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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K/A
|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996. OR |_| TRANSITION REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES AND EXCHANGE ACT OF
1934
COMMISSION FILE NUMBER: 0-26502
COMMUNITY CARE OF AMERICA, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 52-1823411
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
3050 NORTH HORSESHOE DRIVE, SUITE 260,
NAPLES, FLORIDA 34104
(Address of principal executive offices)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (941) 435-0085
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: COMMON
STOCK, $.0025 PAR VALUE
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. |X| Yes |_| No
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. |_|
The aggregate market value of Common Stock held by non-affiliates of
the registrant as of March 31, 1997 was approximately $19,161,858. Solely for
purposes of this computation, the registrant's directors and executive officers
have been deemed to be affiliates. Such treatment is not intended to be, and
should not be construed to be, an admission by the registrant or such directors
and officers that any of such persons are "affiliates," as that term is defined
under the Securities Act of 1933.
The number of shares of common stock outstanding as of March 31, 1997
was 7,597,801.
DOCUMENTS INCORPORATED BY REFERENCE
None
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<PAGE>
PART II
ITEM 10: DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The directors and executive officers of the Company are as follows:
NAME AGE POSITION
John L. Silverman............. 55 Chairman of the Board and Director
Deborah A. Lau................ 36 President, Chief Executive Officer and
Director
William J. Krystopowicz....... 45 Executive Vice President and
Director of Mergers and Acquisitions
Robert N. Elkins, M.D......... 53 Director
Michael S. Blass.............. 40 Director
John L. Silverman has, since July 1995, been President and Chief
Executive Officer of Asia Care, Inc., a company seeking investments in Asia for
its parent, Integrated Health Services, Inc. ("IHS"). From 1985 until he joined
Asia Care, Inc., Mr. Silverman was President and Chief Executive Officer of
Venturecorp, Inc., a venture capital and investment management company. He has
also served as Chief Financial Officer since October 1990, and President from
October 1990 to April 1993, of the Chi Systems Inc., a healthcare consulting
company. Mr. Silverman has served as the Chairman of the Board of the Company
since December 1993. Mr. Silverman is also a director of IHS and several private
companies.
Deborah A. Lau joined the Company as Executive Vice President and
Chief Operating Officer in October 1995 and became President and Chief Executive
Officer (while retaining the post of Chief Operating Officer) of the Company on
April 4, 1997. From March 1989 until she joined the Company, Ms. Lau served in
various capacities with IHS, serving as Vice President of Financial Operations
from January 1995, Vice President Healthcare Controller from November 1993 to
December 1994 and Regional Vice President from March 1989 to November 1993.
Prior thereto, Ms. Lau served as Assistant Controller at Continental Care
Centers, Inc. Ms. Lau received a B.S. degree in Accounting and Business
Administration from Towson State University.
William J. Krystopowicz joined the Company in July 1993, serving as
interim President until February 1994, since which time he has been Executive
Vice President. Mr. Krystopowicz also served as the Company's Chief Financial
Officer from February 1994 until June 1995. Prior to joining the Company, Mr.
Krystopowicz served as IHS's Senior Vice President of Financial Services from
August 1988 and Vice President - Controller from June 1986 to July 1988. From
July 1985 until he joined IHS, Mr. Krystopowicz was Director of Finance and
Reimbursement of Genesis Health Ventures, Inc., a long-term care operator. Mr.
Krystopowicz received a B.S. degree in Accounting from LaSalle University.
Robert N. Elkins, M.D., founder of the Company, has served as a
director of the Company since December 1992. Dr. Elkins is currently Chairman of
the Board and Chief Executive Officer of IHS, a leading provider of subacute
healthcare services, positions he has held since March 1986. From 1980 until
co-founding IHS in 1986, Dr. Elkins was a co-founder and Vice President of
Continental Care Centers, Inc., an owner and operator of long-term healthcare
facilities. From 1976 through 1980, Dr. Elkins was a practicing physician. Dr.
Elkins is a graduate of the University of Pennsylvania, received his M.D. degree
from the Upstate Medical Center, State University of New York, and completed his
residency at Harvard University Medical Center. Dr. Elkins is also a director of
Capstone Capital Corporation and Davstar Industries, Inc.
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Michael S. Blass has served as a director of the Company since July
1995. Mr. Blass has been a partner in the law firm of Blass & Driggs for more
than the past five years. Mr. Blass received a B.A. degree from Georgetown
University and a J.D. degree from Fordham University.
The Company's Certificate of Incorporation provides that the Board of
Directors shall be divided into three classes, with such classes to be as nearly
equal in number as the then total number of directors constituting the entire
Board permits. Each class is elected for a term of three years. The Company's
Board of Directors presently consists of four members. Deborah A. Lau and
Michael S. Blass serve as Class I directors, John L. Silverman serves as Class
II director and Robert N. Elkins serves as Class III director, with terms of
office scheduled to expire at the Company's 1999, 1997 and 1998 Annual Meetings
of Stockholders, respectively.
Officers are elected by the Board of Directors and may be removed at
any time by the Board. The officers of the Company are elected annually by the
Board of Directors at its meeting held immediately after the annual meeting of
the stockholders, and hold their respective offices until their successors are
duly elected and qualified.
Stockholders of the Company who, at April 25, 1997, owned an
aggregate of 733,392 shares of Common Stock (including 287,602 shares owned by a
partnership in which a limited partnership controlled by Dr. Elkins is a general
partner and is afforded sole voting power) are parties to a Voting Agreement
(the "Voting Agreement") with Dr. Elkins, in which such stockholders have agreed
that, during the ten-year term of the Voting Agreement (which was effective
January 26, 1996), at all meetings of stockholders and in all written consents
of stockholders, they will vote all Common Stock owned by them in the same
manner as Common Stock owned by Dr. Elkins (846,235 shares) is voted by him.
Each such stockholder has also irrevocably appointed Dr. Elkins as proxy to
represent and vote all shares of Common Stock of such stockholder at any meeting
of stockholders of the Company and in all actions taken by written consent of
stockholders. Common Stock owned by such stockholders will cease to be subject
to the Voting Agreement following any sale thereof in an underwritten public
offering pursuant to the Securities Act of 1933, as amended, or in a sale under
Rule 144 promulgated under such Act. In addition, Equity-Linked Investors, L.P.
("ELI-I") and Equity-Linked Investors II ("ELI-II") have entered into a
Stockholders' Agreement with Dr. Elkins and the Company (the "Stockholders'
Agreement"), pursuant to which ELI-I and ELI-II are collectively entitled to
designate two nominees to the Company's Board of Directors. Dr. Elkins has
agreed, pursuant to the Stockholders' Agreement, to vote all shares over which
he has voting control for the election of such nominees. If the collective
ownership of ELI-I and ELI-II falls below 665,907 shares, they will be entitled
to one board nominee so long as they own any shares of Common Stock. ELI-I and
ELI-II, which currently own an aggregate of 1,331,814 shares of the Company's
Common Stock, have had no designees sitting on the Board since June 1996. See
"Security Ownership of Certain Beneficial Owners and Management" in Item 12 of
this Report.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's executive officers and directors, and persons who
beneficially own more than 10% of the Company's Common Stock, to timely file
initial statements of stock ownership and statements of changes of beneficial
ownership with the Securities and Exchange Commission and furnish copies of
those statements to the Company. Based solely on a review of the copies of the
statements furnished to the Company to date, or written representations that no
statements were required, the Company believes that all statements required to
be filed by such persons with respect to the Company's fiscal year ended
December 31, 1996 were timely filed, except that Messrs. Damon Ball, Rohit Desai
and Daniel Pine, former directors of the Company, were late in filing reports
covering the
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automatic grant of options to them in 1996 under the Company's 1995 Non-Employee
Director Stock Option Plan.
ITEM 11: EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the annual and long-term compensation
for services in all capacities to the Company for the years ended December 31,
1994, 1995 and 1996 of those persons who, at any time during the year ended
December 31, 1996, were: (i) the chief executive officer of the Company or (ii)
an executive officer whose compensation exceeded $100,000 during that year (the
"Named Officers"):
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
ANNUAL COMPENSATION AWARDS
--------------------------------------------------- ---------------------------
RESTRICTED SECURITIES
NAME AND OTHER ANNUAL STOCK UNDERLYING ALL OTHER
PRINCIPAL POSITION(1) YEAR SALARY($) BONUS($)(2) COMPENSATION($)(3) AWARDS($) OPTIONS(#) COMPENSATION
- - ------------------ ---- --------- ----------- ------------------ --------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Gary W. Singleton 1996 $208,076 $ 76,110(4) -- -- 100,000(5) $126,275(6)
President and
Chief Executive Officer
Kenneth W. Creasman 1996 96,503 -- -- -- -- 133,760(7)
Former President and Former 1995 282,426 60,000 -- -- -- 5,660
Chief Executive Officer 1994 263,916 234,065(8) -- $100,171(9) 86,487 50,000
Deborah A. Lau 1996 230,739 56,250 -- -- -- 126,615(6)
Executive Vice 1995 56,250 55,000 -- -- 60,000 88,781
President and Chief
Operating Officer
William J. Krystopowicz 1996 180,003 -- -- -- -- 125,400(6)
Executive Vice President 1995 138,917 40,000 -- -- -- 25,000
and Director of Mergers 1994 125,000 65,938 --
and Acquisitions
David H. Fater 1996 221,050 -- -- -- -- 144,062(6)
Executive Vice President 1995 95,630 65,000 -- -- 25,316 30,000
and Chief Financial Officer
</TABLE>
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(1) Dr. Singleton served as President and Chief Executive Officer from April
1996 until April 4, 1997. Dr. Singleton replaced Mr. Creasman who resigned
on April 19, 1996. Mr. Fater, who joined the Company in June 1995,
resigned on January 31, 1997. Ms. Lau, who joined the Company in October
1995, as Executive Vice President and Chief Operating Officer, replaced
Dr. Singleton as President and Chief Executive Officer and Mr. Fater as
Chief Financial Officer on April 4, 1997. Reported salaries cover the
portion of the respective year such persons were employees of the Company.
See "Employment Agreements" and "--Termination Agreements," below.
(2) Except as otherwise indicated, bonuses are reflected in the year to which
they relate even if paid in a subsequent year.
(3) None of the Named Officers received prequisites or other personal benefits
in an amount large enough to require reporting, nor did any of them
receive any other compensation required to be reported, in this column
under applicable Securities and Exchange Commission rules.
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(4) Represents a bonus paid to Mr. Singleton as an inducement to enter into an
employment agreement and join the Company ($70,000) and to reimburse Mr.
Singleton for vacation pay forfeited by reason of leaving his prior
employment ($6,110).
(5) In connection with the termination of Dr. Singleton's employment, options
to purchase 25,000 shares became vested and options to purchase 75,000
shares were terminated. See "--Option/SAR Grants in Last Fiscal Year."
(6) Represents amounts paid by the Company for supplemental health insurance
coverage of $1,275 for Dr. Singleton, $1,615 for Ms. Lau, $404 for Mr.
Krystopowicz and $19,062 for Mr. Fater; and (b) the full amount ($125,000)
of vested and unvested Company contributions under the Company's
Supplemental Deferred Compensation Plan ("SDCP") allocated during 1996 to
each of Dr. Singleton, Ms. Lau, Mr. Krystopowic and Mr. Fater. In
connection with the termination in 1997 of Dr. Singleton's and Mr. Fater's
Employment Agreements, the Company agreed to pay each $25,000 in full
settlement of their SDCP accounts.
(7) Includes (a) accrued vacation pay ($18,101) paid in connection with the
termination of Mr. Creasman's employment and (b) consulting availability
fees ($110,782) paid subsequent to the termination of Mr. Creasman's
employment and and (c) premium paid ($4,877) on life insurance prior to
the termination of Mr. Creasman's employment. See "Termination
Agreements," below, for information concerning the settlement of Mr.
Creasman's Employment Agreement with the Company.
(8) Includes a bonus of $210,000 paid to Mr. Creasman as an inducement to
enter into an employment agreement and join the Company, which bonuses
were charged to start-up expense in 1993.
(9) Represents the difference between the fair market value of the Company's
Common Stock on the date Mr. Creasman paid for the 64,693 shares of Common
Stock purchased by him and the consideration paid by him for such shares.
Under federal income tax rules, these shares may be deemed to be
restricted stock awards. In 1995, Mr. Creasman's Employment Agreement was
amended in a manner so that the shares were no longer considered
restricted stock under those rules. The difference between the fair market
value of such shares on the date of the amendment and the amount paid by
Mr. Creasman for such shares was approximately $354,000, which amount is
taxable to Mr. Creasman. The Company loaned Mr. Creasman $141,600 to pay
the estimated income taxes, which loans were discharged in 1997 in
connection with the settlement of a lawsuit commenced by Mr. Creasman
against the Company. See "--Termination Agreements," below, and "Certain
Relationships and Related Transactions" in Item 13 of this Report.
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OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table contains certain information concerning options
granted by the Company during the year ended December 31, 1996 to Gary W.
Singleton, the only Named Officer who was granted options during 1996. No stock
appreciation rights ("SARs") have been granted by the Company.
<TABLE>
<CAPTION>
INDIVIDUAL OPTIONS
POTENTIAL REALIZABLE
NUMBER OF PERCENT OF VALUE AT ASSUMED
SHARES TOTAL OPTIONS EXERCISE ANNUAL RATES OF STOCK
UNDERLYING GRANTED TO PRICE PRICE APPRECIATION FOR
OPTIONS EMPLOYEES IN PER EXPIRATION OPTION TERM (2)
NAME GRANTED FISCAL YEAR SHARE DATE(1) 5% 10%
- - ---- --------- ----------- ------- --------- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Gary W. Singleton 37,187 22.1% $9.50 4/18/2006 $222,174 $563,032
62,813 37.4% $9.50 5/30/2006 $375,276 $951,024
</TABLE>
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(1) In connection with the termination of Dr. Singleton's Employment Agreement
in April 1997, the Company and Dr. Singleton agreed that, of the options
granted to Dr. Singleton, options to purchase 25,000 shares of Common
Stock would be fully vested and the options to purchase the remaining
75,000 shares of Common Stock would be terminated. Unless exercised on or
before July 3, 1997, the vested options are to expire on that date. See
"Termination Agreements," below.
(2) These are hypothetical values using assumed compound growth rates
prescribed by the Securities and Exchange Commission and are not intended
to forecast possible future appreciation, if any, in the market price of
the Common Stock.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR-END VALUES
The following table sets forth certain information concerning the
number of shares of Common Stock acquired upon the exercise of stock options
during the year ended December 31, 1996 by the Named Officers and the value at
December 31, 1996 of shares of Common Stock subject to unexercised options held
by the Named Officers. No SARs are held by any of such executive officers.
<TABLE>
<CAPTION>
NUMBER OF SHARES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT FISCAL OPTIONS AT FISCAL
YEAR-END YEAR-END
SHARES ACQUIRED VALUE (EXERCISABLE/ (EXERCISABLE/
NAME ON EXERCISE REALIZED (1) UNEXERCISABLE) (UNEXERCISABLE) (2)
- - ------------------------ ---------------- ------------ -------------- -------------------
<S> <C> <C> <C>
Gary W. Singleton --- --- 0/100,000(3) $0/ 0
Deborah A. Lau --- --- 16,190/43,810 $0/ 0
William J. Krystopowicz 14,000 $109,455 22,362/16,565 $9,213/6,825
David H. Fater --- --- 8,439/16,877(4) $0/ 0
</TABLE>
(footnotes on next page)
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(1) Represents the closing price of the underlying Common Stock on The Nasdaq
Stock Market's National Market on the date of exercise of the option minus
the applicable option exercise price, multiplied by the number of shares
acquired upon exercise of the option.
(2) Represents the closing price of the underlying Common Stock on The Nasdaq
Stock Market's National Market at year-end minus the option exercise price
multiplied by the applicable number of shares subject to the option. See
"Termination Agreements," below.
(3) In connection with the termination of Dr. Singleton's Employment Agreement
in April 1997, the Company and Dr. Singleton agreed that, of the options
held by Dr. Singleton, options to purchase 25,000 shares of Common Stock
would be fully vested and the options to purchase the remaining 75,000
shares of Common Stock would be terminated. Unless exercised on or before
July 3, 1997, the vested options are to expire on that date. See
"Termination Agreements," below.
(4) As a result of the termination of Mr. Fater's employment, these options
will expire unless exercised before May 1, 1997. See "Termination
Agreements," below.
COMPENSATION OF DIRECTORS
Directors of the Company receive no cash compensation for services
rendered as directors. The Company's 1995 Non-Employee Director Stock Option
Plan (the "Non-Employee Director Plan") provides for the automatic grant of
options to purchase 10,000 shares of Common Stock at the time a non-employee
director initially is elected to the Board and 5,000 shares to each non-employee
director in office immediately following the conclusion of each annual meeting
of stockholders at which directors are elected. Options granted under this plan
have a ten-year term and are exercisable in three equal semi-annual
installments, on a cumulative basis, commencing six months following the date of
grant, subject to early termination in certain instances, at an exercise price
equal to the fair market value of the Common Stock on the date of grant.
EMPLOYMENT AGREEMENTS
The Company is presently a party to Employment Agreements (the
"Employment Agreements") with each of Deborah A. Lau and William J.
Krystopowicz.
The Company's Employment Agreement with Ms. Lau provides for a term
of three years commencing October 2, 1995, with automatic one-year extensions on
each anniversary thereof unless either party elects not to so extend by giving
written notice at least 90 days prior to such anniversary date. Ms. Lau's
current base salary is $237,659 per annum, subject to increase annually by a
percentage equal to the percentage increase in the Consumer Price Index and such
additional amounts as may be determined at the discretion of the Company's Chief
Executive Officer. In addition, Ms. Lau may also receive annual bonuses at the
discretion of the Company's Chief Executive Officer, subject to a maximum amount
equal to 35% of base salary per annum (and a minimum of $56,250 for the year
ended December 31, 1996). Since Ms. Lau has become Chief Executive Officer of
the Company, the Company intends to have determinations as to salary increases
and bonuses made by either the full Board of Directors or the Compensation and
Options Committee of the Board. Ms. Lau's Employment Agreement provides that the
Company may terminate her employment for, among other reasons, cause (as
defined) by continuing to pay Ms. Lau her then current base salary for a period
of 18 months provided that if, at the time, less than 18 months remains on the
term of her Employment Agreement, such base salary shall continue for the longer
of the remaining term of her Employment Agreement or 12 months.
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The Company's Employment Agreement with Mr. Krystopowicz provided for
an initial term extending through December 31, 1998, with automatic one-year
extensions on each January 1 (so that the term is then three years) unless
either party elects not to so extend by giving written notice prior to such
anniversary date. The current base salary under Mr. Krystopowicz's Employment
Agreement is $184,860, subject to increase annually by a percentage equal to the
percentage increase in the Consumer Price Index and such additional amounts as
may be determined at the discretion of the Board of Directors. Mr.
Krystopowicz's Employment Agreement provides that the Company may terminate his
employment for, among other things, cause (as defined) by continuing to pay Mr.
Krystopowicz his then current base salary for a period of 18 months. Either
party shall have the right, at any time upon 180 days' notice, to terminate the
Employment Agreement without cause. In the event of such termination, the
Company is to continue to pay Mr. Krystopowicz his then current base salary for
the remaining scheduled term of his Employment Agreement. In addition, in the
event that either party voluntarily terminates the Employment Agreement, the
Company may elect to continue the non-competition restrictions contained therein
for a period of up to 18 months by paying to Mr. Krystopowicz an amount equal to
100% of his then current base salary for each month the non-competition
restrictions are to be in effect.
In the event of a "change of control" of the Company (as defined),
Ms. Lau and Mr. Krystopowicz each have the right, upon giving 30 days' notice to
the Company within 180 days following such event (or, if terminated by the
Company during such 180 day period), to terminate his or her employment in which
event the executive shall be entitled to receive his or her then base salary for
a period of 36 months following the date of such termination and all stock
options then held by the executive shall become fully vested. A "change of
control" of the Company is deemed to occur under the Employment Agreements, in
general: (i) when a person, other than Robert N. Elkins or an institutional
investor, becomes the "beneficial owner" of 20% or more of the Company's Common
Stock, (ii) in the event of certain mergers or consolidations in which the
Company is not the surviving entity, (iii) in the event of the sale, lease or
transfer of substantially all of the Company's assets or the liquidation of the
Company or (iv) if Robert N. Elkins ceases to be a director of the Company.
Each executive is also entitled to participate in the Company's
employee benefit plans. Whenever the executive is entitled to receive a
continuation of salary following termination or nonrenewal of employment, he or
she is also entitled to receive a continuation of the executive's automobile
allowance and any hospital or major medical insurance during the period of
salary continuation.
Each of the Employment Agreements contains covenants by the employee
to, among other things, maintain the confidentiality of trade secrets of the
Company, as well as covenants not to solicit employees or customers of the
Company and, during specified periods, not to be employed or have certain other
relationships with entities which are directly in the business of owning,
operating or managing businesses which compete with certain aspects of the
Company's business.
TERMINATION AGREEMENTS
Effective April 19, 1996, Mr. Kenneth W. Creasman, who was then
serving as President, Chief Executive Officer and a director of the Company,
resigned. By letter agreement dated April 23, 1996 between the Company and Mr.
