transaction or series of transactions affected solely for the
purpose of converting the form of the Company to a corporation and in
which Unit holders of the Company prior to such conversion acquire, on a
pro-rata basis, all of the capital stock of the Company following such
conversion or (2) a
<PAGE>
27
distribution of assets by the Company to all of its Unit holders on a
pro-rata basis;
(v) If immediately after any merger, consolidation,
combination, reclassification or recapitalization, Current Management (A)
shall have increased the aggregate percentage of the outstanding Units of
the Company represented by the Units they beneficially own, directly or
indirectly, by 20% of such outstanding Units or more (or if the entity
surviving such transaction is a corporation, the Current Management's
ownership in the new entity shall have increased by 20% or more of the
Current Management's aggregate percentage of ownership of the Company
immediately prior to the transaction) and (B) shall be the beneficial
owners directly or indirectly, of outstanding Units or shares of stock of
the Company (or any Person surviving such transaction) entitling the
Current Management collectively to exercise 50% or more of the total
voting power of all Units and other voting equity interests, if any, of
the Company (or the surviving Person in such transaction) and, in
anticipation of, in connection with or as a result of, such transaction,
the Company (or such surviving Person) shall have incurred or issued
additional Indebtedness such that the total Indebtedness so incurred or
issued equals at least 50% of the consideration payable in such
transaction; PROVIDED, HOWEVER, that any such transaction shall not be
considered a Change of Control if the Holders shall have participated
therein on no less than a PARI PASSU basis (assuming conversion of all of
the Holders' NHC Notes into Units) with Current Management collectively;
(vi) At the earlier of the approval by (A) the Unit
holders of the Company or (B) the Board of Directors of the Managing
General Partner of any transaction the result of which is that the Units
shall no longer be required to be registered under Section 12 of the
Exchange Act and that the holders of Units do not receive common stock of
the Person surviving such transaction which is required to be registered
under Section 12 of the Exchange Act.
(vii) If any Person other than Adams shall become the
Special General Partner (as defined in the Amended and Restated Agreement
of Limited Partnership of the Company), other than solely by reason of the
death, disability or personal bankruptcy of Adams.
(b) The Change of Control Offer shall remain open from the
time of mailing until the redemption date set forth in the Notice of Offer. The
Notice of Offer shall be accompanied by a copy of the information most recently
required to be supplied under Sections 8.1(a) and 8.1(b). The Notice of Offer
shall contain all instruments and materials necessary to enable the Holders to
tender the NHC Notes pursuant to the Change of Control Offer. The Notice of
Offer, which shall govern the terms of the Change of Control offer, shall state:
<PAGE>
28
(i) that the Change of Control Offer is being made
pursuant to this Section 8.11 and that tendered NHC Notes will be
redeemed;
(ii) the redemption price and the date for redemption;
(iii)that the Change of Control Offer is being made for
all (but not less than all) NHC Notes held by a Holder;
(iv) that the NHC Notes redeemed pursuant to the Change
of Control Offer shall cease to accrue interest after the designated date
for purchase (unless the Company shall default in the payment of the
redemption price pursuant to the Change of Control Offer, in which case
the NHC Notes shall not cease to accrue interest after such date);
(v) such other information respecting the procedures for
accepting the Change of Control Offer as the Company shall include and
such other information as may be required by law; and
(vi) that (unless otherwise required by law) any Holder
will be entitled to withdraw his or her election if the Company receives,
not later than the close of business on the third Business Day next
preceding the date scheduled for redemption, facsimile transmission or
letter setting forth the name of the Holder, the principal amount of NHC
Notes such Holder delivered for redemption and a statement that such
Holder is withdrawing election to have such NHC Notes redeemed.
8.12 HSR ACT FILING. The Company shall prepare and file, and
cooperate with the Purchaser so that it may prepare and file, in each case
within five Business Days of a request by the Purchaser, notification and report
forms in compliance with the HSR Act, and shall otherwise fully comply with the
requirements of the HSR Act. The Company shall bear all of its own expenses in
connection with any such preparation and filing. Purchaser shall promptly upon
receipt of notice from the Company that the Special Reorganization is expected
to occur prepare and file notification and report forms in compliance with the
HSR Act, and shall otherwise fully comply with the requirements of the HSR Act,
with respect to the Conversion Units.
8.13 REDEMPTION OF NHC NOTES. The Company may optionally redeem the
NHC Notes in the manner and to the extent provided in Section 6 of the NHC
Notes.
8.14 INFORMATION RELATING TO SPECIAL REORGANIZATION. The Company
shall provide to the Purchaser (x) any and all documents and materials
(including, without limitation, any proxy materials) provided to holders of
Units in connection with any meeting of holders of Units called to approve the
Special Reorganization, and (y) any and all other documents related to the
Special Reorganization reasonably requested by the Purchaser. The Company shall
inform the purchaser in writing if
<PAGE>
29
the Company business plan with regard to the Special Reorganization differs in
any material respect from the Special Reorganization Information.
8.15 ASSIGNMENT OF COMPANY'S OBLIGATIONS. The Company shall take all
actions necessary to ensure that the obligations of the Company under this
Agreement, the NHC Notes and the Registration Rights Agreement are assigned to
NHC and that NHC assumes all of the Company's obligations under this Agreement,
the NHC Notes and the Registration Rights Agreement.
8.16 BOARD REPRESENTATION.
(a) For so long as Purchaser shall own Conversion Units
representing, or NHC Notes convertible (after giving effect to any adjustments)
into Units representing, 5% or more of the total number of Units outstanding on
a fully-diluted basis, Purchaser shall have the right to designate one
individual (the "PURCHASER DESIGNEE") to be elected to serve on the Board of
Directors of the Managing General Partner (or, after the Special Reorganization,
on the Board of Directors of the NHC). The Purchaser Designee shall be an
individual who is mutually acceptable to both the Company and the Purchaser, and
the Company and Purchaser have agreed that Lawrence C. Tucker is mutually
acceptable as the initial Purchaser Designee.
(b) After the Closing Date, the stockholders of the Managing
General Partner shall take all action necessary to ensure that the Purchaser
Designee shall be elected to the Board of Directors of the Managing General
Partner; including, without limitation, causing a special meeting of the Board
of Directors of the Managing General Partner to be called to elect the Purchaser
Designee to the Board of Directors and voting all of their Managing General
Partner stock in favor of the Purchaser Designee at the next stockholders'
meeting.
(c) At each annual meeting of stockholders of the Managing
General Partner after the Closing Date but prior to the occurrence of the
Special Reorganization, so long as the Purchaser shall own Conversion Units
representing, or NHC Notes convertible (after giving effect to any adjustments)
into Units representing, 5% or more of the total number of Units outstanding on
a fully-diluted basis, the Purchaser shall be entitled to nominate the Purchaser
Designee to be elected to serve on the Board of Directors of the Managing
General Partner. The Managing General Partner shall cause the Purchaser Designee
to be included in the slate of nominees recommended by the Board to the Managing
General Partner's stockholders for election as directors, and the Managing
General Partner shall use its best efforts to cause the election of the
Purchaser Designee, including voting all shares for which the Managing General
Partner holds proxies (unless otherwise directed by the stockholder submitting
such proxy) or is otherwise entitled to vote, in favor of the election of such
person. Adams and NHC, Inc. hereby agree (for themselves individually and each
of their successors and assigns, and any Affiliate of each of them that owns
voting securities of the Managing General Partner) that they shall vote (i) all
of their Units (ii) all other securities of the Managing General Partner held by
them which are
<PAGE>
30
entitled to vote for directors and (iii) all proxies held by them (unless
otherwise directed by the stockholder submitting such proxy), in favor of the
election of the Purchaser Designee, and Adams and NHC, Inc. shall not sell,
assign or otherwise transfer any of their Units or other voting securities of
the Managing General Partner to an Affiliate thereof unless such Affiliate
agrees to be bound by the foregoing.
(d) Prior to the occurrence of the Special Reorganization, the
Managing General Partner shall take all steps necessary to ensure that the
Purchaser Designee is elected to the Board of Directors of NHC upon its
formation in the Special Reorganization.
(e) Commencing with the annual meeting of stockholders of NHC
immediately following the Special Reorganization, and at each annual meeting of
stockholders of NHC thereafter, so long as the Purchaser shall own Conversion
Units representing 5% or more of the total number of Units outstanding on a
fully-diluted basis, the Purchaser shall be entitled to nominate the Purchaser
Designee to be elected to serve on the Board of Directors of NHC. NHC shall
cause the Purchaser Designee to be included in the slate of nominees recommended
by the Board of Directors to NHC's stockholders for election as directors, and
NHC shall use its best efforts to cause the election of the Purchaser Designee,
including voting all shares for which NHC holds proxies (unless otherwise
directed by the stockholder submitting such proxy) or is otherwise entitled to
vote, in favor of the election of such person. Adams and NHC, Inc. hereby agree
(for themselves individually and each of their successors and assigns, and any
Affiliate of each of them that owns voting securities of NHC) that they shall
vote (i) all securities of NHC held by them which are entitled to vote for
directors and (ii) all proxies held by them (unless otherwise directed by the
stockholder submitting such proxy), in favor of the election of the Purchaser
Designee, and Adams and NHC, Inc. shall not sell, assign or otherwise transfer
any of their Units or other voting securities of NHC to an Affiliate thereof
unless such Affiliate agrees to be bound by the foregoing.
(f) In the event the Purchaser Designee shall cease to serve
as a director for any reason, other than by reason of the Purchaser not being
entitled to nominate the Purchaser Designee, the Company shall use its best
efforts to cause the vacancy resulting thereby to be filled by a nominee
mutually acceptable to NHC and the Purchaser. The Purchaser shall deliver notice
to the Board of Directors of the Managing General Partner designating a new
Purchaser Designee to replace the director previously nominated by the
Purchaser. If the Special Reorganization shall not have occurred, within thirty
(30) days of the giving of the notice, the Board of Directors of the Managing
General Partner shall, prior to the transaction of any other business, take all
action necessary to remove the director previously nominated by the Purchaser
and to elect the new Purchaser Designee; including, without limitation, causing
a special meeting of the Board of Directors of the Managing General Partner to
be called to elect the Purchaser Designee to the board and voting all of their
Managing General Partner stock in favor of the Purchase Designee at the next
stockholders' meeting. If the Special Reorganization has occurred, the Board of
<PAGE>
31
Directors of the Company shall take all action necessary to elect the new
Purchaser Designee.
8.17 SPECIAL REORGANIZATION.
(a) If the Company consummates the Special Reorganization, the
Special Reorganization shall be on terms and conditions as set forth in the
Reorganization S-4 except for material variations.
(b) The Company represents and warrants to the Purchaser that
the representations and warranties in Sections 5.1, 5.2, 5.3, 5.4, 5.5, 5.13 and
the first sentence of Section 5.7 shall be true and correct in all material
respects at and as of the date of the Special Reorganization (and after giving
effect thereto) as if made on and as of such date and as if all references to
the Notes mean the NHC Notes.
ARTICLE 9
NEGATIVE COVENANTS
The Company hereby covenants and agrees that:
9.1 CONSOLIDATIONS AND MERGERS. The Company shall not merge,
consolidate with or into, or convey, transfer, lease or otherwise dispose of
(whether in one transaction or in a series of transactions, including, without
limitation, pursuant to the Special Reorganization) all or substantially all of
its assets (whenever acquired), and the Company shall not allow any of its
Subsidiaries to merge or consolidate with or into any other Person (including,
without limitation, pursuant to the Special Reorganization) except another
Subsidiary of the Company, except that the Company may consolidate or merge with
or into, or sell all or substantially all of its assets to, any Person if:
(a) The corporation or partnership formed by such
consolidation or surviving such merger or the Person which acquires all or
substantially all of the assets of the Company shall be (after giving effect to
such transaction) a Solvent corporation or partnership organized or formed, as
the case may be, and existing under, the laws of the United States, any state
thereof, or the District of Columbia and, at the written request of the
Purchaser, shall expressly assume in writing all of the obligations of the
Company under this Agreement, the NHC Notes and the Registration Rights
Agreement;
(b) immediately after giving effect to such transaction, no
default under, or breach of, the provisions of Article 8 and 9 hereof or the NHC
Notes, exists, except for any default or breach which existed immediately prior
to the consummation of such transaction;
<PAGE>
32
(c) the corporation or partnership formed by or surviving any
such transaction or the Person which acquires all or substantially all of the
assets of the Company shall have a Consolidated Net Worth at least equal to the
Consolidated Net Worth of the Company immediately prior to such transaction; and
(d) the Company shall have furnished to the holders of the NHC
Notes (i) an opinion of counsel satisfactory to the holders of a majority in
principal amount of the NHC Notes, addressing the matters (other than solvency)
set forth in clause (a) above and (ii) the certificate of the Chief Financial
Officer of the Managing General Partner to the effect that such transaction has
been consummated in compliance with the foregoing requirements; PROVIDED that
nothing in this Section 9.1 shall affect the rights of any Holder under this
Agreement, the NHC Notes or the Registration Rights Agreement;
PROVIDED, HOWEVER, that with respect to the Special Reorganization, only
subsections (a) and (b) shall apply.
9.2 TRANSACTIONS WITH AFFILIATES. Unless approved by the Board of
Directors of the Managing General Partner, the Company shall not, and shall not
permit any of its Subsidiaries to, enter into any transaction with any Affiliate
of the Company or of any such Subsidiary, except in the ordinary course of
business and pursuant to the reasonable requirements of the business of the
Company or such Subsidiary and on terms no less favorable to the Company or such
Subsidiary than those the Company or such Subsidiary would obtain in a
comparable arm's-length transaction with a Person not an Affiliate of the
Company or such Subsidiary.
9.3 USE OF PROCEEDS. No portion of the proceeds of the Notes and the
Additional Notes will be used, directly or indirectly, (i) to purchase or carry
margin stock as defined in Regulation U or T of the Federal Reserve Board, (ii)
to repay or otherwise refinance indebtedness of the Company or others incurred
to purchase or carry margin stock or (iii) to extend credit for the purpose of
purchasing or carrying any margin stock.
9.4 NO INCONSISTENT AGREEMENTS. Neither the Company nor any of its
Subsidiaries shall enter into any loan or other agreement, or enter into any
amendment or other modification to any currently existing agreement, which by
its terms restricts or prohibits the ability of the Company to issue Units upon
conversion of the NHC Notes or to pay interest on the NHC Notes in accordance
with this Agreement and the terms of the NHC Notes; PROVIDED, HOWEVER, that the
foregoing shall not prevent the Company from entering into loan or other
agreements that contain, or any amendment or other modification to any currently
existing credit agreement to provide, restrictions on the ability of the Company
to optionally redeem or prepay the NHC Notes, following the occurrence of a
default or event of default under such agreements.
<PAGE>
33
ARTICLE 10
DISPOSITIONS
10.1 DISPOSITIONS BY ADAMS. If W. Andrew Adams ("Adams") at any time
or from time to time proposes or agrees to sell or transfer to a Person or a
"group" (within the meaning of Section 13(d)(3) of the Exchange Act) of Persons,
20% or more of his Units, Adams shall give written notice of such proposed sale
to the Purchaser within 15 Business Days prior to the date of such sale, which
notice shall state the price and other terms of the proposed transaction and
shall state the number of Units proposed to be sold. So long as the Purchaser
holds (i) Units or (ii) NHC Notes convertible (after giving effect to any
adjustments) into Units, that in the aggregate constitute, or upon conversion or
exchange would constitute, 5% or more of the total number of Units outstanding
(assuming the full conversion, exercise and exchange of all warrants, options
and convertible securities of the Company convertible, exercisable or
exchangeable into Units (which number shall be adjusted appropriately for any
subdivision, combination, reclassification or similar event with respect to the
Units), the Purchaser may, upon giving written notice thereof to Adams within
ten Business Days after receipt of such notice, participate in such sale on the
same terms and conditions as those offered by Adams to such third party or
parties, by including in such sale in place of an equal number of Units held by
Adams such aggregate number of Units as is equal to the product obtained by
multiplying (i) the number of Units proposed to be sold by Adams by (ii) a
fraction (A) the numerator of which is the number of Units into which the NHC
Notes held by the Purchaser have theretofore been or may be converted and (B)
the denominator of which is the sum of (x) the amount in such numerator and (y)
1,271,000 and each amount shall be adjusted appropriately for any subdivision,
combination, reclassification or similar event with respect to the Units);
PROVIDED, HOWEVER, that in no event may the Purchaser include in any such sale
more Units than the number of Units sold by Adams in such sale.
10.2 DISPOSITIONS BY THE PURCHASER. Until the earlier to occur of
(i) except in the case of clause (d), the second anniversary of the Closing
Date, (ii) the date on which the Purchaser ceases to own (A) Units or (B) NHC
Notes convertible (after giving effect to any adjustments) into Units, that in
the aggregate represent 5% or more of the total Units then outstanding (after
giving effect to such conversion), (iii) the occurrence of a Change of Control
and (iv) the occurrence of a breach of any of the covenants set forth in
Sections 8.8, 8.9, 8.10, 8.11, 8.12, 8.13, 8.16 and 8.17 and Article 9 and of
the NHC Notes, the Purchaser may only sell or otherwise transfer such NHC Notes
or Units in accordance with the following:
(a) The Purchaser may sell or otherwise transfer NHC Notes or
Units pursuant to the exercise of the registration rights set forth in the
Registration Rights Agreement.
