SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 of 15(d) of the
Securities Exchange Act of 1934
May 21, 1999
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Date of Report (date of earliest event reported)
NEWCARE HEALTH CORPORATION
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Exact name of Registrant as Specified in its Charter
Nevada 0-24110 86-0594391
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State or Other Jurisdiction Commission File IRS Employer Identification
of Incorporation Number Number
6000 Lake Forrest Drive, Suite 200, Atlanta, Georgia 30328
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Address of Principal Executive Offices, Including Zip Code
(404) 255-7500
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Registrant's Telephone Number, Including Area Code
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ITEM 5. OTHER EVENTS.
On May 21, 1999, NewCare Health Corporation (the "Company") entered into
a Management Services Agreement, a Corporate Management Agreement and a
Purchase Agreement (the "Agreements") with Lenox Healthcare, Inc. ("Lenox"), a
privately-held provider of long-term healthcare facilities headquartered in
Pittsfield, Massachusetts. Under the terms of the Agreements, effective June
1, 1999, Lenox will begin managing the Company's facilities and many of the
Company's corporate operations.
Lenox will receive a management fee for managing the Company's facilities
equal to a proportionate share (taking into account both the Company's
facilities and the other facilities operated or managed by Lenox) of the costs
incurred by Lenox in operating its headquarters during its last fiscal year.
In addition, Lenox will be reimbursed for its actual costs for providing
corporate management services.
Under the Agreements, Lenox will also purchase 500,000 shares of the
Company's Common Stock for $500,000 in cash and receive warrants to purchase
an additional 500,000 shares of Common Stock at $2.20 per share through June
1, 2004. The Company has granted Lenox certain demand and other registration
rights with respect to the shares of Common Stock to be issued initially and
issuable under the Warrants. The costs of such registration would be borne by
the Company.
The Agreements provide that the Company will immediately take measures to
appoint two persons designated by Lenox to serve as Directors of the Company.
The two persons selected to serve as new Directors are Thomas Clarke, the
President of Lenox and Linda M. Clarke, the Treasurer of Lenox. Harlan
Mathews and Mark Clein have agreed to resign as Directors of the Company to
facilitate this change.
Thomas M. Clarke (age 43) has been President of Lenox since 1991. Mr.
Clarke has over 19 years of experience in the healthcare industry. From May
1987 until the founding of Lenox in 1991, he was Treasurer and Chief Financial
Officer of Berkshire Health Systems, Inc. in Pittsfield, Massachusetts.
Linda M. Clarke (age 46) is the wife of Thomas M. Clarke and has been
Treasurer of Lenox since 1991. During a portion of this time she was also
employed by the Houlton Regional Hospital Development Office. She continues
to serve as treasurer of several privately-held health care companies.
Upon effectiveness of the Agreements, the Company intends to begin
immediate staff reductions at its corporate headquarters, including executive
officer positions. The Company may be required to make payments under
severance provisions of current employment agreements and incur other expenses
related to reducing its corporate activities.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) EXHIBITS.
EXHIBIT NO. DESCRIPTION LOCATION
Exhibit 10.1 Management Services Agreement Filed herewith
with Lenox Healthcare, Inc. electronically
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Exhibit 10.2 Corporate Management Agreement Filed herewith
with Lenox Healthcare, Inc. electronically
Exhibit 10.3 Purchase Agreement with Filed herewith
Lenox Healthcare, Inc. electronically
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned, hereunto duly authorized.
NEWCARE HEALTH CORPORATION
Dated: June 4, 1999 By:/s/ Darrell C. Tucker
Darrell C. Tucker, President
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MANAGEMENT SERVICES AGREEMENT
THIS MANAGEMENT SERVICES AGREEMENT ("Agreement") is made and entered into
as of this 21st day of May 1999, by and between NewCare Health Corporation, a
Nevada corporation (including all subsidiaries and affiliates) owning or
leasing or managing any facilities, hereinafter the "Facilities" or a
"Facility", the above corporation, subsidiaries and affiliates referred to as
"Owner", and Lenox Healthcare, Inc, a Massachusetts corporation ("Manager")
(Owner and Manager are hereinafter also referred to collectively as
"Parties"). The Facilities are those which are currently operating as well as
those future operations as may be approved Owner's Board of Directors.
WHEREAS, Owner desires to contract with Manager to perform certain
management duties at the Facilities (the "Management Services"), and desires
to perform such Management Services pursuant to the terms of this Agreement,
without assuming any of Owner's other duties or obligations, and without
assuming any duties or obligations of any other person or entity under any
other agreement.
NOW, THEREFORE, the Parties hereby agree as follows:
1. ENGAGEMENT
1.1 Engagement. Pursuant to the terms of this Agreement, Owner hereby
engages, and Manager hereby accepts such engagement, to provide the Management
Services and take the actions described in this Agreement. Manager, subject
to the terms of this Agreement, shall have the right and authority to perform
the Management Services and take the actions described herein.
2. RESPONSIBILITIES
2.1 Agent; Authority. During the Term (as defined in Section 6
below), the Manager shall act as agent of the Owner with general authority to
manage, direct and supervise the operation of the Facilities. Owner hereby
appoints the Manager as its attorney-in-fact, and, subject to the provisions
of Section 2.3 below, hereby grants full authority for operating and
maintaining the Facilities in the respective states in which each such
Facility operates. The Management Services shall include those services set
forth in Sections 2.2 through 2.12 hereof.
2.2 Programs; Compliance with Law. Subject to the provisions of 2.3
below and Owner's obligations thereunder, Manager shall use reasonable efforts
to administer all necessary programs, plans, procedures and services required
to be offered, present or provided at the Facilities, and shall use reasonable
efforts to comply with all statutes, regulations, rules, ordinances and
policies whatsoever of all federal, state, county, municipal or other
governmental authorities having jurisdiction over the operation of the
Facilities.
2.3 Maintenance of Licenses; Agreements. Manager in Owner's name
shall maintain all licenses, permits, operating or occupancy certificates,
transfer or transportation agreements, and insurance certificates relating to
the maintenance and operation of the Facilities, including maintaining a
quality assessment and assurance committee as required for Medicare
certification as a skilled nursing facility.
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2.4 Personnel; Administrator. On behalf of the Owner, the Manager
shall investigate, hire, promote, supervise, and discharge (as necessary)
full-time and part-time on-site personnel necessary for the efficient
discharge of the Management Services (collectively, the "Personnel"). All
Personnel, except for the Administrator described below, shall be employees of
Owner, or independent contractors, or leased employees, and shall be paid as
an expense of the operation of the Facilities. The Manager shall exercise
reasonable care in the selection of Personnel and also shall:
(a) Employ a properly licensed nursing home administrator (who
shall be an employee of Manager) responsible for the management of the
Facilities ("Administrator"). His or her salary, benefits and other
compensation shall be determined by Manager in its sole discretion and treated
as an expense of the operation of the Facilities;
(b) Ensure, consistent with the Management Agreement, that all
Personnel (except for the Administrator) shall be employees of Owner, or
independent contractors, or leased employees, and all salaries, benefits,
wages, and other compensation of the Personnel shall be determined by the
Manager in its sole discretion and shall be charged as an expense of the
operation of the Facilities;
(c) Use reasonable efforts to assure compliance with all
applicable employment, wrongful discharge, anti-discrimination, occupational
safety, and health and other similar laws and regulations affecting employment
of Personnel, and with private employment or union contracts; and
(d) Negotiate with any labor union lawfully entitled to represent
all or any group of Personnel, if any.
2.5 Contracts. Manager shall, in the name of the Owner, and as an
expense of the Facilities (a) enter into, renew, if necessary, or cancel all
contracts, including those for electricity, gas, water, telephone, cleaning,
fuel oil, vermin extermination, trash removal, linen service, pharmacy,
therapy and all other services in the ordinary course of the operation of the
Facilities; and (b) purchase all supplies and equipment necessary to maintain
and to operate the Facilities. Owner represents that, as agent for the Owner,
the Manager has the right to enter into such contracts and to make such
purchases in the name of the Owner. Owner shall give Manager such
powers-of-attorney or further power-of-attorney, as may be necessary to
implement this section.
2.6 Promotional Activities. As an expense of the operation of the
Facilities, the Manager shall be responsible for conducting promotional
activities on behalf of the Facilities, including media advertising and
related marketing efforts.
2.7 Utilities and Supplies. As an expense of the operation of the
Facilities, the Manager shall purchase all utilities, supplies and other items
necessary for the efficient operation of the Facilities.
2.8 Maintenance. As an expense of the operation of the Facilities,
the Manager shall maintain the improvements and grounds of the Facilities,
including interior and exterior cleaning, painting and decorating, plumbing,
carpentry and other normal maintenance and repair work.
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2.9 Bookkeeping; Accounting. The Manager shall provide all necessary
bookkeeping and accounting for the operation of the Facilities, including, but
not limited to, the establishment of one or more bank accounts for the
collection and disbursement of funds in accordance with Section 3.4 below.
Manager shall provide to Owner monthly financial statements regarding the
Facilities' operations during the Term of this Agreement (as defined in
Section 6 below) and, upon request, copies of any licensure or Medicare
surveys related to the Facilities that it receives during the Term.
2.10 Invoicing; Collections. The Manager shall invoice and collect
for all services performed at the Facilities on and after the Effective Date
(as defined in Section 6 below), and, to the extent not yet invoiced or
collected, for services performed prior to the Effective Date, shall process
and pay on behalf of Owner from the Facilities' funds accounts payable that
are generated, and shall process and pay all of the Facilities' payroll,
including payroll taxes. The Manager shall use diligent efforts to collect
all such fees and charges and other revenues relating to the Facilities on
behalf of Owner.
2.11 Patient Trust Account. The Manager shall establish and maintain
records and procedures to account for all patient funds deposited with the
Facilities. A "Patient Trust Account" shall be established in accordance with
the terms hereof and all disbursements therefrom and records and procedures
relating thereto shall conform with the requirements of third party
reimbursement, licensure and all other applicable requirements and the terms
hereof. The Owner agrees to transfer to Manager any and all such patient
funds on the Effective Date and agrees to provide all records and accounts
relating to such patient funds to Manager on the Effective Date.
2.12 Taxes and Rent.
(a) To the extent not otherwise paid, the Manager shall cause to
be paid as an expense of the Facilities when due: (i) all taxes, assessments,
levies, fees, water and sewer rents and charges, and all other governmental
charges, general and special, ordinary and extraordinary, foreseen and
unforeseen, which are, at any time prior to or during the term hereof, imposed
or levied upon or assessed against (A) the Facilities, (B) any Rent (as
defined in any Lease for a Facility), Additional Rent (as defined in any Lease
for a Facility) under the Lease or other sum payable under the Lease or (C)
the Lease or the leasehold estate thereby created, or which arise in respect
of the operation, possession or use of the Facilities; (ii) all gross receipts
or similar taxes imposed or levied upon, assessed against or measured by any
Rent (as defined in a Lease), Additional Rent (as defined in a Lease) or other
sum payable under a Lease; (iii) all sales, use or similar taxes and all
withholdings and payroll taxes, at any time levied, assessed or payable on
account of the acquisition, leasing, use or operation of the Facilities; and
(iv) all charges for utilities serving the Facilities. If any such tax or
assessment may legally be paid in installments, Manager may pay such tax or
assessment in installments.
(b) The Manager shall deliver to Owner a copy of any assessment,
tax notice or tax bill received by Manager and, to the extent not otherwise
paid, shall pay the same as and when due; provided, Manager shall not cause
such payment to be made if (i) same is in good faith being contested by Owner
at its sole expense and without cost to Manager, (ii) enforcement thereof is
stayed, and (iii) Owner shall have given Manager written notice of such
contest and stay and authorized the non-payment thereof, not less than ten
(10) days prior to the date on which such tax assessment, or charge is due and
payable.
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2.14 Change of Manager's Authority. Manager has complete authority to
carry out its obligations hereunder without hindrance or interference from any
officer or employee of NewCare, and Manager may in all instances use its own
reasonable discretion regarding matters within its authority and areas of
responsibility.
3. OWNER'S AND MANAGER'S RESPONSIBILITIES
3.1 Responsible Licensee. In addition to its obligations and duties
under the Management Agreement, the Manager shall use best efforts to cause
the Owner to remain the responsible licensee of the Facilities such that Owner
is fully liable and legally accountable at all times for all aspects of the
operation and management of the Facilities, including assuming responsibility
for obtaining services that meet professional standards and principles that
apply to professionals providing services to a Medicare-certified skilled
nursing facility, and assuming responsibility for the timeliness of the
services as interpreted by applicable Medicare regulations. Owner represents
that, as agent for the Owner, the Manager may act in the name of Owner
regarding operations of the Facilities under the permits issued in Owner's
name by state and federal regulatory authorities, to the extent allowable
under all applicable federal and state statutes and regulations. Owner shall
give Manager such power-of-attorney or further power-of-attorney as may be
necessary to implement this section.