Creasman, except for the provisions concerning confidentiality of trade secrets,
non-solicitation of employees and customers and non-competition, Mr. Creasman's
Employment Agreement, which extended through January 1, 1999 and under which Mr.
Creasman's annual salary was then $290,821, was terminated. In lieu thereof, Mr.
Creasman agreed to be available as a consultant to the Company by telephone
regarding proposed and recently completed acquisitions by the Company for a
period of 18 months at a monthly consulting fee of $24,136. The Company also
agreed to continue Mr. Creasman's employee health benefit package at the
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Company's expense for a period of 18 months or until he secures other employment
with comparable benefits, whichever is earlier. The letter agreement also
provided that, notwithstanding the provisions of his option agreements, options
to purchase 28,147 shares became vested and, together with options to purchase
30,183 shares which had already vested, remain exercisable for 180 days. The
remaining options held by Mr. Creasman (to purchase 28,157 shares of Common
Stock) were terminated. All options have now expired unexercised. On January 30,
1997, as part of a settlement of a lawsuit instituted by Mr. Creasman against
the Company, the consulting arrangement and the Company's agreement to continue
health care benefits was terminated. See also "Certain Relationships and Related
Transactions" in Item 13 of this Report.
Effective April 4, 1997, Dr. Gary W. Singleton, who replaced Mr.
Creasman as President, Chief Executive Officer and a director of the Company,
resigned. By letter agreement dated that date, the Company and Dr. Singleton
agreed to terminate Dr. Singleton's Employment Agreement which had been entered
on April 19, 1996, except for the provisions concerning the confidentiality of
trade secrets, non-solicitation of employees and customers and non-competition.
Dr. Singleton's Employment Agreement provided for, among other things, an annual
salary of $300,000 (subject to annual increases) and extended through April
1999, subject to the Company's right to terminate the Employment Agreement
earlier by making certain future payments to Dr. Singleton. In lieu thereof, Dr.
Singleton is receiving severance pay of $154,500, payable in installments over
eleven months (and evidenced by a non-interest bearing promissory note), and
received $25,000 in satisfaction of his rights under the Company's Supplemental
Deferred Compensation Plan (evidenced by six-month promissory note bearing
interest at 7% per annum). All amounts due Dr. Singleton accelerate in the event
of a sale of the Company. The Company also agreed to continue Dr. Singleton's
employee health benefit package at the Company's expense for a period of six
months. The letter agreement also provides of the options to purchase shares of
the Company's Common Stock held by Dr. Singleton, options to purchase 25,000
shares (which were scheduled to vest in part on April 19, 1997 and in part on
May 31, 1997) would immediately vest. Unless exercised on or before July 3,
1997, the vested options will expire on that date. The remaining options held by
Dr. Singleton (to purchase 75,000 shares of Common Stock) terminated in
accordance with their terms.
Effective January 31, 1997, Mr. David H. Fater, Executive Vice
President and Chief Financial Officer of the Company, resigned. By letter
agreement dated that date, the Company and Mr. Fater agreed to terminate Mr.
Fater's Amended Employment Agreement which had been entered into on April 26,
1996, except for the provisions concerning the confidentiality of trade secrets,
non-solicitation of employees and customers and non-competition. Mr. Fater's
Employment Agreement provided for, among other things, an annual salary of
$210,000 (subject to annual reviews, a bonus and, in general, extended through
June 26, 1997. In lieu thereof, Mr. Fater has received severance pay of $12,454.
The Company also agreed to pay Mr. Fater $6,000 in satisfaction of a claim under
a consulting arrangement between the Company and a company related to Mr. Fater
which existed prior to Mr. Fater's joining the Company and $25,000 in
satisfaction of his rights under the Company's Supplemental Deferred
Compensation Plan.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation and Options Committee, which currently consists of
Messrs. John L. Silverman and Dr. Robert N. Elkins, has power and authority with
respect to all matters pertaining to compensation payable by the Company and the
administration of employee benefits, deferred compensation and stock plans of
the Company.
Robert N. Elkins and John L. Silverman are directors of IHS. Dr.
Elkins is also the Chairman of the Board and Chief Executive Officer of IHS.
Pursuant to a January 19, 1994 Consulting Agreement, during the
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year ended December 31, 1996, the Company paid Symphony Health Care Consulting,
Inc. ("SHCC"), a subsidiary of IHS, approximately $148,000 for services rendered
to the Company for consulting, training and cost reporting services with respect
to the Company's third party Medicare reimbursement operations. SHCC provides
similar services to a number of unrelated companies at similar rates. In 1996,
the Company paid Symphony Rehabilitation Services and Symphony Pharmacy
Services, wholly-owned subsidiaries of IHS, $162,000 for therapy and $98,000 for
pharmacy services, respectively. The Company believes that the terms on which
these services have been and are being provided are as favorable to the Company
as could have been obtained from unaffiliated third parties.
On December 27, 1996, the Company and IHS entered into a Management
Agreement (the "Management Agreement") pursuant to which the Company is
employing IHS to supervise, manage and operate the financial, accounting, MIS,
reimbursement and ancillary services contracting functions for the Company until
December 31, 2001. The Management Agreement provides for the Company to pay to
IHS for its services, until December 31, 1997, an amount equal to the lesser of
2% of the Company's gross revenues (as defined) or the Company's annualized cost
of performing those services itself based on the period July 1, 1996 through
December 31, 1996. Thereafter, the management fee payable to IHS is to be the
lesser of 2% of the Company's gross revenues or a percentage of gross revenues
determined by comparing the Company's cost of performing such functions during
the period July 1, 1996 through December 31, 1996 to its gross revenues for that
period. The gross revenues percentage which is fixed may be increased from 2.0%
to 2.5% by mutual agreement of the parties following IHS's review of the
Company.
At that time, the Company and IHS Financial Holdings, Inc., a
wholly-owned subsidiary of IHS, also entered into a loan agreement which, as
amended on January 13, 1997, entitles the Company to borrow, until December 27,
1998, amounts on a revolving credit basis so that no more than $5.0 million is
outstanding at any time. Loan advances are subject to the consent of IHS to the
making of advances, which consent may not be unreasonably withheld. This
revolving credit facility bears interest at a rate per annum equal to the annual
rate of interest set forth in IHS's revolving credit agreement with Citibank,
N.A., plus 2%. Repayment of amounts advanced under this line of credit are
subordinated to the payment of up to an aggregate of $30 million of principal
and interest on the Company's obligations to its two principal unaffiliated
third party lenders. At April 15, 1997, the Company had outstanding borrowings
aggregating $4.5 million under this facility which, at that date, was bearing
interest at the rate of 10.5% per annum.
In connection with entering into the revolving credit facility, the
Company issued to IHS warrants to purchase an aggregate of 752,182 shares of the
Company's Common Stock, one-half of which are exercisable until January 13, 1999
at $3.22 per share (the average of the high and low trading prices of the
Company's Common Stock on January 14 and 15, 1997) and the remaining one-half of
which are exercisable until January 13, 2002 at $6.44 per share.
On April 14, 1997, IHS agreed to guarantee certain obligations of the
Company to the Company's principal revolving credit lender and to the lender
which has financed the Company's major acquisitions. To induce IHS to issue such
guarantees, the Company agreed to reimburse IHS for such amounts paid by IHS on
behalf of the Company, including costs, fees and expenses, and to pay IHS
interest at the rate of 15% per annum on all amounts which become owing to IHS
from the Company with respect thereto. In connection therewith, the Company also
issued warrants to IHS to purchase an aggregate of 379,900 shares of the
Company's Common Stock until April 15, 2002 at $1.9375 per share (the closing
price of the Company's Common Stock on April 14, 1997).
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<PAGE>
The number of shares subject to each of the above warrants and the
exercise prices are subject to adjustment in certain instances, including if the
Company issues shares of Common Stock (or securities convertible into Common
Stock) at less than the applicable exercise price. In connection therewith, the
Company has granted to IHS certain rights to cause the shares issuable upon
exercise of the warrants to be registered under the Securities Act of 1933, as
amended, at the Company's expense.
ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information concerning the
beneficial ownership of the Company's Common Stock, as of the April 25, 1997
(except as noted below), by (a) each person who is known to the Company to be a
beneficial owner of more than 5% of the outstanding Common Stock, (b) each
director, (c) each current executive officer named in the Summary Compensation
Table under the caption "Executive Compensation" in Item 11 of this Report and
(d) all directors and executive officers of the Company as a group. The Company
understands that, except as noted below, each beneficial owner has sole voting
and investment power with respect to all shares attributable to such owner.
AMOUNT AND NATURE OF PERCENT OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) CLASS(2)
- - ---------------- ----------------------- 1 --------
Robert N. Elkins
8889 Pelican Bay Boulevard
Naples, Florida 33963.................. 1,605,948(3) 21.1%
Integrated Health Services, Inc.
10065 Red Run Boulevard
Owing Mills, Maryland, 21117........... 1,132,082(4) 13.0
Equity-Linked Investors, L.P.
Desai Capital Management Incorporated
Rohit M. Desai
540 Madison Avenue
New York, New York 10022............... 665,907(5) 8.8
Equity-Linked Investors-II
Desai Capital Management Incorporated
Rohit M. Desai
540 Madison Avenue
New York, New York 10022............... 665,907(5) 8.8
Putnam Investments, Inc.
Putnam Investment Management, Inc.
The Putnam Advisory Company, Inc.
One Post Office Square
Boston, Massachusetts 02109............ 417,700(6) 5.5
Deborah A. Lau........................... 26,190(7) *
William J. Krystopowicz.................. 54,708(8)(9) *
John L. Silverman........................ 46,657(8)(10) *
Michael S. Blass......................... 38,570(8)(11) *
All current directors and executive
officers as a group (9 persons)........ 1,706,395(4)(12) 22.1
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- - -------------------
(1) Shares subject to options and warrants are considered beneficially owned
to the extent currently exercisable or exercisable within 60 days after
April 25, 1997.
(2) Asterisk indicates less than 1%. Shares subject to options are considered
outstanding only for the purpose of computing the percentage of
outstanding Common Stock which would be owned by the optionee if the
options held by such person and currently exercisable or exercisable
within 60 days after April 25, 1997 were exercised, but (except for the
calculation of beneficial ownership by all executive officers and
directors as a group) are not considered outstanding for the purpose of
computing the percentage of outstanding Common Stock owned by any other
person.
(3) Includes (a) 846,235 shares owned individually by Dr. Elkins, (b) 287,602
shares (3.8%) owned by a partnership in which a limited partnership
controlled by Dr. Elkins is a general partner and is afforded sole voting
(subject to the Voting Agreement described below) and dispositive power,
(c) [445,790] additional shares (5.9%) subject to the Voting Agreement
described below as to which shares Dr. Elkins has sole voting power but no
dispositive power, (d) 12,000 owned by his wife as to which Mr. Elkins
disclaims beneficial ownership and (e) 14,321 shares subject to options.
Excludes the shares subject to Warrants held by IHS (see footnote 4), of
which Dr. Elkins is Chairman of the Board, Chief Executive Officer and a
director. Dr. Elkins disclaims beneficial ownership of shares deemed
beneficially owned by IHS. Represents Shares subject to Warrants. See
"Certain Relationships and Related Transactions" in Item 13 of this
Report.
(4) Represents shares subject to warrants. Excludes the shares beneficially
owned by Dr. Robert N. Elkins (see footnote 3) who is Chairman of the
Board, Chief Executive Officer and a director of IHS, as to which shares
IHS disclaims beneficial ownership. Dr. Elkins disclaims beneficial
ownership of all warrants held by IHS.
(5) ELI-I and ELI-II are limited partnerships, the general partners of which
are Rohit M. Desai Associates and Rohit M. Desai Associates-II,
respectively. Mr. Rohit M. Desai is the managing general partner of Rohit
M. Desai Associates and Rohit M. Desai Associates-Il. Mr. Desai is also
the sole stockholder, Chairman of the Board and President of DCMI, which
acts as an investment advisor to ELI-I and ELI-II. Under the investment
advisory agreements between DCMI and each of ELI-I and ELI-II, DCMI has
the power to vote and dispose of these shares. Accordingly, each of DCMI
and Mr. Desai may be deemed to be beneficial owners of all 1,331,814
shares owned in the aggregate directly by ELI-I and ELI-II. DCMI and Mr.
Desai each disclaim beneficial ownership of such shares.
(6) Based on a Schedule 13G filed with the Securities and Exchange Commission
and the Company, which provided information as at December 31, 1996,
Putnam Investments, Inc. and its subsidiaries, Putnam Investment
Management Inc. and The Putnam Advisory Company, Inc., registered
investment advisors, have shared voting power with respect to 45,500
shares, no voting power with respect to the remaining 372,200 shares and
shared dispositive power as to all 417,700 shares.
(7) Includes 16,190 shares subject to options.
(8) The shares (and shares subject to options) owned by such person are
subject to the Voting Agreement described below and, accordingly, each
such person has no voting power, but has sole dispositive power, with
respect to such shares.
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(9) Includes 22,362 shares subject to options.
(10) Includes 38,574 shares subject to options.
(11) Includes 14,321 shares subject to options.
(12) Includes 105,768 shares subject to options.
VOTING AGREEMENT AND STOCKHOLDERS AGREEMENT
Stockholders of the Company who, at April 25, 1996, owned an
aggregate of 733,392 shares of Common Stock (including 287,602 shares owned by a
partnership in which a limited partnership controlled by Dr. Robert N. Elkins is
a general partner and is afforded sole voting power) are parties to the Voting
Agreement with Dr. Elkins, a director, founder and principal stockholder of the
Company, in which such stockholders have agreed that, during the ten-year term
of the Voting Agreement (which was effective January 26, 1996), at all meetings
of stockholders and in all written consents of stockholders, they will vote all
Common Stock owned by them in the same manner as Common Stock owned by Dr.
Elkins (846,235 shares) is voted by him. Each such stockholder has also
irrevocably appointed Dr. Elkins as proxy to represent and vote all shares of
Common Stock of such stockholder at any meeting of stockholders of the Company
and in all actions taken by written consent of stockholders. Common Stock owned
by such stockholders will cease to be subject to the Voting Agreement following
any sale thereof in an underwritten public offering pursuant to the Securities
Act of 1933, as amended, or in a sale under Rule 144 promulgated under such Act.
In addition, ELI-I and ELI-II have entered into the Stockholders' Agreement with
Dr. Elkins and the Company, pursuant to which ELI-I and ELI-II are collectively
entitled to designate two nominees to the Company's Board of Directors. Dr.
Elkins has agreed, pursuant to the Stockholders' Agreement, to vote all shares
over which he has voting control for the election of such nominees. If the
collective ownership of ELI-I and ELI-II falls below 665,907 shares, they will
be entitled to one board nominee so long as they own any shares of Common Stock.
ELI-I and ELI-II, which currently own an aggregate of 1,331,814 shares of the
Company's Common Stock, have had no designees sitting on the Board since June
1996.
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ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the period from August 1993 through January 1994, Messrs.
Creasman and Krystopowicz purchased 64,693 and 32,346 shares of Common Stock,
respectively, at purchase prices of $4.64 per share. In connection with their
purchases, the Company loaned Mr. Creasman $220,000 ($70,000 of which was repaid
in February 1995 through the payment of a bonus to Mr. Creasman) and Mr.
Krystopowicz $75,000. Each outstanding loan is evidenced by a promissory note
(the "Stock Purchase Loans") bearing interest at the rate of 8% per annum and
payable on February 1, 1997. The Company has tentatively agreed to extend the
date of this note to September 1, 1997. In addition, under the terms of the
arrangement pursuant to which Mr. Creasman's Employment Agreement was
terminated, the Company loaned to Mr. Creasman $141,600 to pay estimated income
taxes payable with respect to the shares purchased by him which may be deemed to
have been restricted stock under Federal income tax rules. Such loan which bore
interest at the rate of 9% per annum and was payable on the third anniversary of
its issuance. The Company also agreed, subject to obtaining approval of its
senior secured lender, to repurchase 34,193 of Mr. Creasman's Common Stock in
exchange for the cancellation of the remaining balance of his Stock Purchase
Loan, the Additional Loan and $33,233 of accrued interest. On January 30, 1997,
as part of a settlement of a lawsuit instituted by Creasman against the Company,
the Stock Purchase Loan and Additional Loan to Mr. Creasman (aggregating
$291,600) were cancelled. See "Executive Compensation -- Termination Agreements"
in Item 11 of this Report.
On June 14, 1996, the Company loaned $250,000 to Ms. Deborah A. Lau,
which loan bears interest at the rate of 8% per annum and is to be payable in
full, together with interest, on June 14, 2001. In the event of the termination
of Ms. Lau's employment following a change-in-control of the Company, any
severance payments payable to Ms. Lau under her Employment Agreement (see
"Executive Compensation -- Employment Agreements" in Item 11 of this Report)
will be applied as an offset against any principal or interest outstanding under
the note evidencing this loan.
The Company retained Blass & Driggs, of which law firm Michael S.
Blass, a director of the Company, is a member, as counsel during 1996 and is
retaining that law firm during 1997. Fees paid to Blass & Driggs during 1996
were $550,000.
See "Executive Compensation - Compensation Committee Interlocks and
Insider Participation" in Item 11 of this Report for information with respect to
certain transactions between the Company and certain other directors of the
Company and ELI-I and ELI-II.
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<PAGE>
PART IV
ITEM 14: EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) (1) Financial Statements
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
COMMUNITY CARE OF AMERICA, INC.
PAGE
<S> <C>
Independent Auditors' Report........................................................................... F-1
Consolidated Balance Sheets as of December 31, 1995 and 1996........................................... F-2
Consolidated Statements of Operations for the Years Ended December 31, 1994, 1995 and 1996............. F-3
Consolidated Statements of Shareholders' Equity for the Years Ended December 31, 1994, 1995
and 1996........................................................................................... F-4
Consolidated Statements of Cash Flows for the Period for the Years Ended December 31, 1994,
1995 and 1996...................................................................................... F-5
Notes to Consolidated Financial Statements............................................................. F-6
(2) The following financial statement schedule is filed herewith on the page indicated:
SCHEDULE PAGE
Community Care of America, Inc. Schedule II -- Valuation and Qualifying Accounts S-1
</TABLE>
(b) Reports on Form 8-K.
The only Report on Form 8-K filed during the fourth quarter of the
Company's year ended December 31, 1996 was dated October 8, 1996 (date of
earliest event reported), reporting Item 5, Other Events. In January 1997, the
Company filed a report on Form 8-K dated December 23, 1996 (date of earliest
event report), reporting Item 5, Other Events, and Item 7, Financial Statements,
Pro Forma Financial Information and Exhibits. No financial statements were filed
with either Report.
(c) Exhibits:
EXHIBIT NUMBER DESCRIPTION
2.01 Stock Purchase Agreement dated as of July 1, 1993 among the Company
and PNC Venture Corp., Primus Capital Fund I Limited Partnership,
Primus Capital Fund II Limited Partnership, PNC Venture Group I, New
York Life Insurance Company and MeritWest, Inc.
2.02(a) Amended and Restated Agreement and Plan of Reorganization dated as of
May 10, 1996 among the Company, Newco, Southern Care, and Wallace
Olson and Michael Himmelstein, the shareholders of Southern Care.
(Incorporated by reference to Exhibit 2.1 to the Company's Current
Report on Form 8-K, date of earliest reported event: May 16, 1996,
File No. 0-26502.)
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<PAGE>
EXHIBIT NUMBER DESCRIPTION
2.02(b) Consulting and Advisory Services Agreement effective as of January 1,
1996 among the Company, Southern Care Centers, Inc. and its
Shareholders. (Incorporated by reference to Exhibit 2.02(b) to the
Company's Annual Report on Form 10-K for the year ended December 31,
1995, File No. 0-26502.)
2.02(c) Management Agreement dated as of May 10, 1996 between CCA of Texas,
Inc. and Southern Care Centers of Texas, Inc. (Incorporated by
reference to Exhibit 2.3 to the Company's Current Report on Form 8-K,
date of earliest reported event: May 16, 1996, File No. 0-26502.)
2.02(d) Agreement to Provide Accounting and Auditing Services and Rural
Healthcare Provider Network Services dated as of May 10, 1996 among
Newco and Buchanan/SCC, Inc. (Incorporated by reference to Exhibit
2.4 to the Company's Current Report on Form 8-K, date of earliest
reported event: May 16, 1996, File No. 0-26502.)
3.01(a) Certificate of Incorporation of the Company, as filed with the
Secretary of State of the State of Delaware on December 28, 1992.
3.01(b) Certificate of Amendment of Certificate of Incorporation of the
Company, as filed with the Secretary of State of the State of
Delaware on October 13, 1993.
3.01(c) Certificate of Amendment of Certificate of Incorporation of the
Company, as filed with the Secretary of State of the State of
Delaware on December 28, 1993.
3.01(d) Certificate of Designations, Preferences and Rights of Series A 8%
Cumulative Preferred Stock, as filed with the Secretary of State of
the State of Delaware on December 28, 1993.
3.01(e) Certificate of Amendment of Certificate of Incorporation of the
Company, as filed with the Secretary of State of the State of
Delaware on June 7, 1994.
3.01(f) Certificate of Amendment of Certificate of Incorporation of the
Company, as filed with the Secretary of State of the State of
Delaware on July 28, 1995.