<PAGE>
34
(b) The Purchaser may sell or otherwise transfer NHC Notes or
Units pursuant to the provisions of Rule 144 (or any successor rule) promulgated
under the Securities Act.
(c) The Purchaser may sell or otherwise transfer to any Person
in a transaction (other than a sale or other transfer pursuant to Rule 144) not
constituting a public offering any NHC Notes or Units that, in the aggregate
with any and all other such sales or transfers, represent (after giving effect
to the conversion of any NHC Notes to be so sold or previously so sold) a number
of Units in excess of 25% of the number of Units which the aggregate principal
amount of the NHC Notes purchased under this Agreement could have been converted
at the Time of Purchase (or the Second Time of Purchase, if one shall have
occurred) (the "25% THRESHOLD").
(d) If the Purchaser shall desire to sell or otherwise
transfer to any Person in a transaction (other than a sale or other transfer
pursuant to Rule 144) not constituting a public offering any NHC Notes or Units
in excess of the 25% Threshold, the Purchaser shall give the Company notice of
its desire to sell or otherwise dispose of such securities, specifying the
number of such securities the Purchaser desires to sell and the price at, and
terms and conditions on, which the Purchaser desires to sell such securities,
and offering to sell such securities in excess of the 25% Threshold to the
Company at such price and on such terms and conditions. If, within ten Business
Days of receiving such notice, the Company does not accept such offer in
writing, the Purchaser shall be free for a period of 40 Business Days to sell
such securities to any Person at a price not less than 95% of the price offered
to the Company, and on terms and conditions substantially equivalent to those
offered to the Company. If the Purchaser does not sell such securities subject
to such notice within such 40 Business Day period, the sale of such securities
shall thereafter be subject again to the provisions of this Section 10.2. If the
Company accepts such offer within the time period specified in the preceding
sentence, then the Company shall purchase the securities specified in such
notice as promptly as is reasonably practicable, but in no event later than 15
Business Days following such acceptance. If the Company for whatever reason
fails to purchase such securities on or prior to the date specified in the
preceding sentence, the Purchaser may, among other remedies available to it,
sell such securities to any Person at any price and on any terms.
(e) Notwithstanding anything in this Section 10.2 (other than,
in the case of clause (ii) below, Section 10.2(d)) to the contrary, the
Purchaser may, at any time and from time to time, subject to applicable
securities laws, sell or otherwise transfer Units or NHC Notes (i) pursuant to
an exchange offer or a tender offer not opposed by a majority of the Board of
Directors of the Managing General Partner, (ii) subject to Section 10.2(d),
pursuant to any all cash tender offer made by any Person for all of the issued
and outstanding Units or (ii) to any Person holding a partnership interest in
the Purchaser; PROVIDED, HOWEVER, that any Person to whom such securities are
transferred pursuant to clause (iii) shall agree to be bound by all of the
transfer restrictions set forth in this Section 10.2.
<PAGE>
35
(f) Except as otherwise provided in Section 10.2(e), any
securities transferred by the Purchaser pursuant to this Section 10.2 shall not
thereafter be subject to the provisions of this Section 10.2.
10.3 LEGENDS. The Purchaser agrees to the imprinting, so long as
required by the terms of this Agreement, of a legend on certificates
representing all of the NHC Notes and Conversion Units to the following effect:
"THE TRANSFER OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE IS RESTRICTED BY A NOTE PURCHASE AGREEMENT
ON FILE AT THE OFFICE OF THE COMPANY."
Adams agrees to the imprinting, so long as required by the terms of
this Agreement, of a similar legend on certificates representing all of its
Units.
ARTICLE 11
MISCELLANEOUS
11.1 SURVIVAL OF PROVISIONS. All of the representations and
warranties made herein and each of the provisions of Articles 1, 5, 6, 7, 10 and
11, and with regard to the provisions of Articles 8 and 9 for only so long as
the Purchaser shall own any NHC Notes or Conversion Units, shall survive the
execution and delivery of this Agreement, any investigation by or on behalf of
the Purchaser or any Affiliate, acceptance of the NHC Notes and payment
therefor, payment or prepayment of the NHC Notes upon redemption or otherwise,
conversion of the NHC Notes or termination of this Agreement.
11.2 NOTICES. All notices, demands and other communications provided
for or permitted hereunder shall be made in writing and shall be by registered
or certified first-class mail, return receipt requested, telecopier, courier
service or personal delivery:
(a) if to the Purchaser at the following address:
The 1818 Fund II, L.P.
c/o Brown Brothers Harriman & Co.
59 Wall Street
New York, New York 10005
Telecopier No.: (212) 493-8429
Attention: Mr. Lawrence C. Tucker
<PAGE>
36
with a copy to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
Telecopier No.: (212) 757-3990
Attention: Marilyn Sobel, Esq.
(b) if to the Company at the following address:
National HealthCare L.P.
100 Vine Street
Murfreesboro, Tennessee 37130
Telecopier No.: (615) 890-0123
Attention: Mr. Richard P. LaRoche, Jr.
with a copy to:
Harwell, Howard, Hyne, Gabbert & Manner, P.C.
1800 First American Center
315 Deaderick Street
Nashville, Tennessee 37219
Telecopier No.: (615) 251-1059
Attn: Ernest E. Hyne, II
All such notices and communications shall be deemed to have been
duly given: when delivered by hand, if personally delivered; when delivered by
courier, if delivered by commercial overnight courier service; five Business
Days after being deposited in the mail, postage prepaid, if mailed; and when
receipt is acknowledged, if telecopied.
11.3 SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the successors and permitted assigns of the
parties hereto, except that upon the occurrence of the Special Reorganization,
this Agreement shall inure to the benefit of and be binding upon NHC and its
successors and permitted assigns but not to NHR and its successors and assigns.
The Purchaser may assign any of its rights under this Agreement, the NHC Notes
or the Registration Rights Agreement to any of its Affiliates. Subject to the
restrictions of this Agreement, the Purchaser may assign any of its rights under
this Agreement, the NHC Notes or any Conversion Units, or a portion thereof, to
any other Person; PROVIDED that the Purchaser may not assign its rights under
Section 10.1 and may not assign its rights under Sections 8.1(f), 8.11, 8.12 and
8.16 to a Person acquiring any of the NHC Notes in a registered offering
effected pursuant to the Registration Rights Agreement. The Company may not,
except to NHC in connection with the Special Reorganization, assign any of its
rights under this Agreement without the written consent of the Purchaser. Except
as provided in Article 7, no Person other than the
<PAGE>
37
parties hereto is intended to be a beneficiary of this Agreement, the NHC Notes,
any Conversion Units or the Registration Rights Agreement.
11.4 AMENDMENT AND WAIVER. No failure or delay on the part of the
Company or the Purchaser in exercising any right, power or remedy hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right, power or remedy preclude any other or further exercise thereof
or the exercise of any other right, power or remedy. The remedies provided for
herein are cumulative and are not exclusive of any remedies that may be
available to the Company, the Purchaser or any Holder at law, in equity or
otherwise. Except as otherwise provided herein, no amendment, modification,
termination or waiver of any provision of this Agreement, or consent to any
departure by the Company from any provision of this Agreement, shall be
effective unless signed in writing by or on behalf of holders representing at
least a majority of the principal amount of the aggregate outstanding NHC Notes
and Conversion Units.
Any amendment, supplement or modification of or to any provision of
this Agreement, any waiver of any provision of this Agreement, and any consent
to any departure by the Company from the terms of any provision of this
Agreement, shall be effective only in the specific instance and for the specific
purpose for which made or given. Except where notice is specifically required by
this Agreement, no notice to or demand on the Company or Purchaser in any case
shall entitle the Company or Purchaser to any other or further notice or demand
in similar or other circumstances.
11.5 COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
11.6 HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
11.7 DETERMINATIONS. All determinations to be made by the Company,
the Purchaser or any Holder hereunder in its opinion or judgment or with its
approval or otherwise shall be made by it in its sole discretion.
11.8 GOVERNING LAW. This Agreement has been negotiated, executed and
delivered in the State of New York and shall be governed by and construed in
accordance with the laws of the State of New York, without regard to principles
of conflicts of law.
11.9 JURISDICTION. Each party to this Agreement hereby irrevocably
agrees that any legal action or proceeding arising out of or relating to this
Agreement or any agreements or transactions contemplated hereby may be brought
in the courts of the State of New York or of the United States of America for
the Southern District of New York and hereby expressly submits to the personal
jurisdiction and venue of
<PAGE>
38
such courts for the purposes thereof and expressly waives any claim of improper
venue and any claim that such courts are an inconvenient forum. Each party
hereby irrevocably consents to the service of process of any of the
aforementioned courts in any such suit, action or proceeding by the mailing of
copies thereof by registered or certified mail, postage prepaid, to the address
set forth in Section 11.2, such service to become effective ten days after such
mailing.
11.10 SEVERABILITY. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions hereof shall not be in any way impaired,
unless the provisions held invalid, illegal or unenforceable shall substantially
impair the benefits of the remaining provisions hereof.
11.11 RULES OF CONSTRUCTION. Unless the context otherwise requires,
"or" is not exclusive, and references to sections or subsections refer to
sections or subsections of this Agreement.
11.12 REMEDIES. If a breach of this Agreement, the NHC Notes or
Conversion Units by the Company occurs and is continuing, any Holder may pursue
any available remedy by proceeding at law or in equity to enforce the
performance (including, without limitation, the specific performance) of this
Agreement, the NHC Notes or such Conversion Units. A Holder may maintain a
proceeding even if it does not possess any of the NHC Notes or such Conversion
Units or does not produce any of them in the proceeding. Except as otherwise
provided by law, a delay or omission by any Holder in exercising any right or
remedy accruing upon any such breach shall not impair the right or remedy or
constitute a waiver of or acquiescence in any such breach. No remedy is
exclusive of any other remedy. All available remedies are cumulative.
11.13 ENTIRE AGREEMENT. This Agreement, together with the exhibits
hereto, the NHC Notes and the Registration Rights Agreement, is intended by the
parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the parties hereto
in respect of the subject matter contained herein and therein. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein or therein. This Agreement, together with the exhibits
hereto, the NHC Notes and the Registration Rights Agreement, supersede all prior
agreements and understandings between the parties with respect to such subject
matter.
11.14 ATTORNEYS' FEES. In any action or proceeding brought to
enforce any provision of this Agreement, the NHC Notes, any Conversion Units and
the Registration Rights Agreement or any other document or instrument
contemplated hereby or thereby, or where any provision hereof or thereof is
validly asserted as a defense, the successful party shall be entitled to recover
reasonable attorneys' fees, charges and disbursements in addition to any other
available remedy.
<PAGE>
39
11.15 PUBLICITY. Except as may be required by applicable law,
neither party hereto shall issue a publicity release or announcement or
otherwise make any public disclosure concerning this Agreement or the
transactions contemplated hereby, without prior approval by the other party
hereto. If any announcement is required by law to be made by either party
hereto, prior to making such announcement such party will deliver a draft of
such announcement to the other party and shall give the other party an
opportunity to comment thereon.
11.16 CONFIDENTIALITY. The Purchaser agrees that any confidential
information and affairs of the Company and its Subsidiaries obtained (i) during
any inspection pursuant to Section 8.9, (ii) pursuant to Section 8.1(c) or (iii)
from the Company or any of its Subsidiaries which is clearly marked
"Confidential" on the first or cover page thereof (collectively, the
"INFORMATION") shall be kept confidential by the Purchaser, and that the
Purchaser shall not use such Information in violation of law.
The term "Information" shall not include any information which (i)
at the time of disclosure or thereafter is generally available to the public
(other than as a result of its disclosure by the Purchaser), (ii) was available
to the Purchaser on a non-confidential basis prior to disclosure to the
Purchaser by the Company or (iii) becomes available to the Purchaser on a
non-confidential basis from a Person who is not to the Purchaser's knowledge
otherwise bound by a confidentiality agreement with the Company.
<PAGE>
40
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered by their respective officers hereunto duly authorized
as of the date first above written.
NATIONAL HEALTHCARE L.P.
By: NHC, Inc.,
Managing General Partner
By: /s/ Richard F. LaRoche, Jr.
------------------------------------
Name: Richard F. LaRoche, Jr.
Title:
THE 1818 FUND II, L.P.
By: Brown Brothers Harriman & Co.,
General Partner
By: /s/ Lawrence C. Tucker
------------------------------------
Name: Lawrence C. Tucker
Title: General Partner
As a material inducement to the Purchaser to enter
into this Agreement, the undersigned hereby agrees
to be bound by and perform in accordance with
Section 8.16 of this Agreement.
NHC, INC.
By: /s/ Richard F. LaRoche, Jr.
------------------------------------
Name: Richard F. LaRoche, Jr.
Title:
As a material inducement to the Purchaser to enter
into this Agreement, the undersigned hereby agrees
to be bound by and perform in accordance with
Sections 8.16, 10.1 and 10.3 of this Agreement.
/s/ W. Andrew Adams
-----------------------------------------
W. Andrew Adams
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE AND MAY
NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND
APPLICABLE STATE SECURITIES LAWS OR AN APPLICABLE
EXEMPTION TO THE REGISTRATION REQUIREMENTS OF SUCH ACT
OR SUCH LAWS.
THE TRANSFER OF THIS NOTE IS RESTRICTED BY A NOTE
PURCHASE AGREEMENT ON FILE AT THE OFFICE OF THE COMPANY.
NATIONAL HEALTHCARE L.P.
5.75% SUBORDINATED CONVERTIBLE NOTE
DUE JUNE 30, 2004
New York, New York
October 15, 1997
FOR VALUE RECEIVED, the Company hereby promises to pay to The 1818
Fund II, L.P. or registered assigns, at such place as the holder of this Note
shall from time to time designate to the Company in writing, on June 30, 2004,
or, if such date is not a Business Day, on the next day that is a Business Day,
a total of Twenty Million Dollars ($20,000,000) with daily interest from the
date hereof to and including the maturity hereof at the rate set forth in
Section 2 hereof, said interest being payable in quarterly installments in
arrears on the Business Day immediately preceding the last Business Day of
March, June, September and December in each year, commencing December 30, 1997,
to the Person in whose name this Note is registered at the close of business on
the fifteenth day of the month in which the payment date occurs, and at the
stated or any accelerated maturity hereof or, if the date of any such stated or
accelerated maturity is not a Business Day, on the next day which is a Business
Day. In case an Event of Default (as defined in Section 11) shall occur and be
continuing, the entire principal amount of this Note may become or be declared
to be due and payable in the manner and with the effect provided herein. Certain
capitalized terms used herein are defined in Section 12. Capitalized terms not
defined herein have the meanings ascribed to them in the Note Purchase
Agreement, dated as of October 15, 1997, by and between the Company and The 1818
Fund II,
<PAGE>
2
L.P. (as amended, supplemented or modified in accordance with the terms thereof,
the "Note Purchase Agreement").
Section 1. THE NOTES.
This 5.75% Subordinated Convertible Note is issued pursuant to the
Note Purchase Agreement and the holder of this Note is entitled to the benefits
of this Note, the Note Purchase Agreement and the Registration Rights Agreement
and may enforce the agreements of the Company contained herein and therein and
exercise the remedies provided for hereby and thereby or otherwise available in
respect hereto and thereto. All of the 5.75% Subordinated Convertible Notes
issued pursuant to the Note Purchase Agreement are referred to herein as the
"Notes." Upon (i) full payment of all principal and accrued interest under this
Note, or (ii) conversion of this Note as provided herein and irrevocable full
payment of all amounts due under this Note, all rights of the holder of this
Note and all obligations of the Company hereunder shall terminate.
Section 2. INTEREST.
The Company will pay interest on the principal amount hereof, until
the principal amount hereof is paid in full, at a rate of 5.75% per annum.
Interest on this Note will accrue from and including the most recent date to
which interest has been paid (or, if no interest has been paid, from and
including the date of issuance of this Note) to but excluding the date of
payment. Interest will be computed on the basis of a 360-day year consisting of
twelve 30-day months. The Company shall pay interest on overdue principal and on
overdue interest (to the full extent permitted by law) at a rate equal to 8.0%
per annum.
Section 3. METHOD OF PAYMENT.
The registered holder of this Note at the close of business on the
fifteenth day of the month in which the interest payment date occurs shall be
entitled to receive interest on this Note, even if this Note is converted or
canceled after the record date and on or before the interest payment date. The
holder of this Note must surrender it to the Company to collect the principal
payment; PROVIDED, that if upon surrender of this Note the holder does not
receive the full principal amount of this Note plus accrued but unpaid interest
thereon, then the holder shall be issued a new Note equal in principal amount to
the outstanding principal balance on such Note. The Company will pay principal
and interest in money of the United States that at the time of payment is legal
tender for payment of public and private debts. The Company shall pay principal
and interest in immediately available funds.