3.2 Change/Reduction in Operations. The Manager has the right and
authority, without any prior consent from Owner, to change and/or reduce the
licensed bed configuration, based upon shifts in census, Medicare capacity or
economy of operations, if this is necessary for the efficiency of the
operation. Moreover, Manager has the right and authority, with the prior
consent of Owner (which shall be in Owner's sole discretion), to suspend or to
terminate Facility operations at any Facility upon thirty (30) days' written
notice to Owner.
3.3 Management Fee. The management fee ("Management Fee") for the
first month will be calculated based on the Medicare home office cost report
for Lenox Healthcare, Inc. It is calculated by dividing the total licensed
bed days (for all facilities managed by Manager and its affiliates as of
9/30/98) into the total Medicare cost from the prior year home office cost
report as of 9/30/98 to get a per day licensed bed cost. The per day licensed
bed cost will be multiplied by the number of licensed beds managed for Owner
to get the monthly management fee. A reconciliation will be done at the end
of each quarter by preparing a home office cost report for that quarter and
calculating a new per day licensed bed cost and management fee (after the
first quarter, the cost and the licensed bed days corresponding to the
Facilities to be managed pursuant to this Agreement, as well as any other
costs and licensed bed days of other subsequent facilities managed by Manager
in future, shall be included in the calculation). This management fee will be
compared to the management fee paid for that quarter and an adjustment will be
made to the subsequent management fees to correct the over or under payment of
management fees by the actual cost. The subsequent months management fees
will be calculated by using the new per day licensed bed cost and any
adjustment that was needed.
3.4 Collection and Disbursement of Funds.
(a) Manager shall deposit all funds received by it from the
operation of the Facilities and all working capital loans in a bank account or
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bank accounts bearing the name of NewCare (hereinafter the "Agency Accounts")
with a bank or trust company. Such funds shall in no event be commingled with
other funds. Manager shall have no liability or responsibility for any loss
resulting from the insolvency, malfeasance or nonfeasance of the banks, banks,
or trust companies with which such funds are deposited.
(b) Subject to existing restrictions with Owner's
receivables-based lender, Manager shall control the Agency Accounts and have
the right and authority to make withdrawals from and to use the Agency
Accounts for the purposes of operating the Facilities and performing its
obligations hereunder or under the Corporate Management Agreement of even date
herewith between the Parties, as well as paying the Management Fee herein or
the Corporate Management Fee under said Corporate Management Agreement, until
the expiration or sooner termination of this Agreement and the Corporate
Management Agreement, at which time Manager shall resign as signatory on the
account(s) and cooperate in making Owner's designees the signatories on the
account(s).
(c) Out of such Agency Accounts, Manager is authorized to pay all
costs of operations, defined as all debt service payments, all operating
expenses, all management fees, plus interest thereon at the same rate of
interest as that described in Section 4 below for late payments past their due
date. Manager may make all other payments which it deems necessary and
appropriate for the operation of the Facilities.
(d) Receivables collected by the Manager relating to the
Facilities and all other revenues of Owner (collectively, the "Gross Revenue")
will be used by the Manager to pay the operating expenses, fees, accrued
liabilities and other expenditures of the Facilities in the following order:
(I)
Payroll of all Facilities employees, including the
Administrator and any administrative staff.
Payroll-related expenses, employee benefits and employment
taxes.
Manager's Management Fee, to be calculated in accordance
with Section 3.3.
Payment of Owner's corporate overhead, as follows:
payments under individual executive employment contracts, as disclosed on
Owner's most recent 10-K, for those employees remaining with Owner in their
executive capacities on and after the effective date of this Agreement; and,
all reasonable and necessary corporate overhead expenses as determined by
Owner's Board of Directors (including but not limited to payment of reasonable
outside attorneys' fees and legal costs with regard to Owner's corporate
litigation, as well as other outside consultants engaged by Owner with respect
general corporate matters).
Rent (including additional rents, if any) or other
lease-required payments to landlords, for the Facilities.
Debt Service: Principal and Interest on Debt, for the
Facilities.
Non-payroll related Operating Expenses; and,
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Capital Expenditures Reserve of $300.00 per licensed bed
per annum.
(II) Owner shall cause any and all revenues of the Facilities,
including, but not limited to, patient receivables, to be transferred to the
Manager.
(III) To the extent that payments for services occurring on or
after the Effective Date are received by Owner, it agrees that it shall
transfer such payments to Manager within five (5) business days of its receipt
of such funds. To the extent that payments for services occurring before the
Effective Date are received by Manager, it shall deposit such funds into the
appropriate account.
Owner acknowledges that Manager is acting in reliance on its
understanding of the existing arrangements with respect to the Facilities, and
on Manager's ability to have access to the revenues from the Facilities. To
the extent that Manager does not have access to such revenues for whatever
reason, Owner hereby agrees to provide sufficient funds to Manager to pay all
of the expenses, accrued liabilities and expenditures of the Facilities on a
timely basis, including the Management Fee (payable as provided in Section 3.4
(d) (I) (c) above), and Owner and agrees to cooperate with Manager to ensure
that it does have access to such funds.
In addition to the above, the parties agree that:
(A) Everything done by Manager in the performance of
its obligations and all its expense incurred under the portion of this
Agreement relating to managerial services shall be for and on behalf of Owner.
(B) Any services or persons who physical presence in
the Facilities is necessary to obtain or maintain licensure or certification,
if applied for or sought, in the Medicaid or Medicare programs, shall be a
direct expense chargeable to the Facilities as a cost of operation, and not to
Manager, except for a (a) preparation and filing of cost reports and (b)
preparation of operating and capital expenditure budgets. For example, if the
Director of Nurses is terminated or otherwise quits, and Manager sends its own
employee to perform the day to day duties of that position, this is chargeable
to the Facilities; where, however, Manager's employee is sent to assist in the
training or supervision of the nursing department, this is not chargeable to
the Facilities. Also, where licensure requires a specific consultant or
position (e.g. 8 hrs. of registered dietician supervision per month), any
staff person or subsidiary employee of Manager who satisfies this requirement
is chargeable to the Facilities.
(e) The Parties acknowledge and agree that if the Gross Revenue
is not sufficient to pay such operating expenses, accrued liabilities and
other expenditures, the Manager shall have no obligation to pay the amount of
any deficiency from Manager's own funds. Any and all financial shortfalls are
the responsibility of the Owner. The Capital Expenditure Reserve may be used
by the Manager for reasonable and necessary capital improvements at the
Facilities.
3.5 Notice to Manager. Provided there is actual notification
received by an executive of Owner, within two (2) business days of Owner's
receipt of any communication (either oral or written) regarding the
Facilities, Owner agrees to notify Manager of the substance of such
communication and to send to Manager a copy of any written communication.
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3.6 Consent of Owner. Owner agrees promptly to supply to Manager any
consent that is required in connection with the execution and performance of
this Agreement, including but not limited to Owner's consent to open bank
accounts using Owner's federal identification number.
3.7 General Cooperation with Manager. Owner agrees to cooperate
fully with Manager's performance of the Management Services, and shall make
available such records, books of account and personnel as Manager shall
reasonably require to perform hereunder. Owner shall provide Manager with a
full accounting of the Facilities, including, but not limited to, accounts
receivable and patient trust accounts as of the Effective Date (as defined in
Section 6 below).
3.8 Limitation of Manager's Liability. Notwithstanding any other
provision of this Agreement to the contrary, Manager is not responsible for
any obligations or actions or failure to act during any period prior to the
Effective Date. Operating revenues for periods prior to the Effective Date
shall be available to pay operating expenses accruing both before and after
the Effective Date. Where there is a shortfall in revenues to cover expenses,
the Manager shall have absolute discretion as to which expenses to pay. The
Manager shall notify the Owner of any shortfalls in revenue, but the failure
to so notify shall not result in any liability to Manager. The Parties
acknowledge and agree that Manager shall not be required to make any of its
financial resources available for the operation of the Facilities. Manager's
sole obligation is to perform the Management Services hereunder; any and all
shortfalls are the responsibilities of the Owner.
4. MANAGER'S COMPENSATION
4.1 Compensation. As compensation for the Management Services,
Manager shall be entitled to a Management Fee payable on the first day of each
month in advance from the Gross Revenue payable as provided in section 3.4 (d)
(I) (c) above, with interest to accrue until paid of ten (10%) percent per
annum, compounded monthly, or the highest rate allowable by law, whichever is
less.
5. INSURANCE
5.1 Coverage. The Manager shall maintain, as an expense of the
Facilities, liability insurance covering Manager's obligations herein and
malpractice insurance. The Parties agree that Manager may obtain such
insurance from companies and through brokers offering the necessary coverage
at the lowest cost. The Manager shall also maintain, as an expense of the
Facilities, an errors and omissions policy and directors' and officers'
liability policy protecting Manager, its officers, directors, executives, key
employees and controlling persons from and against claims, demands, losses,
law suits or expenses in connection with any alleged acts or omissions
regarding its and their management of the Facilities or any aspect thereof.
5.2 Facilities Coverage. Manager will maintain, as an expense of the
Facilities, insurance of the character and in the amount required by Owner or
any first mortgagee of the Facilities identified in writing to Manager.
5.3 Named Insureds. All policies of liability insurance shall name
Owner, Manager, and any first mortgagee of the Facilities identified in
writing to Manager, and all officers, directors, and controlling persons of
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Manager as the insureds thereunder, as their respective interests may appear.
All policies of hazard insurance shall include loss payment clauses in the
form required by any mortgagee identified in writing to Manager.
5.4 Patient Care Insurance. Manager shall maintain, as an expense of
the Facilities, such insurance in an amount Manager deems necessary in its own
discretion. In addition, Manager may maintain an umbrella policy in an amount
it deems appropriate.
5.5 Notice of Claims. Each Party shall give prompt notice to the
others of any claims made against any one of them and shall cooperate fully
with each other and with any insurance carrier to the end that all such claims
will be properly investigated, defended and adjusted.
6. TERM; DEFAULT; EARLY TERMINATION; REMEDIES; RIGHTS
6.1 Term. The Term of this Agreement shall commence at 12:01 A.M.,
June 1, 1999 (the "Effective Date") and terminate five (5) years thereafter
("Term").
6.2 Default; Termination for Cause. A Party (a "Defaulting Party")
shall be in breach of this Agreement if such Defaulting Party fails to keep,
observe or perform any agreement, term or provision of this Agreement to be
kept, observed or performed by it, and such breach continues for a period of
sixty (60) days (or such shorter period required under the circumstances by
federal, state or local regulation, or such longer period if such breach
cannot reasonably be cured within sixty (60) days) after delivery of notice
from a non-Defaulting Party of the nature of the breach and the steps that the
Defaulting Party must take to cure such breach. Any non-Defaulting Party may
terminate this Agreement immediately and without further action at the end of
such period if the Defaulting Party has not cured its breach. Manager may
terminate under this Section 6.2 if the total Management Fee for any month is
not received by Manager when such Management Fee is due and payable and there
is no cure within the prescribed cure period of sixty (60) days.
6.3 Immediate Termination. Either Owner or Manager may terminate this
Agreement immediately if: (a) Owner or Manager loses its Certification or
ability to participate in Medicare or Medicaid for any reason or (b) the other
Party suffers the appointment of a receiver or files in bankruptcy or suffers
the filing of an involuntary bankruptcy.
6.4 Remedies Upon Breach. Upon the occurrence of a breach by a
Defaulting Party, a non-Defaulting Party may terminate this Agreement in
addition to any other remedy available to it at law or in equity after any
available cure period.
6.5 Rights Upon Expiration or Termination. Upon the expiration or
early termination of this Agreement, the Parties shall have the following
rights and obligations:
Manager, with due diligence, shall (1) remove from the Facilities all of
its property and any employees or representatives of Manager in a manner that
will not endanger the health or safety of the patients of the Facilities, (2)
assign to Owner any agreement that Owner elects to assume, (3) assist Owner in
returning the operation of the Facilities to Owner or any successor for the
Facilities and (4) retain copies of all patient records, employee records,
minutes from quality assurance meetings and incident reports for the period
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from the Effective Date to the date of such expiration or termination. All of
Manager's property, including but not limited to, all documents related to the
general policies and procedures relating to the administration of the
Facilities that were prepared by or at the request of the Manager, shall
remain the sole possession of the Manager.