3.02 By-laws of the Company, as amended to date.
4.01(a) Healthcare Receivables Purchase and Transfer Agreement dated December
23, 1996 among the Company and each of the providers named in the
Agreement and CCA Funding, LLC. (Incorporated by reference to Exhibit
4.1 to the Company's Current Report on Form 8-K, date of earliest
reported event: December 23, 1996.)
4.01(b) Loan and Security Agreement dated December 23, 1996 between CCA
Funding, LLC and Daiwa Healthco-2, LLC. (Incorporated by reference to
Exhibit 4.2 to the
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<PAGE>
EXHIBIT NUMBER DESCRIPTION
Company's Current Report on Form 8-K, date of earliest reported
event: December 23, 1996.)
4.01(c) Assignment of Healthcare Receivables Purchase and Transfer Agreement
as Collateral Security. (Incorporated by reference to Exhibit 4.3 to
the Company's Current Report on Form 8-K, date of earliest reported
event: December 23, 1996.)
o 4.01(d) Waiver and Amendment dated April 16, 1997 between CCA
Funding, LLC and Daiwa Healthco-2, LLC.
o 4.01(e) Warrant dated April 14, 1997 from CCA, Inc. and Daiwa
Healthco-2, LLC.
4.02 Promissory Note dated December 30, 1993 in the principal amount of
$7,000,000 made by ECA Holdings, Inc. ("ECA") payable to HRPT, with
Allonge and Amendment dated April 1, 1995.
4.03(a) Promissory Note dated December 30, 1993 in the principal amount of
$13,600,000 made by ECA payable to HRPT, with Allonge and Amendment
dated April 1, 1995.
4.03(b) Allonge and Amendment dated as of May 10, 1996 to Promissory Note
dated December 30, 1993 in the principal amount of $13,600,000 made
by ECA payable to HRPT. (Incorporated by reference to Exhibit 4.1 to
the Company's Current Report on Form 8-K, date of earliest reported
event: May 16, 1996, File No. 0-26502.)
4.04(a) Promissory Note dated December 30, 1993 in the principal amount of
$6,000,000 made by Community Care of Nebraska Inc. ("CCN") payable to
HRPT, with Allonge and Amendment dated April 1, 1995.
4.04(b) Allonge and Amendment dated as of May 10, 1996 to Promissory Note
dated December 30, 1993 in the principal amount of $6,000,000 made by
CCN payable to HRPT. (Incorporated by reference to Exhibit 4.2 to the
Company's Current Report on Form 8-K, date of earliest reported
event: May 16, 1996, File No. 0-26502.)
4.05 Promissory Note dated April 1, 1995 in the principal amount of
$3,800,000 made by the Company payable to HRPT.
4.06(a) Promissory Note dated April 1, 1995 in the principal amount of
$2,045,000 made by CCN and certain of its subsidiaries payable to
HRPT.
4.06(b) Allonge and Amendment to Promissory Note dated as of May 10, 1996 to
Promissory Note dated April 1, 1995 in the principal amount of
$2,045,000, made by CCN and certain of its subsidiaries payable to
HRPT. (Incorporated by reference to Exhibit 4.3 to the Company's
Current Report on Form 8-K, date of earliest reported event: May 16,
1996, File No. 0-26502.)
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<PAGE>
EXHIBIT NUMBER DESCRIPTION
4.07(a) Renovation Funding Agreement dated April 1, 1995 between ECA and
HRPT.
4.07(b) ECA Holdings Renovation Funding Promissory Note dated April 1, 1995
in the principal amount of $6,466,700 made by ECA payable to HRPT.
4.07(c) Allonge and Amendment to Promissory Note dated as of May 10, 1996 to
ECA Holdings Renovation Funding Promissory Note dated April 1, 1995
in the principal amount of $6,466,700 made by ECA payable to HRPT.
(Incorporated by reference to Exhibit 4.4 to the Company's Current
Report on Form 8-K, date of earliest reported event: May 16, 1996,
File No. 0-26502.)
4.08(a) Renovation Funding Agreement dated April 1, 1995 between CCN and
HRPT.
4.08(b) CCN Group Renovation Funding Promissory Note dated April 1, 1995 in
the principal amount of $2,833,300 made by CCN and its subsidiaries
payable to HRPT.
4.08(c) Allonge and Amendment to Promissory Note dated as of May 10, 1996 to
CCN Group Renovation Funding Promissory Note dated April 1, 1995 in
the principal amount of $2,833,300 made by CCN and its subsidiaries
payable to HRPT. (Incorporated by reference to Exhibit 4.5 to the
Company's Current Report on Form 8-K, date of earliest reported
event: May 16, 1996, File No. 0-26502.)
4.09(a) Amended and Restated Revolving Credit Agreement dated as of December
27, 1996 between the Company and Integrated Health Services, Inc
("IHS"). (Incorporated by reference to Exhibit 4.4 to the Company's
Current Report on Form 8-K, date of earliest reported event: December
23, 1996, File No. 0-26502.)
4.09(b) Subordinated Note dated December 27, 1996 from the Company to IHS in
the principal sum of $5,000,000. (Incorporated by reference to
Exhibit 4.5 to the Company's Current Report on Form 8-K, date of
earliest reported event: December 23, 1996, File No. 0-26502.)
10.01 Stockholders Agreement dated June 30, 1993 among Robert N. Elkins,
Robert N. Elkins, as voting trustee, Equity-Linked Investors, L.P.
("ELI-I"), Equity-Linked Investors, L.P.-II ("ELI-II") and the
Company.
10.02 Voting Agreement dated January 26, 1996 among Robert N. Elkins and
certain stockholders of the Company. (Incorporated by reference to
Exhibit 10.26 to the Company's Annual Report on Form 10-K for the
year ended December 31, 1995, File No. 0-26502.)
10.03(a)(i)+ Restated Employment Agreement dated July 1995 between the Company
and Kenneth W. Creasman.
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EXHIBIT NUMBER DESCRIPTION
10.03(a)(ii)+ Letter agreement dated April 26, 1996 terminating employment
agreement between the Company and Kenneth W. Creasman. (Incorporated
by reference to Exhibit 10.03(a)(ii) to Amendment No. 1 to the
Company's Annual Report on Form 10-K for the year ended December 31,
1995, File No. 0-26502.)
o 10.03(a)(iii)+ Mutual Settlement and Release Agreement dated January
30, 1997 between Kenneth W. Creasman and the Company.
10.03(b)+ Restated Employment Agreement dated July 1995 between the Company and
William T. Filippone.
10.03(b)(ii)+ Separation Agreement dated September 26, 1995 between the Company
and William T. Filippone. (Incorporated by reference to Exhibit
10.03(b) to the Company's Annual Report on Form 10-K for the year
ended December 31, 1995, File No. 0-26502.)
10.03(c)+ Restated Employment Agreement dated July 1995 between the Company and
William J. Krystopowicz.
10.03(d)(i)+ Employment Agreement dated as of June 26, 1995 between the Company
and David H. Fater. (Incorporated by reference to Exhibit 10.03(d) to
the Company's Annual Report on Form 10-K for the year ended December
31, 1995, File No. 0-26502.)
o10.03(d)(ii)+ Amended Employment Agreement dated as of April 26, 1996
between the Company and David H. Fater.
o10.03(d)(iii)+ Letter agreement terminating employment agreement
dated January 31, 1997 between the Company and David H. Fater.
10.03(e)+ Employment Agreement dated October 2, 1995 between the Company and
Deborah Lau. (Incorporated by reference to Exhibit 10.03(e) to the
Company's Annual Report on Form 10-K for the year ended December 31,
1995, File No. 0-26502.)
10.03(f)(i)+ Employment Agreement dated April 19, 1996 between the Company and
Gary W. Singleton. (Incorporated by reference to Exhibit 10.03(f) to
Amendment No. 1 to the Company's Annual Report on Form 10-K for the
year ended December 31, 1995, File No. 0-26502.)
o10.03(f)(ii)+ Letter agreement dated April 4, 1997 terminating
employment agreement between the Company and Gary W. Singleton.
10.04(a)+ 1993 Stock Option Plan, as amended to date.
10.04(b)+ 1993 Senior Executive Stock Option Plan, as amended to date.
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<PAGE>
EXHIBIT NUMBER DESCRIPTION
10.04(c)+ 1995 Stock Option Plan, as amended to date.
10.04(d)+ 1995 Non-Employee Director Stock Option Plan, as amended to date.
10.04(e)(1)+ The Company's Supplemental Deferred Compensation Plan (the "SDRP").
(Incorporated by reference to Exhibit 10.04(e) to Amendment No. 1 to
the Company's Annual Report on Form 10-K for the year ended December
31, 1995, File No. 0- 26502.)
o10.04(e)(2)+ Amendment No. 1 to the Company's SDRP.
o10.04(e)(3)+ Resolutions from minutes of the Board of Directors of
the Company held on January 30, 1997 amending the Company's SDRP.
10.05(a) Master Lease Document, General Terms and Conditions dated December
30, 1993 between Health and Rehabilitation Properties Trust
(currently known as Health and Retirement Properties Trust, "HRPT"),
as landlord, and ECA Holdings, Inc., a wholly-owned subsidiary of the
Company ("ECA"), as tenant, as amended by a First Amendment dated
July 22, 1994, a Second Amendment dated November 1, 1994 and a Third
Amendment dated April 1, 1995.
10.05(b) Fourth Amendment dated as of May 10, 1996 to Master Lease Document,
General Terms and Conditions dated December 30, 1993 between HRPT and
ECA. (Incorporated by reference to Exhibit 99.1 to the Company's
Current Report on Form 8-K, date of earliest reported event: May 16,
1996, File No. 0-26502.)
10.06(a) Master Lease Document, General Terms and Conditions dated April 1,
1995 between HRPT, as landlord, and ECA, as tenant.
10.06(b) First Amendment dated as of May 10, 1996 to Master Lease Document,
General Terms and Conditions dated April 1, 1995 between HRPT and
ECA. (Incorporated by reference to Exhibit 99.2 to the Company's
Current Report on Form 8-K, date of earliest reported event: May 16,
1996, File No. 0-26502.)
10.07(a) Purchase Agreement dated September 15, 1994 among the Company,
Leonard Louis Healthcare Properties, Prospect Lake Healthcare Center,
Inc. and Valley View Healthcare Center, Inc.
10.07(b) Amendment to Purchase Agreement dated October 31, 1994 among the
Company, Leonard Louis Healthcare Properties, Leonard Louis
Healthcare Properties I, Leonard Louis Healthcare Properties II,
Prospect Lake Healthcare Center, Inc. and Valley View Healthcare
Center, Inc.
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<PAGE>
EXHIBIT NUMBER DESCRIPTION
10.08(a) Stock Purchase Agreement dated November 16, 1994 among the Company
and Quality Health Care, Inc. and Timothy J. Juilfs, Sally M. Juilfs
and Brighton Place West, Inc., Quality Care of Topeka, Inc., W.R.T.
Care, Inc., Care Centers, Inc., Quality Care of Council Bluffs North,
Inc., Quality Care of Council Bluffs South, Inc., Oak Grove Medical
Center, Inc., Quality Care of Pacific Junction, Inc., Quality Care of
Glenwood, Inc. and W.T.F.D.R. Care, Inc.
10.08(b) Stock Purchase Agreement dated November 16, 1994 among the Company
and Quality Health Care, Inc., and Timothy J. Juilfs, Sally M. Juilfs
and W.S.T. Care, Inc., Quality Care of Lyons, Inc., Quality Care of
Columbus, Inc. and Quality Care of Grand Island, Inc.
10.09 Asset Purchase Agreement dated February 1, 1995 among the Company,
Georgiana Doctors Hospital, Inc., Reliable Home Health Services,
Inc., Herbert Kinsey, M.D. and Mary Kinsey.
10.10 Stock Purchase Agreement dated as of November 1, 1995 among Community
Care of America, Inc., CCA of Maine, Inc., Maine Head Trauma Center,
Inc., and the shareholders of Maine Head Trauma Center, Inc.
(Incorporated by reference to Exhibit 2.1 to the Company's Current
Report on Form 8-K, date of earliest event reported: November 3,
1995, File No. 0-26502).
10.11(a) Implementation Contract dated January 19, 1994 between the Company
and Health Care Consulting, Inc. (now named Symphony Health Care
Consulting, Inc.).
10.11(b) Agreement dated August 17, 1994 between the Company and Health Care
Consulting, Inc. (now named Symphony Health Care Consulting, Inc.).
10.12 Mortgage Facilities Fee Agreement (ECA) dated April 1, 1995 between
the Company and HRPT.
10.13 Mortgage Facilities Fee Agreement (CCN) dated April 1, 1995 between
the Company and HRPT.
10.14 Right of First Refusal and Option Agreement dated December 30, 1993
between ECA and HRPT with respect to certain of the Company's
facilities in Colorado.
10.15 Right of First Refusal Agreement dated December 30, 1993 between CCN
and HRPT with respect to certain of the Company's facilities in
Nebraska.
10.16 Right of First Refusal Agreements dated April 1, 1995 between W.S.T.
Care, Inc., Quality Care of Lyons, Inc. and Quality Care of Columbus,
Inc., respectively, and HRPT with respect to certain of the Company's
facilities in Nebraska.
-21-
<PAGE>
EXHIBIT NUMBER DESCRIPTION
10.17 Amended and Restated Option Agreement dated April 1, 1995 between ECA
and HRPT with respect to the capital stock of CCN.
10.18(a) Lease dated June 21, 1995 between Midwest Health Enterprises of
Bessemer, Inc. ("Bessemer") and Community Care of America of Alabama,
Inc. ("CCAA").
10.18(b) Lease Guaranty dated June 21, 1995 by the Company for the benefit of
Bessemer.
10.18(c) Subordination, Non-Disturbance, Attornment and Security Agreement
among Bessemer, CCAA and Bankers Trust Company of California, N.A.
("BT").
10.19(a) Lease dated June 21, 1995 between South Gate Village, Inc. ("'South
Gate") and CCAA.
10.19(b) Lease Guaranty dated June 21, 1995 by the Company for the benefit of
South Gate.
10.20(a) Lease dated June 21, 1995 between Greensboro Health Care, Inc.
("Greensboro") and CCAA.
10.20(b) Lease Guaranty dated June 21, 1995 by the Company for the benefit of
Greensboro.
10.20(c) Subordination, Non-Disturbance, Attornment and Security Agreement
among Greensboro, CCAA and BT.
10.21 Non-Competition and Secrecy Agreement dated June 21, 1995 among the
Company, CCAA and Stanley L. Stein.
10.22(a) Form of nine Management Agreements dated June 23, 1995 pursuant to
which the Company is to manage nine long-term care facilities in
Maine, together with a schedule pursuant to Instruction 2 to Item
601(a) of Regulation S-K setting forth material details that differ
from the attached form of Management Agreement.
10.22(b) Management Agreement dated June 23, 1995 among Nursing
Administrators, Inc., David L. Friedman, Mary Bayer, Leon Bresloff
and CCA of Maine, Inc.
10.22(c) Purchase Option Agreement dated June 23, 1995 relating to the ten
long-term facilities in Maine to be managed by the Company.
10.22(d) Services Agreement dated June 23, 1995 between CCA of Maine, Inc. and
Sandy River Development, Inc.
10.22(e) Letter Agreement dated June 23, 1995 from the Company to David I.
Friedman regarding the Purchase Option Agreement dated June 23, 1995
relating to the ten long-term care facilities in Maine to be managed
by the Company.
-22-
<PAGE>
EXHIBIT NUMBER DESCRIPTION
10.22(f) Agreement dated June 23, 1995 between the Company and Harbor Hill
Limited Liability Company.
10.22(g) Development Agreement Term Sheet dated June 30, 1995 between the
Company and Sandy River Development, Inc.
10.22(h) Consulting Agreement dated July 10, 1995 between the Company and
Sandy River Development, Inc.
10.22(i) Letter dated June 30, 1995 from Sandy River Development, Inc. to the
Company re: working capital adjustment.
10.22(j) Form of Term Promissory Note to be issued by each Borrowing Entity to
CCA-Maine in connection with the Sandy River Transaction.
10.22(k) Form of Revolving Credit Promissory Note to be issued by each
Borrowing Entity to CCA-Maine in connection with the Sandy River
Transaction.
10.22(l) Form of Security Agreement to be executed and delivered by each
Borrowing Entity in favor of CCA-Maine in connection with the Sandy
River Transaction.
10.22(m) Form of Mortgage, Lease Assignment and Security Agreement to be
executed and delivered by each Borrowing Entity in favor of CCA-Maine
in connection with the Sandy River Transaction.
o10.22(n) Settlement Agreement dated October 27, 1996 among the
Company and the various principals of the Sandy River Group.
o10.22(o) Amendment dated March 1, 1997 to Settlement Agreement dated
October 27, 1996 among the Company and the various principals of the
Sandy River Group.
10.23(a) Letter of Intent dated July 12, 1995 between the Company and Jeff
Voreis, M.D.
10.23(b) Employment Agreement dated July 11, 1995 between Jeff Voreis, M.D.
and the Company.
10.23(c) Amended and Restated Employment Agreement dated August 4, 1995
between the Company and Jeff Voreis, M.D.
10.23(d) Asset Purchase Agreement dated August 4, 1995 between Jeff Voreis,
M.D. and Community Care of America of Alabama, Inc.
10.25 Master Lease Document, General Terms and Conditions dated as of May
10, 1996 between HRPT and Marietta/SCC, Inc., Glenwood/SCC, Inc.,
Dublin/SCC, Inc.,
-23-
<PAGE>
EXHIBIT NUMBER DESCRIPTION
Macon/SCC, Inc., and College Park/SCC, Inc. (Incorporated by
reference to Exhibit 99.3 to the Company's Current Report on Form
8-K, date of earliest reported event: May 16, 1996, File No.
0-26502.)
*10.26 Waiver Agreement dated April 14, 1997 between CCA, Inc. and its
Subsidiaries and HRPT.
10.27(a) Warrant Acquisition Agreement dated as of January 13, 1997, between
the Company and IHS, including form of Series A Warrants, Form of
Series B Warrants and Registration Rights Agreement. (Incorporated by
reference to Exhibit 4.6 to the Company's Current Report on Form 8-K,
date of earliest reported event: December 23, 1996.)
o10.27(b) Amended and Restated Series C Warrant dated April 15, 1997
from the Company to IHS.
10.28(a) Management Agreement dated as of December 27, 1996 between the
Company and IHS (Incorporated by reference to Exhibit 99.0 to the
Company's Current Report on Form 8-K, date of earliest reported
event: December 23, 1996).
*10.28(b) Amendment No. 1 to Management Agreement dated April 14, 1997 between
the Company and IHS.
o 10.29 Reimbursement Agreement dated April 14, 1997 between the
Company and IHS.
*11.01 Calculation of Earnings per Share.
o21.01 Subsidiaries of the Company.
*23.01 Consent of KPMG Peat Marwick LLP
- - -----------
o Filed herewith
* Filed with the initial filing of this Report
+ Management contract or compensatory plan
All other exhibits, unless otherwise noted by parenthetical cross references,
are incorporated by reference to the corresponding numbered exhibit to Company's
Registration Statement on Form S-1, Registration No. 33-92692.
UNDERTAKING
The Company hereby undertakes to furnish to the Securities and
Exchange Commission, upon request, all constituent instruments defining the
rights of holders of long-term debt of the Company and its consolidated
subsidiaries not filed herewith. Such instruments have not been filed since none
are, nor are being, registered under Section 12 of the Securities Exchange Act
of 1934 and the total amount of securities authorized under any such instruments
does not exceed 10% of the total assets of the Company and its subsidiaries on a
consolidated basis.
-24-
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned thereunto duly authorized on the 30th day of
April, 1997.
COMMUNITY CARE OF AMERICA, INC.
By:/S/ DEBORAH A. LAU
Deborah A. Lau
President
-25-
EXHIBIT NUMBER DESCRIPTION
2.01 Stock Purchase Agreement dated as of July 1, 1993 among the Company
and PNC Venture Corp., Primus Capital Fund I Limited Partnership,
Primus Capital Fund II Limited Partnership, PNC Venture Group I, New
York Life Insurance Company and MeritWest, Inc.
2.02(a) Amended and Restated Agreement and Plan of Reorganization dated as of
May 10, 1996 among the Company, Newco, Southern Care, and Wallace
Olson and Michael Himmelstein, the shareholders of Southern Care.
(Incorporated by reference to Exhibit 2.1 to the Company's Current
Report on Form 8-K, date of earliest reported event: May 16, 1996,
File No. 0-26502.)
<PAGE>
EXHIBIT NUMBER DESCRIPTION
2.02(b) Consulting and Advisory Services Agreement effective as of January 1,
1996 among the Company, Southern Care Centers, Inc. and its
Shareholders. (Incorporated by reference to Exhibit 2.02(b) to the
Company's Annual Report on Form 10-K for the year ended December 31,
1995, File No. 0-26502.)
2.02(c) Management Agreement dated as of May 10, 1996 between CCA of Texas,
Inc. and Southern Care Centers of Texas, Inc. (Incorporated by
reference to Exhibit 2.3 to the Company's Current Report on Form 8-K,
date of earliest reported event: May 16, 1996, File No. 0-26502.)