<PAGE>
3
Section 4. DISTRIBUTIONS.
In the event that the Company shall declare a dividend or make any
other distribution (including, without limitation, in capital stock (which shall
include, without limitation, any options, warrants or other rights to acquire
capital stock) of the Company, whether or not pursuant to a shareholder rights
plan, "poison pill" or similar arrangement, or other property or assets) on or
with respect to the Units (a "SPECIAL DISTRIBUTION"), then the holder of this
Note shall be entitled to receive, a distribution in an amount equal to the
amount of such dividend or distribution received by a holder of the number of
Units for which this Note is convertible on the record date for such dividend or
distribution. Any such amount shall be paid to the holder of this Note at the
same time such dividend or distribution is made to holders of Units.
As used in this Section 4, a Special Distribution shall include,
among other things, a distribution the intention or effect of which is to
decrease the assets or earning power of the Company or to convey a portion of
such operating assets or earning power of the Company to holders of Units;
PROVIDED, HOWEVER, that a Special Distribution shall not include: (i)
distributions of the Company's ordinary income not to exceed 60% of the
Company's ordinary income for the applicable fiscal quarter; (ii) distributions
of the Company's capital gains not to exceed that percentage which is equivalent
to the applicable maximum federal capital gains tax rate for individuals; (iii)
the distribution of securities of NHC and NHR in connection with the Special
Reorganization; (iv) a Regular Distribution (as defined in Section 7.5(g)
herein); and (v) a dividend or distribution paid solely in Units.
Section 5. CHANGE OF CONTROL OFFER.
The Company will redeem this Note tendered pursuant to a Change of
Control Offer in the manner and to the extent provided in the Note Purchase
Agreement.
Section 6. REDEMPTION.
6.1 OPTIONAL REDEMPTION. Except as otherwise provided herein, the
Company shall not have any right to prepay or redeem this Note. If at any time
on or after 42 months after the Closing Date the Company is then taxable as a
corporation the Company shall have the right, at any time at its sole option and
election, to redeem the Notes, in whole, but not in part, on not less than 30
days notice of the date of redemption, which must be a Business Day (any such
date an "OPTIONAL REDEMPTION DATE") at a price (the "OPTIONAL REDEMPTION PRICE")
equal to (i) the outstanding principal amount of the Notes to be redeemed, plus
(ii) an amount equal to all accrued and unpaid interest thereon, whether or not
currently payable, to
<PAGE>
4
the applicable Optional Redemption Date, in cash or other immediately available
funds.
6.2 NOTICE. Notice of any redemption of the Notes pursuant to this
Section 6 shall be mailed at least 30, but not more than 60, days prior to the
date fixed for redemption to each holder of the Notes to be redeemed, at such
holder's address as it appears on the transfer books of the Company. In order to
facilitate the redemption of the Notes, the Board of Directors of the Managing
General Partner may fix a record date for the determination of the Notes to be
redeemed, or may cause the transfer books of the Company for the Notes to be
closed, not more than 60 days or less than 30 days prior to the date fixed for
such redemption.
6.3 DEPOSIT OF FUNDS. On the date of any redemption being made
pursuant to this Section 6 which is specified in a notice given pursuant to
Section 6.2, the Company shall, and at any time after such notice shall have
been mailed and before the date of redemption the Company may, deposit for the
benefit of the holders of the Notes to be redeemed the funds necessary for such
redemption with a bank or trust company in the Borough of Manhattan, The City of
New York, having a capital and surplus of at least $100,000,000. Any moneys so
deposited by the Company and unclaimed at the end of two years from the date
designated for such redemption shall revert to the general funds of the Company
or as otherwise required by law. After such reversion, any such bank or trust
company shall, upon demand, pay over to the Company such unclaimed amounts and
thereupon such bank or trust company shall be relieved of all responsibility in
respect thereof and any holder of Notes to be redeemed shall look only to the
Company for the payment of the Optional Redemption Price. In the event that
moneys are deposited pursuant to this Section 6.3 in respect of Notes that are
converted in accordance with the provisions of Section 7, such moneys shall,
upon such conversion, revert to the general funds of the Company and, upon
demand, such bank or trust company shall pay over to the Company such moneys and
shall be relieved of all responsibilities to the holders of such converted Notes
in respect thereof. Any interest accrued on funds deposited pursuant to this
Section 6.3 shall be paid from time to time to the Company for its own account.
6.4 TERMINATION OF RIGHTS. Notice of redemption having been given as
aforesaid, upon the deposit of funds pursuant to Section 6.4 in respect of Notes
to be redeemed pursuant to Section 6.1, notwithstanding that any such Notes
themselves shall not have been surrendered for cancellation, from and after the
date of redemption designated in the notice of redemption (i) the principal
amount of the Notes that is to be redeemed shall no longer be deemed
outstanding, (ii) the rights to receive interest thereon shall cease to accrue
and (iii) all rights of the holders of the Notes to be redeemed shall cease and
terminate, excepting only the right to receive the Optional Redemption Price
therefor and the right to convert such Notes into Units until the close of
business on the date of redemption, in accordance with Section 7; PROVIDED,
HOWEVER, that if the Company shall default in the payment of the Optional
Redemption Price, the principal amount of the Notes shall thereafter be deemed
to be
<PAGE>
5
outstanding and the holders thereof shall have all of the rights of a holder of
Notes until such time as such default shall no longer be continuing or shall
have been waived by holders of at least 66-2/3% of the then outstanding
principal amount of all Notes.
Section 7. CONVERSION.
7.1 RIGHT TO CONVERT.
(a) Following the expiration or termination of applicable
waiting periods under the HSR Act, including any extensions thereof, the holder
of this Note shall have the right, at its option, at any time and from time to
time on or after January 5, 1998, to convert, subject to the terms and
provisions of this Section 7, any or all of the then outstanding principal
amount of this Note into such number of fully paid and non-assessable Units as
is equal, subject to Section 7.8, to the quotient of the principal of this Note
being so converted divided by the Conversion Price (as defined below) then in
effect, except that with respect to any portion of the Note which shall be
called for redemption, such right shall terminate at the close of business on
the date of redemption for such portion of this Note, unless in any such case
the Company shall default in performance or payment due upon redemption thereof;
PROVIDED, HOWEVER, that notwithstanding anything to the contrary herein, if
there is a Change of Control or Contemplated Change of Control (as defined
below) this Note shall be convertible at any time and from time to time, subject
to the expiration or termination of applicable waiting periods under the HSR
Act, including any extensions thereof. Such conversion right shall be exercised
by the surrender of this Note to the Company at any time during usual business
hours at its principal place of business to be maintained by it, accompanied by
written notice that the holder elects to convert this Note (or a specified
portion of the outstanding principal amount thereof) and specifying the name or
names (with address) in which a certificate or certificates for Units are to be
issued and (if so required by the Company) by a written instrument or
instruments of transfer in form reasonably satisfactory to the Company duly
executed by the holder or its duly authorized legal representative and transfer
tax stamps or funds therefor, if required pursuant to Section 7.12. If less than
all of the then outstanding principal amount of this Note is to be converted,
the Company will promptly issue and deliver to the holder a new Note in the
principal amount of the unconverted portion of the Note submitted for
conversion.
(b) Prior to and including the date of the occurrence of the
Special Reorganization, the Conversion Price shall be equal to $53 (the "Initial
Conversion Price"), subject to adjustment as set forth in Section 7.5. From and
including the next Business Day after the occurrence of the Special
Reorganization, the Conversion Price shall be equal to $36, subject to
adjustment as set forth in Section 7.5.
<PAGE>
6
7.2 MANDATORY CONVERSION. On the next Business Day following the
later of (x) the occurrence of the Special Reorganization, or (y) the expiration
or termination of applicable waiting periods under the HSR Act, including any
extensions thereof, subject to the terms and provisions of this Section 7, all
of the outstanding principal amount of this Note shall be converted into such
number of fully paid and non-assessable Units as is equal, subject to Section
7.8, to the quotient of the principal amount of this Note divided by the
Conversion Price then in effect.
7.3 ISSUANCE OF UNITS. As promptly as practicable after the
surrender, as herein provided, of this Note for conversion pursuant to Section
7.1 and 7.2, the Company shall deliver to or upon the written order of the
holder of this Note so surrendered a certificate or certificates representing
the number of fully paid and nonassessable Units into which this Note may be or
has been converted in accordance with the provisions of this Section 7. Subject
to the following provisions of this Section 7.3 and of Section 7.5, such
conversion shall be deemed to have been made immediately prior to the close of
business on the date that this Note shall have been surrendered in satisfactory
form for conversion, and the Person or Persons entitled to receive the Units
deliverable upon conversion of this Note shall be treated for all purposes as
having become the record holder or holders of such Units at such appropriate
time, and such conversion shall be at the Conversion Price in effect at such
time; PROVIDED, HOWEVER, that no surrender shall be effective to constitute the
Person or Persons entitled to receive the Units deliverable upon such conversion
as the record holder or holders of such Units while the transfer books of the
Company for Units shall be closed (but not for any period in excess of five
days), but such surrender shall be effective to constitute the Person or Persons
entitled to receive such Units as the record holder or holders thereof for all
purposes immediately prior to the close of business on the next succeeding day
on which such transfer books are open, and such conversion shall be deemed to
have been made at, and shall be made at the Conversion Price in effect at, such
time on such next succeeding day. In case of the redemption of this Note
pursuant to Section 6, the right of conversion shall cease and terminate, as to
the portion of this Note to be redeemed, at the close of business on the date
fixed for redemption, unless the Company shall default in the payment of the
applicable redemption price for this Note. If the last day for the exercise of
the conversion right shall not be a Business Day, then such conversion right may
be exercised on the next succeeding Business Day.
7.4 PAYMENT OF INTEREST. When this Note is converted, all interest
accrued and unpaid (whether or not currently payable) on this Note to the date
of conversion shall be immediately due and payable, in cash or other immediately
available funds, and must accompany the Units issued upon such conversion.
<PAGE>
7
7.5 ADJUSTMENT OF CONVERSION PRICE. The Conversion Price shall be
subject to adjustment as follows:
(a) In case the Company shall at any time or from time to time
(i) pay a dividend or make a distribution (other than a dividend or distribution
paid or made to the holder of this Note in the manner provided in Section 4) on
the outstanding Units in Units or other equity interests (which, for purposes of
this Section 7.5 shall include, without limitation, any dividends or
distributions in the form of options, warrants or other rights to acquire Units
or other equity interests) of the Company, (ii) subdivide the outstanding Units
into a larger number of Units, (iii) combine the outstanding Units into a
smaller number of Units, (iv) issue any equity interest in a reclassification of
the Units or (v) pay a dividend or make a distribution on the outstanding Units
in Units or other equity interests pursuant to a rights plan, "poison pill" or
similar arrangement, then, and in each such case, the Conversion Price in effect
immediately prior to such event shall be adjusted (and any other appropriate
actions shall be taken by the Company) so that the holder of this Note
thereafter surrendered for conversion shall be entitled to receive the number of
Units or other securities of the Company that such holder would have owned or
would have been entitled to receive upon or by reason of any of the events
described above, had this Note been converted immediately prior to the
occurrence of such event. An adjustment made pursuant to this Section 7.5(a)
shall become effective retroactively (i) in the case of any such dividend or
distribution, to a date immediately following the close of business on the
record date for the determination of holders of Units entitled to receive such
dividend or distribution or (ii) in the case of any such subdivision,
combination or reclassification, to the close of business on the day upon which
such corporate action become effective.
(b) In case the Company shall at any time or from time to time
issue or sell Units (or securities convertible into or exchangeable for Units,
or any options, warrants or other rights to acquire Units) (other than Units
issued pursuant to the Company's Employee Unit Purchase Plan or any other
employee or director option plan approved by the Board of Directors of the
Managing General Partner), at a price per Unit less than the Current Market
Price per Unit then in effect at the record date referred to in the following
sentence (treating the price per share or unit of any security convertible or
exchangeable or exercisable into Units as equal to (i) the sum of the price for
such security convertible, exchangeable or exercisable into Units plus any
additional consideration payable (without regard to any anti-dilution
adjustments) upon the conversion, exchange or exercise of such security into
Units divided by (ii) the number of Units initially underlying such convertible,
exchangeable or exercisable security), then, and in each such case, the
Conversion Price then in effect shall be adjusted by dividing the Conversion
Price in effect on the day immediately prior to such record date by a fraction
(x) the numerator of which shall be the sum of the number of Units outstanding
on such record date plus the number of additional Units issued or to be issued
(or the maximum number into which such convertible or exchangeable securities
initially may convert or exchange or for which
<PAGE>
8
such options, warrants or other rights initially may be exercised) and (y) the
denominator of which shall be the sum of the number of Units outstanding on such
record date plus the number of Units which the aggregate consideration for the
total number of such additional Units so issued (or into which such convertible
or exchangeable securities may convert or exchange or for which such options,
warrants or other rights may be exercised plus the aggregate amount of any
additional consideration initially payable upon conversion, exchange or exercise
of such security) would purchase at the Current Market Price per Unit on such
record date. Such adjustment shall be made whenever such Units, securities,
options, warrants or other rights are issued, and shall become effective
retroactively to a date immediately following the close of business on the
record date for the determination of holders of Units entitled to receive such
Units, securities, options, warrants or other rights; PROVIDED, HOWEVER, that
the determination as to whether an adjustment is required to be made pursuant to
this Section 7.5(b) shall only be made upon the issuance of such Units or such
convertible or exchangeable securities, options, warrants or other rights, and
not upon the issuance of the security into which such convertible or
exchangeable security converts or exchanges, or the security underlying such
option, warrants or other right; PROVIDED, FURTHER, that if any convertible or
exchangeable securities, options, warrants or other rights (or any portions
thereof) which shall have given rise to an adjustment pursuant to this Section
7.5(b) shall have expired or terminated without the exercise thereof and/or if
by reason of the terms of such convertible or exchangeable securities, options,
warrants or other rights there shall have been an increase or increases, with
the passage of time or otherwise, in the price payable upon the exercise or
conversion thereof, then the Conversion Price hereunder shall be readjusted (but
to no greater extent than originally adjusted with respect to the related event)
on the basis of (x) eliminating from the computation any additional Units
corresponding to such convertible or exchangeable securities, options, warrants
or other rights as shall have expired or terminated, (y) treating the additional
Units, if any, actually issued or issuable pursuant to the previous exercise of
such convertible or exchangeable securities, options, warrants or other rights
as having been issued for the consideration actually received and receivable
therein and (z) treating any of such convertible or exchangeable securities,
options, warrants or other rights which remain outstanding as being subject to
exercise or conversion on the basis of such exercise or conversion price as
shall be in effect at the time.
(c) In case the Company shall at any time or from time to time
issue or sell Units or securities convertible into or exchangeable for Units, or
any options, warrants or other rights to acquire Units (other than Units and
options to acquire Units, in each case issued pursuant to any stock option plan
of the Company or the Company's Employee Unit Purchase Plan), at a price per
Unit less than the Conversion Price then in effect at the record date referred
to in the following sentence (treating the price per share or unit of any
security convertible or exchangeable or exercisable into Units as equal to (A)
the sum of the price for such security convertible, exchangeable or exercisable
into Units plus any additional consideration payable (without regard to any
anti-dilution adjustments) upon the conversion,
<PAGE>
9
exchange or exercise of such security into Units divided by (B) the number of
Units initially underlying such convertible, exchangeable or exercisable
security), then, and in each such case, the Conversion Price then in effect
shall be adjusted, to the extent an adjustment is not made for any such issuance
or sale pursuant to Section 7.5(b), by dividing the Conversion Price in effect
on the day immediately prior to such record date by a fraction (x) the numerator
of which shall be the sum of the number of Units outstanding on such record date
plus the number of additional Units issued or to be issued (or the maximum
number into which such convertible or exchangeable securities initially may
convert or exchange or for which such options, warrants or other rights
initially may be exercised) and (y) the denominator of which shall be the sum of
the number of Units outstanding on such record date plus the number of Units
which the aggregate consideration for the total number of such additional Units
so issued (or into which such convertible or exchangeable securities may convert
or exchange or for which such options, warrants or other rights may be exercised
plus the aggregate amount of any additional consideration initially payable upon
conversion, exchange or exercise of such security) would purchase at the
Conversion Price on such record date. Such adjustment shall be made whenever
such Units, securities, options, warrants or other rights are issued, and shall
become effective retroactively to a date immediately following the close of
business on the record date for the determination of holders of Units entitled
to receive such Units, securities, options, warrants or other rights; PROVIDED,
HOWEVER, that the determination as to whether an adjustment is required to be
made pursuant to this Section 7.5(c) shall be made upon the issuance of such
Units or such convertible or exchangeable securities, options, warrants or other
rights; PROVIDED, FURTHER, that if any convertible or exchangeable securities,
options, warrants or other rights (or any portion thereof) which shall have
given rise to an adjustment pursuant to this Section 7.5(c) shall have expired
or terminated without the exercise thereof and/or if by reason of the terms of
such convertible or exchangeable securities, options, warrants or other rights
there shall have been an increase or increases, with the passage of time or
otherwise, in the price payable upon the exercise or conversion thereof, then
the Conversion Price hereunder shall be readjusted (but to no greater extent
than originally adjusted with respect to the related event) on the basis of (x)
eliminating from the computation any additional Units corresponding to such
convertible or exchangeable securities, options, warrants or other rights as
shall have expired or terminated, (y) treating the additional Units, if any,
actually issued or issuable pursuant to the previous exercise of such
convertible or exchangeable securities, options, warrants or other rights as
having been issued for the consideration actually received and receivable
therefor and (z) treating any of such convertible or exchangeable securities,
options, warrants or other rights which remain outstanding as being subject to
exercise or conversion on the basis of such exercise or conversion price as
shall be in effect at this time.