Upon any termination or the expiration pursuant to this section, the
obligations of the Parties (except those specified as surviving) shall cease
as of the date specified in the notice of termination, except that Manager
shall be entitled to receive any and all compensation that may be due
hereunder through the effective date of such termination or expiration.
7. INDEMNIFICATION
7.1 Indemnification of Manager. Owner acknowledges that Manager's
agreement to enter into this Agreement may expose Manager to certain risks.
Owner agrees to indemnify and hold harmless and defend Manager, its
shareholders, directors, officers, agents and employees (collectively,
"Manager Indemnitees") from and against any liability, loss, cost, expense,
claim, damage, suit, action or proceeding ever suffered or incurred by
(including actual attorneys' fees and expenses) (collectively, "Claims") which
are related to or in connection with: the proper exercise of its obligations
as Manager under this Agreement, any misrepresentations made to the Manager in
connection with the execution or discharge of this Agreement or the failure of
the Owner to comply with its obligations under this Agreement (including, but
not limited to, claims for property damage, bodily injuries and/or deaths
caused by an act or omission); provided, however, that Owner shall not be
obligated to indemnify Manager Indemnitees for Claims to the extent that they
are due to the gross negligence or willful misconduct of Manager or its
employees. Out-of-pocket charges and expenses incurred by the Manager
(including, without limitation, actual out-of-pocket attorneys' fees and
expenses) in connection with the enforcement, protection or preservation of
any right or claim of Manager Indemnitees under this Agreement, including
those resulting from any dispute regarding this indemnification, shall be the
responsibility of and paid for or reimbursed (at the option of Manager) by
Owner. Notwithstanding any contrary provision in this Agreement, the
obligations of Owner in this Section 7.1 shall survive the expiration or other
termination of this Agreement. Owner's insurance shall be endorsed to cover
Manger as additional insureds and shall be in sufficient amounts and with
deductibles, if any, that are deemed satisfactory to Manager at all times.
7.2 Operation of Indemnity. Manager shall have the right to offset the
amount of any claims or damages for which it reasonably believes it is
entitled to indemnification against revenues of the Facilities: provided
however, that prior to exercising any such right to offset, Manager shall give
written notification to Owner stating the reasons for such offset with copies
of any invoices or documentation which may be reasonably available to Manager.
Once Manager has sent such notification, it may proceed to offset the
corresponding amount.
7.3 Claims by Third Party. The Manager shall give notice within a
reasonable time to the Owner upon notice of any third party claim or the
commencement of any third party legal proceedings ("Third Party Claim")
arising after the Effective Date against the Manager for which is entitled to
indemnification hereunder. Owner shall cooperate in the defense of such Third
Party Claim. Manager shall have the right to assume and control, at Owner's
expense, any Third Party Claim which Manager, in its reasonable discretion,
believes may have a material impact on the business at the Facilities.
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7.4 Indemnification of Owner. Manager agrees to indemnify and hold
harmless and defend Owner, its shareholders, directors, officers, agents and
employees (collectively, "Owner Indemnitees") from and against any liability,
loss, cost, expense, claim, damage, suit, action or proceeding ever suffered
or incurred by (including attorneys' fees and expenses) (collectively,
"Claims") which are related to or in connection with: any gross negligence or
willful misconduct of Manager or its employees, including any
misrepresentations made to Owner in connection with the execution or discharge
of this Agreement or the failure of the Owner to comply with its obligations
under this Agreement (including, but not limited to, claims for property
damage, bodily injuries and/or deaths caused by an act or omission); provided,
however, that Manager shall not be obligated to indemnify Owner Indemnitees
for Claims to the extent that they are due to the gross negligence or willful
misconduct of Manager or its employees. Out-of-pocket charges and expenses
incurred by the Owner (including, without limitation, out-of-pocket attorneys'
fees and expenses) in connection with the enforcement, protection or
preservation of any right or claim of Owner Indemnitees under this Agreement,
including those resulting from any dispute regarding this indemnification,
shall be the responsibility of and paid for or reimbursed (at the option of
Owner) by Manager. Notwithstanding any contrary provision in this Agreement,
the obligations of Owner in this Section 7.4 shall survive the expiration or
other termination of this Agreement. Manager's insurance shall be endorsed to
cover Owner as additional insureds and shall be in sufficient amounts and with
deductibles, if any, that are deemed satisfactory to Owner at all times.
8. MISCELLANEOUS PROVISIONS
8.1 Notices. All notices, requests, demands and other communications
required or permitted to be given or made under this Agreement shall be in
writing and shall be deemed to have been given (a) on the date of transmission
by facsimile, with proof of receipt thereof or (b) on the date following the
date of (i) deposit in the United States mail, postage prepaid, by registered
or certified mail, return receipt requested, effective when received or (ii)
delivery to a nationally recognized overnight courier service effective when
received. In each case, it is to be addressed as follows, or to such other
address, person or entity as the Party shall designate by notice to the other
in accordance herewith;
If to Manager: Thomas M. Clarke
President and Chief Executive Officer
Lenox Healthcare, Inc.
75 South Church Street, Suite 650
Pittsfield, MA 01201
Fax No. (413) 448-2120
If to Owner: NewCare Health Corporation
6000 Lake Forrest Drive, Suite 200
Atlanta, GA 30328
Attention: General Counsel
Fax No. (404) 255-5789
8.2 Waiver of Subrogation. Manager and Owner each hereby waive any
rights of recovery against the other, or against the officers, employees,
agents and representatives of the other, for loss or damages to such waiving
Party's property or the property of others under its control, where and to the
extent that such loss or damage is insured against under any insurance policy
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in force at the time of such loss or damage. Upon obtaining the policies of
insurance required hereunder, Manager and Owner shall give notice to the
insurance carriers that the foregoing mutual waiver of subrogation is
contained in this Agreement.
8.3 Continued Liability of Parties. Unless otherwise expressly
stated, expiration or termination of the Term pursuant to Section 6 shall not
relieve any Party hereto of any of its liabilities and obligations hereunder
that accrued prior to expiration or termination of the Term.
8.4 Patient Records. Manager and Owner shall preserve the
confidentiality of the records of all patients of the Facilities as required
by all applicable federal and state statutes, regulations, and rules of
accrediting organizations for skilled nursing facilities, and use the
information in such records solely for the limited purposes necessary to
perform their respective obligations hereunder.
8.5 Governing Law. This Agreement shall be construed and enforced in
accordance with, and the performance of its terms shall be governed by, the
laws of the State of Delaware, without giving effect to conflict of laws
principles.
8.6 Assignability. No Party shall assign any of its rights and
obligations under this Agreement without obtaining the prior consent of the
other Parties.
8.7 Right of first Refusal. Manager shall have, and is hereby
granted, a right of first refusal upon the exact same terms and conditions as
the offer received by Owner which Owner is willing to accept, to purchase,
where a third party purchase is contemplated, or to lease, where a third party
transfer of a leased Facility is contemplated, any of the Facilities which are
the subject matter of this Agreement. Owner shall give Manager no less than
ten (10) days' prior written notice of any proposed sale, or lease transfer,
as the case may be, setting forth all financial and all other terms and
conditions thereof. Manager may send Owner written notice of its willingness
to purchase or lease the Facility upon the same terms and conditions within
said 10-days after its receipt of notice from Owner, in which event the
parties shall within ten (10) days thereafter enter into binding purchase and
sale, or lease assignment or transfer agreement, of the Facility or
Facilities.
8.8 Non-Waiver. No waiver by any Party hereto of any failure of any
other Party to keep or perform any provision, covenant or condition of this
Agreement shall be deemed to be a waiver of any preceding or succeeding breach
of the same or any other provision, covenant or condition. All rights and
remedies herein granted or referred to are cumulative. If any Party resorts
to any one remedy, it shall not be precluded from resorting to any other right
or remedy provided by law or in equity.
8.9 Required Prior Regulatory Approval. Manager shall not formally
begin managing those Facilities in the State of Kansas until regulatory
authority is received. Manager will assist Owner with Facilities in the State
of Kansas until such time as regulatory authority is received. Owner and
Manager shall work together to achieve such regulatory approval.
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8.10 NewCare as Facility Manager. As to each Facility covered by this
Agreement that Owner is itself managing, Manager shall have the option to: (a)
take an assignment of Owner's management function, if any required approvals
(by the owner of the property or by any third party to this Agreement) can be
obtained for such assignment; subject thereto, Owner hereby agrees to so
approve and assign; or (b) to include as a Facility under this Agreement, with
Owner continuing as the manager of the Facility with Manager as its consultant
under a consultant services agreement. Upon termination of this Agreement,
any assignment by Owner to Manager under this Section 8.10 shall also
terminate automatically.
8.11 Regional Offices. Manager shall have complete and unconditional
authority to hire and dismiss all regional personnel and terminate regional
offices as necessary. All regional team members shall be direct employees of
Manager.
8.12 No Financial Responsibility by Manager. It is understood and
agreed that Manager shall have no responsibility or obligation of any kind or
nature to make any payments or to in any manner fund any payments or
activities contemplated under this Agreement, including but not limited to,
those payments and Owner liabilities contemplated under Section 3.4 hereto.
8.13 Headings. The headings of this Agreement are inserted for
convenience only and are not to be considered in the interpretation of this
Agreement. They shall not in any way limit or expand the scope, or modify the
substance or context, of any section of this Agreement.
8.14 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
8.15 Enforcement. If any Party seeks to enforce this Agreement, the
prevailing party in any lawsuit shall be entitled to receive from the other
Party its reasonable attorneys' fees, court costs, costs of collection and
reasonable expenses.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date first written above.
LENOX HEALTHCARE, INC.
("Manager")
/s/ Thomas Clarke
By: Thomas Clarke
Its: President
NEWCARE HEALTH CORPORATION
("NewCare")
/s/ Chris Brogdon
By: Chris Brogdon
Its: Chairman
12
CORPORATE MANAGEMENT AGREEMENT
THIS CORPORATE MANAGEMENT AGREEMENT, dated this 21st day of May 1999
("Agreement"), is entered into by and between NewCare Health Corporation, a
Nevada corporation, and its affiliated companies and subsidiaries ("NewCare")
and Lenox Healthcare, Inc. a Massachusetts corporation ("Manager") (NewCare
and Manager are hereinafter also referred to collectively as "Parties").
WHEREAS, NewCare desires to have Manager manage some or all of its
corporate books, records and corporate operations;
AND WHEREAS, Manager is desirous of managing some or all of NewCare's
corporate books, records and corporate operations;
NOW THEREFORE, in consideration of the mutual and reciprocal covenants and
agreements set forth herein, and for other consideration acknowledged as
received,
the Parties agree as follows:
1. SCOPE OF ENGAGEMENT
1.1 Manager shall have authority and responsibility to manage
all aspects of NewCare's corporate operations as to each of the following:
Financial oversight, of and regarding NewCare's accounts receivable,
accounts payable, accounts payable and accounts receivable processing, bank
accounts, loans, loan payments, securing new loans or lines of credit (as to
all intended loans, securing new loans or lines of credit, the final form must
be approved by NewCare's Board of Directors);
All Facility matters of NewCare, including federal tax withholding,
other employee-related tax considerations, employee hiring and firing,
promotions, compensation, benefits, benefit plans, corporate policies toward
employees, compliance with EEOC, OSHA and other laws applying to NewCare
employees and their working environment; labor disputes and resolution;
NewCare's litigation and litigation files, but only to the extent
that it is related to Facility operations;
Document storage and retrieval of all Facility-related NewCare
documents, including confidential documents;
In consultation with NewCare, MIS, computer systems, technology and
equipment; storage and retrieval of NewCare information; any changes in such
systems, hardware and /or software components; networks and intra-company
sharing of information and software; computer and telephone inter- and
intra-office compatibility.
1.2 To the extent requested and directed by NewCare's Board of
Directors, Manager shall have the authority and responsibility to do some or
all of the following:
NewCare trademarks, service marks, copyrights, patents (if any),
trade secrets and proprietary information; protection and registration of such
intellectual property in the U.S. and in other countries, as may be
appropriate;
<PAGE>
Marketing matters for NewCare, including any and all advertising and
promotions, including advertising and promotional budgets;
All real estate leases, licenses, purchases or sales of NewCare
property or property interests of any kind and wherever located;
Preparation of all corporate tax returns and payment of taxes due
and receipt of any refunds due; this shall include other duties, levies,
assessments or other impositions, whether local, state, federal, special or
otherwise; only Manager may file for and seek tax abatements or refunds on
real estate taxes or on other impositions;
All licensing and governmental approvals for all aspects of
NewCare's corporate operations; this responsibility shall include, but shall
not be limited to, all due diligence required in connection with filings
before the U.S. Securities and Exchange Commission, all due diligence required
in connection with Blue Sky registration, and the actual filing thereof (but
to be signed by an officer or officers of NewCare); Manager shall have similar
authority and responsibility with regard to any registrations necessitated
because of any contemplated or actual public offering or private offering by
NewCare; in addition, preparation of quarterly and annual reports shall be
undertaken, managed and coordinated by Manager, including the printing,
dissemination and filing thereof;
All matters normally performed by the Corporate Secretary or Clerk
of NewCare shall be performed by Manager, including annual and special
shareholder meetings, board of director meetings, minutes of such meetings and
dissemination of same; proxy preparation, dissemination and voting entries and
recordation; conduct of such meetings, including annual shareholder and board
of directors meetings;
Supervision and control of NewCare's litigation and litigation
files, not included under Section 1.1 (c) above.