2.02(d) Agreement to Provide Accounting and Auditing Services and Rural
Healthcare Provider Network Services dated as of May 10, 1996 among
Newco and Buchanan/SCC, Inc. (Incorporated by reference to Exhibit
2.4 to the Company's Current Report on Form 8-K, date of earliest
reported event: May 16, 1996, File No. 0-26502.)
3.01(a) Certificate of Incorporation of the Company, as filed with the
Secretary of State of the State of Delaware on December 28, 1992.
3.01(b) Certificate of Amendment of Certificate of Incorporation of the
Company, as filed with the Secretary of State of the State of
Delaware on October 13, 1993.
3.01(c) Certificate of Amendment of Certificate of Incorporation of the
Company, as filed with the Secretary of State of the State of
Delaware on December 28, 1993.
3.01(d) Certificate of Designations, Preferences and Rights of Series A 8%
Cumulative Preferred Stock, as filed with the Secretary of State of
the State of Delaware on December 28, 1993.
3.01(e) Certificate of Amendment of Certificate of Incorporation of the
Company, as filed with the Secretary of State of the State of
Delaware on June 7, 1994.
3.01(f) Certificate of Amendment of Certificate of Incorporation of the
Company, as filed with the Secretary of State of the State of
Delaware on July 28, 1995.
3.02 By-laws of the Company, as amended to date.
4.01(a) Healthcare Receivables Purchase and Transfer Agreement dated December
23, 1996 among the Company and each of the providers named in the
Agreement and CCA Funding, LLC. (Incorporated by reference to Exhibit
4.1 to the Company's Current Report on Form 8-K, date of earliest
reported event: December 23, 1996.)
4.01(b) Loan and Security Agreement dated December 23, 1996 between CCA
Funding, LLC and Daiwa Healthco-2, LLC. (Incorporated by reference to
Exhibit 4.2 to the
<PAGE>
EXHIBIT NUMBER DESCRIPTION
Company's Current Report on Form 8-K, date of earliest reported
event: December 23, 1996.)
4.01(c) Assignment of Healthcare Receivables Purchase and Transfer Agreement
as Collateral Security. (Incorporated by reference to Exhibit 4.3 to
the Company's Current Report on Form 8-K, date of earliest reported
event: December 23, 1996.)
o 4.01(d) Waiver and Amendment dated April 16, 1997 between CCA
Funding, LLC and Daiwa Healthco-2, LLC.
o 4.01(e) Warrant dated April 14, 1997 from CCA, Inc. and Daiwa
Healthco-2, LLC.
4.02 Promissory Note dated December 30, 1993 in the principal amount of
$7,000,000 made by ECA Holdings, Inc. ("ECA") payable to HRPT, with
Allonge and Amendment dated April 1, 1995.
4.03(a) Promissory Note dated December 30, 1993 in the principal amount of
$13,600,000 made by ECA payable to HRPT, with Allonge and Amendment
dated April 1, 1995.
4.03(b) Allonge and Amendment dated as of May 10, 1996 to Promissory Note
dated December 30, 1993 in the principal amount of $13,600,000 made
by ECA payable to HRPT. (Incorporated by reference to Exhibit 4.1 to
the Company's Current Report on Form 8-K, date of earliest reported
event: May 16, 1996, File No. 0-26502.)
4.04(a) Promissory Note dated December 30, 1993 in the principal amount of
$6,000,000 made by Community Care of Nebraska Inc. ("CCN") payable to
HRPT, with Allonge and Amendment dated April 1, 1995.
4.04(b) Allonge and Amendment dated as of May 10, 1996 to Promissory Note
dated December 30, 1993 in the principal amount of $6,000,000 made by
CCN payable to HRPT. (Incorporated by reference to Exhibit 4.2 to the
Company's Current Report on Form 8-K, date of earliest reported
event: May 16, 1996, File No. 0-26502.)
4.05 Promissory Note dated April 1, 1995 in the principal amount of
$3,800,000 made by the Company payable to HRPT.
4.06(a) Promissory Note dated April 1, 1995 in the principal amount of
$2,045,000 made by CCN and certain of its subsidiaries payable to
HRPT.
4.06(b) Allonge and Amendment to Promissory Note dated as of May 10, 1996 to
Promissory Note dated April 1, 1995 in the principal amount of
$2,045,000, made by CCN and certain of its subsidiaries payable to
HRPT. (Incorporated by reference to Exhibit 4.3 to the Company's
Current Report on Form 8-K, date of earliest reported event: May 16,
1996, File No. 0-26502.)
<PAGE>
EXHIBIT NUMBER DESCRIPTION
4.07(a) Renovation Funding Agreement dated April 1, 1995 between ECA and
HRPT.
4.07(b) ECA Holdings Renovation Funding Promissory Note dated April 1, 1995
in the principal amount of $6,466,700 made by ECA payable to HRPT.
4.07(c) Allonge and Amendment to Promissory Note dated as of May 10, 1996 to
ECA Holdings Renovation Funding Promissory Note dated April 1, 1995
in the principal amount of $6,466,700 made by ECA payable to HRPT.
(Incorporated by reference to Exhibit 4.4 to the Company's Current
Report on Form 8-K, date of earliest reported event: May 16, 1996,
File No. 0-26502.)
4.08(a) Renovation Funding Agreement dated April 1, 1995 between CCN and
HRPT.
4.08(b) CCN Group Renovation Funding Promissory Note dated April 1, 1995 in
the principal amount of $2,833,300 made by CCN and its subsidiaries
payable to HRPT.
4.08(c) Allonge and Amendment to Promissory Note dated as of May 10, 1996 to
CCN Group Renovation Funding Promissory Note dated April 1, 1995 in
the principal amount of $2,833,300 made by CCN and its subsidiaries
payable to HRPT. (Incorporated by reference to Exhibit 4.5 to the
Company's Current Report on Form 8-K, date of earliest reported
event: May 16, 1996, File No. 0-26502.)
4.09(a) Amended and Restated Revolving Credit Agreement dated as of December
27, 1996 between the Company and Integrated Health Services, Inc
("IHS"). (Incorporated by reference to Exhibit 4.4 to the Company's
Current Report on Form 8-K, date of earliest reported event: December
23, 1996, File No. 0-26502.)
4.09(b) Subordinated Note dated December 27, 1996 from the Company to IHS in
the principal sum of $5,000,000. (Incorporated by reference to
Exhibit 4.5 to the Company's Current Report on Form 8-K, date of
earliest reported event: December 23, 1996, File No. 0-26502.)
10.01 Stockholders Agreement dated June 30, 1993 among Robert N. Elkins,
Robert N. Elkins, as voting trustee, Equity-Linked Investors, L.P.
("ELI-I"), Equity-Linked Investors, L.P.-II ("ELI-II") and the
Company.
10.02 Voting Agreement dated January 26, 1996 among Robert N. Elkins and
certain stockholders of the Company. (Incorporated by reference to
Exhibit 10.26 to the Company's Annual Report on Form 10-K for the
year ended December 31, 1995, File No. 0-26502.)
10.03(a)(i)+ Restated Employment Agreement dated July 1995 between the Company
and Kenneth W. Creasman.
<PAGE>
EXHIBIT NUMBER DESCRIPTION
10.03(a)(ii)+ Letter agreement dated April 26, 1996 terminating employment
agreement between the Company and Kenneth W. Creasman. (Incorporated
by reference to Exhibit 10.03(a)(ii) to Amendment No. 1 to the
Company's Annual Report on Form 10-K for the year ended December 31,
1995, File No. 0-26502.)
o 10.03(a)(iii)+ Mutual Settlement and Release Agreement dated January
30, 1997 between Kenneth W. Creasman and the Company.
10.03(b)+ Restated Employment Agreement dated July 1995 between the Company and
William T. Filippone.
10.03(b)(ii)+ Separation Agreement dated September 26, 1995 between the Company
and William T. Filippone. (Incorporated by reference to Exhibit
10.03(b) to the Company's Annual Report on Form 10-K for the year
ended December 31, 1995, File No. 0-26502.)
10.03(c)+ Restated Employment Agreement dated July 1995 between the Company and
William J. Krystopowicz.
10.03(d)(i)+ Employment Agreement dated as of June 26, 1995 between the Company
and David H. Fater. (Incorporated by reference to Exhibit 10.03(d) to
the Company's Annual Report on Form 10-K for the year ended December
31, 1995, File No. 0-26502.)
o10.03(d)(ii)+ Amended Employment Agreement dated as of April 26, 1996
between the Company and David H. Fater.
o10.03(d)(iii)+ Letter agreement terminating employment agreement
dated January 31, 1997 between the Company and David H. Fater.
10.03(e)+ Employment Agreement dated October 2, 1995 between the Company and
Deborah Lau. (Incorporated by reference to Exhibit 10.03(e) to the
Company's Annual Report on Form 10-K for the year ended December 31,
1995, File No. 0-26502.)
10.03(f)(i)+ Employment Agreement dated April 19, 1996 between the Company and
Gary W. Singleton. (Incorporated by reference to Exhibit 10.03(f) to
Amendment No. 1 to the Company's Annual Report on Form 10-K for the
year ended December 31, 1995, File No. 0-26502.)
o10.03(f)(ii)+ Letter agreement dated April 4, 1997 terminating
employment agreement between the Company and Gary W. Singleton.
10.04(a)+ 1993 Stock Option Plan, as amended to date.
10.04(b)+ 1993 Senior Executive Stock Option Plan, as amended to date.
<PAGE>
EXHIBIT NUMBER DESCRIPTION
10.04(c)+ 1995 Stock Option Plan, as amended to date.
10.04(d)+ 1995 Non-Employee Director Stock Option Plan, as amended to date.
10.04(e)(1)+ The Company's Supplemental Deferred Compensation Plan (the "SDRP").
(Incorporated by reference to Exhibit 10.04(e) to Amendment No. 1 to
the Company's Annual Report on Form 10-K for the year ended December
31, 1995, File No. 0- 26502.)
o10.04(e)(2)+ Amendment No. 1 to the Company's SDRP.
o10.04(e)(3)+ Resolutions from minutes of the Board of Directors of
the Company held on January 30, 1997 amending the Company's SDRP.
10.05(a) Master Lease Document, General Terms and Conditions dated December
30, 1993 between Health and Rehabilitation Properties Trust
(currently known as Health and Retirement Properties Trust, "HRPT"),
as landlord, and ECA Holdings, Inc., a wholly-owned subsidiary of the
Company ("ECA"), as tenant, as amended by a First Amendment dated
July 22, 1994, a Second Amendment dated November 1, 1994 and a Third
Amendment dated April 1, 1995.
10.05(b) Fourth Amendment dated as of May 10, 1996 to Master Lease Document,
General Terms and Conditions dated December 30, 1993 between HRPT and
ECA. (Incorporated by reference to Exhibit 99.1 to the Company's
Current Report on Form 8-K, date of earliest reported event: May 16,
1996, File No. 0-26502.)
10.06(a) Master Lease Document, General Terms and Conditions dated April 1,
1995 between HRPT, as landlord, and ECA, as tenant.
10.06(b) First Amendment dated as of May 10, 1996 to Master Lease Document,
General Terms and Conditions dated April 1, 1995 between HRPT and
ECA. (Incorporated by reference to Exhibit 99.2 to the Company's
Current Report on Form 8-K, date of earliest reported event: May 16,
1996, File No. 0-26502.)
10.07(a) Purchase Agreement dated September 15, 1994 among the Company,
Leonard Louis Healthcare Properties, Prospect Lake Healthcare Center,
Inc. and Valley View Healthcare Center, Inc.
10.07(b) Amendment to Purchase Agreement dated October 31, 1994 among the
Company, Leonard Louis Healthcare Properties, Leonard Louis
Healthcare Properties I, Leonard Louis Healthcare Properties II,
Prospect Lake Healthcare Center, Inc. and Valley View Healthcare
Center, Inc.
<PAGE>
EXHIBIT NUMBER DESCRIPTION
10.08(a) Stock Purchase Agreement dated November 16, 1994 among the Company
and Quality Health Care, Inc. and Timothy J. Juilfs, Sally M. Juilfs
and Brighton Place West, Inc., Quality Care of Topeka, Inc., W.R.T.
Care, Inc., Care Centers, Inc., Quality Care of Council Bluffs North,
Inc., Quality Care of Council Bluffs South, Inc., Oak Grove Medical
Center, Inc., Quality Care of Pacific Junction, Inc., Quality Care of
Glenwood, Inc. and W.T.F.D.R. Care, Inc.
10.08(b) Stock Purchase Agreement dated November 16, 1994 among the Company
and Quality Health Care, Inc., and Timothy J. Juilfs, Sally M. Juilfs
and W.S.T. Care, Inc., Quality Care of Lyons, Inc., Quality Care of
Columbus, Inc. and Quality Care of Grand Island, Inc.
10.09 Asset Purchase Agreement dated February 1, 1995 among the Company,
Georgiana Doctors Hospital, Inc., Reliable Home Health Services,
Inc., Herbert Kinsey, M.D. and Mary Kinsey.
10.10 Stock Purchase Agreement dated as of November 1, 1995 among Community
Care of America, Inc., CCA of Maine, Inc., Maine Head Trauma Center,
Inc., and the shareholders of Maine Head Trauma Center, Inc.
(Incorporated by reference to Exhibit 2.1 to the Company's Current
Report on Form 8-K, date of earliest event reported: November 3,
1995, File No. 0-26502).
10.11(a) Implementation Contract dated January 19, 1994 between the Company
and Health Care Consulting, Inc. (now named Symphony Health Care
Consulting, Inc.).
10.11(b) Agreement dated August 17, 1994 between the Company and Health Care
Consulting, Inc. (now named Symphony Health Care Consulting, Inc.).
10.12 Mortgage Facilities Fee Agreement (ECA) dated April 1, 1995 between
the Company and HRPT.
10.13 Mortgage Facilities Fee Agreement (CCN) dated April 1, 1995 between
the Company and HRPT.
10.14 Right of First Refusal and Option Agreement dated December 30, 1993
between ECA and HRPT with respect to certain of the Company's
facilities in Colorado.
10.15 Right of First Refusal Agreement dated December 30, 1993 between CCN
and HRPT with respect to certain of the Company's facilities in
Nebraska.
10.16 Right of First Refusal Agreements dated April 1, 1995 between W.S.T.
Care, Inc., Quality Care of Lyons, Inc. and Quality Care of Columbus,
Inc., respectively, and HRPT with respect to certain of the Company's
facilities in Nebraska.
<PAGE>
EXHIBIT NUMBER DESCRIPTION
10.17 Amended and Restated Option Agreement dated April 1, 1995 between ECA
and HRPT with respect to the capital stock of CCN.
10.18(a) Lease dated June 21, 1995 between Midwest Health Enterprises of
Bessemer, Inc. ("Bessemer") and Community Care of America of Alabama,
Inc. ("CCAA").
10.18(b) Lease Guaranty dated June 21, 1995 by the Company for the benefit of
Bessemer.
10.18(c) Subordination, Non-Disturbance, Attornment and Security Agreement
among Bessemer, CCAA and Bankers Trust Company of California, N.A.
("BT").
10.19(a) Lease dated June 21, 1995 between South Gate Village, Inc. ("'South
Gate") and CCAA.
10.19(b) Lease Guaranty dated June 21, 1995 by the Company for the benefit of
South Gate.
10.20(a) Lease dated June 21, 1995 between Greensboro Health Care, Inc.
("Greensboro") and CCAA.
10.20(b) Lease Guaranty dated June 21, 1995 by the Company for the benefit of
Greensboro.
10.20(c) Subordination, Non-Disturbance, Attornment and Security Agreement
among Greensboro, CCAA and BT.
10.21 Non-Competition and Secrecy Agreement dated June 21, 1995 among the
Company, CCAA and Stanley L. Stein.
10.22(a) Form of nine Management Agreements dated June 23, 1995 pursuant to
which the Company is to manage nine long-term care facilities in
Maine, together with a schedule pursuant to Instruction 2 to Item
601(a) of Regulation S-K setting forth material details that differ
from the attached form of Management Agreement.
10.22(b) Management Agreement dated June 23, 1995 among Nursing
Administrators, Inc., David L. Friedman, Mary Bayer, Leon Bresloff
and CCA of Maine, Inc.
10.22(c) Purchase Option Agreement dated June 23, 1995 relating to the ten
long-term facilities in Maine to be managed by the Company.
10.22(d) Services Agreement dated June 23, 1995 between CCA of Maine, Inc. and
Sandy River Development, Inc.
10.22(e) Letter Agreement dated June 23, 1995 from the Company to David I.
Friedman regarding the Purchase Option Agreement dated June 23, 1995
relating to the ten long-term care facilities in Maine to be managed
by the Company.
<PAGE>
EXHIBIT NUMBER DESCRIPTION
10.22(f) Agreement dated June 23, 1995 between the Company and Harbor Hill
Limited Liability Company.
10.22(g) Development Agreement Term Sheet dated June 30, 1995 between the
Company and Sandy River Development, Inc.
10.22(h) Consulting Agreement dated July 10, 1995 between the Company and
Sandy River Development, Inc.
10.22(i) Letter dated June 30, 1995 from Sandy River Development, Inc. to the
Company re: working capital adjustment.
10.22(j) Form of Term Promissory Note to be issued by each Borrowing Entity to
CCA-Maine in connection with the Sandy River Transaction.
10.22(k) Form of Revolving Credit Promissory Note to be issued by each
Borrowing Entity to CCA-Maine in connection with the Sandy River
Transaction.
10.22(l) Form of Security Agreement to be executed and delivered by each
Borrowing Entity in favor of CCA-Maine in connection with the Sandy
River Transaction.
10.22(m) Form of Mortgage, Lease Assignment and Security Agreement to be
executed and delivered by each Borrowing Entity in favor of CCA-Maine
in connection with the Sandy River Transaction.
o10.22(n) Settlement Agreement dated October 27, 1996 among the
Company and the various principals of the Sandy River Group.
o10.22(o) Amendment dated March 1, 1997 to Settlement Agreement dated
October 27, 1996 among the Company and the various principals of the
Sandy River Group.
10.23(a) Letter of Intent dated July 12, 1995 between the Company and Jeff
Voreis, M.D.
10.23(b) Employment Agreement dated July 11, 1995 between Jeff Voreis, M.D.
and the Company.
10.23(c) Amended and Restated Employment Agreement dated August 4, 1995
between the Company and Jeff Voreis, M.D.
10.23(d) Asset Purchase Agreement dated August 4, 1995 between Jeff Voreis,
M.D. and Community Care of America of Alabama, Inc.
10.25 Master Lease Document, General Terms and Conditions dated as of May
10, 1996 between HRPT and Marietta/SCC, Inc., Glenwood/SCC, Inc.,
Dublin/SCC, Inc.,
-23-
<PAGE>
EXHIBIT NUMBER DESCRIPTION
Macon/SCC, Inc., and College Park/SCC, Inc. (Incorporated by
reference to Exhibit 99.3 to the Company's Current Report on Form
8-K, date of earliest reported event: May 16, 1996, File No.
0-26502.)
*10.26 Waiver Agreement dated April 14, 1997 between CCA, Inc. and its
Subsidiaries and HRPT.
10.27(a) Warrant Acquisition Agreement dated as of January 13, 1997, between
the Company and IHS, including form of Series A Warrants, Form of
Series B Warrants and Registration Rights Agreement. (Incorporated by
reference to Exhibit 4.6 to the Company's Current Report on Form 8-K,
date of earliest reported event: December 23, 1996.)
o10.27(b) Amended and Restated Series C Warrant dated April 15, 1997
from the Company to IHS.
10.28(a) Management Agreement dated as of December 27, 1996 between the
Company and IHS (Incorporated by reference to Exhibit 99.0 to the
Company's Current Report on Form 8-K, date of earliest reported
event: December 23, 1996).
*10.28(b) Amendment No. 1 to Management Agreement dated April 14, 1997 between
the Company and IHS.
o10.29 Reimbursement Agreement dated April 14, 1997 between the
Company and IHS.
*11.01 Calculation of Earnings per Share.
o21.01 Subsidiaries of the Company.
*23.01 Consent of KPMG Peat Marwick LLP
o Filed herewith
* Filed with the initial filing of this Report
+ Management contract or compensatory plan
All other exhibits, unless otherwise noted by parenthetical cross references,
are incorporated by reference to the corresponding numbered exhibit to Company's
Registration Statement on Form S-1, Registration No. 33-92692.
SEGMENT EX401 INSERT HERE
WARRANT
To Purchase Common Stock of
Community Care of America, Inc.