(d) In case the Company shall at any time or from time to time
distribute on or with respect to the Units (including any such distribution made
in connection with a consolidation or merger in which the Company is the
resulting or surviving corporation and the Units are not changed or exchanged)
cash, evidences of
<PAGE>
10
Indebtedness of the Company or another issuer, securities of the Company or
another issuer or other assets (excluding (i) Regular Distributions, (ii)
dividends and distributions paid or made to the holder of this Note in the
manner provided in Section 4, and (iii) dividends payable in Units for which
adjustment is made under Section 7.5(a)) or rights or warrants to subscribe for
or purchase securities of the Company (excluding those referred to in Section
7.5(b) and 7.5(c)), then, and in each such case, the Conversion Price then in
effect shall be adjusted by dividing the Conversion Price in effect immediately
prior to the date of such distribution by a fraction (x) the numerator of which
shall be the Current Market Price of the Units on the record date referred to
below and (y) the denominator of which shall be such Current Market Price of the
Units less the amount that a willing buyer would pay a willing seller in an
arm's-length transaction at such time (as determined by the Board of Directors
of the Managing General Partner) for the portion of the cash, evidences of
Indebtedness, securities or other assets so distributed or of such subscription
rights or warrants applicable to one Unit (but such denominator not to be less
than one); PROVIDED, HOWEVER, that no adjustment shall be made with respect to
any distribution of rights to purchase securities of the Company if the holder
of this Note would otherwise be entitled to receive such rights upon conversion
at any time of this Note into Units unless such rights are subsequently redeemed
by the Company, in which case such redemption shall be treated for purposes of
this Section 7.5(d) as a distribution on the Units. Such adjustment shall be
made whenever any such distribution is made; PROVIDED, HOWEVER, that in the case
of one or more distributions of cash or cash equivalents on or with respect to
the Units ("Cash Distribution(s)") such adjustment shall be calculated not later
than 45 days following the last day of the Calculation Period or Relevant Period
(each as defined in Section 7.5(g)), as the case may be. The adjustment shall
become effective retroactively to a date immediately following the close of
business on the record date for the determination of holders of Units entitled
to receive such distribution.
(e) In case the Company at any time or from time to time shall
take any action affecting the Units or its other equity interests, if any, other
than an action described in any of Section 7.5(a) through Section 7.5(d),
inclusive, or Section 7.9, then, and in each such case, the Conversion Price
shall be adjusted in such manner and at such time as the Board of Directors of
the Managing General Partner in good faith determines to be equitable in the
circumstances (such determination to be evidenced in a resolution, a certified
copy of which shall be mailed to the holders of the Notes).
(f) Notwithstanding anything herein to the contrary, no
adjustment under this Section 7.5 need be made to the Conversion Price (i)
unless such adjustment would require an increase or decrease of at least 1% of
the Conversion Price then in effect or (ii) for issuances of Units to any or all
of the Managing General Partner, the Administrative General Partner and Adams
solely for the purpose of maintaining their collective 1% interest in the
Company. Any lesser adjustment shall be carried forward and shall be made at the
time of and together with
<PAGE>
11
the next subsequent adjustment, which, together with any adjustment or
adjustments so carried forward, shall amount to an increase or decrease of at
least 1% of such Conversion Price. Any adjustment to the Conversion Price
carried forward and not theretofore made shall be made immediately prior to the
conversion of this Note pursuant hereto.
(g) For purposes of this Agreement, a "Regular Distribution"
shall mean a Cash Distribution in an amount that, when added to the amount of
all other Cash Distributions made during the 12-month period ending on the last
day of the fiscal quarter of the Company in which such Cash Distribution is made
(or, if this Note has been outstanding for a period shorter than 12 months, the
period from the first day of the fiscal quarter in which this Note was issued to
the last day of such fiscal quarter) (the "CALCULATION PERIOD"), does not exceed
sixty percent (60%) of the income of the Company during the Calculation Period
that, if the Calculation Period were a calendar year, would be subject, in the
hands of the holders of Units, to U.S. federal income tax applicable to the
Calculation Period. For the purposes of this Agreement, "Relevant Period" shall
mean the 12 month period ending on such last day (or, if this Note has been
outstanding for a period shorter than 12 months, the period from the first day
of the fiscal quarter in which the Note was issued to such last day).
(h) Notwithstanding anything to the contrary in this Section
7.5, no adjustment shall be made to the Conversion Price in connection with or
as a result of the Special Reorganization except as provided in Section 7.1.
7.6 NO ADJUSTMENT FOR TAKING RECORD ONLY. If the Company shall take
a record of the holders of Units for the purpose of entitling them to receive a
dividend or other distribution, and shall thereafter and before the distribution
to holders thereof legally abandon its plan to pay or deliver such dividend or
distribution, then thereafter no adjustment in the Conversion Price then in
effect shall be required by reason of the taking of such record.
7.7 OFFICERS' CERTIFICATE. Upon any increase or decrease in the
Conversion Price, then, and in each such case, the Company promptly shall
deliver to the registered holder of this Note at least 10 Business Days prior to
effecting any of the foregoing transactions a certificate, signed by the
President or a Vice-President and by the Treasurer or an Assistant Treasurer or
the Secretary or an Assistant Secretary of the Managing General Partner, setting
forth in reasonable detail the event requiring the adjustment and the method by
which such adjustment was calculated and specifying the increased or decreased
Conversion Price then in effect following such adjustment.
7.8 NO FRACTIONAL UNITS ISSUED. No fractional Units or scrip
representing fractional Units shall be issued upon the conversion of this Note.
If more than one Note shall be surrendered for conversion at one time by the
same
<PAGE>
12
holder, the number of full Units issuable upon conversion thereof shall be
computed on the basis of the aggregate outstanding principal amount of the Notes
so surrendered. If the conversion of any Note or Notes results in a fraction, an
amount equal to such fraction multiplied by the Current Market Price of the
Units on the Business Day preceding the day of conversion shall be paid to such
holder in cash by the Company.
7.9 SUBSEQUENT TRANSACTIONS. Except with regard to the Special
Reorganization, in case of any capital reorganization or reclassification or
other change of outstanding Units or other equity interests, if any, or in case
of any consolidation or merger of the Company with or into another Person (other
than a consolidation or merger in which the Company is the resulting or
surviving Person and which does not result in any reclassification or change of
Units or other outstanding equity interests, if any), or in case of any sale or
other disposition to another Person of all or substantially all of the assets of
the Company (any of the foregoing, a "TRANSACTION"), the Company, or such
successor or purchasing Person, as the case may be, shall execute and deliver to
each holder of Notes at least 10 Business Days prior to effecting any of the
foregoing Transactions a certificate stating that the holder of each Note then
outstanding shall have the right thereafter to convert such Note into the kind
and amount (estimating such amount to the extent necessary) of equity securities
or other securities (of the Company or another issuer) or property or cash
receivable upon such Transaction by a holder of the number of Units into which
such Note could have been converted immediately prior to such Transaction. Such
certificate shall provide for adjustments which shall be as nearly equivalent as
may be practicable to the adjustments provided for in this Section 7. If, in the
case of any such Transaction, the equity securities, other securities, cash or
property receivable thereupon by a holder of Units includes equity or other
securities of a Person other than the successor or purchasing Person and other
than the Company, which controls or is controlled by the successor or purchasing
Person or which, in connection with such Transaction, issues equity securities,
other securities, other property or cash to holders of Units, then such
certificate also shall be executed by such Person, and such Person shall, in
such certificate, specifically acknowledge the obligations of such successor or
purchasing Person and acknowledge its obligations to issue such equity
securities, other securities, other property or cash to the holders of Notes
upon conversion of the Notes as provided above. The provisions of this Section
7.9 and any equivalent thereof in any such certificate similarly shall apply to
successive Transactions. The provisions of this Section 7.9 and any equivalent
thereof in any such certificate are and shall be in addition to, and not in lieu
of, the requirements of the Note Purchase Agreement with respect to a Change of
Control Offer. Notwithstanding anything to the contrary in this Section 7.9,
from and after the consummation of the Special Reorganization, upon conversion
of this Note the holder shall be entitled to receive shares of capital stock of
NHC in accordance with the other provisions of this Section 7.
<PAGE>
13
7.10 NOTICE OF CERTAIN EVENTS. In case at any time or from time to
time:
(a) the Company shall declare a dividend (or any other
distribution) on the Units or other equity interests, if any, of the Company;
(b) the Company shall authorize the granting to the holders of
the Units or other equity interests, if any, of the Company of rights or
warrants to subscribe for or purchase any equity interests of any class or of
any other rights or warrants;
(c) there shall be any reclassification of the Units or other
equity interests, if any, of the Company, or any consolidation or merger to
which the Company is a party and for which approval of any holders of Units of
the Company is required, or any sale or other disposition of all or
substantially all of the assets of the Company; or
(d) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company;
then the Company shall mail to each holder of Notes at such holder's address as
it appears on the transfer books of the Company, as promptly as possible but in
any event at least ten days prior to the applicable date hereinafter specified,
a notice stating (x) the date on which a record is to be taken for the purpose
of such dividend, distribution or rights or warrants or, if a record is not to
be taken, the date as of which the holders of Units of record to be entitled to
such dividend, distribution or rights are to be determined, or (y) the date on
which such reclassification, consolidation, merger, sale, conveyance,
dissolution, liquidation or winding up is expected to become effective; PROVIDED
that in the case of any event to which Section 7.9 applies, the Company shall
give at least 10 days' prior written notice as aforesaid. Such notice also shall
specify the date as of which it is expected that holders of Units of record
shall be entitled to exchange their Units for equity securities or other
securities or property or cash deliverable upon such reclassification,
consolidation, merger, sale, conveyance, dissolution, liquidation or winding up.
7.11 RESERVATION OF UNITS. The Company shall at all times reserve
and keep available for issuance upon the conversion of the Notes, such number of
its authorized but unissued Units as will from time to time be sufficient to
permit the conversion of all the then outstanding principal amount of the Notes
and shall take all action required to increase the authorized number of Units if
at any time there shall be insufficient authorized but unissued Units to permit
such reservation or to permit the conversion of all the then outstanding
principal amount of the Notes.
<PAGE>
14
7.12 ISSUE TAXES. The issuance or delivery of certificates for Units
upon the conversion of Notes shall be made without charge to the converting
holder of Notes for such certificates or for any tax in respect of the issuance
or delivery of such certificates or the securities represented thereby, and such
certificates shall be issued or delivered in the respective names of, or in such
names as may be directed by, the holders of the Notes converted; 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 certificate in a name other than that of the holder of the Notes, and the
Company shall not be required to issue or deliver such certificate unless or
until the Person or Persons requesting the issuance or delivery thereof shall
have paid to the Company the amount of such tax or shall have established to the
reasonable satisfaction of the Company that such tax has been paid.
Section 8. INDENTURE.
8.1 EXECUTION AND DELIVERY OF INDENTURE. On or after July 1, 1998,
at the request of the holders of a majority of the then outstanding principal
amount of the Notes at such time (the "REQUESTING HOLDERS"), the Company, at its
expense and only if a filing under the Trust Indenture Act of 1939 is required,
will, as soon as practicable, notify all other holders of Notes of such request
and execute and deliver to a bank or trust company having a combined capital and
surplus in excess of $100,000,000 that shall be designated by the Company as
trustee and shall be reasonably acceptable to the holders of a majority of the
then outstanding principal amount of the Notes, an indenture (the "INDENTURE"),
providing for the issuance thereunder of debentures ("DEBENTURES") in an
aggregate principal amount at least equal to the aggregate outstanding principal
amount of the Notes and having substantially all the rights, benefits and
privileges carried by the Notes. The Indenture and the Debentures to be issued
thereunder shall embody the substance of all covenants, provisions and terms,
including subordination provisions, contained in the Note Purchase Agreement and
in the Notes, and the Indenture and the Debentures shall, so far as appropriate,
contain such other terms of the Notes and such terms of the Note Purchase
Agreement as shall be approved by the Company and the holders of a majority of
the then outstanding principal amount of the Notes, and such other terms as are
customary or appropriate in corporate indentures and debentures, or required by
the Trust Indenture Act of 1939, as amended, as the case may be, and shall
otherwise, subject to the foregoing, be satisfactory in substance and form to
the Company, its counsel, the Requesting Holders and such counsel as may be
selected by the Requesting Holders. The Indenture and all Debentures delivered
thereunder shall, in the opinion of counsel to the Company reasonably
satisfactory to the Requesting Holders, be duly authorized, executed and
delivered by or on behalf of the Company, valid and binding obligations of the
Company enforceable in accordance with their terms, and in the case of the
Debentures, entitled to the benefits of the Indenture.
<PAGE>
15
8.2 EXCHANGE OF NOTES FOR DEBENTURES. Upon the execution and
delivery of the Indenture, each Note shall be deemed to be amended to contain
the terms of the Debentures. Within five days of such execution and delivery the
Company, at its expense, will give written notice thereof to each holder of the
Notes at the time outstanding and, at any time or from time to time thereafter,
upon surrender of any Notes to the Company in exchange therefor, the Company
will issue and deliver Debentures in not less than the same aggregate principal
amount as the then unpaid principal amount of the Notes surrendered, in fully
registered form and in such denominations (not less than $1,000) as any holder
may request and bearing interest from the date to which interest shall have been
paid on the Note or Notes so surrendered. The Company will pay all expenses in
connection with the indenturization and issuance of the Debentures.
Section 9. SUBORDINATION.
9.1 AGREEMENT OF SUBORDINATION. The Company covenants and agrees,
and the holder of this Note (whether upon original issue or upon transfer,
assignment or exchange thereof), by his acceptance hereof, likewise covenants
and agrees, that the payment of the principal of, premium, if any, and interest
on this Note, together with any other payments payable in respect of this Note,
including, without limitation, any amount payable in connection with the
redemption or repurchase of this Note ("Subordinated Amounts") shall, to the
extent and in the manner hereinafter set forth, be subordinated and subject in
right of payment to the prior payment in full of all Senior Indebtedness,
whether outstanding at the date of this Note or hereafter incurred.
The term "Senior Indebtedness" shall mean the principal of, premium,
if any, and interest on, and any other payment due pursuant to any of the
following, whether outstanding at the date hereof or hereafter incurred or
created:
(a) all Indebtedness of the Company for money borrowed arising
under or in connection with any of the Credit Agreements, as amended and as any
of them may be further amended or modified from time to time, and all renewals,
extensions, refundings or refinancings of such Indebtedness incurred with
financial institutions, insurance companies or other institutional lenders (any
such Indebtedness and renewals, extensions, refundings or refinancings thereof,
"Senior Institutional Indebtedness");
(b) all Indebtedness of the Company for money borrowed other
than Senior Institutional Indebtedness (including, without limitation, any
Indebtedness secured by a mortgage, conditional sales contract or other lien
which is (i) given to secure all or part of the purchase price of property
subject thereto, whether given to the vendor of such property or to another, or
(ii) existing on property at the time of acquisition thereof);
<PAGE>
16
(c) all Indebtedness of the Company evidenced by notes,
debentures, bonds or other securities sold by the Company for money;
(d) all lease obligations of the Company which are capitalized
on the books of the Company in accordance with generally accepted accounting
principles;
(e) all Indebtedness of others of the kinds described in either
of the preceding clauses (b) or (c) and all lease obligations of others of the
kind described in the preceding clause (d) assumed by or guaranteed in any
manner by the Company or in effect guaranteed by the Company through an
agreement to purchase, contingent or otherwise;
(f) all Indebtedness of any subsidiary of the Company or of
National Health Investors, Inc., for which the Company is liable as a guarantor;
(g) all renewals, extensions, refundings or refinancings of
Indebtedness of the kinds described in any of the preceding clauses (b), (c),
(e) and (f) and all renewals or extensions of lease obligations of the kinds
described in either of the preceding clauses (d) and (e);
(h) interest accruing subsequent to the filing of a petition
initiating any bankruptcy, insolvency or similar proceeding with respect to any
Indebtedness or lease obligation of the Company;
(i) all obligations of the Company in respect of any rate
hedging agreement entered into with any holder of any Senior Indebtedness; and
(j) all fees, expenses, reimbursements and other amounts payable
to holders of Senior Indebtedness under the terms of the instrument or lease
creating or evidencing the same,
unless, in the case of any particular Indebtedness, lease, renewal, extension,
refunding or refinancing, the instrument or lease creating or evidencing the
same or the assumption or guarantee of the same expressly provides that such
Indebtedness, lease, renewal, extension, refunding or refinancing is not senior
in right of payment to the Notes or is expressly subordinate by its terms in
right of payment to all other Indebtedness of the Company.