1.3 In connection with the above-described authority and
responsibilities of Manager, NewCare hereby represents, warrants and agrees
that it shall fully assist Manager and cooperate with Manager on items
requested by NewCare to be handled by Manager.
1.4 The Parties agree that, as to the categories of services
under Section 1.2 (categories listed in subsections "a" through "g"),
NewCare's Board of Directors may, in its sole discretion, direct Manager to no
longer perform any particular category of services. Any services requested by
NewCare's Board of Directors under Section 1.2 must be reasonably requested in
advance ( at least 30 days' notice ) so as to allow Manager to perform such
services.
2. MANAGER'S AUTHORITY; NON-INTERFERENCE; INDEMNIFICATION
2.1 Manager has complete authority to carry out its obligations
hereunder without hindrance or interference from any officer or employee of
NewCare, unless otherwise stated in this Agreement, and Manager may in all
instances use its own reasonable discretion regarding matters within its
authority and areas of responsibility.
2.2 Manager is acting as agent of NewCare in performing its
obligations hereunder, in recognition of which NewCare hereby agrees to
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indemnify and hold Manager, its agents, employees, directors, and officers,
(jointly and severally, "Manager Indemnitees") harmless from and against any
and all liabilities, losses, costs, expenses, claims, damages, suits, actions
or proceedings ever suffered or incurred by Manager Indemnitees (including but
not limited to reasonable, actual attorneys' fees) of or in connection with
the proper performance of Manager's obligations and responsibilities hereunder
or actions taken by or on behalf of Manager pursuant to or in furtherance of
such obligations and responsibilities. This section shall survive the
expiration or sooner termination of this Agreement.
2.3 Manager hereby agrees to indemnify and hold Owner, its
agents, employees, directors, and officers (jointly and severally "Owner
Indemnitees") harmless from and against any and all liabilities, losses,
costs, expenses, claims damages, suits, actions or proceedings every suffered
or incurred by Owner Indemnitees (including but not limited to reasonable
attorneys' fees) of or in connection with Manager's or its employees' gross
negligence or willful misconduct in the performance of its duties hereunder.
This section shall survive the expiration or sooner termination of this
Agreement.
3. REIMBURSEMENTS
3.1 In addition and not in lieu of the management fee to which
Manager is entitled under the Management Services Agreement, but due and
payable at such time as said management fee, NewCare shall reimburse Manager
an amount equal to the actual costs associated with providing Manager's
services hereunder ("Corporate Management Reimbursement") provided, however,
that consulting costs shall not also be included in the calculation of the fee
pursuant to the Management Services Agreement. Such Corporate Management
Reimbursement shall be due and payable monthly in arrears. The Corporate
Management Fee shall include documented time spent by Manager's employees, and
by any outside consultants or agents, on NewCare matters pursuant to or in
furtherance of Manager's responsibilities under this Agreement.
3.2 NewCare grants Manager the right and authority to hire and
to direct in Manager's own discretion outside consultants, and NewCare agrees
to reimburse Manager for all expenses so incurred by Manager on behalf of
NewCare or in furtherance of the purposes of this Agreement for matters
performed by such outside consultants, including tax preparers, accountants,
attorneys or independent contractors deemed to be necessary by Manager in
Manager's reasonable discretion. Such reimbursement shall be made by Manager
on behalf of NewCare.
4. TERM
4.1 The effective date of this Agreement shall be the same as the
effective date of the management services agreement dated __________, 1999
between the Parties ("Management Services Agreement"); and this Agreement
shall expire or sooner terminate as of the time that said Management Services
Agreement expires or terminates.
5. MISCELLANEOUS PROVISIONS
5.1 Notices. All notices, requests, demands and other
communications required or permitted to be given or made under this Agreement
shall be in writing and shall be deemed to have been given (a) on the date of
transmission by facsimile, with proof of receipt thereof or (b) on the date
following the date of (i) deposit in the United States mail, postage prepaid,
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by registered or certified mail, return receipt requested, effective when
received or (ii) delivery to a nationally recognized overnight courier service
effective when received. In each case, it is to be addressed as follows, or
to such other address, person or entity as the Party shall designate by notice
to the other in accordance herewith;
If to Manager: Thomas M. Clarke
President and Chief Executive Officer
Lenox Healthcare, Inc.
75 South Church Street, Suite 650
Pittsfield, MA 01201
Fax No. (413) 448-2120
If to Owner: NewCare Health Corporation
6000 Lake Forrest Drive, Suite 200
Atlanta, GA 30328
Attn: General Counsel
Fax No. (404) 255-5789
5.2 Waiver of Subrogation. Manager and NewCare each hereby
waive any rights of recovery against the other, or against the officers,
employees, agents and representatives of the other, for loss or damages to
such waiving Party's property or the property of others under its control,
where and to the extent that such loss or damage is insured against under any
insurance policy in force at the time of such loss or damage. Upon obtaining
the policies of insurance required hereunder, Manager and NewCare shall give
notice to the insurance carriers that the foregoing mutual waiver of
subrogation is contained in this Agreement.
5.3 Continued Liability of Parties. Unless otherwise expressly
stated, expiration or termination of the Term shall not relieve any Party
hereto of any of its liabilities and obligations hereunder that accrued prior
to expiration or termination of the Term.
5.4 Governing Law. This Agreement shall be construed and
enforced in accordance with, and the performance of its terms shall be
governed by, the laws of the State of Delaware, without giving effect to
conflict of laws principles.
5.5 Assignability. No Party shall assign any of its rights and
obligations under this Agreement without obtaining the prior consent of the
other Parties. Subject to the foregoing, the terms of this Agreement shall
inure to the benefit of, and shall be binding upon, the Parties hereto and
their respective successors and assigns.
5.6 Non-Waiver. No waiver by any Party hereto of any failure of
any other Party to keep or perform any provision, covenant or condition of
this Agreement shall be deemed to be a waiver of any preceding or succeeding
breach of the same or any other provision, covenant or condition. All rights
and remedies herein granted or referred to are cumulative. If any Party
resorts to any one remedy, it shall not be precluded from resorting to any
other right or remedy provided by law or in equity.
5.7 No Financial Responsibility by Manager. It is understood
and agreed that Manager shall have no responsibility or obligation of any kind
or nature to make any payments or to in any manner fund any payments or
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activities contemplated under this Agreement, including but not limited to,
those responsibilities and NewCare liabilities contemplated under Section 1.1
hereto except out of NewCare funds controlled by Manager.
5.8 Headings. The headings of this Agreement are inserted for
convenience only and are not to be considered in the interpretation of this
Agreement. They shall not in any way limit or expand the scope, or modify the
substance or context, of any section of this Agreement.
5.9 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
5.10 Insurance. NewCare shall maintain director's and officer's
liability insurance, at its own expense, naming Manager's officers and
directors and others designated by Manager as named insureds with regard to
their performance of duties, obligations and responsibilities contemplated by
the terms of this Agreement.
5.11 Termination of Management Services Agreement. If the
Management Services Agreement terminates or is terminated pursuant to Section
6 of said Management Services Agreement, then this Agreement shall likewise
terminate as of such date; termination notice under the Management Services
Agreement may, but need not, mention termination of this Agreement in addition
to termination of the Management Services Agreement for said notice to be an
effective termination of both agreements.
5.12 No Conflict. NewCare hereby represents and warrants, for
itself and all affiliated entities, that there is nothing in its By-laws,
Charter, corporate books, records, corporate documents, licenses, resolutions
of its stockholders or Board of Directors, or contracts of any kind or nature
that contradict, invalidate or that are contrary to, any of the terms or
conditions of this Agreement, or that establish conditions precedent or
conditions subsequent to any of the terms or conditions of this Agreement,
other than anything which has been disclosed to Manager in writing prior to or
as of the date of this Agreement first above written.
5.13 Enforcement. If any Party seeks to enforce this
Agreement, the prevailing party in any lawsuit shall be entitled to receive
from the other Party its reasonable attorneys' fees, court costs, costs of
collection and reasonable expenses.
IN WITNESS WHEREOF, the Parties hereto have signed this Agreement as of
the date first above written.
LENOX HEALTHCARE, INC.
("Manager")
By: /s/ Thomas M. Clarke
Thomas M. Clarke
President
NEWCARE HEALTH CORPORATION
("NewCare")
By: /s/ Chris Brogdon
Its: Chairman
5
PURCHASE AGREEMENT
by and between
NEWCARE HEALTH CORPORATION
and
LENOX HEALTHCARE, INC.
Dated as of May 20, 1999
PURCHASE AGREEMENT
INTRODUCTION
THIS PURCHASE AGREEMENT (the "Agreement") is made and entered into as of
the 19th day of May, 1999, by and among NEWCARE HEALTH CORPORATION, a Nevada
corporation ("NewCare"), and LENOX HEALTHCARE, INC., a Massachusetts
corporation (the "Buyer").
W I T N E S S E T H:
WHEREAS, the Buyer desires to purchase from NewCare, and NewCare desires
to sell to the Buyer, 500,000 shares (the "Shares") of the common stock, par
value $.02 per share, of NewCare (the "NewCare Common Stock") and warrants to
purchase an additional 500,000 shares of NewCare Common Stock (the "Warrants")
in exchange for the Purchase Price (as hereinafter defined) in accordance with
the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the respective covenants,
representations and warranties herein contained, and intending to be legally
bound hereby, the parties hereto hereby agree as follows:
ARTICLE 1
SALE AND PURCHASE OF THE SHARES
SECTION 1.1 Sale and Purchase. Subject to the terms and conditions
hereinafter set forth, on June 1, 1999, NewCare shall sell to the Buyer, and
the Buyer shall purchase from NewCare, all of the Shares and the Warrants in
exchange for the Purchase Price.
SECTION 1.2 Purchase Price. As full payment for the Shares, on June
1, 1999, the Buyer shall pay to NewCare cash in the amount of Five Hundred
Thousand Dollars ($500,000) contemporaneous with the delivery by NewCare of
the certificate or certificates representing the Shares pursuant to Section
1.3 hereof by wire transfer to an account designated by NewCare in writing
(the "Purchase Price").
SECTION 1.3 Deliveries. Contemporaneous with the execution and
delivery hereof: (i) NewCare shall deliver to the Buyer, (A) a Warrant
Certificate, substantially in the form attached hereto as Exhibit A and
incorporated herein by this reference (the "Warrant Certificate"), for the
Warrants, duly executed by NewCare, (B) the management agreements
substantially in the forms attached hereto as Exhibit B and Exhibit C
(collectively, the "Management Agreements"), each duly executed by NewCare,
and (C) a registration rights agreement substantially in the form attached
hereto as Exhibit D; and (ii) the Buyer shall deliver to NewCare (A) the
Management Agreements, each duly executed by the Buyer, and (B) the
<PAGE>
Registration Rights Agreement, duly executed by the Buyer. On June 1, 1999,
(x) NewCare shall deliver to the Buyer a certificate or certificates for the
Shares, free and clear of any and all liens, claims, options, charges,
encumbrances or rights of others; and (y) the Buyer shall deliver to NewCare
the Purchase Price in accordance with the terms of Section 1.2 hereof.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF NEWCARE
NewCare hereby represents and warrants to the Buyer as follows:
SECTION 2.1 Organization. NewCare is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of
its incorporation and has all requisite corporate power and authority to own,
lease and operate its properties and to carry on its business as now being
conducted.
SECTION 2.2 Authority and Binding Effect. NewCare has the full power
and authority to execute, deliver and perform this Agreement, the Warrant
Certificate and the Management Agreements and have taken all actions necessary
to secure all approvals required in connection herewith and therewith. The
execution and delivery of this Agreement, the Warrant Certificate, the
Management Agreements and the Registration Rights Agreement and the
consummation of the transactions herein and therein contemplated will not
contravene or violate the Articles of Incorporation or Bylaws of NewCare or
any of its other governing documents. This Agreement, the Warrant
Certificate, the Management Agreements and the Registration Rights Agreement
constitute the legal, valid and binding obligations of NewCare, enforceable
against NewCare in accordance with their respective terms, except as such
enforceability may be subject to bankruptcy, moratorium, insolvency,
reorganization, arrangement, voidable preference, fraudulent conveyance and
other similar laws relating to or affecting the rights of creditors and except
as the same may be subject to the effect of general principles of equity.