Warrant No. 1
No. of Shares of Common Stock: 1,787,568
Doc # 1397641
<PAGE>
TABLE OF CONTENTS
1. DEFINITIONS.....................................................1
2. EXERCISE OF WARRANT.............................................5
2.1 Manner of Exercise....................................5
2.2 Cashless Exercise.....................................6
2.3 Payment of Taxes......................................6
2.4 Fractional Shares.....................................6
2.5 Continued Validity....................................7
3. TRANSFER, DIVISION AND COMBINATION..............................7
3.1 Transfer..............................................7
3.2 Division and Combination..............................7
3.3 Expenses..............................................7
3.4 Maintenance of Books..................................7
4. ADJUSTMENTS.....................................................8
4.1 Stock Dividends, Subdivisions and Combinations........8
4.2 Certain Other Distributions...........................8
4.3 Issuance of Additional Shares of Common Stock.........9
4.4 Issuance of Warrants or Other Rights.................11
4.5 Issuance of Convertible Securities...................11
4.6 Superseding Adjustment...............................12
4.7 Other Provisions Applicable to Adjustments
under this Section...................................13
4.8 Reorganization, Reclassification, Merger,
Consolidation or Disposition of Assets...............15
4.9 Other Action Affecting Common Stock..................16
4.10 Certain Limitations..................................16
4.11 Adjustment to Number of Shares of Common
Stock Purchasable Hereunder..........................16
5. NOTICES TO WARRANT HOLDERS.....................................17
5.1 Notice of Adjustments................................17
5.2 Notice of Certain Corporate Action...................17
6. NO IMPAIRMENT..................................................17
7. RESERVATION AND AUTHORIZATION OF COMMON STOCK; REGISTRATION
WITH OR APPROVAL OF ANY GOVERNMENTAL AUTHORITY.................18
8. TAKING OF RECORD; STOCK AND WARRANT TRANSFER BOOKS.............18
i
<PAGE>
9. RESTRICTIONS ON TRANSFERABILITY...............................19
9.1 Restrictive Legend..................................19
9.2 Notice of Proposed Transfers; Request for
Registration........................................19
9.3 Required Registration...............................20
9.4 Incidental Registration.............................20
9.5 Registration Procedures.............................21
9.6 Expenses............................................23
9.7 Indemnification and Contribution....................24
9.8 Termination of Restrictions.........................25
9.9 Listing on Securities Exchange......................26
9.10 Certain Limitations on Registration Rights..........26
9.11 Selection of Managing Underwriters..................26
10. SUPPLYING INFORMATION.........................................26
11. LOSS OR MUTILATION............................................27
12. OFFICE OF THE COMPANY.........................................27
13. FINANCIAL AND BUSINESS INFORMATION............................27
13.1 Quarterly Information...............................27
13.2 Annual Information..................................27
13.3 Filings.............................................28
14. APPRAISAL.....................................................28
15. LIMITATION OF LIABILITY.......................................28
16. REPURCHASE BY THE COMPANY OF WARRANT..........................28
16.1 Obligation to Repurchase Warrant....................29
16.2 Determination and Payment of Repurchase Price.......29
17. MISCELLANEOUS.................................................30
17.1 Nonwaiver and Expenses..............................30
17.2 Notice Generally....................................30
17.3 Indemnification.....................................31
17.4 Remedies............................................31
17.5 Successors and Assigns..............................31
17.6 Amendment...........................................31
17.7 Severability........................................32
17.8 Headings............................................32
17.9 Governing Law.......................................32
ii
<PAGE>
EXHIBIT A SUBSCRIPTION FORM.............................................33
EXHIBIT B ASSIGNMENT FORM...............................................34
EXHIBIT C CONVERSION FORM................................................35
iii
<PAGE>
1
THIS WARRANT AND THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED AND MAY NOT BE SOLD OR OTHERWISE
TRANSFERRED IN VIOLATION OF SUCH ACT, THE RULES AND REGULATIONS THEREUNDER OR
THE PROVISIONS OF THIS WARRANT.
No. of Shares of Common Stock: up to 1,787,568 Warrant No. 1
WARRANT
To Purchase Common Stock of
Community Care of America, Inc.
This is to certify that Daiwa Healthco-2 LLC, or its registered
assigns ("Holder"), is entitled, at any time or from time to time during the
Exercise Period, to purchase from Community Care of America, Inc., a Delaware
corporation (the "Company"), an aggregate of up to 1,787,568 shares of Common
Stock at a purchase price of $0.0025 per share, subject to adjustment as
provided herein, all on the terms and conditions and pursuant to the provisions
hereinafter set forth.
1. DEFINITIONS
As used in this Warrant, the following terms have the respective
meanings set forth below:
"Additional Shares of Common Stock" shall mean all shares of Common
Stock issued by the Company after the date hereof, other than Warrant Stock.
"Appraised Value" shall mean, in respect of any share of Common Stock
on any date herein specified, the fair saleable value of such share of Common
Stock (determined without giving effect to the discount for (i) a minority
interest, (ii) a lack of voting power or (iii) any lack of liquidity of the
Common Stock or to the fact that the Company may have no class of equity
registered under the Exchange Act) as of the last day of most recent fiscal
month to end within 60 days prior to such date specified, based on the value of
the Company, as determined by an investment banking firm selected in accordance
with the terms of Section 14, adjusted to reflect the aggregate consideration
receivable by the Company or the aggregate principal amount of indebtedness of
the Company extinguishable upon the issuance of any and all securities not
outstanding but deemed to be outstanding in the computation, divided by the
number of Fully Diluted Outstanding shares of Common Stock.
"Book Value" shall mean, in respect of any share of Common Stock on
any date herein specified, the consolidated stockholders' equity of the Company
as of the last day of any month immediately preceding such date plus the
aggregate consideration receivable by the Company or
<PAGE>
2
the aggregate principal amount of indebtedness of the Company extinguishable
upon the issuance of any and all securities not outstanding but deemed to be
outstanding in the computation of Fully Diluted Outstanding shares of Common
Stock, divided by the number of Fully Diluted Outstanding shares of Common Stock
as determined in accordance with GAAP by any firm of independent certified
public accountants of recognized national standing selected by the Company and
reasonably acceptable to the Majority Holders.
"Business Day" shall mean any day that is not a Saturday or Sunday or
a day on which banks in the City of New York are required or permitted to be
closed.
"Commission" shall mean the Securities and Exchange Commission or any
other federal agency then administering the Securities Act and other federal
securities laws.
"Common Stock" shall mean the common stock, par value $0.0025 per
share of the Company as constituted on the date hereof, and any capital stock
into which such Common Stock may thereafter be changed, and shall also include
(i) capital stock of the Company of any other class (regardless of how
denominated) issued to the holders of shares of Common Stock upon any
reclassification thereof, excluding any class which provides for (A) dividends
at a fixed rate which rate does not vary based on the net income or operating
results of the Company and/or its subsidiaries, (B) a preference as to
liquidation which is limited to the consideration received by the Company for
such stock and (C) no right of redemption and (ii) shares of common stock of any
successor or acquiring corporation (as defined in Section 4.8) received by or
distributed to the holders of Common Stock in the circumstances contemplated by
Section 4.8.
"Convertible Securities" shall mean evidences of indebtedness, shares
of stock or other securities which are convertible into or exchangeable, with or
without payment of additional consideration in cash or property, for Additional
Shares of Common Stock, either immediately or upon the occurrence of a specified
date or a specified event.
"Current Market Price" shall mean, in respect of any share of Common
Stock on any date herein specified, (a) the higher of (x) the Book Value per
share of Common Stock at such date, and (y) the Appraised Value per share of
Common Stock as at such date, or (b) if there shall then be a public market for
the Common Stock, the higher of (x) the Book Value per share of Common Stock at
such date, and (y) the average of the daily market prices for 30 consecutive
Business Days commencing 45 days before such date. The daily market price for
each such Business Day shall be (i) the last sale price on such day on the
principal stock exchange on which such Common Stock is then listed or admitted
to trading, (ii) if no sale takes place on such day on any such exchange, the
average of the last reported closing bid and asked prices on such day as
officially quoted on any such exchange, (iii) if the Common Stock is not then
listed or admitted to trading on any stock exchange, the average of the last
reported closing bid and asked prices on such day in the over-the-counter
market, as furnished by the National Association of Securities Dealers Automatic
Quotation System or the National Quotation Bureau, Inc., (iv) if neither such
corporation at the time is engaged in the business of reporting such prices, as
furnished by any
<PAGE>
3
similar firm then engaged in such business, or (v) if there is no such firm, as
furnished by any member of the NASD selected mutually by the Majority Holders
and the Company or, if they cannot agree upon such selection, as selected by two
such members of the NASD, one of which shall be selected by the Majority Holders
and one of which shall be selected by the Company.
"Current Warrant Price" shall mean the price at which a share of
Common Stock may be purchased at any date pursuant to the exercise of this
Warrant on such date; the initial Current Warrant Price is stated in the
preamble on to this Warrant.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect from time to time.
"Exercise Period" shall have the meaning set forth in Section 2.1.
"Expiration Date" shall mean the fifth anniversary of the date
hereof.
"Fully Diluted Outstanding" shall mean, when used with reference to
Common Stock, at any date as of which the number of shares thereof is to be
determined, all shares of Common Stock Outstanding at such date and all shares
of Common Stock issuable in respect of this Warrant on such date, and all other
options or warrants to purchase, or securities convertible into, shares of
Common Stock outstanding on such date which would be deemed outstanding in
accordance with GAAP for purposes of determining book value or net income per
share on a fully-diluted basis.
"GAAP" shall mean generally accepted accounting principles in the
United States of America from time to time in effect.
"Loan and Security Agreement" shall mean the Loan and Security
Agreement, dated as of December 23, 1996 as amended, modified or supplemented
from time to time, or any successor agreement between such parties.
"Majority Holders" shall mean the Holders of Warrants exercisable for
in excess of 50% of the aggregate number of shares of Common Stock then
purchasable upon exercise of all Warrants, whether or not then exercisable.
"NASD" shall mean the National Association of Securities Dealers,
Inc., or any successor corporation thereto.
"Other Property" shall have the meaning set forth in Section 4.8.
"Outstanding" shall mean, when used with reference to Common Stock,
at any date as of which the number of shares thereof is to be determined, all
issued shares of Common Stock,
<PAGE>
4
except shares then owned or held by or for the account of the Company or any
subsidiary thereof, and shall include all shares issuable in respect of
outstanding scrip or any certificates representing fractional interests in
shares of Common Stock.
"Permitted Issuances" shall mean (i) the issuance of warrants or
stock options to the Company's management employees for the purchase of up to
965,000 shares of Common Stock, (ii) the issuance of shares of Common Stock upon
exercise of the warrants and options referred to in clause (i).
"Person" shall mean any individual, sole proprietorship, partnership,
limited liability company, joint venture, trust, association, corporation,
institution, other entity or government (whether federal, state, county, city,
municipal or otherwise, including, without limitation, any instrumentality,
division, agency, body or department thereof).
"Registration Statement" shall have the meaning set forth in Section
9.4.
"Restricted Common Stock" shall mean shares of Common Stock which
are, or which upon their issuance on the exercise of this Warrant would be,
evidenced by a certificate bearing the restrictive legend set forth in Section
9.1(a).
"Securities Act" shall mean the Securities Act of 1933, as amended,
or any similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Transfer" shall mean any disposition of any Warrant or Warrant Stock
or of any interest in either thereof, which would constitute a sale thereof
within the meaning of the Securities Act.
"Transfer Notice" shall have the meaning set forth in Section 9.2.
"Warrants" shall mean this Warrant and all warrants issued upon
transfer, division or combination of, or in substitution for, any thereof. All
Warrants shall at all times be identical as to terms and conditions and date,
except as to the number of shares of Common Stock for which they may be
exercised and, to the extent provided in Section 4.3(d), the Current Warrant
Price.
"Warrant Price" shall mean an amount equal to (i) the number of
shares of Common Stock being purchased upon exercise of this Warrant pursuant to
Section 2.1, multiplied by (ii) the Current Warrant Price as of the date of such
exercise.
"Warrant Stock" shall mean the shares of Common Stock purchased by
the holders of the Warrants upon the exercise thereof.
<PAGE>
5
2. EXERCISE OF WARRANT
2.1 MANNER OF EXERCISE. At any time and from time to time after the
earliest of (A) the date of the satisfaction by the Company of the principal
outstanding in excess of the Basic Borrowing Amount pursuant to the Loan and
Security Agreement, (B) the occurrence of an Event of Default under the Loan and
Security Agreement and (C) April 1, 1998 until 5:00 P.M., New York time, on the
Expiration Date (the "Exercise Period"), Holder may exercise this Warrant, on
any Business Day, for all or any part of the number of shares of Common Stock
purchasable hereunder on such date.
In order to exercise this Warrant, in whole or in part, Holder shall
deliver to the Company at its principal office at 3050 North Horshoe Drive,
Suite 260, Naples, Florida 34104 or at the office or agency designated by the
Company pursuant to Section 12, (i) a written notice of Holder's election to
exercise this Warrant, which notice shall specify the number of shares of Common
Stock to be purchased, (ii) payment of the Warrant Price and (iii) this Warrant;
provided, that any notice of exercise given hereunder may be made contingent
upon the happening of, and effective concurrently with the effectiveness of, any
event, including, without limitation, the participation of any Holder in or
closing of any public offering proposed to be effected by the Company, if such
contingency and such event are specified in such notice. Such notice shall be
substantially in the form of the subscription form appearing at the end of this
Warrant as Exhibit A, duly executed by Holder or its agent or attorney. Upon
receipt thereof, the Company shall, as promptly as practicable, and in any event
within five (5) Business Days thereafter, execute or cause to be executed and
deliver or cause to be delivered to Holder a certificate or certificates
representing the aggregate number of full shares of Common Stock issuable upon
such exercise, together with cash in lieu of any fraction of a share, as
hereinafter provided. The stock certificate or certificates so delivered shall
be, to the extent possible, in such denomination or denominations as such Holder
shall request in the notice and shall be registered in the name of Holder or,
subject to Section 9, such other name as shall be designated in the notice. This
Warrant shall be deemed to have been exercised and such certificate or
certificates shall be deemed to have been issued, and Holder or any other Person
so designated to be named therein shall be deemed to have become a holder of
record of such shares for all purposes, as of the date the notice, together with
the cash or check or checks and this Warrant, is received by the Company as
described above and all taxes required to be paid by Holder, if any, pursuant to
Section 2.3 prior to the issuance of such shares have been paid. If this Warrant
shall have been exercised in part, the Company shall, at the time of delivery of
the certificate or certificates representing Warrant Stock, deliver to Holder a
new Warrant evidencing the rights of Holder to purchase the unpurchased shares
of Common Stock called for by this Warrant, which new Warrant shall in all other
respects be identical with this Warrant, or, at the request of Holder,
appropriate notation may be made on this Warrant and the same returned to
Holder. Notwithstanding any provision herein to the contrary, the Company shall
not be required to register shares in the name of any Person who acquired this
Warrant (or part hereof) or any Warrant Stock otherwise than in accordance with
this Warrant. Payment of the Warrant Price shall be made at the option of the
Holder by certified or official bank check.
<PAGE>
6
2.2 CASHLESS EXERCISE. Notwithstanding the provisions set forth in
Section 2.1, if, at any time during the Exercise Period, the Current Market
Price of one share of Common Stock is greater than the Current Warrant Price (at
the date of calculation as set forth below), in lieu of exercising this Warrant
(or any portion thereof) for cash, the Holder may elect to convert such Warrant
(or portion thereof) into the number of shares of Common Stock equal to the
value (as determined below) of this Warrant (or the portion thereof being
canceled) by surrender of this Warrant at the principal office of the Company
together with written notice of such election (pursuant to the Conversion Form
attached hereto as Exhibit C), in which event the Company shall issue to Holder
a number of shares of Common Stock computed using the following formula:
X = Y (A-B)
A
where
X= the number of shares of Common Stock to be issued to the Holder upon
conversion of this Warrant (or portion thereof) pursuant to this
Section 2.1
Y= the number of shares of Common Stock purchasable under this Warrant,
or if only a portion of this Warrant is being exercised, the portion
of this Warrant being exercised (at the date of such calculation)
A= the Current Market Price of one share of Common Stock (at the date of
such calculation)
B= the Current Warrant Price (as adjusted to the date of such
calculation)
2.3 PAYMENT OF TAXES. All shares of Common Stock issuable upon the
exercise of this Warrant pursuant to the terms hereof shall be validly issued,
fully paid and nonassessable and without any preemptive rights. The Company
shall pay all expenses in connection with, and all taxes and other governmental
charges that may be imposed with respect to, the issue or delivery thereof,
unless such tax or charge is imposed by law upon Holder, in which case such
taxes or charges shall be paid by Holder. The Company shall not be required,
however, to pay any tax or other charge imposed in connection with any transfer
involved in the issue of any certificate for shares of Common Stock issuable
upon exercise of this Warrant in any name other than that of Holder.
2.4 FRACTIONAL SHARES. The Company shall not be required to issue a
fractional share of Common Stock upon exercise of any Warrant. As to any
fraction of a share which the Holder of one or more Warrants, the rights under
which are exercised in the same transaction, would otherwise be entitled to
purchase upon such exercise, the Company shall pay a cash adjustment in respect
of such final fraction in an amount equal to the same fraction of the Current
Market Price per share of Common Stock on the date of exercise.
<PAGE>
7
2.5 CONTINUED VALIDITY. A holder of shares of Common Stock issued
upon the exercise of this Warrant, in whole or in part (other than a holder who
acquires such shares after the same have been publicly sold pursuant to a
Registration Statement under the Securities Act or sold pursuant to Rule 144
thereunder), shall continue to be entitled with respect to such shares to all
rights to which it would have been entitled as Holder under Sections 9, 10 and
16 of this Warrant. The Company will, at the time of each exercise of this
Warrant, in whole or in part, upon the request of the holder of the shares of
Common Stock issued upon such exercise hereof, acknowledge in writing, in form
reasonably satisfactory to such holder, its continuing obligation to afford to
such holder all such rights; provided, however, that if such holder shall fail
to make any such request, such failure shall not affect the continuing
obligation of the Company to afford to such holder all such rights.
3. TRANSFER, DIVISION AND COMBINATION
3.1 TRANSFER. Subject to compliance with Section 9, transfer of this
Warrant and all rights hereunder, in whole or in part, shall be registered on
the books of the Company to be maintained for such purpose, upon surrender of
this Warrant at the principal office of the Company referred to in Section 2.1
or the office or agency designated by the Company pursuant to Section 12,
together with a written assignment of this Warrant substantially in the form of
Exhibit B hereto duly executed by Holder or its agent or attorney and funds
sufficient to pay any transfer taxes payable upon the making of such transfer.
Upon such surrender and, if required, such payment, the Company shall, subject
to Section 9, execute and deliver a new Warrant or Warrants in the name of the
assignee or assignees and in the denomination specified in such instrument of
assignment, and shall issue to the assignor a new Warrant evidencing the portion
of this Warrant not so assigned, and this Warrant shall promptly be cancelled. A
Warrant, if properly assigned in compliance with Section 9, may be exercised by
a new Holder for the purchase of shares of Common Stock without having a new
Warrant issued.
3.2 DIVISION AND COMBINATION. Subject to Section 9, this Warrant may
be divided or combined with other Warrants upon presentation hereof at the
aforesaid office or agency of the Company, together with a written notice
specifying the names and denominations in which new Warrants are to be issued,
signed by Holder or its agent or attorney. Subject to compliance with Section
3.1 and with Section 9, as to any transfer which may be involved in such
division or combination, the Company shall execute and deliver a new Warrant or
Warrants in exchange for the Warrant or Warrants to be divided or combined in
accordance with such notice.
3.3 EXPENSES. The Company shall prepare, issue and deliver at its own
expense (other than transfer taxes) the new Warrant or Warrants under this
Section 3.
3.4 MAINTENANCE OF BOOKS. The Company agrees to maintain, at its
aforesaid office or agency, books for the registration and the registration of
transfer of the Warrants.
<PAGE>
8
4. ADJUSTMENTS
The number of shares of Common Stock for which this Warrant is
exercisable and the Current Warrant Price shall be subject to adjustment from
time to time as set forth in this Section 4. The Company shall give each Holder
notice of any event described below which requires an adjustment pursuant to
this Section 4 at the time of such event in accordance with Section 5.1.
Notwithstanding anything to the contrary in this Section 4, no adjustment under
this Section 4 (other than subsection 4.1(c)) shall increase the Current Warrant
Price or decrease the number of shares of Common Stock for which this Warrant is
exercisable except for (i) any rescission adjustment required to be made
pursuant to the first sentence of Section 4.6 and (ii) any adjustment required
to be made pursuant to Section 4.11.
4.1 STOCK DIVIDENDS, SUBDIVISIONS AND COMBINATIONS. If any time the
Company shall:
(a) take a record of the holders of its Common Stock for
the purpose of entitling them to receive a dividend payable in, or
other distribution of, Additional Shares of Common Stock,
(b) subdivide its outstanding shares of Common Stock into
a larger number of shares of Common Stock, or
(c) combine its outstanding shares of Common Stock into a
smaller number of shares of Common Stock,
then (i) the number of shares of Common Stock for which this Warrant is
exercisable immediately after the occurrence of any such event shall be adjusted
to equal the number of shares of Common Stock which a record holder of the same
number of shares of Common Stock for which this Warrant is exercisable
immediately prior to the occurrence of such event would own or be entitled to
receive after the happening of such event, and (ii) the Current Warrant Price
shall be adjusted to equal (A) the Current Warrant Price multiplied by the
number of shares of Common Stock for which this Warrant is exercisable
immediately prior to the adjustment divided by (B) the number of shares for
which this Warrant is exercisable immediately after such adjustment.