This Section 9 shall constitute a continuing offer to all persons
who, in reliance upon such provisions, become holders of, or continue to hold,
Senior Indebtedness, and such provisions are made for the benefit of the holders
of Senior Indebtedness, and such holders are made obligees hereunder and they
and/or each of them may enforce such provisions in accordance with the
provisions of this Note.
<PAGE>
17
No provision of this Section 9 shall prevent the occurrence of any
default or Event of Default hereunder.
9.2 PAYMENTS TO NOTE HOLDERS. No payment shall be made by the
Company of any Subordinated Amounts: (a) in the event and during the
continuation of any default in the payment (a "PAYMENT DEFAULT") of principal,
premium, if any, interest or any other payment due on any Senior Indebtedness
under or in connection with the instrument, agreement or lease evidencing such
Senior Indebtedness and the holders of the requisite principal amounts of such
Senior Indebtedness or their agents shall not have delivered to the holder of
this Note a notice of waiver of the benefits of this clause (a) and a consent to
the making of scheduled payments on or on account of this Note or taking any
other prohibited action until further notice from such holders or such agents;
or (b) in the event of receipt of written notice by the holder of this Note from
the holders of any Senior Institutional Indebtedness or their representatives of
a default (other than a Payment Default) permitting acceleration of any Senior
Institutional Indebtedness for a period (the "BLOCKAGE PERIOD") terminating on
the earlier to occur of (i) the cure, waiver or cessation of such default or
(ii) 180 days from the date of receipt of written notice thereof by the holder
of this Note. At the expiration of such Blockage Period, and so long as there
does not exist a Payment Default, the Company shall promptly pay to the holder
of this Note all sums not paid during such Blockage Period as a result of this
paragraph. For all purposes of this paragraph, no event of default which existed
or was continuing with respect to the Senior Institutional Indebtedness to which
the Blockage Period relates on the date such Blockage Period commenced shall be
or be made the basis for the commencement of any subsequent Blockage Period by
the holder or holders of such Senior Institutional Indebtedness (or their
respective agents) unless such event of default is cured or waived for a period
of not less than 90 consecutive days. There shall be no more than one Blockage
Period initiated in any 360 day period.
Upon any payment by the Company, or distribution of assets of the
Company of any kind or character, whether in cash, property or securities, to
creditors upon any dissolution or winding-up or liquidation or reorganization of
the Company, whether voluntary or involuntary or in bankruptcy, insolvency,
receivership or other proceedings, all amounts due or to become due upon all
Senior Indebtedness shall first be paid in full, or payment thereof provided for
in money in accordance with its terms, before any payment (other than equity
securities or other securities of the Company or any other entity, the payment
of which is subordinated at least to the extent provided in this Section 9 to
the payment of all Senior Indebtedness that may at the time be outstanding) is
made on account of the principal, premium, if any, or interest on, or other
amounts payable in respect of, this Note including, without limitation, any
amount payable in connection with the redemption of this Note; and upon any such
dissolution, winding-up or liquidation or reorganization any payment by the
Company, or distribution of assets of the Company of any kind or character,
whether in cash, property or securities, to which the holder of this Note would
be entitled, except for the provisions of this Section 9, shall be
<PAGE>
18
paid by the Company or by any receiver, trustee in bankruptcy, liquidating
trustee, agent or other Person making such payment or distribution, or by the
holder of this Note if received by them or it, directly to the holders of Senior
Indebtedness (pro rata to such holders on the basis of the respective amounts of
Senior Indebtedness held by such holders) or their representative or
representatives, or to the trustee or trustees under any indenture pursuant to
which any instruments evidencing any Senior Indebtedness may have been issued,
as their respective interests may appear, to the extent necessary to pay all
Senior Indebtedness in full, in money or money's worth, after giving effect to
any concurrent payment or distribution to or for the holders of Senior
Indebtedness, before any payment or distribution is made to the holder of this
Note.
In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities, prohibited by the foregoing, shall be received by the
holder of this Note before all Senior Indebtedness is paid in full, or provision
is made for such payment in money in accordance with its terms, such payment or
distribution shall be held in trust for the benefit of and shall be paid over or
delivered to the holders of Senior Indebtedness or their representative or
representatives, or to the trustee or trustees under any indenture pursuant to
which any instrument evidencing any Senior Indebtedness may have been issued, as
their respective interests may appear, for application to the payment of all
Senior Indebtedness remaining unpaid to the extent necessary to pay all Senior
Indebtedness in full in money in accordance with its terms, after giving effect
to any concurrent payment or distribution to or for the holders of such Senior
Indebtedness.
9.3 SUBROGATION OF NOTE. Subject to the payment in full of all
Senior Indebtedness, the rights of the holder of this Note shall be subrogated
to the rights of the holders of Senior Indebtedness to receive payments or
distributions of cash, property or securities of the Company applicable to the
Senior Indebtedness until the principal of (and premium, if any) and interest on
this Note shall be paid in full; and, for the purposes of such subrogation, no
payments or distributions to the holders of the Senior Indebtedness of any cash,
property or securities to which the holder of this Note would be entitled except
for the provisions of this Section 9, and no payment over pursuant to the
provisions of this Section 9, to or for the benefit of the holders of Senior
Indebtedness by the holder of this Note, shall, as between the Company, its
creditors other than holders of Senior Indebtedness, and the holder of this
Note, be deemed to be a payment by the Company to or on account of the Senior
Indebtedness. It is understood that the provisions of this Section 9 are and are
intended solely for the purpose of defining the relative rights of the holder of
this Note, on the one hand, and the holders of the Senior Indebtedness, on the
other hand.
If any payment or distribution to which the holder of this Note
would otherwise have been entitled but for the provisions of this Section 9
shall have been applied, pursuant to the provisions of this Section 9 to the
payment of amounts
<PAGE>
19
payable under Senior Indebtedness of the Company, then, and in such case, the
holder of this Note shall be entitled to receive from the holders of Senior
Indebtedness the full amount of any such payments or distributions received by
holders of Senior Indebtedness in excess of the amount sufficient to pay in full
all amounts payable under or in respect of, the Senior Indebtedness of the
Company.
Nothing contained in this Section 9 or elsewhere in this Note is
intended to or shall impair or affect, as between the Company, its creditors
other than the holders of Senior Indebtedness, and the holder of this Note, the
obligation of the Company, which is absolute and unconditional, to pay to the
holder of this Note the principal of (and premium, if any) and interest on this
Note as and when the same shall become due and payable in accordance with its
terms, or is intended to or shall affect the relative rights of the holder of
this Note and creditors of the Company other than the holders of the Senior
Indebtedness, nor shall anything herein or therein prevent the holder of this
Note from exercising all remedies otherwise permitted by applicable law upon
default under this Note, subject to the rights, if any, under this Section 9 of
the holders of Senior Indebtedness in respect of cash, property or securities
of the Company received upon the exercise of any such remedy.
Upon any payment or distribution of assets of the Company referred
to in this Section 9, the holder of this Note shall be entitled to rely upon any
order or decree made by any court of competent jurisdiction in which such
dissolution, winding-up, liquidation or reorganization proceedings are pending,
or a certificate of the receiver, trustee in bankruptcy, liquidation trustee,
agent or other Person making such payment or distribution, delivered to the
holder of this Note, for the purpose of ascertaining the Persons entitled to
participate in such distribution, the holders of the Senior Indebtedness and
other Indebtedness of the Company, the amount thereof or payable thereon, the
amount or amounts paid or distributed thereon and all other facts pertinent
thereto and to this Section 9.
9.4 NOTICE TO NOTE HOLDERS. The Company shall give prompt written
notice to the holder of this Note of any fact known to the Company which would
prohibit the making of any payment to the holder of this Note.
9.5 NOTE HOLDER'S RELATION TO SENIOR INDEBTEDNESS. The holder of
this Note shall be entitled to all the rights set forth in this Section 9 in
respect of any Senior Indebtedness at any time held by it, to the extent as any
other holder of Senior Indebtedness, and nothing in this Note shall deprive the
holder of this Note of any of its rights as such holder.
With respect to the holders of Senior Indebtedness, the holder of
this Note undertakes to perform or to observe only such of its covenants and
obligations as are specifically set forth in this Note, and no implied covenants
or obligations with respect to the holders of Senior Indebtedness shall be read
into this Note against the holder of this Note. The holder of this Note shall
not be deemed to owe any
<PAGE>
20
fiduciary duty to the holders of Senior Indebtedness and the holder of this Note
shall not be liable to any holder of Senior Indebtedness if it shall mistakenly
pay over or deliver to the Company or any other Person money or assets to which
any holder of Senior Indebtedness shall be entitled by virtue of this Section 9
or otherwise.
9.6 NO IMPAIRMENT OF SUBORDINATION. No right of any present or
future holder of any Senior Indebtedness to enforce subordination as herein
provided shall at any time in any way be prejudiced or impaired by any act or
failure to act on the part of the Company or by any act or failure to act, in
good faith, by any such holder, or by any noncompliance by the Company with the
terms, provisions and covenants of this Note regardless of any knowledge thereof
which any such holder may have or otherwise be charged with.
Section 10. ADDITIONAL INDEBTEDNESS.
The Company hereby covenants and agrees that, so long as any amount
is outstanding on any of the Notes, the Company will not, without the consent of
a majority in outstanding principal amount of the Notes, create, assume, incur
or in any manner become or remain liable in respect of any Indebtedness (as
defined in the Note Purchase Agreement), other than Senior Indebtedness, that by
its terms is expressly subordinate in right of payment to the Senior
Indebtedness unless by its terms such Indebtedness is expressly junior to, or
PARI PASSU with, this Note in right of payment.
Section 11. DEFAULTS AND REMEDIES.
11.1 EVENT OF DEFAULT. An "Event of Default" shall occur if:
(a) the Company defaults in the payment of interest on this
Note when the same becomes due and payable and such default continues for a
period of 15 Business Days, whether or not such payment shall be prohibited by
the provisions of Section 9 hereof;
(b) the Company defaults in the payment of principal of the
Note when the same becomes due and payable at maturity, upon redemption or
otherwise, whether or not such payment shall be prohibited by the provisions of
Section 9 hereof;
(c) the Company fails to comply with Section 10 hereof or with
Section 8.16 or Article 9 of the Note Purchase Agreement, and if such failure is
capable of being cured, as determined in good faith by the Purchaser, such
failure continues uncured for 30 days (or if, despite the Company's good faith
efforts to
<PAGE>
21
remedy such failure, such failure is not remedied within such 30 day period,
then such failure continues uncured for an additional 30 days);
(d) the Company fails to comply with any agreements (other than
those referred to in clauses (a), (b) or (c) above) in the Note Purchase
Agreement, this Note or the Registration Rights Agreement and, if such failure
is capable of being remedied, such failure continues unremedied for 30 days (or
if, despite the Company's good faith efforts to remedy such failure, such
failure is not remedied within such 30-day period, then if such failure
continues unremedied for an additional 60 days) after notice thereof by the
holders of a majority of the then outstanding principal amount of the Notes;
(e) the Company or any of its Subsidiaries pursuant to or
within the meaning of any United States bankruptcy laws or any applicable
bankruptcy, insolvency or similar laws of any other country (a "Bankruptcy
Law"):
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief
against it in an involuntary case,
(iii) consents to the appointment of a receiver,
liquidator, assignee, custodian, trustee, sequestrator or other similar
official (a "Custodian") of it or for all or substantially all of its
property, or
(iv) makes a general assignment for the benefit of its
creditors;
(f) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(i) is for relief against the Company or any of its
Subsidiaries in an involuntary case,
(ii) appoints a Custodian of the Company or any of its
Subsidiaries or for all or substantially all of its property, or
(iii) orders the winding up or liquidation of the
Company or any of its Subsidiaries and the order or decree remains
unstayed and in effect for 60 days;
(g) the Company or any of its Subsidiaries defaults in the
payment of Indebtedness aggregating in excess of $10,000,000 when due, after any
grace periods with respect thereto shall have expired and upon non-waiver by the
holders of any such Indebtedness and such default continues unremedied for 30
days,
<PAGE>
22
or there has been an acceleration of in excess of $10,000,000 aggregate
principal amount of Indebtedness of the Company by the holder thereof following
an event of default as defined in any mortgage, indenture, agreement or
instrument under which there may be issued or by which there may be secured or
evidenced such Indebtedness of the Company, whether such Indebtedness now exists
or shall hereafter be created; or
(h) a judgment for the payment of money the uninsured portion
of which exceeds $10,000,000 shall be rendered against the Company or any of its
Subsidiaries and shall remain undischarged for a period (during which execution
shall not be effectively stayed) of 60 days after the date on which the
judgement has been rendered, unless (i) no proceeding for execution of such
judgment has been commenced or (ii) any such proceeding has been stayed.
11.2 ACCELERATION. If an Event of Default occurs under clauses (e)
or (f) of Section 11.1, then the principal of and the accrued interest on all
Notes shall become due and payable immediately, whether or not notice of such
Event of Default shall have been given by any holder of Notes. If any other
Event of Default occurs and is continuing, holders holding a majority of the
then outstanding principal amount of the Notes by notice to the Company may
declare the principal of and accrued interest on all the Notes to be due and
payable immediately. Upon such declaration such principal and interest shall be
due and payable immediately. The holders of a majority of the then outstanding
principal amount of the Notes may rescind an acceleration and its consequences
if all existing Events of Default (other than nonpayment of principal or
interest that has become due solely because of the acceleration), have been
cured or waived and if the rescission would not conflict with any judgment or
decree. Nothing in this Section 11.2 shall limit or modify the provisions of
Section 9.
11.3 OTHER REMEDIES. If an Event of Default occurs and is
continuing, the holder of this Note may pursue any available remedy by
proceeding at law or in equity to collect the payment of principal of or
interest on this Note or to enforce the performance of any provision of this
Note, the Note Purchase Agreement or the Registration Rights Agreement.
The holder of this Note may maintain a proceeding even if it does
not possess the Note or does not produce it in the proceeding. Except as
otherwise provided by law, a delay or omission by this holder of this Note in
exercising any right or remedy accruing upon an Event of Default shall not
impair the right or remedy or constitute a waiver of or acquiescence in the
Event of Default. No remedy is exclusive of any other remedy. All available
remedies are cumulative.
11.4 WAIVER OF DEFAULTS. Holders of a majority of the then
outstanding principal amount of the Notes may waive in writing a default and its
consequences (other than a default in the payment of principal of or interest on
this Note). When a default is
<PAGE>
23
waived, it is deemed cured, but no such waiver shall extend to any subsequent or
other default or Event of Default or impair any consequent right.
11.5 CONTROL BY MAJORITY. Holders of a majority in outstanding
principal amount of the Notes may direct the time, method and place of
conducting any proceeding for any legal remedy available to the holders;
PROVIDED, HOWEVER, that if an "Event of Default" occurs under clause (a) or (b)
of Section 11.1, the holder of this Note, if it exercises its right to
accelerate the maturity of this Note, may proceed, subject to the next to last
sentence of Section 11.2, to enforce its remedies with or without the holders of
any other Notes at the time and place and in the manner determined by such
holder in its sole discretion.
Section 12. DEFINITIONS.
For the purposes of this Note, the following terms shall have the
meanings indicated:
"AFFILIATE" shall have the meaning ascribed to such term in Rule
12b-2 of the General Rules and Regulations under the Securities Exchange Act of
1934, as amended.
"BUSINESS DAY" shall mean any day other than a Saturday, Sunday or
other day on which commercial banks in the City of New York are authorized or
required by law or executive order to close.
"COMPANY" shall mean National HealthCare L.P., a Delaware limited
partnership and any permitted successors and assigns; PROVIDED that upon the
occurrence of the Special Reorganization the term "Company" shall refer to NHC
and any permitted successors and assigns.
"CONTEMPLATED CHANGE OF CONTROL" shall mean such time as there is a
public announcement or filing of any document with the Securities and Exchange
Commission by the Company or any other Person which discloses an actual,
proposed or contemplated Change of Control of the Company (other than the
Special Reorganization).
"CREDIT AGREEMENT" shall mean the Loan Agreements, Indentures of
Trust, Guarantees and other documents relating to Company Indebtedness with or
to State Street Bank and Trust Company of Connecticut, Third National Bank in
Nashville and/or the Toronto Dominion Bank (including the $50 million Credit
Revolving Loan, dated December 31, 1996, as amended May 15, 1997, among the
Company, SunTrust Bank, Nashville, N.A., as agent, and the lenders named
therein), as any of such documents may be amended, modified or replaced from
time to time.