SECTION 2.3 Absence of Restrictions and Conflicts. The execution,
delivery and performance of this Agreement, the Warrant Certificate, the
Management Agreements and the Registration Rights Agreement, the consummation
of the transactions contemplated hereby and thereby and the fulfillment of and
compliance with the terms and conditions hereof and thereof do not and will
not, with the passage of time or the giving of notice or both, violate or
conflict with, constitute a breach of or default under, result in the loss of
any material benefit under, or permit the acceleration of any obligation
under, (i) any term or provision of the Articles of Incorporation or Bylaws of
NewCare, (ii) any contract which is material to the business and operations of
NewCare and its subsidiaries taken as a whole, (iii) any judgment, decree or
order of any court or governmental authority or agency to which NewCare is a
party or by which NewCare or its properties is bound, or (iv) any statute,
law, regulation or rule applicable to NewCare, so as to have in the case of
subsections (ii) through (iv) above, a material adverse effect on the assets,
liabilities, results of operations, financial condition, business or prospects
of NewCare. No consent, approval, order or authorization of, or registration,
declaration or filing with, any governmental agency or public or regulatory
unit, agency, body or authority with respect to NewCare is required in
connection with the execution, delivery or performance of this Agreement, the
Warrant Certificate, the Management Agreements and the Registration Rights
Agreement by NewCare or the consummation of the transactions contemplated
hereby and thereby, the failure to obtain which could reasonably be expected
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to have, individually or in the aggregate, a material adverse effect upon the
assets, liabilities, results of operations, financial condition, business or
prospects of NewCare.
SECTION 2.4 Capitalization. The authorized capital stock of NewCare
is as set forth in NewCare's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1999. Each share of NewCare Common Stock which is outstanding
as of the date hereof is, and when issued the Shares will be, duly authorized,
validly issued, fully paid and non-assessable and free of pre-emptive rights.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer hereby represents and warrants to NewCare as follows:
SECTION 3.1 Organization. The Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of
its incorporation and has all requisite corporate power and authority to own,
lease and operate its properties and to carry on its business as now being
conducted.
SECTION 3.2 Authority and Binding Effect. The Buyer has the full
power and authority to execute, deliver and perform this Agreement, the
Management Agreements and the Registration Rights Agreement and have taken all
actions necessary to secure all approvals required in connection herewith and
therewith. The execution and delivery of this Agreement, the Management
Agreements and the Registration Rights Agreement and the consummation of the
transactions herein and therein contemplated will not contravene or violate
the Articles of Incorporation or Bylaws of the Buyer. This Agreement, the
Management Agreements and the Registration Rights Agreement constitute the
legal, valid and binding obligations of the Buyer, enforceable against the
Buyer in accordance with their respective terms, except as such enforceability
may be subject to bankruptcy, moratorium, insolvency, reorganization,
arrangement, voidable preference, fraudulent conveyance and other similar laws
relating to or affecting the rights of creditors and except as the same may be
subject to the effect of general principles of equity.
SECTION 3.3 Absence of Restrictions and Conflicts. The execution,
delivery and performance of this Agreement, the Management Agreements and the
Registration Rights Agreement, the consummation of the transactions
contemplated hereby and thereby and the fulfillment of and compliance with the
terms and conditions hereof and thereof do not and will not, with the passage
of time or the giving of notice or both, violate or conflict with, constitute
a breach of or default under, result in the loss of any material benefit
under, or permit the acceleration of any obligation under, (i) any term or
provision of the Articles of Incorporation or Bylaws of the Buyer, (ii) any
contract which is material to the business and operations of the Buyer and its
subsidiaries taken as a whole, (iii) any judgment, decree or order of any
court or governmental authority or agency to which the Buyer is a party or by
which the Buyer or its properties is bound, or (iv) any statute, law,
regulation or rule applicable to the Buyer, so as to have in the case of
subsections (ii) through (iv) above, a material adverse effect on the assets,
liabilities, results of operations, financial condition, business or prospects
of the Buyer. No consent, approval, order or authorization of, or
registration, declaration or filing with, any governmental agency or public or
regulatory unit, agency, body or authority with respect to the Buyer is
required in connection with the execution, delivery or performance of this
Agreement, the Management Agreements and the Registration Rights Agreement by
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the Buyer or the consummation of the transactions contemplated hereby and
thereby, the failure to obtain which could reasonably be expected to have,
individually or in the aggregate, a material adverse effect upon the assets,
liabilities, results of operations, financial condition, business or prospects
of the Buyer.
SECTION 3.4 Qualification of Buyer. Buyer (i) is an "accredited
investor" within the meaning of Regulation D of the regulations of the
Securities and Exchange Commission promulgated under the Securities Act of
1933, as amended (the "Securities Act"), and is acquiring the Shares pursuant
hereto for its own account and not with a view to, or for resale in connection
with, any distribution thereof; (ii) understands and acknowledges that the
Shares have not been registered under the Securities Act or any state
securities laws by reason of certain exemptions from the registration
provisions thereof which depend upon, among other things, the bona fide nature
of the Buyer's investment intent as expressed herein; (iii) is able to bear
the economic risk of investment in the Shares and has such knowledge and
experience in financial and business matters that it is capable of evaluating
the risks and merits of an investment in the Shares; (iv) has been provided
with all information or been given access to all information with respect to
NewCare which the Buyer believes might affect its decision whether to
consummate the transactions contemplated hereby; and (v) understands and
acknowledges that the Shares will be "restricted securities", as that term is
defined in Rule 144 under the Securities Act, and that the certificate or
certificates representing the Shares will bear a legend restricting transfer
unless (A) the transfer is exempt from the registration requirements of the
Securities Act and all applicable state securities law and an opinion of
counsel reasonably satisfactory to NewCare that such transfer is exempt
therefrom is delivered to NewCare or (B) the transfer is made pursuant to an
effective registration statement under the Securities Act and all applicable
state securities law. In determining to proceed with the transactions
contemplated hereby, the Buyer has relied solely on the results of its own
independent investigation with respect to NewCare and the Shares and upon the
representations and statements of NewCare set forth herein. The Buyer
acknowledges that the representations and statements to the Buyer by NewCare
set forth herein constitute the sole and exclusive representations,
warranties, covenants and statements of NewCare or any of its affiliates in
connection with the transactions contemplated hereby, and the Buyer
understands, acknowledges and agrees that all other representations,
warranties, covenants and statements of any kind or nature, whether oral or
contained in any writing other than this Agreement and each of the other
documents contemplated hereby, are specifically disclaimed by NewCare.
ARTICLE 4
MISCELLANEOUS PROVISIONS
SECTION 4.1 Election to Board of Directors. Immediately upon the
execution and delivery of this Agreement, NewCare shall take whatever action
is necessary to cause the NewCare Board of Directors, at and immediately after
the date hereof, to consist of seven (7) individuals, two (2) of whom shall be
individuals chosen by the Buyer, in its sole discretion, and at least three
(3) of whom shall be outside directors. If any person chosen by the Buyer to
serve on the NewCare Board of Directors is unable or unwilling to serve, or if
a director chosen by the Buyer resigns or is removed from the NewCare Board of
Directors, such person shall be replaced by an individual or individuals
designated by the Buyer, in its sole discretion.
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SECTION 4.2 Notices. All notices and other communications under this
Agreement shall be in writing and may be given by any of the following
methods: (i) personal delivery; (ii) facsimile transmission; (iii) registered
or certified mail, postage prepaid, return receipt requested; or (iv)
overnight delivery service requiring acknowledgment of receipt. Any such
notice or communication shall be sent to the appropriate party at its address
or facsimile number given below (or at such other address or facsimile number
for such party as shall be specified by notice given hereunder):
To the Buyer:
Lenox Healthcare, Inc.
75 South Church Street, Suite 650
Pittsfield, Massachusetts 01201
Fax No. (413) 448-2120
Attn: General Counsel
To NewCare:
NewCare Health Corporation
6000 Lake Forest Drive, Suite 200
Atlanta, Georgia 30328
Facsimile: (404) 843-9677
Attn: Philip M. Rees, Esq.
All such notices and communications shall be deemed received upon (i) actual
receipt thereof by the addressee, (ii) actual delivery thereof to the
appropriate address as evidenced by an acknowledged receipt, or (iii) in the
case of a facsimile transmission, upon transmission thereof by the sender and
confirmation of receipt. In the case of notices or communications sent by
facsimile transmission, the sender shall contemporaneously mail a copy of the
notice or communication to the addressee at the address provided for above;
provided, however, such mailing shall in no way alter the time at which the
facsimile notice or communication is deemed received.
SECTION 4.3 Incorporation of Exhibits. All Exhibits hereto are
hereby incorporated into this Agreement and made a part hereof as if set out
in full herein.
SECTION 4.4 Successors in Interest. This Agreement shall be binding
upon, and shall inure to the benefit of and be enforceable by, the parties
hereto and their respective successors and assigns, and any reference to a
party hereto shall also be a reference to any such successor or assign.
SECTION 4.5 Number; Gender. Whenever the context so requires, the
singular number shall include the plural and the plural shall include the
singular, and the gender of any pronoun shall include the other genders.
SECTION 4.6 Captions. The titles, captions and table of contents
contained in this Agreement are inserted herein only as a matter of
convenience and for reference and in no way define, limit, extend or describe
the scope of this Agreement or the intent of any provision hereof. Unless
otherwise specified to the contrary, all references to Articles and Sections
are references to Articles and Sections of this Agreement and all references
to Exhibits are references to Exhibits to this Agreement.
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SECTION 4.7 Controlling Law; Integration; Amendment. This Agreement
shall be governed by and construed and enforced in accordance with the
internal laws of the State of Georgia without reference to its choice of law
rules. This Agreement and the documents executed pursuant hereto or in
connection herewith supersede all negotiations, agreements and understandings
among the parties with respect to the subject matter hereof and constitutes
the entire agreement among the parties hereto. This Agreement may not be
amended, modified or supplemented except by written agreement of the parties
hereto.
SECTION 4.8 Severability. Any provision hereof which is prohibited
or unenforceable in any jurisdiction will, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction will not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent
permitted by law, the parties hereto waive any provision of law which renders
any such provision prohibited or unenforceable in any respect.
SECTION 4.9 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, and it shall not
be necessary in making proof of this Agreement or the terms hereof to produce
or account for more than one of such counterparts.
SECTION 4.10 Enforcement of Certain Rights. Nothing expressed or
implied in this Agreement is intended, or shall be construed, to confer upon
or give any person other than the parties hereto, and their respective heirs,
legal representatives, successors and assigns, as the case may be, any rights,
remedies, obligations or liabilities under or by reason of this Agreement, or
result in such person being deemed a third party beneficiary of this
Agreement.
SECTION 4.11 Fees and Expenses. The Buyer and NewCare shall each pay
its own fees, costs and expenses incurred in connection with this Agreement,
the Warrant Certificate, the Management Agreements and the Registration Rights
Agreement and the transactions contemplated hereby and thereby, including,
without limitation, the fees, costs and expenses of its financial advisors,
accountants and counsel.
[SIGNATURES NEXT PAGE]
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IN WITNESS WHEREOF, the Buyer and NewCare have each caused this Agreement
to be executed and delivered on its behalf by an officer thereunto duly
authorized, all as of the date first above written.
NEWCARE HEALTH CORPORATION
By:/s/ Chris Brogdon
Its:
LENOX HEALTHCARE, INC.
By:/s/ Thomas M. Clarke
Its: President
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EXHIBIT A
WARRANT CERTIFICATE
THE WARRANT REPRESENTED BY THIS CERTIFICATE (THE "WARRANT") HAS BEEN (i)
ACQUIRED FOR INVESTMENT AND (ii) ISSUED AND SOLD IN RELIANCE UPON AN EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
AND APPLICABLE STATE SECURITIES LAWS. THE WARRANT, AND THE SECURITIES
ISSUABLE UPON EXERCISE THEREOF, CANNOT BE OFFERED FOR SALE, SOLD OR
TRANSFERRED, OTHER THAN PURSUANT TO (i) AN EFFECTIVE REGISTRATION UNDER THE
ACT OR IN A TRANSACTION THAT IS OTHERWISE IN COMPLIANCE WITH THE ACT AND (ii)
EVIDENCE REASONABLY SATISFACTORY TO THE ISSUER OF COMPLIANCE WITH ALL
APPLICABLE STATE AND FEDERAL SECURITIES LAWS. THE ISSUER SHALL BE ENTITLED TO
RELY UPON AN OPINION OF COUNSEL SATISFACTORY TO IT WITH RESPECT TO COMPLIANCE
WITH SUCH LAWS.