4.2 CERTAIN OTHER DISTRIBUTIONS. If at any time the Company shall
take a record of the holders of its Common Stock for the purpose of entitling
them to receive any dividend or other distribution of:
(a) cash (other than a cash distribution or dividend
payable out of earnings for the year in which such dividend was
declared or earned surplus legally available for the payment of
dividends under the laws of the jurisdiction of incorporation of the
Company),
<PAGE>
9
(b) any evidences of its indebtedness, any shares of its
stock or any other securities or property of any nature whatsoever
(other than cash, Convertible Securities or Additional Shares of
Common Stock), or
(c) any warrants or other rights to subscribe for or
purchase any evidences of its indebtedness, any shares of its stock
or any other securities or property of any nature whatsoever (other
than cash, Convertible Securities or Additional Shares of Common
Stock),
then (i) the number of shares of Common Stock for which this Warrant is
exercisable shall be increased to equal the product of the number of shares of
Common Stock for which this Warrant is exercisable immediately prior to such
adjustment multiplied by a fraction (A) the numerator of which shall be the
Current Market Price per share of Common Stock at the date of taking such record
and (B) the denominator of which shall be such Current Market Price per share of
Common Stock minus the amount of cash and the amount (as determined in good
faith by the Board of Directors of the Company and supported by an opinion from
an investment banking firm of recognized national standing acceptable to the
Majority Holders) of any and all such evidences of indebtedness, shares of
stock, other securities or property or warrants or other subscription or
purchase rights distributable to a holder of one share of Common Stock, and (ii)
the Current Warrant Price shall be reduced to equal (A) the Current Warrant
Price multiplied by the number of shares of Common Stock for which this Warrant
is exercisable immediately prior to the adjustment divided by (B) the number of
shares for which this Warrant is exercisable immediately after such adjustment;
provided, that if the event requiring adjustment by this Section 4.2 would cause
the Current Warrant Price to be equal to or less than $0, no such adjustment
shall be made and the Company shall distribute to each Holder such cash, any and
all evidences of indebtedness, shares of stock, other securities or property or
warrants or other subscription or purchase rights that would be distributable to
such Holder had such Holder exercised this Warrant immediately prior to such
distribution. A reclassification of the Common Stock (other than a change in par
value, or from par value to no par value or from no par value to par value) into
shares of Common Stock and shares of any other class of stock shall be deemed a
distribution by the Company to the holders of its Common Stock of such shares of
such other class of stock within the meaning of this Section 4.2 and, if the
outstanding shares of Common Stock shall be changed into a larger or smaller
number of shares of Common Stock as a part of such reclassification, such change
shall be deemed a subdivision or combination, as the case may be, of the
outstanding shares of Common Stock within the meaning of Section 4.1.
4.3 ISSUANCE OF ADDITIONAL SHARES OF COMMON STOCK. (a) If at any time
the Company shall (except as hereinafter provided) issue or sell any Additional
Shares of Common Stock, other than Permitted Issuances, in exchange for
consideration in an amount per Additional Share of Common Stock less than the
Current Warrant Price at the time the Additional Shares of Common Stock are
issued, then (i) the Current Warrant Price as to the number of shares for which
this Warrant is exercisable prior to such adjustment shall be reduced to a price
determined by dividing (A) an amount equal to the sum of (x) the number of
shares of Common Stock
<PAGE>
10
Outstanding immediately prior to such issue or sale multiplied by the then
existing Current Warrant Price, and (y) the consideration, if any, received by
the Company upon such issue or sale, by (B) the total number of shares of Common
Stock Outstanding immediately after such issue or sale; and (ii) the number of
shares of Common Stock for which this Warrant is exercisable shall be increased
to equal the product obtained by multiplying the Current Warrant Price in effect
immediately prior to such issue or sale by the number of shares of Common Stock
for which this Warrant is exercisable immediately prior to such issue or sale
and dividing the product thereof by the Current Warrant Price resulting from the
adjustment made pursuant to clause (i) above.
(b) If at any time the Company shall (except as hereinafter provided)
issue or sell any Additional Shares of Common Stock, other than Permitted
Issuances, for consideration in an amount per Additional Share of Common Stock
less than the Current Market Price, then (i) the number of shares of Common
Stock for which this Warrant is exercisable shall be increased to equal the
product obtained by multiplying the number of shares of Common Stock for which
this Warrant is exercisable immediately prior to such issue or sale by a
fraction (A) the numerator of which shall be the number of shares of Common
Stock Outstanding immediately after such issue or sale, and (B) the denominator
of which shall be the number of shares of Common Stock Outstanding immediately
prior to such issue or sale plus the number of shares which the aggregate
offering price of the total number of such Additional Shares of Common Stock
would purchase at the then Current Market Price; and (ii) the Current Warrant
Price as to the number of shares for which this Warrant is exercisable prior to
such adjustment shall be reduced to a price determined by multiplying such
Current Warrant Price by a fraction (X) the numerator of which shall be the
number of shares for which this Warrant is exercisable immediately prior to such
issue or sale; and (Y) the denominator of which shall be the number of shares of
Common Stock purchasable immediately after such issue or sale.
(c) If at any time the Company (except as hereinafter provided) shall
issue or sell any Additional Shares of Common Stock, other than Permitted
Issuances, in exchange for consideration in an amount per Additional Shares of
Common Stock which is less than the Current Warrant Price and Current Market
Price at the time the Additional Shares of Common Stock are issued, the
adjustment required under this Section 4.3 shall be made in accordance with the
formula in paragraph (a) or (b) above which results in the lower Current Warrant
Price following such adjustment. The provisions of paragraphs (a) and (b) of
Section 4.3 shall not apply to any issuance of Additional Shares of Common Stock
for which an adjustment is provided under Section 4.1 or 4.2. No adjustment of
the number of shares of Common Stock for which this Warrant shall be exercisable
shall be made under paragraph (a) or (b) of Section 4.3 upon the issuance of any
Additional Shares of Common Stock which are issued pursuant to the exercise of
any warrants or other subscription or purchase rights or pursuant to the
exercise of any conversion or exchange rights in any Convertible Securities, if
any such adjustment shall previously have been made upon the issuance of such
warrants or other rights or upon the issuance of such Convertible Securities (or
upon the issuance of any warrant or other rights therefor) pursuant to Section
4.4 or Section 4.5.
<PAGE>
11
(d) If any Additional Shares of Common Stock, other than Permitted
Issuances, are issued or sold in exchange for consideration in an amount per
Additional Share of Common Stock equal to or greater than the Current Warrant
Price and the Current Market Price at the time the Additional Shares are issued,
then (i) the number of shares of Common Stock for which this Warrant is
exercisable shall be increased to equal the product obtained by multiplying the
number of shares of Common Stock for which this Warrant is exercisable
immediately prior to such adjustment by a fraction (A) the numerator of which
shall be the number of shares of Common Stock Outstanding immediately after the
issuance of such Additional Shares of Common Stock, and (B) the denominator of
which shall be the number of shares of Common Stock Outstanding immediately
prior to the issuance of such Additional Shares of Common Stock; and (ii) the
Current Warrant Price as to the number of shares of Common Stock for which this
Warrant is exercisable prior to such adjustment shall not change but the Current
Warrant Price for each of the incremental number of shares of Common Stock for
which this Warrant becomes exercisable after such adjustment shall be equal to
the amount of such consideration per Additional Share of Common Stock.
4.4 ISSUANCE OF WARRANTS OR OTHER RIGHTS. If at any time the Company
shall take a record of the holders of its Common Stock for the purpose of
entitling them to receive a distribution of, or shall in any manner (whether
directly or by assumption in a merger in which the Company is the surviving
corporation) issue or sell, any warrants or other rights to subscribe for or
purchase any Additional Shares of Common Stock or any Convertible Securities,
whether or not the rights to exchange or convert thereunder are immediately
exercisable, then the Current Warrant Price and the number of shares of Common
Stock for which this Warrant is then exercisable shall be adjusted as provided
in Section 4.3 on the basis that the maximum number of Additional Shares of
Common Stock issuable pursuant to all such warrants or other rights or necessary
to effect the conversion or exchange of all such Convertible Securities shall be
deemed to have been issued and outstanding and the Company shall have received
all of the consideration payable therefor, if any, as of the date of the actual
issuance of such warrants or other rights. No further adjustments of the Current
Warrant Price or the number of shares for which this Warrant is exercisable
shall be made upon the actual issue of such Common Stock or of such Convertible
Securities upon exercise of such warrants or other rights or upon the actual
issue of such Common Stock upon such conversion or exchange of such Convertible
Securities.
4.5 ISSUANCE OF CONVERTIBLE SECURITIES. If at any time the Company
shall take a record of the holders of its Common Stock for the purpose of
entitling them to receive a distribution of, or shall in any manner (whether
directly or by assumption in a merger in which the Company is the surviving
corporation) issue or sell, any Convertible Securities, whether or not the
rights to exchange or convert thereunder are immediately exercisable, then the
Current Warrant Price and the number of shares of Common Stock for which this
Warrant is then exercisable shall be adjusted as provided in Section 4.3 on the
basis that the maximum number of Additional Shares of Common Stock necessary to
effect the conversions or exchange of all such Convertible Securities shall be
deemed to have been issued and outstanding and the Company shall have received
all of the consideration payable therefor, if any, as of the date of actual
issuance
<PAGE>
12
of such Convertible Securities. No adjustment of the Current Warrant Price or
the number of shares for which this Warrant is exercisable shall be made under
this Section 4.5 upon the issuance of any Convertible Securities which are
issued pursuant to the exercise of any warrants or other subscription or
purchase rights therefor, if any such adjustment shall previously have been made
upon the issuance of such warrants or other rights pursuant to Section 4.4. No
further adjustments of the Current Warrant Price or the number of shares for
which this Warrant is exercisable shall be made upon the actual issue of such
Additional Shares of Common Stock or of such Convertible Securities upon
exercise of such warrants or other rights or upon the actual issue of such
Additional Shares of Common Stock upon such conversion or exchange of such
Convertible Securities.
4.6 SUPERSEDING ADJUSTMENT. If, at any time after any adjustment of
the Current Warrant Price and the number of shares of Common Stock for which
this Warrant is exercisable shall have been made pursuant to Section 4.4 or
Section 4.5 as the result of any issuance of warrants, rights or Convertible
Securities,
(a) such warrants or rights, or the right of conversion or
exchange in such other Convertible Securities, shall expire, and all
or a portion of such warrants or rights, or the right of conversion
or exchange with respect to all or a portion of such other
Convertible Securities, as the case may be, shall not have been
exercised, or
(b) the consideration per share for which shares of Common
Stock are issuable pursuant to such warrants or rights, or the terms
of such other Convertible Securities, shall be increased or decreased
solely by virtue of provisions therein contained for an automatic
increase or decrease in such consideration per share upon the
occurrence of a specified date or event,
then such previous adjustment shall be rescinded and annulled and the Additional
Shares of Common Stock which were deemed to have been issued by virtue of the
computation made in connection with the adjustment so rescinded and annulled
shall no longer be deemed to have been issued by virtue of such computation.
Thereupon, a recomputation shall be made of the effect of such warrants or
rights or other Convertible Securities on the basis of
(c) treating the number of Additional Shares of Common
Stock or other property, if any, theretofore actually issued or
issuable pursuant to the previous exercise of any such warrants or
rights or any such right of conversion or exchange, as having been
issued on the date or dates of any such exercise and for the
consideration actually received and receivable therefor, and
(d) treating any such warrants or rights or any such other
Convertible Securities which then remain outstanding as having been
granted or issued immediately after the time of such increase or
decrease, as the case may be, of the consideration per share for
which shares of Common Stock or other property are issuable under
such warrants or rights or
<PAGE>
13
other Convertible Securities; whereupon a new adjustment of the
Current Warrant Price and the number of shares of Common Stock for
which this Warrant is exercisable shall be made pursuant to Section
4.4 or Section 4.5, as appropriate, which new adjustment shall
supersede the previous adjustment so rescinded and annulled;
provided, that no rescission or recomputation adjustment shall be made under
this Section 4.6 in respect of any portion of this Warrant which has been
exercised prior to the occurrence of any action otherwise requiring such
rescission or recomputation adjustment.
4.7 OTHER PROVISIONS APPLICABLE TO ADJUSTMENTS UNDER THIS SECTION.
The following provisions shall be applicable to the making of adjustments of the
Current Warrant Price and the number of shares of Common Stock for which this
Warrant is exercisable provided for in this Section 4:
(a) Computation of Consideration. To the extent that any
Additional Shares of Common Stock or any Convertible Securities or
any warrants or other rights to subscribe for or purchase any
Additional Shares of Common Stock or any Convertible Securities shall
be issued for cash consideration, the consideration received by the
Company therefor shall be the amount of the cash received by the
Company therefor, or, if such Additional Shares of Common Stock or
Convertible Securities are offered by the Company for subscription,
the subscription price, or, if such Additional Shares of Common Stock
or Convertible Securities are sold to underwriters or dealers for
public offering without a subscription offering, the initial public
offering price (in any such case subtracting (x) any amounts paid or
receivable for accrued interest or accrued dividends and (y) any
compensation, discounts or expenses paid or incurred by the Company
for and in the underwriting of, or otherwise in connection with, the
issuance thereof). To the extent that such issuance shall be for a
consideration other than cash, then, except as herein otherwise
expressly provided, the amount of such consideration shall be deemed
to be the fair value of such consideration at the time of such
issuance as determined in good faith by the Board of Directors of the
Company. In case any Additional Shares of Common Stock or any
Convertible Securities or any warrants or other rights to subscribe
for or purchase such Additional Shares of Common Stock or Convertible
Securities shall be issued in connection with any merger in which the
Company issues any securities, the amount of consideration therefor
shall be deemed to be the fair value, as determined in good faith by
the Board of Directors of the Company, of such portion of the assets
and business of the nonsurviving corporation as such Board in good
faith shall determine to be attributable to such Additional Shares of
Common Stock, Convertible Securities, warrants or other rights, as
the case may be. The consideration for any Additional Shares of
Common Stock issuable pursuant to any warrants or other rights to
subscribe for or purchase the same shall be the consideration
received by the Company for issuing such warrants or other rights
plus the lowest amount of additional consideration payable to the
Company upon exercise of such warrants or other rights. The
consideration for any Additional Shares of Common Stock issuable
pursuant to the terms of any Convertible
<PAGE>
14
Securities shall be the consideration received by the Company for
issuing warrants or other rights to subscribe for or purchase such
Convertible Securities, plus the consideration paid or payable to the
Company in respect of the subscription for or purchase of such
Convertible Securities, plus the lowest amount of additional
consideration, if any, payable to the Company upon the exercise of
the right of conversion or exchange in such Convertible Securities.
In case of the issuance at any time of any Additional Shares of
Common Stock or Convertible Securities in payment or satisfaction of
any dividends upon any class of stock other than Common Stock, the
Company shall be deemed to have issued such Additional Shares of
Common Stock or Convertible Securities for no consideration. Whenever
the Board of Directors of the Company shall be required to make a
determination in good faith of the fair value of any consideration,
such determination shall, if requested by the Majority Holders, be
supported by an opinion of an investment banking firm of recognized
national standing selected by the Company and acceptable to such
Holders, with all costs thereof borne by the Company.
(b) When Adjustments to Be Made. The adjustments required
by this Section 4 shall be made whenever and as often as any
specified event requiring an adjustment shall occur, except that any
adjustment of the number of shares of Common Stock for which this
Warrant is exercisable that would otherwise be required may be
postponed (except in the case of a subdivision or combination of
shares of the Common Stock, as provided for in Section 4.1) up to,
but not beyond the date of exercise if such adjustment either by
itself or with other adjustments not previously made adds or
subtracts less than 0.1% of the shares of Common Stock for which this
Warrant is exercisable immediately prior to the making of such
adjustment. Any adjustment representing a change of less than such
minimum amount (except as aforesaid) which is postponed shall be
carried forward and made as soon as such adjustment, together with
other adjustments required by this Section 4 and not previously made,
would result in a minimum adjustment or on the date of exercise. For
the purpose of any adjustment, any specified event shall be deemed to
have occurred at the close of business on the date of its occurrence.
(c) Fractional Interests. In computing adjustments under
this Section 4, fractional interests in Common Stock shall be taken
into account to the nearest 1/10th of a share.
(d) When Adjustment Not Required. If the Company shall take
a record of the holders of its Common Stock for the purpose of
entitling them to receive a dividend or distribution or subscription
or purchase rights and shall, thereafter and before the distribution
to stockholders thereof, legally abandon its plan to pay or deliver
such dividend, distribution, subscription or purchase rights, then
thereafter no adjustment shall be required by reason of the taking of
such record and any such adjustment previously made in respect
thereof shall be rescinded and annulled.
<PAGE>
15
(e) Escrow of Warrant Stock. If after any property becomes
distributable pursuant to this Section 4 by reason of the taking of
any record of the holders of Common Stock, but prior to the
occurrence of the event for which such record is taken, Holder
exercises this Warrant, then any additional shares of Common Stock
and other property issuable upon exercise solely by reason of such
adjustment shall be held in escrow for Holder by the Company to be
issued to Holder upon and to the extent that the event actually takes
place. Notwithstanding any other provision to the contrary herein, if
the event for which such record was taken fails to occur or is
rescinded, then such escrowed shares shall be cancelled by the
Company and escrowed property returned.
(f) Challenge to Good Faith Determination. Whenever the
Board of Directors of the Company shall be required to make a
determination in good faith of the fair value of any item under this
Section 4, such determination may be challenged in good faith by
Holder, and any dispute shall be resolved by an investment banking
firm of recognized national standing selected by the Company and
acceptable to such Holder, with all costs thereof borne by the
Company.
(g) Current Warrant Price Not Less than $.0025. If,
following any reduction of the Current Warrant Price and increase in
the number of shares of Common Stock for which the Warrant is
exercisable made pursuant to this Section 4, except any reduction
made pursuant to subsections 4.1(a) or 4.1(b), the Current Warrant
Price is reduced to an amount less than $.0025, the Current Warrant
Price shall be increased (without any further change in the number of
shares of Common Stock for which this Warrant is exercisable) to
equal the lesser of (x) the Current Warrant Price immediately prior
to such adjustment and (y) $.01. However, for purposes of calculating
any subsequent adjustment pursuant to this Section 4 (except this
Section 4.7(g)) any increase in the Current Warrant Price pursuant to
this Section 4.7(g) shall be disregarded.
4.8 REORGANIZATION, RECLASSIFICATION, MERGER, CONSOLIDATION OR
DISPOSITION OF ASSETS. In case the Company shall reorganize its capital,
reclassify its capital stock, consolidate or merge with or into another
corporation (where the Company is not the surviving corporation or where there
is a change in or distribution with respect to the Common Stock of the Company),
or sell, transfer or otherwise dispose of all or substantially all its property,
assets or business to another corporation and, pursuant to the terms of such
reorganization, reclassification, merger, consolidation or disposition of
assets, shares of common stock of the successor or acquiring corporation, or any
cash, shares of stock or other securities or property of any nature whatsoever
(including warrants or other subscription or purchase rights) in addition to or
in lieu of common stock of the successor or acquiring corporation ("Other
Property"), are to be received by or distributed to the holders of Common Stock
of the Company, then each Holder shall have the right thereafter to receive,
upon exercise of such Warrant, the number of shares of common stock of the
successor or acquiring corporation or of the Company, if it is the surviving
corporation, and Other Property receivable upon or as a result of such
reorganization, reclassification, merger, consolidation or disposition of assets
by a holder of the
<PAGE>
16
number of shares of Common Stock for which this Warrant is exercisable
immediately prior to such event. In case of any such reorganization,
reclassification, merger, consolidation or disposition of assets, the successor
or acquiring corporation (if other than the Company) shall expressly assume the
due and punctual observance and performance of each and every covenant and
condition of this Warrant to be performed and observed by the Company and all
the obligations and liabilities hereunder, subject to such modifications as may
be deemed appropriate (as determined by resolution of the Board of Directors of
the Company) in order to provide for adjustments of shares of the Common Stock
for which this Warrant is exercisable which shall be as nearly equivalent as
practicable to the adjustments provided for in this Section 4. For purposes of
this Section 4.8 "common stock of the successor or acquiring corporation" shall
include (i) stock of such corporation of any class which does not provide for
(A) dividends at a fixed rate which does not vary based on the net income or
operating results of the Company and/or its subsidiaries, (B) a preference as to
liquidation which is limited to the consideration received by the Company for
such stock and (C) a right of redemption and (ii) any evidences of indebtedness,
shares of stock or other securities which are convertible into or exchangeable
for any such stock, either immediately or upon the arrival of a specified date
or the happening of a specified event and any warrants or other rights to
subscribe for or purchase any such stock. The foregoing provisions of this
Section 4.8 shall similarly apply to successive reorganizations,
reclassification, mergers, consolidations or disposition of assets.
4.9 OTHER ACTION AFFECTING COMMON STOCK. If at any time or from time
to time the Company shall take any action in respect of its Common Stock, other
than the payment of dividends described in Section 4.2(a) or any other action
described in this Section 4, then, unless such action will not have a materially
adverse effect upon the rights of the Holders, the number of shares of Common
Stock or other stock for which this Warrant is exercisable and/or the purchase
price thereof shall be adjusted in such manner as may be equitable in the
circumstances.
4.10 CERTAIN LIMITATIONS. Notwithstanding anything herein to the
contrary, the Company agrees not to enter into any transaction which, by reason
of any adjustment hereunder, would cause the Current Warrant Price to be less
than the par value per share of Common Stock.