"CURRENT MARKET PRICE" per Unit shall mean, on any date specified
herein for the determination thereof, (a) the average daily Market Price of the
Units for the
<PAGE>
24
twenty trading days immediately preceding such date (if no Market Price is
available for any given trading day, such trading day shall not be included in
the determination of the Current Market Price), and (b) if the Units are not
then listed or admitted to trading on any national securities exchange or quoted
in the over-counter market, a market price per share determined at the Company's
expense by an appraiser chosen by the holders of a majority of the Notes with
the consent of the Company, which consent shall not be unreasonably withheld or,
if no such appraiser is so chosen more than twenty business days after notice of
the necessity of such calculation shall have been delivered by the Company to
the holders of the Notes, then by an appraiser chosen by the Company.
"MANAGING GENERAL PARTNER" has the meaning assigned to that term in
the Amended and Restated Agreement of Limited Partnership of the Company, and,
as of the date hereof, is NHC, Inc.; PROVIDED, that after National HealthCare
L.P. becomes NHC and NHR in the Special Reorganization all references to the
Managing General Partner in this Note shall become references to the Company.
"MARKET PRICE" shall mean, per Unit, on any date specified herein:
(a) the closing price per share of the Units on such date published in the Wall
Street Journal or, if no such closing price on such date is published in the
Wall Street Journal, the closing price on such date, as officially reported on
the principal national securities exchange on which the Units are then listed or
admitted to trading; or (b) if the Units are not then listed or admitted to
trading on any national securities exchange but are designated as a national
market system security by the National Association of Securities Dealers, Inc.,
the last trading price (the closing sale price) of the Units on such date; or
(c) if there shall have been no trading on such date or if the Units are not so
designated, the average of the reported closing bid and asked prices of the
Units, on such date as shown by the National Market System of the National
Association of Securities Dealers, Inc. Automated Quotations System (NASDAQ) and
reported by any member firm of the American Stock Exchange, Inc. selected by the
Company.
"NHC" shall mean National HealthCare Corporation, a Delaware
corporation, and its successors and assigns, NHC being one of two entities to be
formed in the restructuring of the Company from a limited partnership in the
Special Reorganization.
"NHR" shall mean National Health Realty, Inc., a Maryland
corporation, and one of two entities to be formed upon the restructuring of the
Company in the Special Reorganization, NHR being formed to hold substantially
all of the Company's real estate assets and certain related Indebtedness.
"PERSON" shall mean any individual, firm, corporation, partnership,
trust, incorporated or unincorporated association, joint venture, joint stock
company, government (or an agency or political subdivision thereof) or other
entity of any kind, and shall include any successor (by merger or otherwise) of
such entity.
<PAGE>
25
"SPECIAL REORGANIZATION" means the restructuring of National
HealthCare L.P. into NHC and NHR.
"SUBSIDIARY" shall mean, with respect to any Person, a corporation
or other entity of which 50% or more of the voting power of the voting equity
securities or equity interest is owned, directly or indirectly, by such Person.
"UNITS" shall mean the limited partnership units of the Company or
the securities of a Person which are issued in respect of, or in exchange for,
the limited partnership units of the Company if such Person is the successor to
the business or assets of the Company as the result of a merger, consolidation,
combination, reclassification, recapitalization or otherwise (including, without
limitation, any shares of capital stock of NHC issued in connection with the
conversion of the Company from a limited partnership to a corporation in
connection with the Special Reorganization), PROVIDED, that, subject to Section
7.1, Units will not include any interests of NHR distributed to holders of Units
in connection with the Special Reorganization.
Section 13. MISCELLANEOUS.
13.1 GOVERNING LAW. This Note shall be governed by and construed in
accordance with the laws of the State of New York without regard to principles
of conflicts of law.
13.2 WAIVER OF NOTICE. The Company, to the extent permitted by law,
hereby waives presentment, demand, notice, protest and all other demands and
notices in connection with delivery, acceptance, performance and enforcement of
this Note, except as specifically otherwise provided herein or in the Note
Purchase Agreement.
13.3 AMENDMENT. The terms of this Note other than the principal
amount, the maturity date and the interest rate, may be amended only by the
written agreement of the holders of the majority of the then outstanding
principal amount of the Notes, and then only if identical amendments are made
simultaneously to all other then outstanding Notes. The principal amount,
maturity date and interest rate of this Note may be amended only by the written
agreement of the holder of this Note.
13.4 REACQUIRED NOTES. Any Note converted, redeemed, purchased or
otherwise acquired by the Company or any of its Subsidiaries in any manner
whatsoever, shall be deemed canceled immediately upon such conversion,
redemption, purchase or other acquisition. None of the outstanding principal
amounts of any Notes held by the Company or any of its Subsidiaries or
Affiliates shall be deemed at
<PAGE>
26
any time to be outstanding for purposes of determining whether the holders of
any percentage of the outstanding principal amount of the Notes have taken or
desire to take any action as holders of the Notes.
13.5 ASSIGNMENT. This Note shall not be assigned by the Company or
purchaser or holder of this Note except in accordance with the terms and
provisions of the Note Purchase Agreement.
NATIONAL HEALTHCARE L.P.
By: NHC, Inc.,
Managing General Partner
By:
________________________________
Name:
Title:
================================================================================
REGISTRATION RIGHTS AGREEMENT
between
NATIONAL HEALTHCARE L.P.
and
THE 1818 FUND II, L.P.
------------------------------------------------
Dated as of October 15, 1997
------------------------------------------------
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
1. Background.......................................................1
2. Registration Under Securities Act, etc...........................1
2.1 Registration on Request.....................................1
2.2 Incidental Registration.....................................3
2.3 Shelf Registration.........................................5
2.4 Registration Procedures.....................................6
2.5 Underwritten Offerings......................................9
2.6 Preparation; Reasonable Investigation......................10
2.7 Limitations, Conditions and Qualifications to
Obligations under Registration Covenants..................11
2.8 Holdback Agreement.........................................11
2.9 Indemnification............................................11
3. Definitions.....................................................15
4. Rule 144 and Rule 144A..........................................17
5. Amendments and Waivers..........................................18
6. Nominees for Beneficial Owners..................................18
7. Notices.........................................................18
8. Assignment......................................................19
9. Calculation of Percentage Interests in Registrable Securities...19
10. No Inconsistent Agreements......................................19
11. Certain Distributions...........................................19
12. Remedies........................................................20
13. Severability....................................................20
14. Entire Agreement................................................20
15. Headings........................................................20
16. Governing Law...................................................20
17. Counterparts....................................................20
<PAGE>
REGISTRATION RIGHTS AGREEMENT, dated as of October 15, 1997, between
NATIONAL HEALTHCARE L.P., a Delaware limited partnership, and THE 1818 FUND II,
L.P., a Delaware limited partnership (the "Purchaser").
1. BACKGROUND. Pursuant to a Note Purchase Agreement, dated as of
October 15, 1997, between the Company and the Purchaser (the "Purchase
Agreement"), the Purchaser has agreed to purchase from the Company, and the
Company has agreed to issue to the Purchaser, (x) $20,000,000 in principal
amount of its 5.75% Subordinated Convertible Notes due June 30, 2004 (the
"Notes"), and (y) subject to the terms and provisions of the Purchase Agreement,
up to an additional $10,000,000 in principal amount of its 5.75% Subordinated
Convertible Notes due June 30, 2004 (the "Additional Notes"). Capitalized terms
used herein but not otherwise defined shall have the meanings given them in
Section 3.
2. REGISTRATION UNDER SECURITIES ACT, ETC.
2.1 REGISTRATION ON REQUEST.
(a) REQUEST. At any time, or from time to time, on
or after January 5, 1998, upon the written request of one or more holders (the
"Initiating Holders") of Registrable Securities representing not less than 20%
of the Registrable Securities that the Company effect the registration under the
Securities Act of all or part of such Initiating Holders' Registrable
Securities, which notice shall contain a non-binding estimate of the number of
such Initiating Holders' Registrable Securities to be registered, the Company
will promptly give written notice of such requested registration to all
registered holders of Registrable Securities, and thereupon the Company will use
its best efforts to effect, at the earliest possible date, the registration
under the Securities Act, including by means of a shelf registration on Form S-3
(or any successor form) pursuant to Rule 415 under the Securities Act if so
requested in such request (but only if the Company is then eligible to use such
a shelf registration and if Form S-3 (or such successor form) is then available
to the Company), of
(i) the Registrable Securities which the Company
has been so requested to register by such Initiating Holders, and
(ii) all other Registrable Securities which the
Company has been requested to register by the holders thereof (such holders
together with the Initiating Holders hereinafter are referred to as the "Selling
Holders") by written request given to the Company within 30 days after the
giving of such written notice by the Company, which notice shall contain a
non-binding estimate of the number of such holders' Registrable Securities to be
registered, all to the extent requisite to permit the disposition of the
Registrable Securities so to be registered.
<PAGE>
2
(b) REGISTRATION STATEMENT FORM. Registrations under
this Section 2.1 shall be on such appropriate registration form of the
Commission as shall be reasonably selected by the Company.
(c) EFFECTIVE REGISTRATION STATEMENT. A registration
requested pursuant to this Section 2.1 shall not be deemed to have been effected
(i) unless a registration statement with respect thereto has become effective
and remained effective in compliance with the provisions of the Securities Act
with respect to the disposition of all Registrable Securities covered by such
registration statement until such time as all of such Registrable Securities
have been disposed of in accordance with the intended methods of disposition by
the seller or sellers thereof set forth in such registration statement;
PROVIDED, that, except with respect to any registration statement filed pursuant
to Rule 415 under the Securities Act, such period need not exceed 135 days
whether or not such securities have been disposed of, (ii) if after it has
become effective, such registration is interfered with by any stop order,
injunction or other order or requirement of the Commission or other governmental
agency or court for any reason not attributable to the Selling Holders and has
not thereafter become effective, or (iii) if the conditions to closing specified
in the underwriting agreement, if any, entered into in connection with such
registration are not satisfied or waived, other than by reason of a failure on
the part of the Selling Holders.
(d) UNDERWRITTEN OFFERINGS. Notwithstanding
anything to the contrary herein, if the Initiating Holders so elect, a
registration pursuant to this Section 2.1 shall be in the form of an
underwritten offering and the underwriter or underwriters of each underwritten
offering of the Registrable Securities so to be registered shall be selected by
the Selling Holders of more than 50% of each class of Registrable Securities to
be included in such registration and shall be reasonably acceptable to the
Company.
(e) PRIORITY IN REQUESTED REGISTRATION. If the
managing underwriter of any underwritten offering shall advise the Company in
writing (and the Company shall so advise each Selling Holder of Registrable
Securities requesting registration of such advice) that, in its opinion, the
number of securities requested to be included in such registration exceeds the
number which can be sold in such offering within a price range acceptable to the
Selling Holders of 66-2/3% of the Registrable Securities requested to be
included in such registration, the Company, except as provided in the following
sentence, will exclude from such registration, to the extent necessary to reduce
the number of securities to be sold in such offering to the number that the
underwriter advises can be so sold in such price range, (i) first, securities
other than Registrable Securities and (ii) second, Registrable Securities
requested to be included in such registration, pro rata among the Selling
Holders requesting such registration on the basis of the estimated gross
proceeds from the sale thereof. If the total number of Registrable Securities
requested to be included in such registration cannot be included as provided in
the preceding sentence, holders
<PAGE>
3
of Registrable Securities requesting registration thereof pursuant to Section
2.1, representing not less than 15% of the Registrable Securities with respect
to which registration has been requested and constituting not less than 50% of
the Initiating Holders, shall have the right to withdraw the request for
registration by giving written notice to the Company within 20 days after
receipt of such notice by the Company and, in the event of such withdrawal, the
Company shall have the right to terminate such registration, but in all events
such request shall not be counted for purposes of the requests for registration
to which holders of Registrable Securities are entitled pursuant to Section 2.1
hereof.
(f) LIMITATIONS ON REGISTRATION ON REQUEST.
Notwithstanding anything in this Section 2.1 to the contrary, in no event will
the Company be required to (i) effect, in the aggregate, more than three
registrations pursuant to this Section 2.1 or (ii) effect a registration
pursuant to this Section 2.1 (A) within the twelve-month period occurring
immediately subsequent to the effectiveness (within the meaning of Section
2.1(c)) of a registration statement filed pursuant to this Section 2.1 or (B)
within the six-month period occurring immediately subsequent to the
effectiveness of a registration statement (other than on Form S-4 or any
successor or similar form) with respect to the offering by the Company to the
general public of its securities for its own account; or (iii) effect a
registration pursuant to this Section 2.1 if the aggregate offering price of
securities included in the registration statement is less than $5 million.
(g) EXPENSES. The Company will pay all Registration
Expenses in connection with any registrations requested pursuant to this Section
2.1.
(h) LISTING. The Company shall list the Registrable
Securities subject to Section 2.1 on the ASE or the NASDAQ or another national
securities exchange or automated quotation system and shall provide for
redesignation of the securities to be offered into denominations suitable for
public trading upon the request of any Selling Holders.
2.2 INCIDENTAL REGISTRATION.
(a) RIGHT TO INCLUDE REGISTRABLE SECURITIES. If the
Company at any time proposes to register any of its Units or other equity
interests, if any, under the Securities Act by registration on any form other
than Forms S-4 or S-8, or any successor or similar form and other than pursuant
to Sections 2.1 and 2.3 hereof, whether or not for sale for its own account, it
will each such time give prompt written notice to all registered holders of
Registrable Securities of its intention to do so and of such holders' rights
under this Section 2.2. Upon the written request of any such holder (a
"Requesting Holder") made as promptly as practicable and in any event within 30
days after the receipt of any such notice (10 days if the Company states in such
written notice or gives telephonic or telecopied notice to all registered
holders of Registrable Securities, with written confirmation to follow promptly
<PAGE>
4
thereafter, stating that (i) such registration will be on Form S-3 and (ii) such
shorter period of time is required because of a planned filing date) (which
request shall specify the Registrable Securities intended to be disposed of by
such Requesting Holder), the Company will use its best efforts to effect the
registration under the Securities Act of all Registrable Securities which the
Company has been so requested to register by the Requesting Holders thereof;
PROVIDED, that prior to the effective date of the registration statement filed
in connection with such registration, immediately upon notification to the
Company from the managing underwriter of the price at which such securities are
to be sold, the Company shall so advise each Requesting Holder of such price,
and if such price is below the price which any Requesting Holder shall have
indicated to be acceptable to such Requesting Holder, such Requesting Holder
shall then have the right to withdraw its request to have its Registrable
Securities included in such registration statement; PROVIDED, FURTHER, that if,
at any time after giving written notice of its intention to register any
securities and prior to the effective date of the registration statement filed
in connection with such registration, the Company shall determine for any reason
not to register or to delay registration of such securities, the Company may, at
its election, give written notice of such determination to each Requesting
Holder of Registrable Securities and (i) in the case of a determination not to
register, shall be relieved of its obligation to register any Registrable
Securities in connection with such registration (but not from any obligation of
the Company to pay the Registration Expenses in connection therewith), without
prejudice, however, to the rights of any holder or holders of Registrable
Securities entitled to do so to cause such registration to be effected as a
registration under Section 2.1, and (ii) in the case of a determination to delay
registering, shall be permitted to delay registering any Registrable Securities,
for the same period as the delay in registering such other securities. Except as
provided in Section 2.1(f)(ii)(B), no registration effected under this Section
2.2 shall relieve the Company of its obligation to effect any registration upon
request under Section 2.1.
(b) PRIORITY IN INCIDENTAL REGISTRATIONS. If the
managing underwriter of any underwritten offering shall inform the Company by
letter of its opinion that the number or type of Registrable Securities
requested to be included in such registration would materially adversely affect
such offering (including a material adverse affect on the marketing of the
securities to be sold by that Company or an opinion that the number of
securities requested to be included in such registration exceeds the number
which can be sold in or during the time of the offering), and the Company has so
advised the Requesting Holders in writing, then the Company will include in such
registration, to the extent of the number and type which the Company is so
advised can be sold in (or during the time of) such offering, FIRST, all
securities proposed by the Company to be sold for its own account, and SECOND,
such Registrable Securities requested to be included in such registration
pursuant to this Agreement, pro rata among such Requesting Holders on the basis
of the estimated proceeds from the sale thereof.
<PAGE>
5
(c) EXPENSES. The Company will pay all Registration
Expenses in connection with any registration effected pursuant to this Section
2.2.
2.3 SHELF REGISTRATION.
(a) FILING AND EFFECTIVENESS OF SHELF REGISTRATION.