No. 1 June 1, 1999
VOID AFTER 5:00 P.M. ATLANTA, GEORGIA TIME
ON JUNE 1, 2004
(the "Expiration Date")
NEWCARE HEALTH CORPORATION
Warrant Certificate
THIS CERTIFIES THAT for value received LENOX HEALTHCARE, INC., a
Massachusetts corporation whose principal address is 75 South Church Street,
Suite 650, Pittsfield, Massachusetts 01201 ("Holder"), is the owner of a
Warrant that, subject to the terms of this Warrant Certificate, entitles the
Holder to purchase up to Five Hundred Thousand (500,000) fully paid and
non-assessable shares (the "Shares") of the common stock, $.02 par value per
share (the "Common Stock"), of NEWCARE HEALTH CORPORATION., a Nevada
corporation (the "Company"), at the purchase price of Two and 20/100 Dollars
($2.20) per share (the "Exercise Price"), upon presentation and surrender of
this Warrant Certificate with the Form of Election to Purchase attached
hereto, duly executed, at any time prior to the Expiration Date.
1. Registration. The Warrant has been numbered and registered in a
warrant register (the "Warrant Register"). The Company shall treat the Holder
of the Warrant as set forth in the Warrant Register as the owner in fact
thereof for all purposes. The Company is not liable for any registration or
transfer of any Warrant that is registered or any Warrant that will become
registered in the name of a fiduciary or its nominee unless the Company has
actual knowledge that a fiduciary or its nominee is committing a breach of
trust by requesting such registration or transfer or has actual knowledge of
such facts that its participation therein amounts to bad faith.
2. Transfer of Warrant. The Warrant is transferable on the books of
the Company only upon delivery of the Warrant to the Company, duly endorsed by
the Holder or by its duly authorized attorney or representative, or
accompanied by proper evidence of succession, assignment or authority to
transfer. In all cases of transfer by an attorney, the original power of
attorney, duly approved, or an official certified copy thereof, shall be
deposited with the Company. Should an executor, administrator, guardian or
other legal representative of a Holder effect such a transfer, then duly
authenticated evidence of its authority must be produced and may be required
to be deposited with the Company in its discretion. Upon any registration of
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transfer, the Company agrees to deliver a new Warrant or Warrants to the
persons entitled thereto. Notwithstanding the foregoing, the Company has no
obligation to transfer the name of a Holder on its books to any person, unless
the Holder furnishes the Company evidence of compliance with the Act, in
accordance with the provisions of Section 9 hereof.
3. Period of Exercise. The Exercise Price and the number of Shares
issuable upon exercise of the Warrant are subject to adjustment upon the
occurrence of certain events, pursuant to the provisions of Section 8 hereof.
Subject to the provisions of this Warrant, the Holder has the right to
purchase from the Company (and the Company will issue and sell to such
registered Holder) all of the Shares from and after the date hereof until June
1, 2004, at which time this Warrant shall expire and no longer be exercisable.
4. Exercise of Warrant. The rights represented by this Warrant may be
exercised by the Holder in whole or in part (but not as to a fractional
Share), by surrendering the Warrant to the Company or its duly authorized
agent, with the form of Election to Purchase, a copy of which is attached
hereto, duly completed and signed, and upon paying to the Company the Exercise
Price, as may be adjusted in accordance with the provisions of Section 8
hereof, for the number of Shares for which this Warrant is exercised. Payment
of such Exercise Price may be made (a) in cash; (b) by certified check, bank
draft or drawn postal, express money order payable to the order of NewCare
Health Corporation; or (c) upon a dollar for dollar cancellation of any
principal outstanding under any indebtedness of the Company payable to Holder,
if any. Upon the surrender of this Warrant, payment of the Exercise Price as
described above and payment of all tax obligations as described in Section 5
below, the Company agrees to cause to be issued and delivered with all
reasonable dispatch to or upon the written order of the registered Holder and
(subject to receipt of evidence of compliance with the Act in accordance with
the provisions of Section 9 hereof) in such name or names as such registered
Holder may designate, a certificate or certificates for the number of full
Shares so purchased upon the exercise of such Warrant, together with cash, as
provided in Section 10 hereof, in respect of any fractional Share otherwise
issuable upon such surrender. Such certificate or certificates shall be
deemed to have been issued and any person so designated to be named therein
shall be deemed to have become a holder of record of such Shares as of the
date of surrender of this Warrant, payment of the Exercise Price as described
above and payment of all tax obligations as described in Section 5 hereof;
provided, however, that if, at the date of surrender of this Warrant and
payment of the Exercise Price and taxes the transfer books for the Common
Stock or other class of stock purchasable upon the exercise of this Warrant
shall be closed, the certificates for the Shares for which this Warrant is
exercised shall be issuable as of the date on which such books shall next be
opened (whether before, on or after the Expiration Date) and until such date
the Company shall be under no duty to deliver any certificates for such
Shares; and provided further, however, that the transfer books shall not be
closed at any one time for a period longer than twenty (20) consecutive
calendar days unless otherwise required by law.
5. Payment of Taxes. The Holder agrees to pay all documentary stamp
taxes (whether federal, state or local) attributable to the exercise of this
Warrant and the issuance of any Shares upon such exercise by delivery of cash
or a certified check payable to the Company in the amount of all such taxes.
In addition, as a condition to the exercise of the Warrant, the Company may
require the Holder to pay or reimburse the Company for any taxes which the
Company determines are required to be withheld in connection with the grant or
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any exercise of this Warrant. Such payment or reimbursement shall be in the
manner set forth in this Section 5.
6. Mutilated or Missing Warrants. Should this Warrant be mutilated,
lost, stolen or destroyed, the Company may, in its discretion, issue and
deliver in exchange and substitution for, and upon cancellation of, the
mutilated Warrant, or in lieu of and substitution for the lost, stolen or
destroyed Warrant, a new Warrant of like tenor representing an equivalent
right or interest. The Company shall issue and deliver such new Warrant only
upon receipt of evidence reasonably satisfactory to the Company, if requested,
of such loss, theft or destruction of such Warrant and a reasonable indemnity.
Applicants for such substitute Warrants also shall comply with such other
reasonable regulations and pay such other reasonable charges as the Company
may prescribe.
7. Reservation of Common Stock, etc. The Company has reserved out of
the authorized and unissued shares of the Common Stock a number of shares
sufficient to provide for the exercise of the rights of purchase represented
by this Warrant. The transfer agent for the Common Stock (the "Transfer
Agent") and every subsequent Transfer Agent for any shares of the Common Stock
issuable upon the exercise of any of the rights of purchase aforesaid are
hereby irrevocably authorized and directed at all times until the Expiration
Date to reserve such number of authorized and unissued shares of the Common
Stock as shall be requisite for such purpose. The Company will supply such
Transfer Agent with duly executed stock certificates for such purposes. Any
Warrant surrendered in the exercise of the rights hereby evidenced shall be
cancelled, and such cancelled Warrant shall constitute sufficient evidence of
the number of Shares that have been issued upon the exercise of such Warrant.
No shares of Common Stock shall be subject to reservation concerning any
Warrant not exercised on or prior to the Expiration Date.
8. Adjustments of Warrant Price and Number and Kind of Shares. The
Exercise Price and the number and kind of securities purchasable upon the
exercise of this Warrant shall be subject to adjustment from time to time upon
the occurrence of the following events subsequent to the date hereof.
(a) In case the Company shall (i) pay a dividend in shares of its
capital stock or make a distribution in shares of its capital stock (whether
of the Common Stock or of any other class of capital stock), (ii) subdivide
its outstanding Common Stock into a greater number of shares or (iii) combine
its outstanding Common Stock into a smaller number of shares, then the number
of Shares (calculated immediately prior to such change) shall be increased or
decreased, as the case may be, in direct proportion to the increase or
decrease in the total number of shares of Common Stock of the Company by
reason of such change, and the Exercise Price of the Shares after such change
shall, in the case of an increase in the number of shares of Common Stock, be
proportionately reduced, and, in case of a decrease in the total number of
shares of Common Stock, be proportionately increased. An adjustment made
pursuant to this Paragraph (a) of this Section 8 shall become effective
immediately after the record date for determining stockholders entitled to
receive such dividend or distribution in the case of a dividend or
distribution in shares of the Company's capital stock and shall become
effective immediately after the effective date in the case of a subdivision,
combination or reclassification. If, as a result of an adjustment made
pursuant to this Paragraph (a) of this Section 8, the Holder shall become
entitled to receive shares of two or more classes of capital stock of the
Company, the Board of Directors of the Company (whose determination shall be
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conclusive) shall in good faith determine the allocation of the adjusted
exercise price between or among shares of such classes of capital stock.
(b) If any capital reorganization or reclassification of the capital
stock of the Company (other than by change in par value, or from par value to
no par value, or from no par value to par value where such change in par value
does not result in any change in the number of outstanding shares), or
consolidation or merger of the Company with another corporation, or the sale
of all or substantially all of its assets to another corporation, shall be
effected in such a way that holders of the Common Stock shall be entitled to
receive stock, securities or assets with respect to or in exchange for the
Common Stock, then, as a condition of such reorganization, reclassification,
consolidation, merger or sale, the Holder shall have the right, and the
Company shall enter into such agreements as may be necessary to effectuate
such right, thereafter and until the expiration of the period of
convertibility, to convert this Warrant into the same kind and amount of
stock, securities or assets as the stock, securities or assets receivable upon
such reorganization, reclassification, consolidation, merger or sale by a
holder of the same number of shares of the Common Stock as the number of
Shares then subject to this Warrant.
(c) No adjustment in the Exercise Price shall be required unless and
until such adjustments would require an increase or decrease of at least five
cents ($0.05) in such price; provided, however, that any adjustments that by
reason of this Paragraph (c) of this Section 8 are not required to be made
shall be carried forward and taken into account in any subsequent adjustment.
All calculations under this Section 8 shall be made to the nearest cent or to
the nearest whole Share, as the case may be.
(d) If at any time as a result of any adjustment made pursuant to
Paragraph A of this Section 8, the Holder of this Warrant shall become
entitled to receive any shares of the Company's capital stock other than
Common Stock, then the number of such other shares receivable upon exercise of
this Warrant shall be subject to adjustment from time to time in a manner and
on terms as nearly equivalent as practicable to the provisions concerning the
Common Stock contained in Paragraphs (a) through (c), inclusive, of this
Section 8.
(e) Irrespective of any adjustments in the Exercise Price or the
number or kind of Shares or shares of other capital stock of the Company or of
others purchasable upon exercise of this Warrant, any warrants theretofore or
thereafter issued may continue to express the same price and number and kind
of Shares or shares of other capital stock of the Company or of others as are
stated in such warrants when initially issued.
9. Registration Under the Securities Act of 1933. Neither this
Warrant nor the Shares have been registered under the Act in reliance on
exemption from such registration requirements provided by Section 4(2) of the
Act and Regulation D promulgated thereunder, and under exemptions provided by
applicable state securities laws. The Holder, by its acceptance hereof,
covenants and agrees that it will not transfer or dispose of this Warrant or
any of the Shares except pursuant to (a) an effective registration statement
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filed under the Act or (b) an opinion of counsel, reasonably satisfactory to
counsel for the Company, that an exemption from the registration requirements
under the Act and applicable state securities laws is available and otherwise
in accordance with the conditions set forth in Section 2 hereof.
10. Fractional Interests. No fractional shares of the Common Stock
will be issued upon the exercise of this Warrant or any future Warrants issued
in replacement hereof, but in lieu thereof a cash payment will be made to the
Holder.
11. Rights of Warrant Holders. No Holder of this Warrant Certificate
shall be entitled to vote or receive dividends or be deemed the holder of
Common Stock or any other securities of the Company that may at any time be
issuable upon the exercise hereof for any purpose, nor shall anything
contained herein be construed to confer upon Holder, as such, any of the
rights of a stockholder of the Company or any right to vote for the election
of directors or upon any matter submitted to stockholders at any meeting
thereof, or to give or withhold consent to any corporate action (whether upon
any recapitalization, issue of stock, reclassification of stock, change of par
value, consolidation, merger, conveyance or otherwise) or to receive notice of
meetings, or to receive dividends or subscription rights or otherwise, until
this Warrant shall have been exercised and the Common Stock purchasable upon
the exercise hereof shall have become deliverable to Holder.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
under seal by its duly authorized officer and delivered as of the date and
year first written above.