4.11 ADJUSTMENT TO NUMBER OF SHARES OF COMMON STOCK PURCHASABLE
HEREUNDER. In the event and on each occasion that, pursuant to the terms of the
Loan and Security Agreement, the Company reduces the amount of principal
outstanding in excess of the Basic Borrowing Amount (as defined in the Loan and
Security Agreement) by at least $300,000 (the amount of any such reduction, the
"Reduction Amount"), the number of shares of Common Stock for which this Warrant
is exercisable shall be adjusted to a number of shares as follows. In the event
that the Current Market Price of one share of Common Stock on the date of such
event is equal to or less than such Current Market Price onApril 1, 1998, then
the number of shares of Common Stock for which this Warrant is exercisable shall
be adjusted to a number of shares equal in value to the value of this Warrant on
April 1, 1998 minus the Reduction Amount. In the event that the Current Market
Price of one share of Common Stock on the date of such event is greater than
such Current Market Price on April 1, 1998, then the number of shares of
<PAGE>
17
Common Stock for which this Warrant is exercisable shall be decreased by a
number of shares equal in value to the Reduction Amount valued at the Current
Market Price of one share of Common Stock on the date of such event.
5. NOTICES TO WARRANT HOLDERS
5.1 NOTICE OF ADJUSTMENTS. Whenever the Current Warrant Price or the
number of shares of Common Stock for which this Warrant is exercisable shall be
adjusted pursuant to Section 4, the Company shall forthwith prepare a
certificate to be executed by the chief financial officer of the Company setting
forth, in reasonable detail, the event requiring the adjustment and the method
by which such adjustment was calculated (including a description of the basis on
which the Board of Directors of the Company determined the fair value of any
evidences of indebtedness, shares of stock, other securities or property or
warrants or other subscription or purchase rights referred to in Section 4.2 or
4.7(a)), specifying the number of shares of Common Stock for which this Warrant
is exercisable and (if such adjustment was made pursuant to Section 4.8 or 4.9)
describing the number and kind of any other shares of stock or Other Property
for which this Warrant is exercisable, and any change in the purchase price or
prices thereof, after giving effect to such adjustment or change. The Company
shall promptly cause an executed copy of such certificate to be delivered to
each Holder in accordance with Section 15.2. The Company shall keep at its
office or agency designated pursuant to Section 12 copies of all such
certificates and cause the same to be available for inspection at said office
during normal business hours by any Holder or any prospective purchaser of a
Warrant designated by a Holder thereof.
5.2 NOTICE OF CERTAIN CORPORATE ACTION. The Holder shall be entitled
to the same rights to receive notice of corporate action as any holder of Common
Stock.
6. NO IMPAIRMENT
The Company shall not by any action including, without limitation,
amending its certificate of incorporation or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issuance or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms of this Warrant, but will at all times in
good faith assist in the carrying out of all such terms and in the taking of all
such actions as may be necessary or appropriate to protect the rights of Holder
against impairment. Without limiting the generality of the foregoing, the
Company will (a) not increase the par value of any shares of Common Stock
receivable upon the exercise of this Warrant above the amount payable therefor
upon such exercise immediately prior to such increase in par value, (b) take all
such action as may be necessary or appropriate in order that the Company may
validly and legally issue fully paid and nonassessable shares of Common Stock
upon the exercise of this Warrant, and (c) use its best efforts to obtain all
such authorizations, exemptions or consents from any public regulatory body
having jurisdiction thereof as may be necessary to enable the Company to perform
its obligations under this Warrant.
<PAGE>
18
Upon the request of Holder, the Company will at any time during the
period this Warrant is outstanding acknowledge in writing, in form satisfactory
to Holder, the continuing validity of this Warrant and the obligations of the
Company hereunder.
7. RESERVATION AND AUTHORIZATION OF COMMON STOCK;
REGISTRATION WITH OR APPROVAL OF ANY GOVERNMENTAL
AUTHORITY
From and after the date hereof, the Company shall at all times
reserve and keep available for issue upon the exercise of Warrants such number
of its authorized but unissued shares of Common Stock as will be sufficient to
permit the exercise in full of all outstanding Warrants. All shares of Common
Stock which shall be so issuable, when issued upon exercise of any Warrant and
payment therefor in accordance with the terms of such Warrant, shall be duly and
validly issued and fully paid and nonassessable, and not subject to preemptive
rights.
Before taking any action which would cause an adjustment reducing the
Current Warrant Price below the then par value, if any, of the shares of Common
Stock issuable upon exercise of the Warrants, the Company shall take any
corporate action which may be necessary in order that the Company may validly
and legally issue fully paid and nonassessable shares of such Common Stock at
such adjusted Current Warrant Price.
Before taking any action which would result in an adjustment in the
number of shares of Common Stock for which this Warrant is exercisable or in the
Current Warrant Price, the Company shall take all actions required, including,
without limitation, amending its certificate of incorporation, to ensure that it
has a sufficient number of shares of authorized and unissued shares of Common
Stock in order to permit the exercise of the Warrants following such adjustment
and obtain all such authorizations or exemptions thereof, or consents thereto,
as may be necessary from any public regulatory body or bodies having
jurisdiction thereof.
If any shares of Common Stock required to be reserved for issuance
upon exercise of Warrants require registration or qualification with any
governmental authority under any federal or state law (otherwise than as
provided in Section 9) before such shares may be so issued, the Company will in
good faith and as expeditiously as possible and at its expense endeavor to cause
such shares to be duly registered.
8. TAKING OF RECORD; STOCK AND WARRANT TRANSFER BOOKS
In the case of all dividends or other distributions by the Company to
the holders of its Common Stock with respect to which any provision of Section 4
refers to the taking of a record of such holders, the Company will in each such
case take such a record and will take such record as of the close of business on
a Business Day. The Company will not at any time, except upon dissolution,
liquidation or winding up of the Company, close its stock transfer books or
Warrant transfer books so as to result in preventing or delaying the exercise or
transfer of any Warrant.
<PAGE>
19
9. RESTRICTIONS ON TRANSFERABILITY
The Warrants and the Warrant Stock shall not be transferred,
hypothecated or assigned before satisfaction of the conditions specified in this
Section 9, which conditions are intended to ensure compliance with the
provisions of the Securities Act with respect to the Transfer of any Warrant or
any Warrant Stock. Holder, by acceptance of this Warrant, agrees to be bound by
the provisions of this Section 9.
9.1 RESTRICTIVE LEGEND. (a) Except as otherwise provided in this
Section 9, each certificate for Warrant Stock initially issued upon the exercise
of this Warrant, and each certificate for Warrant Stock issued to any subsequent
transferee of any such certificate, shall be stamped or otherwise imprinted with
a legend in substantially the following form:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended, and are
subject to the conditions specified in a certain Warrant dated April
14,1997, originally issued by Community Care of America, Inc. No
transfer of the shares represented by this certificate shall be valid
or effective until such conditions have been fulfilled. A copy of the
form of said Warrant is on file with the Secretary of Community Care
of America, Inc. The holder of this certificate, by acceptance of
this certificate, agrees to be bound by the provisions of such
Warrant."
(b) Except as otherwise provided in this Section 9, each
Warrant shall be stamped or otherwise imprinted with a legend in
substantially the following form:
"This Warrant and the securities represented hereby have
not been registered under the Securities Act of 1933, as amended, and
may not be transferred in violation of such Act, the rules and
regulations thereunder or the provisions of this Warrant."
9.2 NOTICE OF PROPOSED TRANSFERS; REQUEST FOR REGISTRATION. Prior to
any Transfer or attempted Transfer of any Warrants or any shares of Restricted
Common Stock, the holder of such Warrants or Restricted Common Stock shall give
ten days' prior written notice (a "Transfer Notice") to the Company of such
holder's intention to effect such Transfer, describing the manner and
circumstances of the proposed Transfer, and obtain from counsel to such holder
who shall be reasonably satisfactory to the Company, an opinion that the
proposed Transfer of such Warrants or such Restricted Common Stock may be
effected without registration under the Securities Act. After receipt of the
Transfer Notice and opinion, the Company shall, within five days thereof, so
notify the holder of such Warrants or such Restricted Common Stock and such
holder shall thereupon be entitled to Transfer such Warrants or such Restricted
Common Stock, in accordance with the terms of the Transfer Notice. Each
certificate, if any, evidencing such shares of Restricted Common Stock issued
upon such Transfer shall bear the restrictive legend set forth in Section
9.1(a), and each Warrant issued upon such Transfer shall bear the restrictive
legend set forth in Section 9.1(b), unless in the opinion of such counsel such
legend is not required in order to ensure compliance with the Securities Act.
The holder of the Warrants or the
<PAGE>
20
Restricted Common Stock, as the case may be, giving the Transfer Notice shall
not be entitled to transfer such Warrants or such Restricted Common Stock until
receipt of notice from the Company under this Section 9.2(a).
The holder of Warrants and Warrant Stock shall have the right to
request registration of such Warrant Stock pursuant to Sections 9.3 and 9.4.
9.3 REQUIRED REGISTRATION. After receipt of a written request from
the holders of Warrants and/or Warrant Stock representing at least an aggregate
of 30% of the total of (i) all shares of Warrant Stock then subject to purchase
upon exercise of all Warrants and (ii) all shares of Warrant Stock then
outstanding, requesting that the Company effect the registration of Warrant
Stock issuable upon the exercise of such holder's Warrants or of any of such
holder's Warrant Stock under the Securities Act and specifying the intended
method or methods of disposition thereof, the Company shall promptly notify all
holders of Warrants and Warrant Stock in writing of the receipt of such request
and each such holder, in lieu of exercising its rights under Section 9.4, may
elect (by written notice sent to the Company within ten Business Days from the
date of such holder's receipt of the aforementioned Company's notice) to have
its shares of Warrant Stock included in such registration thereof pursuant to
this Section 9.3. Thereupon the Company shall, as expeditiously as is possible,
use its best efforts to effect the registration under the Securities Act of all
shares of Warrant Stock which the Company has been so requested to register by
such holders for sale, all to the extent required to permit the disposition (in
accordance with the intended method or methods thereof, as aforesaid) of the
Warrant Stock so registered; provided, however, that the Company shall not be
required to effect more than two registrations of any Warrant Stock pursuant to
this Section 9.3, unless the Company shall be eligible to file a registration
statement on Form S-3 (or other comparable short form) under the Securities Act,
in which event there shall be no limit on the number of such registrations
pursuant to this Section 9.3.
9.4 INCIDENTAL REGISTRATION. If the Company at any time proposes to
file on its behalf and/or on behalf of any of its security holders ("the
demanding security holders") a registration statement under the Securities Act
on any form (other than a registration statement on Form S-4 or S-8 or any
successor form for securities to be offered in a transaction of the type
referred to in Rule 145 under the Securities Act or to employees of the Company
pursuant to any employee benefit plan, respectively) for the general
registration of securities to be sold for cash with respect to its Common Stock
or any other class of equity security (as defined in Section 3(a)(11) of the
Exchange Act) of the Company (a "Registration Statement"), it will give written
notice to all holders of Warrants or Warrant Stock at least 60 days before the
initial filing with the Commission of such Registration Statement, which notice
shall set forth the intended method of disposition of the securities proposed to
be registered by the Company. The notice shall offer to include in such filing
the aggregate number of shares of Warrant Stock, and the number of shares of
Common Stock for which this Warrant is exercisable, as such holders may request.
<PAGE>
21
Each holder of any such Warrants or any such Warrant Stock desiring
to have Warrant Stock registered under this Section 9.4 shall advise the Company
in writing within 30 days after the date of receipt of such offer from the
Company, setting forth the amount of such Warrant Stock for which registration
is requested. The Company shall thereupon include in such filing the number of
shares of Warrant Stock for which registration is so requested, subject to the
next sentence, and shall use its best efforts to effect registration under the
Securities Act of such shares. If the managing underwriter of a proposed public
offering shall advise the Company in writing that, in its opinion, the
distribution of the Warrant Stock requested to be included in the registration
concurrently with the securities being registered by the Company or such
demanding security holder would materially and adversely affect the distribution
of such securities by the Company or such demanding security holder, then all
selling security holders (other than any demanding security holder who initially
requested such registration) shall reduce the amount of securities each intended
to distribute through such offering on a pro rata basis. Except as otherwise
provided in Section 9.6, all expenses of such registration shall be borne by the
Company.
9.5 REGISTRATION PROCEDURES. If the Company is required by the
provisions of this Section 9 to use its best efforts to effect the registration
of any of its securities under the Securities Act, the Company will, as
expeditiously as possible:
(a) prepare and file with the Commission a Registration
Statement with respect to such securities and use its best efforts to
cause such Registration Statement to become and remain effective for
a period of time required for the disposition of such securities by
the holders thereof;
(b) prepare and file with the Commission such amendments
and supplements to such Registration Statement and the prospectus
used in connection therewith as may be necessary to keep such
Registration Statement effective and to comply with the provisions of
the Securities Act with respect to the sale or other disposition of
all securities covered by such Registration Statement until the
earlier of such time as all of such securities have been disposed of
in a public offering or the expiration of 180 days;
(c) furnish to such selling security holders such number of
copies of a summary prospectus or other prospectus, including a
preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents, as such selling security
holders may reasonably request;
(d) use its best efforts to register or qualify the
securities covered by such Registration Statement under such other
securities or blue sky laws of such jurisdictions within the United
States and Puerto Rico as each holder of such securities shall
request (provided, however, the Company shall not be obligated to
qualify as a foreign corporation to do business under the laws of any
jurisdiction in which it is not then qualified or to file any general
consent to service or process), and do such other reasonable acts and
things
<PAGE>
22
as may be required of it to enable such holder to consummate the
disposition in such jurisdiction of the securities covered by such
Registration Statement;
(e) furnish, at the request of any holder requesting
registration of Warrant Stock pursuant to Section 9.3, on the date
that such shares of Warrant Stock are delivered to the underwriters
for sale pursuant to such registration or, if such Warrant Stock is
not being sold through underwriters, on the date that the
Registration Statement with respect to such shares or Warrant Stock
becomes effective, (1) an opinion, dated such date, of the
independent counsel representing the Company for the purposes of such
registration, addressed to the underwriters, if any, and if such
Warrant Stock is not being sold through underwriters, then to the
holders making such request, stating that such Registration Statement
has become effective under the Securities Act and that (i) to the
best knowledge of such counsel, no stop order suspending the
effectiveness thereof has been issued and no proceedings for that
purpose have been instituted or are pending or contemplated under the
Securities Act, (ii) the Registration Statement, the related
prospectus, and each amendment or supplement thereto, comply as to
form in all material respects with the requirements of the Securities
Act and the applicable rules and regulations of the Commission
thereunder (except that such counsel need express no opinion as to
financial statements contained therein), (iii) the descriptions in
the Registration Statement or the prospectus, or any amendment or
supplement thereto, of all legal matters and contracts and other
legal documents or instruments are accurate and fairly present the
information required to be shown, and (iv) such counsel does not know
of any legal or governmental proceedings, pending or contemplated,
required to be described in the Registration Statement or prospectus,
or any amendment or supplement thereto, which are not described as
required, nor of any contracts or documents or instruments of a
character required to be described in the Registration Statement or
prospectus, or any amendment or supplement thereto, or to be filed as
exhibits to the Registration Statement which are not described and
filed or incorporated by reference as required; such counsel shall
also confirm that he has no reason to believe that either the
Registration Statement or the prospectus, or any amendment or
supplement thereto (other than financial material as to which such
counsel need make no statement) contains any untrue statement of a
material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances in which made, not misleading; and (2) a letter dated
such date, from the independent certified public accountants of the
Company, addressed to the underwriters, if any, and if such Warrant
Stock is not being sold through underwriters, then to the holder
making such request and, if such accountants refuse to deliver such
letter to such holder, then to the Company stating that they are
independent certified public accountants within the meaning of the
Securities Act and that, in the opinion of such accountants, the
financial statements and other financial data of the Company included
in the Registration Statement or the prospectus, or any amendment or
supplement thereto, comply as to form in all material respects with
the applicable accounting requirements of the Securities Act. Such
opinion of counsel shall additionally cover such other legal matters
with respect to the registration in respect of which such
<PAGE>
23
opinion is being given as such holders of Warrant Stock may
reasonably request. Such letter from the independent certified public
accountants shall additionally cover such other financial matters
(including information as to the period ending not more than 5
Business Days prior to the date of such letter) with respect to the
registration in respect of which such letter is being given as the
holders holding a majority of the Warrant Stock being so registered
may reasonably request;
(f) entered into customary agreements (including an
underwriting agreement in customary form) and take such other actions
as are reasonably required in order to expedite or facilitate the
disposition of such Warrant Stock; and
(g) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make
available to its security holders, as soon as reasonably practicable,
but not later than 18 months after the effective date of the
Registration Statement, an earnings statement covering the period of
at least 12 months beginning with the first full month after the
effective date of such Registration Statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the
Securities Act.
It shall be a condition precedent to the obligation of the Company to
take any action pursuant to this Section 9 in respect of the securities which
are to be registered at the request of any holder of Warrants or Warrant Stock
that such holder shall furnish to the Company such information regarding the
securities held by such holder and the intended method of disposition thereof as
the Company shall reasonably request and as shall be required in connection with
the action taken by the Company.
9.6 EXPENSES. All expenses incurred in complying with Section 9,
including, without limitation, all registration and filing fees (including all
expenses incident to filing with the NASD), printing expenses, fees and
disbursements of counsel for the Company, the reasonable fees and expenses of
one counsel for the selling security holders (selected by those holding a
majority of the shares being registered), expenses of any special audits
incident to or required by any such registration and expenses of complying with
the securities or blue sky laws of any jurisdictions pursuant to Section 9.5(d),
shall be paid by the Company, except that
(a) all such expenses in connection with any amendment or
supplement to the Registration Statement or prospectus filed more
than 12 months after the effective date of such Registration
Statement because any holder of Warrant Stock has not effected the
disposition of the securities requested to be registered shall be
paid by such holder; and
(b) the Company shall not be liable for any fees, discounts
or commissions to any underwriter or any fees or disbursements of
counsel for any underwriter in respect of the securities sold by such
holder of Warrant Stock.
<PAGE>
24
9.7 INDEMNIFICATION AND CONTRIBUTION. (a) In the event of any
registration of any of the Warrant Stock under the Securities Act pursuant to
this Section 9, the Company shall indemnify and hold harmless the holder of such
Warrant Stock, such holder's directors and officers, and each other Person
(including each underwriter) who participated in the offering of such Warrant
Stock and each other Person, if any, who controls such holder or such
participating Person within the meaning of the Securities Act, against any
losses, claims, damages or liabilities, joint or several, to which such holder
or any such director or officer or participating Person or controlling Person
may become subject under the Securities Act or any other statute or at common
law, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon (i) any alleged unsure statement
of any material fact contained, on the effective date thereof, in any
Registration Statement under which such securities were registered under the
Securities Act, any preliminary prospectus or final prospectus contained
therein, or any amendment or supplement thereto, or (ii) any alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and shall reimburse such holder or such
director, officer or participating Person or controlling Person for any legal or
any other expenses reasonably incurred by such holder or such director, officer
or participating Person or controlling Person in connection with investigating
or defending any such loss, claim, damage, liability or action; provided,
however, that the Company shall not be liable in any such case to the extent
that any such loss, claim, damage or liability arises out of or is based upon
any alleged untrue statement or alleged omission made in such Registration
Statement, preliminary prospectus, prospectus or amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company by such holder specifically for use therein or (in the case of any
registration pursuant to Section 9.3) so furnished for such purposes by any
underwriter. Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of such holder or such director, officer
or participating Person or controlling Person, and shall survive the transfer of
such securities by such holder.
(b) Each holder of any Warrant Stock, by acceptance thereof, agrees
to indemnify and hold harmless the Company, its directors and officers and each
other person, if any, who controls the Company within the meaning of the
Securities Act against any losses, claims, damages or liabilities, joint or
several, to which the Company or any such director or officer or any such Person
may become subject under the Securities Act or any other statute or at common
law, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon information in writing provided
to the Company by such holder of such Warrant Stock contained, on the effective
date thereof, in any Registration Statement under which securities were
registered under the Securities Act at the request of such holder, any
preliminary prospectus or final prospectus contained therein, or any amendment
or supplement thereto.
(c) If the indemnification provided for in this Section 9 from the
indemnifying party is unavailable to an indemnified party hereunder in respect
of any losses, claims, damages, liabilities or expenses referred to therein,
then the 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, claims, damages, liabilities or expenses in such
proportion as is
<PAGE>
25
appropriate to reflect the relative fault of the indemnifying party and
indemnified parties in connection with the actions which resulted in such
losses, claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative fault of such indemnifying party and
indemnified parties shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue statement
of a material fact or omission or alleged omission to state a material fact, has
been made by, or relates to information supplied by, such indemnifying party or
indemnified parties, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action. The amount paid
or payable by a party as a result of the losses, claims, damages, liabilities
and expenses referred to above shall be deemed to include any legal or other
fees or expenses reasonably incurred by such party in connection with any
investigation or proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 9(c) were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
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.