Within 18 months after the date hereof, if the Company is then eligible to use
Form S-3 (or such successor form) the Company shall file an "evergreen" shelf
registration statement solely with respect to the Registrable Securities and
pursuant to Rule 415 under the Securities Act (the "SHELF REGISTRATION") on Form
S-3 (or any successor form). The Company shall use its best efforts to have the
Shelf Registration declared effective as soon as practicable after such filing,
and shall use its best efforts to keep the Shelf Registration effective and
updated, from the date such Shelf Registration is declared effective until such
time as all of the Registrable Securities shall cease to be Registrable
Securities. Notwithstanding the foregoing, if the Company makes a good faith
determination that a filing of the Shelf Registration or the sale of any
Registrable Securities under an effective Shelf Registration would interfere
with any material financing or material investment transaction, business
combination or material acquisition then under consideration, and the Company
provides notice (the "SHELF NOTICE") to the holders containing a general
statement of the reasons for such determination (which shall be kept
confidential by such holders), (x) if there is not an effective Shelf
Registration, the Company may postpone the filing of the Shelf Registration for
the period indicated in the Shelf Notice (which shall be kept confidential by
such holders), which period shall in no event exceed 90 days, or (y) if the
Shelf Registration shall have already been declared effective, the holders of
Registrable Securities shall, upon request by the Company, not effect any sales
of Registrable Securities for the period requested by the Company in the Shelf
Notice (which shall be kept confidential by such holders); PROVIDED, that the
Company may only request that the holders of Registrable Securities not effect
any sales of Registrable Securities under an effective Shelf Registration for an
aggregate of 120 days in any 365 day period. Notwithstanding anything to the
contrary herein, so long as a Shelf Registration is effective and until such
time as all of the Registrable Securities shall cease to be Registrable
Securities, holders of Registration Securities shall have no rights under
Section 2.1 hereof, but shall continue to have all rights under Section 2.2
hereof.
(b) SUPPLEMENTS AND AMENDMENTS; EXPENSES. The
Company shall supplement or amend, if necessary, the Shelf Registration, as
required by the instructions applicable to such registration form or by the
Securities Act or as reasonably required by the holders of (or any underwriter
for) more than 50% of the Registrable Securities and the Company shall furnish
to the holders of the Registrable Securities to which the Shelf Registration
relates copies of any such supplement or amendment prior to its being used
and/or filed with the Commission. The Company shall pay all Registration
Expenses in connection with the Shelf Registration, whether or not it becomes
effective, and whether all, none or some of the Registrable
<PAGE>
6
Securities are sold pursuant to the Shelf Registration. In no event shall the
Shelf Registration include securities other than Registrable Securities, unless
the holders of more than 662/3% of the Registrable Securities consent to such
inclusion.
(c) EFFECTIVE SHELF REGISTRATION STATEMENT. A Shelf
Registration pursuant to this Section 2.3 shall not be deemed to have been
effected (i) unless a Shelf Registration has become effective and remained
effective in compliance with the provisions of the Securities Act with respect
to the disposition of all Registrable Securities and until such time as all of
such Registrable Securities have been disposed of under the Shelf Registration
or (ii) if after it has become effective, the Shelf Registration is interfered
with by any stop order, injunction or other order or requirement of the
Commission or other governmental agency or court and has not thereafter become
effective.
2.4 REGISTRATION PROCEDURES. If and whenever the Company is
required to use its best efforts to effect the registration of any Registrable
Securities under the Securities Act as provided in Sections 2.1, 2.2 and 2.3,
the Company will, as expeditiously as possible:
(i) prepare and (within 90 days after the end of the
period within which requests for registration may be given to the Company
or in any event as soon thereafter as practicable) file with the
Commission the requisite registration statement to effect such
registration and thereafter use its best efforts to cause such
registration statement to become effective; PROVIDED, HOWEVER, that the
Company may discontinue any registration of its securities which are not
Registrable Securities (and, under the circumstances specified in Sections
2.1 and 2.2(a), its securities which are Registrable Securities) at any
time prior to the effective date of the registration statement relating
thereto;
(ii) prepare and file with the Commission such
amendments and supplements to such registration statement and the
prospectus used in connection therewith as may be necessary to keep such
registration statement effective and to comply with the provisions of the
Securities Act with respect to the disposition of all Registrable
Securities covered by such registration statement until such time as all
of such Registrable Securities have been disposed of in accordance with
the intended methods of disposition by the seller or sellers thereof set
forth in such registration statement; PROVIDED, that, except with respect
to any such registration statement filed pursuant to Rule 415 under the
Securities Act, such period need not exceed 135 days whether or not such
securities have been disposed of;
(iii) furnish to each seller of Registrable Securities
covered by such registration statement, 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
<PAGE>
7
prospectus contained in such registration statement (including each
preliminary prospectus and any summary prospectus) and any other
prospectus filed under Rule 424 under the Securities Act, in conformity
with the requirements of the Securities Act, and such other documents, as
such seller may reasonably request;
(iv) use its best efforts (x) to register or qualify
all Registrable Securities and other securities covered by such
registration statement as the sellers of Registrable Securities covered by
such registration statement shall reasonably request, under such other
securities or blue sky laws of such States of the United States of America
where an exemption is not available, (y) to keep such registration or
qualification in effect for so long as such registration statement remains
in effect and (z) to take any other action which may be reasonably
necessary or advisable to enable such sellers to consummate the
disposition in such jurisdictions of the securities to be sold by such
sellers, except that the Company shall not for any such purpose be
required to qualify generally to do business as a foreign corporation in
any jurisdiction wherein it would not but for the requirements of this
subdivision (iv) be obligated to be so qualified or to consent to general
service of process in any such jurisdiction;
(v) use its best efforts to cause all Registrable
Securities covered by such registration statement to be registered with or
approved by such other federal or state governmental agencies or
authorities as may be necessary in the opinion of counsel to the Company
and counsel to the seller or sellers of Registrable Securities to enable
the seller or sellers thereof to consummate the disposition of such
Registrable Securities;
(vi) use its best efforts to obtain and furnish at
the effective date of such registration statement to each seller of
Registrable Securities, and each such seller's underwriters, if any, a
signed counterpart of
(x) an opinion of counsel for the
Company, dated the later of the effective date of such registration
statement or, if applicable, the date of the closing under the
underwriting agreement, and
(y) a "comfort" letter signed by the
independent public accountants who have certified the Company's
financial statements included or incorporated by reference in such
registration statement,
covering substantially the same matters with respect to such registration
statement (and the prospectus included therein) and, in the case of the
accountants' comfort letter, with respect to events subsequent to the date
of
<PAGE>
8
such financial statements, as are customarily covered in opinions of
issuer's counsel and in accountants' comfort letters delivered to the
underwriters in underwritten public offerings of securities and, in the
case of the accountants' comfort letter, such other financial matters,
and, in the case of the legal opinion, such other legal matters, as the
sellers of the Registrable Securities covered by such registration
statement, or the underwriters, may reasonably request;
(vii) notify each seller of Registrable Securities
covered by such registration statement at any time when a prospectus
relating thereto is required to be delivered under the Securities Act,
upon discovery that, or upon the happening of any event as a result of
which, the prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading, in the light of the circumstances under
which they were made, and at the request of any such seller promptly
prepare and furnish to it a reasonable number of copies of a supplement to
or an amendment of such prospectus as may be necessary so that, as
thereafter delivered to the purchasers of such securities, such prospectus
shall not include an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances under
which they were made;
(viii) otherwise use its best efforts to comply with
all applicable rules and regulations of the Commission, and, if required,
make available to its security holders, as soon as reasonably practicable,
an earnings statement covering the period of at least twelve months, but
not more than eighteen months, beginning with the first full calendar
month after the effective date of such registration statement, which
earnings statement shall satisfy the provisions of Section 11(a) of the
Securities Act and Rule 158 promulgated thereunder;
(ix) provide and cause to be maintained a transfer
agent and registrar (which, in each case, may be the Company) for all
Registrable Securities covered by such registration statement from and
after a date not later than the effective date of such registration; and
(x) use its best efforts to list all Registrable
Securities covered by such registration statement on the ASE or the NASDAQ
or any national securities exchange on which Registrable Securities of the
same class covered by such registration statement are then listed and, if
no such Registrable Securities are so listed, on any national securities
exchange on which the Units are then listed.
<PAGE>
9
The Company may require each seller of Registrable Securities as to which any
registration is being effected to promptly furnish the Company such information
and fill out such questionnaires regarding such seller and the distribution of
such securities as the Company may from time to time reasonably request in
writing; PROVIDED, THAT any such information or questionnaires shall be given or
made by a seller of Registrable Securities without representation or warranty of
any kind whatsoever except representations with respect to the identity of such
seller, such seller's Registrable Securities and such seller's intended method
of distribution or any other representations required by applicable law.
Each holder of Registrable Securities agrees by acquisition of such
Registrable Securities that, upon receipt of any notice from the Company of the
happening of any event of the kind described in subdivision (vii) of this
Section 2.4, such holder will forthwith discontinue such holder's disposition of
Registrable Securities pursuant to the registration statement relating to such
Registrable Securities until such holder's receipt of the copies of the
supplemented or amended prospectus contemplated by subdivision (vii) of this
Section 2.4 and, if so directed by the Company, will deliver to the Company (at
the Company's expense) all copies, other than permanent file copies, then in
such holder's possession of the prospectus relating to such Registrable
Securities current at the time of receipt of such notice.
2.5 UNDERWRITTEN OFFERINGS.
(a) REQUESTED UNDERWRITTEN OFFERINGS. If requested
by the underwriters for any underwritten offering by holders of Registrable
Securities pursuant to a registration requested under Section 2.1, the Company
will use all reasonable efforts to enter into an underwriting agreement with
such underwriters for such offering, such agreement to be reasonably
satisfactory in substance and form to each such holder and the underwriters and
to contain such representations and warranties by the Company and such other
terms as are generally prevailing in agreements of that type, including, without
limitation, indemnities to the effect and to the extent provided in Section 2.8.
The holders of the Registrable Securities proposed to be sold by such
underwriters will reasonably cooperate with the Company in the negotiation of
the underwriting agreement. Such holders of Registrable Securities to be sold by
such underwriters shall be parties to such underwriting agreement and may, at
their option, require that any or all of the representations and warranties by,
and the other agreements on the part of, the Company to and for the benefit of
such underwriters shall also be made to and for the benefit of such holders of
Registrable Securities and that any or all of the conditions precedent to the
obligations of such underwriters under such underwriting agreement be conditions
precedent to the obligations of such holders of Registrable Securities. No
holder of Registrable Securities shall be required to make any representations
or warranties to or agreements with the Company other than representations,
warranties or agreements regarding such holder, such holder's Registrable
Securities and such holder's intended method of distribution or any other
representations required by applicable law.
<PAGE>
10
(b) INCIDENTAL UNDERWRITTEN OFFERINGS. If the
Company proposes to register any of its securities under the Securities Act as
contemplated by Section 2.2 and such securities are to be distributed by or
through one or more underwriters, the Company will, if requested by any
Requesting Holder of Registrable Securities, use its best efforts to arrange for
such underwriters to include all the Registrable Securities to be offered and
sold by such Requesting Holder among the securities of the Company to be
distributed by such underwriters, subject to the provisions of Section 2.2(b).
The holders of Registrable Securities shall be parties to the underwriting
agreement between the Company and such underwriters and may, at their option,
require that any or all of the representations and warranties by, and the other
agreements on the part of, the Company to and for the benefit of such
underwriters shall also be made to and for the benefit of such holders of
Registrable Securities and that any or all of the conditions precedent to the
obligations of such underwriters under such underwriting agreement be conditions
precedent to the obligations of such holders of Registrable Securities. The
underwriters may require such holders of Registrable Securities to agree in such
underwriting agreement to sell to such underwriters the Registerable Securities
to be offered, in which event the holders may only participate pursuant to such
agreement. Any such Requesting Holder of Registrable Securities shall not be
required to make any representations or warranties to or agreements with the
Company or the underwriters other than representations, warranties or agreements
regarding the identity of such Requesting Holder, such Requesting Holder's
Registrable Securities and such Requesting Holder's intended method of
distribution or any other representations required by applicable law.
2.6 PREPARATION; REASONABLE INVESTIGATION. In connection with
the preparation and filing of each registration statement under the Securities
Act pursuant to this Agreement, the Company will give the holders of Registrable
Securities registered under such registration statement, their underwriters, if
any, and their respective counsel and accountants the opportunity to participate
in the preparation of such registration statement, each prospectus included
therein or filed with the Commission, and each amendment thereof or supplement
thereto, and will give each of them such reasonable access to its books and
records and such opportunities to discuss the business of the Company with its
officers and the independent public accountants who have certified its financial
statements as shall be necessary, in the opinion of such holders' and such
underwriters' respective counsel, to conduct a reasonable investigation within
the meaning of the Securities Act.
2.7 LIMITATIONS, CONDITIONS AND QUALIFICATIONS TO OBLIGATIONS
UNDER REGISTRATION COVENANTS. The Company shall be entitled to postpone for a
reasonable period of time (but not exceeding 90 days) the filing of any
registration statement otherwise required to be prepared and filed by it
pursuant to Section 2.1 if the Company determines, in its reasonable judgment,
that such registration and offering would interfere with any financing,
acquisition, corporate reorganization or other material transaction involving
the Company or any of its affiliates and promptly
<PAGE>
11
gives the holders of Registrable Securities requesting registration thereof
pursuant to Section 2.1 written notice of such determination, containing a
general statement of the reasons for such postponement and an approximation of
the anticipated delay (which shall be kept confidential by such holders). If the
Company shall so postpone the filing of a registration statement, holders of
Registrable Securities requesting registration thereof pursuant to Section 2.1,
representing not less than 15% of the Registrable Securities with respect to
which registration has been requested and constituting not less than 50% of the
Initiating Holders, shall have the right to withdraw the request for
registration by giving written notice to the Company within 30 days after
receipt of the notice of postponement and, in the event of such withdrawal, the
Company shall have the right to terminate such registration, but in all events
such request shall not be counted for purposes of the requests for registration
to which holders of Registrable Securities are entitled pursuant to Section 2.1
hereof.
2.8 HOLDBACK AGREEMENT. To the extent not inconsistent with
applicable law, each holder of Registrable Securities agrees, if so requested by
the relevant underwriters, by acquisition of such Registrable Securities not to
effect any public sale or distribution of any Registrable Securities, including
a sale pursuant to Rule 144 under the Securities Act (or any similar provision
then in force), for a period of up to 180 days after any underwritten
registration pursuant to Section 2.1 or 2.2 hereof has become effective, except
as part of such underwritten registration, whether or not such holder
participates in such registration.
2.9 INDEMNIFICATION.
(a) INDEMNIFICATION BY THE COMPANY. The Company
will, and hereby does, indemnify and hold harmless, in the case of any
registration statement filed pursuant to Section 2.1, 2.2 or 2.3, each seller of
any Registrable Securities covered by such registration statement and each other
Person who participates as an underwriter in the offering or sale of such
securities and their respective directors, officers, partners, agents and
affiliates, and each other Person, if any, who controls such seller or any such
underwriter within the meaning of the Securities Act, against any losses,
claims, damages or liabilities, joint or several, to which such seller or
underwriter or any such director, officer, partner, agent, affiliate or
controlling person may become subject under the Securities Act or otherwise,
including, without limitation, the fees and expenses of legal counsel, insofar
as such losses, claims, damages or liabilities (or actions or proceedings,
whether commenced or threatened, in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained in any registration statement under which such securities were
registered under the Securities Act, any preliminary prospectus, final
prospectus or summary prospectus contained therein, or any amendment or
supplement thereto, or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein in light of the circumstances in which they were made not misleading,
and the Company will reimburse such seller or underwriter and each such
<PAGE>
12
director, officer, partner, agent, affiliate and controlling Person for any
legal or any other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, liability, action or
proceeding; PROVIDED, HOWEVER, that the Company shall not be liable in any such
case to the extent that any such loss, claim, damage, liability (or action or
proceeding in respect thereof) or expense arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in such registration statement, any such preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by or on behalf of
such seller or underwriter, as the case may be, specifically stating that it is
for use in the preparation thereof; and PROVIDED, FURTHER, that the Company
shall not be liable to any Person who participates as an underwriter in the
offering or sale of Registrable Securities or any other Person, if any, who
controls such underwriter within the meaning of the Securities Act, in any such
case to the extent that any such loss, claim, damage, liability (or action or
proceeding in respect thereof) or expense arises out of such Person's failure to
send or give a copy of the final prospectus, as the same may be then
supplemented or amended, to the Person asserting an untrue statement or alleged
untrue statement or omission or alleged omission at or prior to the written
confirmation of the sale of Registrable Securities to such Person if such
statement or omission was corrected in such final prospectus. Such indemnity
shall remain in full force and effect regardless of any investigation made by or
on behalf of such seller or any such director, officer, partner, agent,
affiliate or controlling person and shall survive the transfer of such
securities by such seller.