NEWCARE HEALTH CORPORATION
By:_______________________________
Christopher F. Brogdon,
Chief Executive Officer
[CORPORATE SEAL]
Attest:______________________________
Secretary
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FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise the Warrant Certificate)
TO: NEWCARE HEALTH CORPORATION
The undersigned hereby irrevocably elects to exercise the Warrant
represented by this Warrant Certificate to purchase 500,000 shares of Common
Stock issuable upon the exercise of such Warrant and requests that
certificates for such shares be issued in the name of:
Insert federal tax identification number or other identifying number:________
Lenox Healthcare, Inc.
(Print Name)
75 South Church Street, Suite 650, Pittsfield, Massachusetts 01201
(Print Address)
Dated:___________
LENOX HEALTHCARE, INC.
By:___________________________________
Its:___________________________________
<PAGE>
EXHIBIT D
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and entered
into as of May 20, 1999, by and between NEWCARE HEALTH CORPORATION, a Nevada
corporation ("NewCare"), and LENOX HEALTHCARE, INC., a Massachusetts
corporation (the "Buyer"), pursuant to the Purchase Agreement dated of even
date herewith between NewCare and the Buyer (the "Purchase Agreement"). In
order to induce the buyer to enter into the Purchase Agreement, NewCare has
agreed to provide the registration rights set forth in this Agreement. The
execution of this Agreement is a condition to the consummation of the
transactions contemplated by the Purchase Agreement.
NewCare agrees with the Buyer for the benefit of the Buyer, as follows:
1. Definitions. Capitalized terms used herein without definition
shall have their respective meanings set forth in the Purchase Agreement. As
used in this Agreement, the following terms shall have the following meanings:
Affiliate: With respect to any specified Person, (i) any other
Person directly or indirectly controlling or controlled by, or under direct or
indirect common control with, such specified Person or (ii) any officer or
director of such other Person. For purposes of this definition, the term
"control" of a Person means the possession, direct or indirect, of the power
(whether or not exercised) to direct or cause the direction of the management
and policies of such Person, whether through the ownership of voting
securities, by contract, or otherwise, and the terms "controlling,"
"controlled by," and "under direct or indirect common control with" have
meanings correlative thereto.
Business Day: Each Monday, Tuesday, Wednesday, Thursday and Friday
that is not a day on which banking institutions in the City of Atlanta,
Georgia are authorized or obligated by law or executive order to close.
Common Stock: The shares of common stock, $.02 par value, of
NewCare.
Demand Registration: See Section 2(a) hereof.
Effectiveness Period: The period commencing with June 1, 1999 and
ending on the earlier of June 1, 2001 and the date that all Registrable
Securities have ceased to be Registrable Securities.
Exchange Act: The Securities Exchange Act of 1934, as amended, and
the rules and regulations of the SEC promulgated thereunder.
Indemnified Party: See Section 5(c) hereof.
Indemnifying Party: See Section 5(c) hereof.
Losses: See Section 5(a) hereof.
Person: Any natural person, corporation, partnership, limited
liability partnership, limited liability company, trust or other legal entity.
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Prospectus: The prospectus included in any Registration Statement
(including, without limitation, a prospectus that discloses information
previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A promulgated under the
Securities Act), as amended or supplemented by any amendment or prospectus
supplement, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such Prospectus.
Purchase Agreement: See the first paragraph of this Agreement.
Registrable Securities: Each share of Common Stock issued to the
Buyer pursuant to the Purchase Agreement, each share of Common Stock issued to
the Buyer upon its exercise of the Warrants (as such term is defined in the
Purchase Agreement) and any Common Stock issued with respect thereto upon any
stock dividend, split or similar event, until (i) it is effectively registered
under the Securities Act and disposed of in accordance with the Registration
Statement covering it, (ii) it is salable pursuant to Rule 144(k) or (iii) it
is sold to the public pursuant to Rule 144, and, as a result of an event or
circumstance described in any of the foregoing clauses (i) through (iii), the
legends with respect to transfer restrictions required under the Securities
Act (other than any such legends required solely as the consequences of the
fact that the Registrable Securities are owned by, or were previously owned
by, NewCare or an Affiliate of NewCare) are removed or removable.
Registration Expenses: See Section 3 hereof.
Registration Statement: Any registration statement of NewCare which
covers any of the Registrable Securities pursuant to the provisions of this
Agreement, including the Prospectus, amendments and supplements to such
registration statement, including post-effective amendments, all exhibits and
all material incorporated by reference or deemed to be incorporated by
reference in such registration statement.
Rule 144: Rule 144 under the Securities Act, as such Rule may be
amended from time to time, or any similar rule or regulation hereafter adopted
by the SEC.
SEC: The Securities and Exchange Commission.
Securities Act: The Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder.
Selling Expenses: All underwriting discounts, selling commissions
and stock transfer taxes applicable to the Registrable Securities.
Underwriter: The investment banking firm or firms that shall manage
or co-manage an offering of the Registrable Securities under the terms of
Section 2 hereof.
2. Requested Registration.
(a) Subject to the conditions of Section 2(b) below, no more than one
time during the Effectiveness Period, the Buyer may make written demand on
NewCare to register all of the Registrable Securities of the Buyer (being
referred to hereinafter as a "Demand Registration").
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(b) In the event that NewCare shall receive from the Buyer a written
request that NewCare effect a Demand Registration with respect to all or a
part of the Registrable Securities, other than a registration pursuant to Rule
415 under Regulation C promulgated under the Securities Act, NewCare shall:
(i) as soon as practicable, use its best efforts to effect such
Demand Registration (including, without limitation, the execution of an
undertaking to file post-effective amendments, appropriate qualification under
applicable "blue sky" or other state securities laws, and appropriate
compliance with applicable regulations issued under the Securities Act) as may
be so requested and as would permit or facilitate the sale and distribution of
such portion of such Registrable Securities as is specified in such request;
provided that NewCare shall not be obligated to take any action to effect any
such Demand Registration pursuant to this Section 2:
(A) in any particular jurisdiction in which NewCare would be
required to execute a general consent to service of process in effecting such
Demand Registration, qualification or compliance unless NewCare is already
subject to service in such jurisdiction and except as may be required by the
Securities Act; or
(B) during the period starting with the date that is sixty
(60) days prior to NewCare's good faith estimate of the date of filing of, and
ending on a date one hundred eighty (180) days after the effective date of, a
NewCare-initiated underwritten registration for an all-cash offer price;
provided that NewCare is actively employing in good faith all reasonable
efforts to cause such registration statement to become effective.
If NewCare is not obligated to effect any requested Demand Registration by
virtue of the foregoing clauses (A) and (B), such request shall not be deemed
to be a Demand Registration for purposes of Section 2(a). Subject to the
foregoing clauses (A) and (B), NewCare shall file a Registration Statement
covering the Registrable Securities so requested to be registered as soon as
practicable after receipt of the request of the Buyer; provided, however, that
if NewCare shall furnish to the Buyer a certificate signed by the Chairman of
the Board of NewCare stating that in the good-faith judgment of the Board of
Directors of NewCare it would be seriously detrimental to NewCare and its
stockholders for such Registration Statement to be filed and it is therefore
essential to defer the filing of such Registration Statement, NewCare shall
have the right to defer such filing (except as provided in clause (B) above)
for a period of not more than one hundred eighty (180) days after receipt of
the request of the Buyer.
The Registration Statement filed pursuant to the request of the Buyer may,
subject to the provisions of Section 2(c) below, include securities offered by
NewCare for its own account and/or other securities of NewCare that are held
by other NewCare stockholders.
(c) If the Buyer intends to distribute the Registrable Securities
covered by its request by means of an underwritten offering to the public, the
Buyer shall so advise NewCare as a part of its request made pursuant to
Section 2(a). The right of the Buyer to a Demand Registration pursuant to
this Section 2(c) shall be conditioned upon the Buyer's participation in such
underwriting in the manner provided herein.
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If NewCare shall request inclusion in any Demand Registration pursuant to
this Section 2(c) of securities being sold for its own account, or if other
NewCare stockholders shall request inclusion in any such Demand Registration,
then NewCare shall (together with the Buyer) enter into an underwriting
agreement in customary form and containing customary terms reasonably
acceptable to the Buyer with the representative of the Underwriter selected
for such underwriting by NewCare and reasonably acceptable to the Buyer;
provided, however, that if NewCare has not selected an Underwriter reasonably
acceptable to the Buyer within thirty (30) days after NewCare's receipt of the
request for a Demand Registration from the Buyer under this Section 2(c), then
the Buyer may select an Underwriter reasonably acceptable to NewCare in
connection with such Demand Registration. Notwithstanding any other provision
of this Section 2, if the Underwriter representative advises NewCare in
writing that marketing factors require a limitation of the number of shares to
be underwritten, the Registerable Securities and the securities of NewCare
held by NewCare and other stockholders of NewCare to be included in such
Demand Registration shall be excluded from such Demand Registration on a
pro-rata basis to the extent so required by such limitation. NewCare shall
advise the Buyer as to the number of shares of Registrable Securities that may
be included in the Demand Registration and underwriting as allocated in the
foregoing manner. If the Buyer disapproves of the terms of the underwriting,
the Buyer may elect to withdraw therefrom by written notice to NewCare and the
Underwriter. The securities so withdrawn shall also be withdrawn from the
Demand Registration. If the Underwriter has not limited the number of shares
to be underwritten, NewCare may include its securities for its own account in
such Demand Registration if the Underwriter so agrees and if the number of
Registrable Securities that would otherwise have been included in such Demand
Registration and underwriting will not be limited thereby.
3. Expenses of Demand Registration. All expenses incurred in
connection with any Demand Registration, qualification or compliance pursuant
to this Agreement (collectively, "Registration Expenses") shall be borne by
NewCare, and all Selling Expenses shall be borne by the Buyer; provided,
however, that NewCare shall not be required to pay any Registration Expenses
if, as a result of the withdrawal of a request for a Demand Registration by
the Buyer pursuant to Section 2(c) hereof, the Registration Statement does not
become effective, in which case the Buyer shall bear such Registration
Expenses; and provided further, however, that if any jurisdiction in which the
Registrable Securities shall be qualified shall require that expenses incurred
in connection with the qualification of the Registrable Securities in that
jurisdiction be borne by the selling stockholder, then such expenses shall be
payable by the Buyer to the extent required by such jurisdiction.
4. Registration Procedures. NewCare shall keep the Buyer advised in
writing as to the initiation of the Demand Registration and as to the
completion thereof. At its expense, NewCare shall use its best efforts to:
(a) keep such Demand Registration effective for a period of one
hundred twenty (120) days or until the Buyer has completed the distribution
described in the Registration Statement relating thereto, whichever first
occurs; and
(b) furnish such number of Prospectuses and other documents incident
thereto as the Buyer from time to time may reasonably request.
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5. Indemnification.
(a) NewCare shall indemnify and hold harmless the Buyer from and
against all losses, liabilities, damages and expenses (including, without
limitation, any legal or other expenses reasonably incurred in connection with
defending or investigating any such action or claim) (collectively, "Losses"),
arising out of or based upon any untrue statement or alleged untrue statement
of a material fact contained in any Registration Statement or Prospectus or in
any amendment or supplement thereto, or arising out of or based upon any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, in
light of the circumstances under which they were made, except insofar as such
Losses arise out of or are based upon the information relating to the Buyer
furnished to NewCare by the Buyer expressly for use therein; provided,
however, that NewCare shall not be liable in any such case to the extent that
any such Losses arise out of or are based upon an untrue statement or alleged
untrue statement or omission or alleged omission made in any preliminary
Prospectus if (i) the Buyer failed to send or deliver a copy of the Prospectus
with or prior to the delivery of written confirmation of the sale of
Registrable Securities and (ii) the Prospectus would have corrected such
untrue statement or omission; and provided further, however, that NewCare
shall not be liable in any such case to the extent that any such Losses arise
out of or are based upon an untrue statement or alleged untrue statement or
omission or alleged omission in the Prospectus, if such untrue statement or
alleged untrue statement, omission or alleged omission is corrected in an
amendment or supplement to the Prospectus and if, having previously been
furnished by or on behalf of NewCare with copies of the Prospectus as so
amended or supplemented, the Buyer thereafter fails to deliver such
Prospectus, as so amended or supplemented, prior to or concurrently with the
sale of a Registrable Security to the person asserting such Losses who
purchased such Registrable Security which is the subject thereof from the
Buyer.