(b) INDEMNIFICATION BY THE SELLERS. As a condition to
including any Registrable Securities in any registration statement, the Company
shall have received an undertaking satisfactory to it from the prospective
seller of such Registrable Securities, to indemnify and hold harmless (in the
same manner and to the same extent as set forth in Section 2.9(a)) the Company,
and each director of the Company, each officer and director of the Company and
each other Person, if any, who participates as an underwriter in the offering or
sale of such securities and their respective directors, officers, partners,
agents and affiliates and each other Person, if any, who controls the Company or
any such underwriter within the meaning of the Securities Act, with respect to
any statement or alleged statement in or omission or alleged omission from such
registration statement, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto, if such
statement or alleged statement or omission or alleged omission was made in
reliance upon and in conformity with written information furnished to the
Company by such seller specifically stating that it is for use in the
preparation of such registration statement, preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement; PROVIDED, HOWEVER, that
the liability of such indemnifying party under this Section 2.9(b) shall be
limited to the amount of proceeds received by such indemnifying party in the
offering giving rise to such liability. Such indemnity shall remain in full
force and effect, regardless of any
<PAGE>
13
investigation made by or on behalf of the Company or any such director, officer
or controlling person and shall survive the transfer of such securities by such
seller.
(c) NOTICES OF CLAIMS, ETC. Each indemnified party will,
promptly after the receipt of notice of the commencement of any action,
investigation, claim or other proceeding against such indemnified party in
respect of which indemnity may be sought from an indemnifying party under
Section 2.9(a) or (b), notify the indemnifying party of the commencement
thereof. The omission of any indemnified party so to notify the indemnifying
party of any such action shall not relieve the indemnifying party from any
liability which it may have to such indemnified party (i) other than pursuant to
this Section 2.9 or (ii) under this Section 2.9 unless, and only to the extent
that, such omission results in the indemnifying party's forfeiture of
substantive rights or defenses. In case any such action, claim or other
proceeding shall be brought against any indemnified party and it shall notify
the indemnifying party of the commencement thereof, the indemnifying party shall
be entitled to assume the defense thereof at its own expense, with counsel
reasonably satisfactory to such indemnified party; PROVIDED, HOWEVER, that any
indemnified party may, at its own expense, retain separate counsel to
participate in such defense. Notwithstanding the foregoing, in any action, claim
or proceeding in which an indemnifying party and an indemnified party is, or is
reasonably likely to become, a party, such indemnified party shall have the
right to employ separate counsel at the indemnifying party's expense and to
control its own defense of such action, claim or proceeding if, in the
reasonable opinion of counsel to such indemnified party, a conflict or potential
conflict exists between such indemnifying party and such indemnified party that
would make separate representation advisable; PROVIDED, HOWEVER, that in no
event shall any indemnifying party be required to pay fees and expenses under
this Section 2.9 for more than one firm of attorneys in any jurisdiction in any
one legal action or group of related legal actions. No indemnifying party shall
be liable for any settlement of any action or proceeding effected without its
written consent, which consent shall not be unreasonably withheld. No
indemnifying party shall, without the consent of the indemnified party, which
consent shall not be unreasonably withheld, consent to entry of any judgment or
enter into any settlement (x) which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such indemnified party of a
release from all liability in respect to such claim or litigation, or (y) which
requires action other than the payment of money by the indemnifying party.
(d) CONTRIBUTION. If the indemnification provided for in
this Section 2.9 shall for any reason be held by a court to be unavailable to an
indemnified party under Section 2.9(a) or (b) hereof in respect of any loss,
claim, damage or liability, or any action in respect thereof, then, in lieu of
the amount paid or payable under Section 2.9(a) or (b), the indemnified party
and the indemnifying party under Section 2.9(a) or (b) shall contribute to the
aggregate losses, claims, damages and liabilities (including legal or other
expenses reasonably incurred in connection with investigating the same), (i) in
such proportion as is appropriate to
<PAGE>
14
reflect the relative fault of the Company and the prospective sellers of
Registrable Securities covered by the registration statement which resulted in
such loss, claim, damage or liability, or action or proceeding in respect
thereof, with respect to the statements or omissions which resulted in such
loss, claim, damage or liability, or action or proceeding in respect thereof, as
well as any other relevant equitable considerations or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as shall be appropriate to reflect the relative benefits received by
the Company and such prospective sellers from the offering of the securities
covered by such registration statement, PROVIDED, that for purposes of this
clause (ii), the relative benefits received by the prospective sellers shall be
deemed not to exceed the amount of proceeds received by such prospective
sellers. No Person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any
Person who was not guilty of such fraudulent misrepresentation. Such prospective
sellers' obligations to contribute as provided in this Section 2.9(d) are
several in proportion to the relative value of their respective Registrable
Securities covered by such registration statement and not joint. In addition, no
Person shall be obligated to contribute hereunder any amounts in payment for any
settlement of any action or claim effected without such Person's consent, which
consent shall not be unreasonably withheld.
(e) OTHER INDEMNIFICATION. Indemnification and
contribution similar to that specified in the preceding subdivisions of this
Section 2.9 (with appropriate modifications) shall be given by the Company and
each seller of Registrable Securities with respect to any required registration
or other qualification of securities under any federal or state law or
regulation of any governmental authority other than the Securities Act.
(f) INDEMNIFICATION PAYMENTS. The indemnification
and contribution required by this Section 2.9 shall be made by periodic payments
of the amount thereof during the course of the investigation or defense, as and
when bills are received or expense, loss, damage or liability is incurred.
3. DEFINITIONS. As used herein, unless the context otherwise
requires, the following terms have the following respective meanings:
"ASE" means the American Stock Exchange, Inc.
"COMMISSION" means the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act.
"COMPANY" means National HealthCare L.P., a Delaware limited
partnership and any permitted successors and assigns; PROVIDED that upon the
occurrence of the Special Reorganization the term "Company" shall refer to NHC
and any permitted successors and assigns.
<PAGE>
15
"CONVERSION UNITS" means Units issued or issuable upon conversion of
the NHC Notes.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, or any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time. Reference
to a particular section of the Securities Exchange Act of 1934, as amended,
shall include a reference to the comparable section, if any, of any such similar
Federal statute.
"INITIATING HOLDER" is defined in Section 2.1.
"NASDAQ" means the National Market System of NASDAQ Stock
Market.
"NHC" means National HealthCare Corporation, a Delaware corporation,
and any permitted successors and assigns, NHC being one of two entities to be
formed upon the restructuring of the Company in the Special Reorganization.
"NHC NOTES" means the Notes and, upon the issuance and sale of the
Additional Notes in accordance with the terms and provisions of the Purchase
Agreement, the Additional Notes.
"NHR" means National Health Realty, Inc., a Maryland corporation,
and one of two entities to be formed upon the restructuring of the Company in
the Special Reorganization, NHR being formed to hold substantially all of the
Company's real estate assets and certain related indebtedness.
"PERSON" means any individual, firm, corporation, partnership,
trust, incorporated or unincorporated association, joint venture, joint stock
company, government (or an agency or political subdivision thereof) or other
entity of any kind.
"REGISTRABLE SECURITIES" means any Conversion Units and any Related
Registrable Securities and as to any particular Registrable Securities, once
issued such securities shall cease to be Registrable Securities when (a) a
registration statement with respect to the sale of such securities shall have
become effective under the Securities Act and such securities shall have been
disposed of in accordance with such registration statement, (b) they shall have
been sold as permitted by Rule 144 (or any successor provision) under the
Securities Act, (c) they shall have been otherwise transferred, new certificates
for them not bearing a legend restricting further transfer shall have been
delivered by the Company and subsequent public distribution of them shall not
require registration of them under the Securities Act, (d) Rule 144(k) (or any
successor provision) under the Securities Act is available with respect to their
transfer or (e) they shall have ceased to be outstanding. All references to
percentages of Registrable Securities shall be calculated pursuant to Section
10.
<PAGE>
16
"REGISTRATION EXPENSES" means all expenses incident to the Company's
performance of or compliance with Section 2, including, without limitation, all
registration and filing fees, all fees of the ASE, other national securities
exchanges or the National Association of Securities Dealers, Inc., all fees and
expenses of complying with securities or blue sky laws, all word processing,
duplicating and printing expenses, messenger and delivery expenses, the fees and
disbursements of counsel for the Company and of its independent public
accountants, including the expenses of "cold comfort" letters required by or
incident to such performance and compliance, any fees and disbursements of
underwriters customarily paid by issuers or sellers of securities (excluding any
underwriting discounts or commissions with respect to the Registrable
Securities, fees and expenses of counsel of the sellers of Registrable
Securities and all reasonable fees and expenses incurred by the Company relating
to a "roadshow" in connection with the registration of Registrable Securities in
an underwritten offering pursuant to Section 2.1 hereof); PROVIDED, HOWEVER,
that, for purposes of Section 2.2(c), Registration Expenses shall not include
any registration or filing fees or any listing fees of the ASE, other national
securities exchange or the National Association of Securities Dealers, Inc. with
respect to any Registrable Securities solely to the extent the Company
previously paid such fees with respect to such Registrable Securities pursuant
to a registration deemed to have been effected under Section 2.1 or 2.3;
PROVIDED, FURTHER, that in the event the Company shall, in accordance with
Section 2.2(a) or Section 2.7, not register any securities with respect to which
it had given written notice of its intention to so register to holders of
Registrable Securities, notwithstanding anything to the contrary in the
foregoing, all of the costs incurred by Requesting Holders in connection with
such registration shall be deemed Registration Expenses.
"RELATED REGISTRABLE SECURITIES" means with respect to any
Conversion Units, any securities of the Company issued or issuable with respect
to any Conversion Units by way of a dividend or stock split or other
distribution on the Conversion Units or in connection with a combination of
shares, recapitalization, merger, consolidation or other reorganization or
otherwise.
"REQUESTING HOLDER" is defined in Section 2.2.
"SECURITIES ACT" means the Securities Act of 1933, as amended, or
any similar Federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time. References to a
particular section of the Securities Act of 1933, as amended, shall include a
reference to the comparable section, if any, of any such similar Federal
statute.
"SELLING HOLDER" is defined in Section 2.1.
"SPECIAL REORGANIZATION" means the conversion of the Company into
NHC and NHR.
<PAGE>
17
"UNITS" means the limited partnership units of the Company or the
securities of a Person which are issued in respect of, or in exchange for, the
limited partnership units of the Company if such Person is the successor to the
business or assets of the Company as the result of a merger, consolidation,
combination, reclassification, recapitalization or otherwise (including, without
limitation, any shares of capital stock of NHC issued in connection with the
conversion of the Company from a limited partnership to a corporation in
connection with the Special Reorganization); PROVIDED, that, except as otherwise
provided in the NHC Notes, Units will not include any capital stock representing
interests of NHR distributed to holders of Units in connection with the Special
Reorganization.
4. RULE 144 AND RULE 144A. The Company shall take all actions
reasonably necessary to enable holders of Registrable Securities to sell such
securities without registration under the Securities Act within the limitation
of the provisions of (a) Rule 144 under the Securities Act, as such Rule may be
amended from time to time, (b) Rule 144A under the Securities Act, as such Rule
may be amended from time to time, if applicable or (c) any similar rules or
regulations hereafter adopted by the Commission, including, without limiting the
generality of the foregoing, filing on a timely basis all reports required to,
be filed by the Exchange Act. Upon the request of any holder of Registrable
Securities, the Company will deliver to such holder a written statement as to
whether it has complied with such requirements.
5. AMENDMENTS AND WAIVERS. This Agreement may be amended with the
consent of the Company and the Company may take any action herein prohibited, or
omit to perform any act herein required to be performed by it, only if the
Company shall have obtained the written consent to such amendment, action or
omission to act, of the holder or holders of at least 50% of the Registrable
Securities affected by such amendment, action or omission to act. Each holder of
any Registrable Securities at the time or thereafter outstanding shall be bound
by any consent authorized by this Section 5, whether or not such Registrable
Securities shall have been marked to indicate such consent.
6. NOMINEES FOR BENEFICIAL OWNERS. In the event that any Registrable
Securities are held by a nominee for the beneficial owner thereof, the
beneficial owner thereof may, at its election in writing delivered to the
Company, be treated as the holder of such Registrable Securities for purposes of
any request or other action by any holder or holders of Registrable Securities
pursuant to this Agreement or any determination of any number or percentage of
shares of Registrable Securities held by any holder or holders of Registrable
Securities contemplated by this Agreement. If the beneficial owner of any
Registrable Securities so elects, the Company may require assurances reasonably
satisfactory to it of such owner's beneficial ownership of such Registrable
Securities.
7. NOTICES. All notices, demands and other communications provided
for or permitted hereunder shall be made in writing and shall be by
<PAGE>
18
registered or certified first-class mail, return receipt requested, telecopier,
courier service or personal delivery:
(a) if to the Purchaser, addressed to it in the manner
set forth in the Purchase Agreement, or at such other address as it shall have
furnished to the Company in writing;
(b) if to any other holder of Registrable Securities, at
the address that such holder shall have furnished to the Company in writing, or,
until any such other holder so furnishes to the Company an address, then to and
at the address of the last holder of such Registrable Securities who has
furnished an address to the Company; or
(c) if to the Company, addressed to it in the manner
set forth in the Purchase Agreement, or at such other address as the Company
shall have furnished in the manner set forth herein to each holder of
Registrable Securities at the time outstanding.
All such notices and communications shall be deemed to have been
duly given: when delivered by hand, if personally delivered; when delivered to a
courier, if delivered by overnight courier service; five business days after
being deposited in the mail, postage prepaid, if mailed; and when receipt is
acknowledged, if telecopied.
8. ASSIGNMENT. This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the parties hereto and, with respect to the
Company, its respective successors and permitted assigns and, with respect to
the Purchaser, any holder of any Registrable Securities, subject to provisions
respecting the minimum numbers of percentages of shares of Registrable
Securities required in order to be entitled to certain rights, or take certain
actions, contained herein; PROVIDED, HOWEVER, that upon the occurrence of the
Special Reorganization, this Agreement shall be binding upon the inure to the
benefit of NHC and its successors and permitted assigns but not to NHR and its
successors and assigns. This Agreement may not be assigned by the Company,
except to NHC in connection with the Special Reorganization, without the prior
written consent of the holders of a majority in interest of the Registrable
Securities outstanding at the time such consent is requested, other than to a
successor to all or substantially all of the Company's assets, which the parties
hereto agree shall include, without limitation, NHC.
9. CALCULATION OF PERCENTAGE INTERESTS IN REGISTRABLE SECURITIES.
For purposes of this Agreement, all references to a percentage of the
Registrable Securities shall be calculated based upon the number of Registrable
Securities outstanding at the time such calculation is made, assuming the
conversion of all NHC Notes into Units.
<PAGE>
19
10. NO INCONSISTENT AGREEMENTS. The Company will not hereafter enter
into any agreement with respect to its securities which is inconsistent with the
rights granted to the holders of Registrable Securities in this Agreement.
Without limiting the generality of the foregoing, the Company will not hereafter
enter into any agreement with respect to its securities which grants, or modify
any existing agreement with respect to its securities to grant, to the holder of
its securities in connection with an incidental registration of such securities
higher priority to the rights granted to the holders of Registrable Securities
under Section 2.2(b) of this Agreement.
11. CERTAIN DISTRIBUTIONS. Except in connection with the Special
Reorganization, the Company shall not at any time make a distribution on or with
respect to the Units (including any such distribution made in connection with a
consolidation or merger in which the Company is the resulting or surviving
corporation and the Units are not changed or exchanged) of securities of the
Company or another issuer if holders of Registrable Securities are entitled to
receive such securities in such distribution as holders of Registrable
Securities and any of the securities so distributed are registered under the
Securities Act, unless the securities to be distributed to the holders of
Registrable Securities are also registered under the Securities Act.
12. REMEDIES. Each holder of Registrable Securities, in addition to
being entitled to exercise all rights granted by law, including recovery of
damages, will be entitled to specific performance of its rights under this
Agreement. The Company agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of the provisions
of this Agreement and hereby agrees to waive the defense in any action for
specific performance that a remedy at law would be adequate.
13. SEVERABILITY. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstances, is
held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions contained herein shall not be in any way
impaired thereby, it being intended that all of the rights and privileges of the
purchaser shall be enforceable to the fullest extent permitted by law.
14. ENTIRE AGREEMENT. This Agreement, together with the Purchase
Agreement (including the exhibits thereto), the NHC Notes, is intended by the
parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the parties hereto
in respect of the subject matter contained herein and therein. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein and therein. This Agreement, the Purchase Agreement
(including the exhibits thereto),
<PAGE>
20
the NHC Notes and the Letter Agreement supersede all prior agreements and
understandings between the parties with respect to such subject matter.
15. HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
16. GOVERNING LAW. This Agreement has been negotiated, executed and
delivered in the State of New York and shall be governed by and construed in
accordance with the laws of the State of New York, without regard to principles
of conflicts of law.
17. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed an original and all of which taken together
shall constitute one and the same instrument.
<PAGE>
21
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered by their respective officers hereunto duly authorized
as of the date first above written.
NATIONAL HEALTHCARE L.P.
By: NHC, Inc.,
Managing General Partner
By: /s/ Richard F. LaRoche, Jr.
---------------------------
Name: Richard F. LaRoche, Jr.
Title:
THE 1818 FUND II, L.P.
By: Brown Brothers Harriman & Co.,
General Partner
By: /s/ Lawrence C. Tucker
----------------------
Name: Lawrence C. Tucker
Title: General Partner