(b) The Buyer agrees to indemnify and hold harmless NewCare, its
directors, its officers who sign a Registration Statement and each Person, if
any, who controls NewCare (within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act), from and against all Losses
arising out of or based upon any untrue statement of a material fact contained
in any Registration Statement, Prospectus or arising out of or based upon any
omission of a material fact required to be stated therein or necessary to make
the statements therein not misleading, in light of the circumstances under
which they were made, to the extent, but only to the extent, that such untrue
statement or omission is contained in any information relating to the Buyer so
furnished by the Buyer to NewCare expressly for use in such Registration
Statement or Prospectus. In no event shall the liability of the Buyer
hereunder be greater in amount than the dollar amount of the proceeds received
by the Buyer upon the sale of the Registrable Securities giving rise to such
indemnification obligation.
(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any Person in respect of which indemnity may be
sought pursuant to either of the two preceding paragraphs, such Person (the
"Indemnified Party") shall promptly notify the Person against whom such
indemnity may be sought (the "Indemnifying Party") in writing, but failure so
to notify an Indemnifying Party shall not relieve such Indemnifying Party from
any liability hereunder to the extent it is not materially prejudiced as a
result thereof. The Indemnifying Party, upon request of the Indemnified
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Party, shall retain counsel satisfactory to the Indemnified Party to represent
the Indemnified Party and any others the Indemnifying Party may designate in
such proceeding and shall pay the fees and disbursements of such counsel
related to such proceeding. In any such proceeding, any Indemnified Party
shall have the right to retain its own counsel, but the fees and expenses of
such counsel shall be at the expense of such Indemnified Party unless (i) the
Indemnifying Party and the Indemnified Party shall have mutually agreed to the
retention to such counsel, (ii) the named parties to any such proceeding
(including any impleaded parties) include both the Indemnifying Party and the
Indemnified Party and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between them,
or (iii) the Indemnifying Party shall not have employed counsel satisfactory
to the Indemnified Party to represent the Indemnified Party within a
reasonable time after notice of commencement of the action. It is understood
that the Indemnifying Party shall not, in respect of the legal expenses of any
Indemnified Party in connection with any proceeding or related proceedings in
the same jurisdiction, be liable for the fees and expenses of more than one
separate firm (in addition to any local counsel) for all indemnified parties
under Section 5(a) or 5(b) hereof who are parties to such proceeding or
proceedings, and that all such fees and expenses shall be reimbursed as they
are incurred. The Indemnifying Party shall not be liable for any settlement
of any proceeding effected without its written consent, but if settled with
such consent or if there be a final judgment for the plaintiff, the
Indemnifying Party agrees to indemnify the Indemnified Party from and against
any loss or liability by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an Indemnified Party
shall have requested an Indemnifying Party to reimburse the Indemnified Party
for fees and expenses of counsel as contemplated by the second and third
sentences of this paragraph, such Indemnifying Party agrees that it shall be
liable for any settlements of any proceeding effected without its written
consent if (i) such settlement is entered into more than 45 days after receipt
by such Indemnifying Party of the aforesaid request, and (ii) such
Indemnifying Party shall not have reimbursed the Indemnified Party in
accordance with such request prior to the date of such settlement. No
Indemnifying Party shall, without the prior written consent of the Indemnified
Party, effect any settlement of any pending or threatened proceeding in
respect of which any Indemnified Party is or could have been a party and
indemnity could have been sought hereunder by such Indemnified Party, unless
such settlement includes an unconditional release of such Indemnified Party
from all liability on claims that are the subject matter of such proceeding.
(d) If the indemnification provided for in this Section 5 is
unavailable to an Indemnified Party under Section 5(a) or 5(b) hereof in
respect of any Losses or is insufficient to hold such Indemnified Party
harmless, then each applicable Indemnifying Party, in lieu of indemnifying
such Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such Losses, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Indemnifying
Party or Indemnifying Parties on the one hand, and the Indemnified Party or
Indemnified Parties on the other hand, or (ii) if the allocation provided by
clause (i) above, is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause
(i) above, but also the relative fault of the Indemnifying Party or
Indemnified Parties on the one hand, and of the Indemnified Party or
Indemnifying Parties on the other hand, in connection with the statements or
omissions that resulted in such Losses, as well as any other relevant
equitable considerations. Benefits received by NewCare shall be deemed to be
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equal to the total number of Registrable Securities multiplied by the per
share closing price of the Common Stock on the date of this Agreement, as
listed on the Nasdaq Small Cap Market or other exchange or interdealer
quotation system upon which the Common Stock is listed. Benefits received by
the Buyer shall be deemed to be equal to the value of receiving the
Registrable Securities and having such shares registered under the Securities
Act. Benefits received by any Underwriter shall be deemed to be equal to the
total underwriting discounts and commissions, as set forth on the cover page
of the Prospectus forming a part of the Registration Statement which resulted
in such Losses. The relative fault of the Buyer on the one hand, and NewCare
on the other hand, shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Buyer or by NewCare and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 5(d) were determined by pro rata
allocation or by any other method or allocation that does not take into
account the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an Indemnified Party as a result of
the Losses referred to in the immediately preceding paragraph shall be deemed
to include, subject to the limitations set forth above, any legal or other
expenses reasonably incurred by such Indemnified Party in connection with
investigating or defending any such action or claim. Notwithstanding this
Section 5(d), the Buyer shall not be required to contribute any amount in
excess of the amount by which the total price at which the Registrable
Securities sold by the Buyer and distributed to the public were offered to the
public exceeds the amount of any damages which the Buyer has otherwise been
required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation. The indemnity, contribution and expense
reimbursement obligations of NewCare and the Buyer hereunder shall be in
addition to any liability NewCare and the Buyer may otherwise have hereunder,
under the Purchase Agreement or otherwise.
The indemnity and contribution provisions contained in this Section 5
shall remain operative and in full force and effect regardless of (i) any
termination of this Agreement, (ii) any investigation made by or on behalf of
the Buyer or NewCare, its officers or directors or any Person controlling
NewCare, and (iii) the sale of any Registrable Securities by the Buyer.
6. Information Requirements.
(a) NewCare shall file the reports required to be filed by it under
the Securities Act and the Exchange Act, and if at any time NewCare is not
required to file such reports, it will, upon the request of the Buyer, make
publicly available other information so long as necessary to permit sales
pursuant to Rule 144. NewCare further covenants that it will cooperate with
the Buyer and take such further reasonable action as the Buyer may reasonably
request (including, without limitation, making such reasonable representations
as the Buyer may reasonably request), all to the extent required from time to
time to enable the Buyer to sell Registrable Securities without registration
under the Securities Act within the limitation of the exemptions provided by
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Rule 144. Notwithstanding the foregoing, nothing in this Section 6 shall be
deemed to require NewCare to register any of its securities under any section
of the Exchange Act.
(b) NewCare shall file the reports required to be filed by it under
the Exchange Act and shall comply with all other requirements set forth in the
instructions to the appropriate SEC registration statement form permitting
registration of the Registrable Securities for resale by the Buyer in the
manner or manners designated by it.
7. Volume Limitations. Notwithstanding anything herein to the
contrary, the Buyer may not sell any Registrable Securities without the prior
written consent of NewCare prior to the effective date of the Registration
Statement filed hereunder for such Registrable Securities, except that without
such consent, the Buyer may sell the Registrable Securities to a buyer that
acquires such Registrable Securities for investment and not with a view toward
distribution thereof otherwise than pursuant to the terms of this Agreement;
provided that the registration rights hereunder with respect to such
Registrable Securities shall terminate immediately upon such transfer, and no
subsequent holder thereof may avail itself of the rights of the Buyer
hereunder.
8. Other Covenants of the Buyer. Neither the Buyer, nor any Person
controlled by or related to, nor any Affiliate of the Buyer (collectively, the
"Stockholder Group") shall, directly or indirectly, acquire any shares of
capital stock of NewCare which are then entitled to vote generally in the
election of directors (the "Voting Securities") (except by way of stock
dividend or other distributions or offerings made available to holders of
Voting Securities generally) if the effect of such acquisition would be to
increase the aggregate voting power in the election of directors of all Voting
Securities then owned by all members of the Stockholder Group to greater than
15% of such total combined voting power of all the Voting Securities then
outstanding.
9. Miscellaneous.
(a) In the event of a breach by NewCare of its obligations under this
Agreement, the Buyer, 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. NewCare agrees that monetary
damages would not be adequate compensation for any loss incurred by reason or
a breach by it of any of the provisions of this Agreement and hereby further
agrees that, in the event of any action for specific performance in respect of
such breach, it shall waive the defense that a remedy at law would be
adequate.
(b) NewCare has not entered, as of the date hereof and shall not, on
or after the date of this Agreement, enter into any agreement with respect to
its securities which conflicts with the rights granted to the Buyer. NewCare
represents and warrants that the rights granted to the Buyer hereunder do not
in any way conflict with the rights granted to the holders of NewCare's
securities under any other agreements.
(c) The provisions of this Agreement, including the provisions of
this sentence, may not be amended, modified or supplemented, and waivers or
consents to departures from the provisions hereof may not be given, unless
NewCare has obtained the written consent of the Buyer.
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(d) All notices and other communications provided for or permitted
hereunder shall be deemed to have been duly given and made if in writing and
if served either by personal delivery to the party for whom intended (which
shall include delivery by Federal Express or similar nationally recognized
service) or five (5) Business Days after being deposited, postage prepaid,
certified or registered mail, return receipt requested, in the United States
mail bearing the address shown in this Agreement for, or such other address as
may be designated in writing hereafter by, such party:
If to the Buyer:
Lenox Healthcare, Inc.
75 South Church Street, Suite 650
Pittsfield, Massachusetts 01201
Fax No. (413) 448-2120
Attn: General Counsel
If to NewCare:
NewCare Health Corporation
6000 Lake Forrest Drive
Suite 200
Atlanta, Georgia 30328
Fax No. (404) 843-9677
Attention: General Counsel
with a copy (which will constitute notice to NewCare) to:
Rogers & Hardin LLP
2700 International Tower
229 Peachtree Street, NE
Atlanta, Georgia 30303
Fax No. (404) 525-2224
Attention: Steven E. Fox, Esq.
(e) NewCare will maintain, or will cause its transfer agent to
maintain, a register with respect to the Registrable Securities in which all
transfers of Registrable Securities of which NewCare has received notice will
be recorded. NewCare may deem and treat the Person in whose name Registrable
Securities are registered in such register of NewCare as the owner thereof for
all purposes.
(f) This Agreement shall inure to the benefit of and be binding upon
each of the parties hereto and their respective successors and assigns.
(g) 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 original and all of which taken together shall
constitute one and the same agreement.
(h) The headings in this Agreement are for convenience of reference
only and shall not limit or otherwise affect the meaning hereof.
(i) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF THE STATE OF GEORGIA, EXCEPT THAT BODY OF LAW
RELATING TO CHOICE OF LAWS.
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(j) If any term, provision, covenant or restriction of this Agreement
is held to be invalid, illegal, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions set forth herein shall remain in
full force and effect, and shall in no way be affected, impaired or
invalidated thereby, and the parties hereto shall use their best efforts to
find and employ an alternative means to achieve the same or substantially the
same result as that contemplated by such term, provision, covenant or
restriction. It is hereby stipulated and declared to be the intention of the
parties that they would have executed the remaining terms, provisions,
covenants and restrictions without including any of such which may be
hereafter declared invalid, illegal, void or unenforceable.
(k) This Agreement is intended by the parties as a final expression
of their agreement and is 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. Except as provided in the Purchase Agreement
and the agreements ancillary thereto, there are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein,
with respect to the registration rights granted by NewCare with respect to the
securities issued pursuant to the Purchase Agreement. This Agreement
supersedes all prior agreements and understandings among the parties with
respect to such subject matter.
(l) In any action or proceeding brought to enforce any provision of
this Agreement, or where any provision hereof is validly asserted as a
defense, the prevailing party, as determined by the court, shall be entitled
to recover reasonable attorneys' fees in addition to any other available
remedy.
(m) Each of the parties hereto shall use all reasonable efforts to
take, or cause to be taken, all appropriate action, do or cause to be done all
things reasonably necessary, proper or advisable under applicable law, and
execute and deliver such documents and other papers, as may be required to
carry out the provisions of this Agreement and the other documents
contemplated hereby and consummate the make effective the transactions
contemplated hereby.
(n) This Agreement and the obligations of the parties hereunder shall
terminate upon the end of the Effectiveness Period, except for any liabilities
or obligations under Section 5 hereof, each of which shall remain in effect in
accordance with their terms.
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IN WITNESS WHEREOF, the parties have executed and delivered this
Registration Rights Agreement or caused this Registration Rights Agreement to
be executed and delivered by its duly authorized officer, all as of the date
first written above.
NEWCARE HEALTH CORPORATION
By:/s/ Chris Brogdon
Name:
Title:
LENOX HEALTHCARE, INC.
By:/s/ Thomas M. Clarke
Name: Thomas M. Clarke
Title: President
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