9.8 TERMINATION OF RESTRICTIONS. Notwithstanding the foregoing
provisions of Section 9, the restrictions imposed by this Section upon the
transferability of the Warrants, the Warrant Stock and the Restricted Common
Stock (or Common Stock issuable upon the exercise of the Warrants) and the
legend requirements of Section 9.1 shall terminate as to any particular Warrant
or share of Warrant Stock or Restricted Common Stock (or Common Stock issuable
upon the exercise of the Warrants) (i) when and so long as such security shall
have been effectively registered under the Securities Act and disposed of
pursuant thereto or (ii) when the Company shall have received an opinion of
counsel reasonably satisfactory to it that such legend is not required in order
to ensure compliance with the Securities Act. Whenever the restrictions imposed
by Section 9 shall terminate as to this Warrant, as hereinabove provided, the
Holder hereof shall be entitled to receive from the Company, at the expense of
the Company, a new Warrant bearing the following legend in place of the
restrictive legend set forth hereon:
"THE RESTRICTIONS ON TRANSFERABILITY OF THE WITHIN WARRANT
CONTAINED IN SECTION 9 HEREOF TERMINATED ON ________________, 19__,
AND ARE OF NO FURTHER FORCE AND EFFECT."
All Warrants issued upon registration of transfer, division or combination of,
or in substitution for, any Warrant or Warrants entitled to bear such legend
shall have a similar legend endorsed thereon. Wherever the restrictions imposed
by this Section shall terminate as to any share of Restricted Common Stock, as
hereinabove provided, the holder thereof shall be entitled to receive from the
Company, at the Company's expense, a new certificate representing such Common
Stock not bearing the restrictive legend set forth in Section 9.1(a).
<PAGE>
26
9.9 LISTING ON SECURITIES EXCHANGE. If the Company shall list any
shares of Common Stock on any securities exchange, it will, at its expense, list
thereon, maintain and, when necessary, increase such listing of, all shares of
Common Stock issued or, to the extent permissible under the applicable
securities exchange rules, issuable upon the exercise of this Warrant so long as
any shares of Common Stock shall be so listed during any such Exercise Period.
9.10 CERTAIN LIMITATIONS ON REGISTRATION RIGHTS. Notwithstanding the
other provisions of Section 9:
(i) the Company shall not be obligated to register the Warrant
Stock of any holder if, in the opinion of counsel to the
Company reasonably satisfactory to the holder and its
counsel (or, if the holder has engaged an investment
banking firm, to such investment banking firm and its
counsel), the sale or other disposition of such holder's
Warrant Stock, in the manner proposed by such holder (or by
such investment banking firm), may be effected without
registering such Warrant Stock under the Securities Act;
and
(ii) the Company shall not be obligated to register the Warrant
Stock of any holder pursuant to Section 9.3, if the
Company has had a registration statement, under which such
holder had a right to have its Warrant Stock included
pursuant to Section 9.3 or 9.4, declared effective within
one year prior to the date of the request pursuant to
Section 9.3; provided, however, that if any holder elected
to have shares of its Warrant Stock included under such
registration statement but some or all of such shares were
excluded pursuant to the last sentence of Section 9.3 or
9.4, then such one-year period shall be reduced to six
months.
9.11 SELECTION OF MANAGING UNDERWRITERS. The managing underwriter or
underwriters for any offering of Warrant Stock to be registered pursuant to
Section 9.3 shall be selected by the holders of a majority of the shares being
so registered (other than any shares being registered pursuant to Section 9.4)
and shall be reasonably acceptable to the Company.
10. SUPPLYING INFORMATION
The Company shall cooperate with each Holder of a Warrant and each
holder of Restricted Common Stock in supplying such information as may be
reasonably necessary for such holder to complete and file any information
reporting forms presently or hereafter required by the Commission as a condition
to the availability of an exemption from the Securities Act for the sale of any
Warrant or Restricted Common Stock.
<PAGE>
27
11. LOSS OR MUTILATION
Upon receipt by the Company from any Holder of evidence reasonably
satisfactory to it of the ownership of and the loss, theft, destruction or
mutilation of this Warrant and indemnity reasonably satisfactory to it and in
case of mutilation upon surrender and cancellation hereof, the Company will
execute and deliver in lieu hereof a new Warrant of like tenor to such Holder;
provided, however, that in the case of mutilation, no indemnity shall be
required if this Warrant in identifiable form is surrendered to the Company for
cancellation.
12. OFFICE OF THE COMPANY
As long as any of the Warrants remain outstanding, the Company shall
maintain an office or agency (which may be the principal executive offices of
the Company) where the Warrants may be presented for exercise, registration of
transfer, division or combination as provided in this Warrant.
13. FINANCIAL AND BUSINESS INFORMATION
13.1 QUARTERLY INFORMATION. The Company will deliver to each Holder,
as soon as practicable after the end of each of the first three quarters of the
Company, and in any event within 45 days thereafter, one copy of an unaudited
consolidated balance sheet of the Company and its subsidiaries as at the close
of such quarter, and the related unaudited consolidated statements of income and
changes in financial position of the Company for such quarter and, in the case
of the second and third quarters, for the portion of the fiscal year ending with
such quarter, setting forth in each case in comparative form the figures for the
corresponding periods in the previous fiscal year. Such financial statements
shall be prepared by the Company in accordance with GAAP and accompanied by the
certification of the Company's chief executive officer or chief financial
officer that such financial statements are complete and correct and present
fairly the consolidated financial position, results of operations and changes in
financial position of the Company and its subsidiaries as at the end of such
quarter and for such year-to-date period, as the case may be.
13.2 ANNUAL INFORMATION. The Company will deliver to each Holder as
soon as practicable after the end of each fiscal year of the Company, and in any
event within 90 days thereafter, one copy of:
(i) an audited consolidated balance sheet of the Company
and its subsidiaries as at the end of such year, and
(ii) audited consolidated statements of income, retained
earnings and changes in financial position of the Company and its
subsidiaries for such year;
<PAGE>
28
setting forth in each case in comparative form the figures for the corresponding
periods in the previous fiscal year; all prepared in accordance with GAAP, and
which audited financial statements shall be accompanied by (i) an opinion
thereon of the independent certified public accountants regularly retained by
the Company, or any other firm of independent certified public accountants of
recognized national standing selected by the Company and (ii) a report of such
independent certified public accountants confirming any adjustment made pursuant
to Section 4 during such year.
13.3 FILINGS. The Company will file on or before the required date
all regular or periodic reports (pursuant to the Exchange Act) with the
Commission and will deliver to Holder promptly upon their becoming available one
copy of each report, notice or proxy statement sent by the Company to its
stockholders generally, and of each regular or periodic report (pursuant to the
Exchange Act) and any Registration Statement, prospectus or written
communication (other than transmittal letters) (pursuant to the Securities Act),
filed by the Company with (i) the Commission or (ii) any securities exchange on
which shares of Common Stock are listed.
14. APPRAISAL
The determination of the Appraised Value per share of Common Stock
shall be made by an investment banking firm of nationally recognized standing
selected by the Company and acceptable to the Majority Holders. If the
investment banking firm selected by the Company is not acceptable to the
Majority Holders and the Company and the Majority Holders cannot agree on a
mutually acceptable investment banking firm, then the Majority Holders and the
Company shall each choose one such investment banking firm and the respective
chosen firms shall agree on another investment banking firm which shall make the
determination. The Company shall retain, at its sole cost, such investment
banking firm as may be necessary for the determination of Appraised Value
required by the terms of this Warrant.
15. LIMITATION OF LIABILITY
No provision hereof, in the absence of affirmative action by Holder
to purchase shares of Common Stock, and no enumeration herein of the rights or
privileges of Holder hereof, shall give rise to any liability of such Holder for
the purchase price of any Common Stock or as a stockholder of the Company,
whether such liability is asserted by the Company or by creditors of the
Company.
16. REPURCHASE BY THE COMPANY OF WARRANT
16.1 OBLIGATION TO REPURCHASE WARRANT.
(a) Upon the earlier of (i) April 1, 1998 and (ii) 10 Business Days
after delivery of an Event Notice (defined below) with respect to the proposed
consummation of a merger, sale of all or substantially all of the property and
assets of the Company or sale of the majority of the
<PAGE>
29
outstanding shares of Common Stock of the Company (each, an "Event") (the
"Repurchase Date"), the Company shall repurchase this Warrant in its entirety in
the manner set forth in Section 16.2 below, from such Holder for an amount
determined by multiplying (i) the number of shares of Common Stock subject to
this Warrant by (ii) the difference between (A) the higher of (i) the Current
Market Price of one share of Common Stock on the date of such notice and (ii)
the Current Market Price of one share of Common Stock on [March 11, 1997] and
(B) the Current Warrant Price per share of Common Stock as of the relevant date
described in Section 16.2. Nothing herein shall preclude the exercise by Holder
of any portion of this Warrant exercisable at any time prior to such repurchase.
(b) The Company shall give the Holder at least 20 Business
Days' written notice prior to the consummation of an Event (the "Event Notice").
(c) The Company hereby agrees that the repurchase obligation
set forth in paragraph (a) hereof shall be a condition precedent to the
consummation of any Event.
16.2 DETERMINATION AND PAYMENT OF REPURCHASE PRICE.
(a) The purchase price for any repurchase pursuant to this
Section 16 (the "Repurchase Price") shall be determined as of 5 days prior to
the applicable Repurchase Date. On the Repurchase Date, each Holder shall assign
to the Company such Holder's Warrant or portion thereof being repurchased, as
the case may be, without any representation or warranty, by the surrender of
such Holder's Warrant at the principal office of the Company referred to in
Section 2.1 against payment therefor of the Repurchase Price by, at the option
of such Holder, (i) wire transfer to an account in a bank located in the United
States designated by such Holder for such purpose or (ii) a certified or
official bank check drawn on a member of the New York Clearing House payable to
the order of such Holder.
(b) Each Holder shall have the right at any time to object
to the determination of
Book Value, if relevant to the determination of the Repurchase Price by
specifying in writing to the Company the nature of its objection and, unless
such objection is resolved by agreement of the Company and such Holder, the
Company and such Holder shall each have the right to subject the disputed
determination to separate firms of independent accountants of recognized
national standing for a joint resolution of the objection of such Holder (which
firms of independent accountants may, in either case, be the firms of
accountants regularly retained by the Company or such Holder). If such firms
cannot jointly resolve the objection of such Holder, then, unless otherwise
directed by agreement of the Company and such Holder, such firms shall in their
sole discretion choose another firm of independent certified public accountants
of recognized national standing, which is not the regular auditor of such Holder
or the Company, which firm shall resolve such objection. In either case, for
purposes hereof the determination so made shall be conclusive and binding on the
Company, such Holder and all Persons claiming under or through any of them, and
any adjustment in the determination of Book Value and the Repurchase Price per
share of Common Stock resulting from such determination shall be made. The cost
of any
<PAGE>
30
such determination shall be borne by the Company if it results in an increase of
the aggregate Repurchase Price for all shares of Common Stock issuable upon the
exercise hereof and by such Holder if it results in no adjustment or a decrease
of the aggregate Repurchase Price for all shares of Common Stock issuable upon
the exercise hereof.
(c) In the event that the determination of the Repurchase
Price requires an opinion from an investment banking firm or accounting firm,
all costs and fees associated therewith shall be paid by the Company.
17. MISCELLANEOUS
17.1 NONWAIVER AND EXPENSES. No course of dealing or any delay or
failure to exercise any right hereunder on the part of Holder shall operate as a
waiver of such right or otherwise prejudice Holder's rights, powers or remedies.
If the Company fails to make, when due, any payments provided for hereunder, or
fails to comply with any other provision of this Warrant, the Company shall pay
to Holder such amounts as shall be sufficient to cover any costs and expenses
including, but not limited to, reasonable attorneys' fees, including those of
appellate proceedings, incurred by Holder in collecting any amounts due pursuant
hereto or in otherwise enforcing any of its rights, powers or remedies
hereunder.
17.2 NOTICE GENERALLY. Any notice, demand, request, consent,
approval, declaration, delivery or other communication hereunder to be made
pursuant to the provisions of this Warrant shall be sufficiently given or made
if in writing and either delivered in person with receipt acknowledged or sent
by registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
(a) If to any Holder or holder of Warrant Stock, at its
last known address appearing on the books of the Company maintained
for such purpose.
(b) If to the Company at
3050 North Horshoe Drive, Suite 260
Naples, Florida 34104
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Every notice, demand, request,
consent, approval, declaration, delivery or other communication hereunder shall
be deemed to have been duly given or served on the date on which personally
delivered, with receipt acknowledged, or three (3) Business Days after the same
shall have been deposited in the United States mail. Failure or delay in
delivering copies of any notice, demand, request, approval, declaration,
delivery or other communication to the person designated above to receive a copy
shall in no way adversely affect the effectiveness of such notice, demand,
request, approval, declaration, delivery or other communication.
<PAGE>
31
17.3 INDEMNIFICATION. The Company agrees to indemnify and hold
harmless Holder from and against any liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, claims, costs, attorneys' fees, expenses
and disbursements of any kind which may be imposed upon, incurred by or asserted
against Holder in any manner relating to or arising out of (i) Holder's exercise
of this Warrant and/or ownership of any shares of Warrant Stock issued in
consequence thereof, or (ii) any litigation to which Holder is made a party in
its capacity as a stockholder of the Company; provided, however, that the
Company will not be liable hereunder to the extent that any liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, claims,
costs, attorneys' fees, expenses or disbursements are found in a final
non-appealable judgment by a court to have resulted from Holder's gross
negligence, bad faith or willful misconduct in its capacity as a stockholder or
warrantholder of the Company.
17.4 REMEDIES. Each holder of Warrant and Warrant Stock, 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 Section 9
of this Warrant. The Company agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of the provisions
of Section 9 of this Warrant and hereby agrees to waive the defense in any
action for specific performance that a remedy at law would be adequate.
17.5 SUCCESSORS AND ASSIGNS. Subject to the provisions of Sections
3.1 and 9, this Warrant and the rights evidenced hereby shall inure to the
benefit of and be binding upon the successors of the Company and the successors
and assigns of Holder. The provisions of this Warrant are intended to be for the
benefit of all Holders from time to time of this Warrant, and shall be
enforceable by any such Holder.
17.6 AMENDMENT. This Warrant and all other Warrants may be modified
or amended or the provisions hereof waived with the written consent of the
Company and the Majority Holders, provided that no such Warrant may be modified
or amended to reduce the number of shares of Common Stock for which such Warrant
is exercisable or to increase the price at which such shares may be purchased
upon exercise of such Warrant (before giving effect to any adjustment as
provided therein) without the prior written consent of the Holder thereof.
<PAGE>
32
17.7 SEVERABILITY. Wherever possible, each provision of this Warrant
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Warrant shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Warrant.
17.8 HEADINGS. The headings used in this Warrant are for the
convenience of reference only and shall not, for any purpose, be deemed a part
of this Warrant.
17.9 GOVERNING LAW. This Warrant shall be governed by the laws of the
State of New York, without regard to the provisions thereof relating to conflict
of laws.
Dated:April 14, 1997
COMMUNITY CARE OF AMERICA, INC.
By:____________________________
Name:
Title:
DAIWA HEALTHCO-2 LLC
By:_____________________________
Name:
Title:
<PAGE>
33
EXHIBIT A SUBSCRIPTION FORM
[To be executed only upon exercise of Warrant]
The undersigned registered owner of this Warrant irrevocably
exercises this Warrant for the purchase of _____ Shares of Common Stock of
Community Care of America, Inc. and herewith makes payment therefor, all at the
price and on the terms and conditions specified in this Warrant and requests
that certificates for the shares of Common Stock hereby purchased (and any
securities or other property issuable upon such exercise) be issued in the name
of and delivered to _______________ whose address is ____________________ and,
if such shares of Common Stock shall not include all of the shares of Common
Stock issuable as provided in this Warrant, that a new Warrant of like tenor and
date for the balance of the shares of Common Stock issuable hereunder be
delivered to the undersigned.
----------------------------
(Name of Registered Owner)
----------------------------
(Signature of Registered Owner)
----------------------------
(Street Address)
----------------------------
(City) (State) (Zip Code)
NOTICE: The signature on this subscription must correspond with the name as
written upon the face of this Warrant in every particular, without
alteration.
<PAGE>
34
EXHIBIT B ASSIGNMENT FORM
FOR VALUE RECEIVED the undersigned registered owner of this Warrant
hereby sells, assigns and transfers unto the Assignee named below all of the
rights of the undersigned under this Warrant, with respect to the number of
shares of Common Stock set forth below:
Name and Address of Assignee Number of Shares of Common Stock
and does hereby irrevocably constitute and appoint ___________________________
attorney-in-fact to register such transfer on the books of Community Care of
America, Inc. maintained for the purpose, with full power of substitution in the
premises.
Dated:_________________________ Print Name:___________________
Signature:____________________
Witness:______________________
NOTICE: The signature on this assignment must correspond with the name as
written upon the face of this Warrant in every particular, without
alteration.
<PAGE>
35
EXHIBIT C CONVERSION FORM
The undersigned registered owner of this Warrant hereby irrevocably elects to
convert, pursuant to Section 2.2 of this Warrant, ____% of this Warrant into
shares of the Common Stock of Community Care of America, Inc. (the "Shares"),
and requests that certificates for the Shares (or any securities or other
property issuable upon such conversion) be issued in the name of and delivered
to __________________ whose address is ______________ and, if such Shares shall
not include all Shares issuable as provided in this Warrant, that a new Warrant
of like tenor and date for the balance of Shares issuable hereunder be delivered
to the undersigned.
The number of Shares to br received by the undersigned shall be calculated in
accordance with the provisions of Section 2.2 of this Warrant.
----------------------------------
(Name of Registered Owner)
----------------------------------
(Signature of Registered Owner)
----------------------------------
(Street Address)
----------------------------------
(City) (State) (Zip Code)
NOTICE: The signature on this conversion form must correspond with the name
as written upon the face of this Warrant in every particular, without
alteration.
EXHIBIT 10.03(a)(iii)
MUTUAL SETTLEMENT AND RELEASE AGREEMENT
Mutual Settlement and Release Agreement (the "Agreement") dated as of
January 30, 1997, between Kenneth W. Creasman ("Creasman"), having an address at
363 Sedgwick Court, Naples, FL 33963, and Community Care of America, Inc., a
Delaware corporation, having an address at 3050 N. Horseshoe Drive, Suite 260,
Naples, FL 33942 ("CCA").
WHEREAS, Creasman and CCA are parties to a Letter Agreement, dated April
26, 1996 (the "Letter Agreement") pursuant to which CCA agreed to (i) pay to
Creasman a monthly consulting fee in the amount of $24,135.56 pursuant to
Paragraph 2 of the Letter Agreement, and (ii) pay to Creasman a monthly car
allowance in the amount of $750.00 and provide to him certain health insurance
coverage pursuant to Paragraph 3 of the Letter Agreement, each for a period of
eighteen (18) months running from April 19, 1996; and
WHEREAS, Creasman is indebted to CCA pursuant to two promissory notes (the
"Notes"), one of which is dated December 29, 1993, in the original principal
amount of $150,000.00 and the other dated May 8, 1996, in the original principal
amount of $141,600.00; and
WHEREAS, Creasman has filed a lawsuit against CCA, styled Kenneth W.
Creasman v. Community Care of America, Inc., Case No. 96-3805CA-01-TB, in the
Twentieth Judicial Circuit of Florida (the "Lawsuit"); and
WHEREAS, the parties wish to settle the Lawsuit and their respective claims
in respect of the Notes and the Letter Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, CCA and Creasman hereby agree as
follows:
1. Creasman hereby releases and discharges CCA from any and all actions,
causes of action, suits, debts, dues, sums of money, accounts, reckonings,
bonds, bills, specialties, covenants, contracts, controversies, agreements,
promises, variances, trespasses, damages, judgments, extents, executions, claims
and demands whatsoever, in law, admiralty or equity by Creasman and/or his
successors, administrators, executors, heirs and assigns, which against any or
all of CCA and/or its successors and assigns, Creasman ever had, now has, or
hereafter can, shall or may, have for, upon, or by reason of any matter, cause
or thing whatsoever arising out of, or under, or by reason of Paragraphs and 2
and 3 of the Letter Agreement, including, without limitation, any obligations of
CCA to perform any action or make any future payment pursuant to Paragraphs 2
and 3 of the Letter Agreement ("Released Creasman Claims").
2. CCA hereby releases and discharges Creasman from any and all actions,
causes of actions, suits, debts, dues, sums of money, accrued interest,
accounts, reckonings, bonds, bills, specialties, covenants, contracts,
controversies, agreements, promises, variances, trespasses, damages, judgments,
extent, executions, claims and demands whatsoever, in law, admiralty or equity
by CCA
<PAGE>
and/or its successors and assigns, which against any or all of the Creasman
and/or his successors, administrators, executors, heirs and assigns, CCA ever
had, now has, or hereafter can, shall or may, have for, upon, or by reason of
any matter, cause or thing whatsoever arising out of, or under, or by reason of
(i) the Notes, and (ii) any other claim on the part of CCA against Creasman of
which CCA has actual knowledge as of the date of this Agreement (collectively,
"Released CCA Claims"); provided that the terms of subparagraph (ii) of this
Paragraph 2 shall not apply to (and Released CCA Claims shall not be deemed to
include) any matter in respect of which a claim is hereafter asserted against
CCA by any shareholder of CCA or any other third party, other than any officer
or director of CCA who held such position as of the date of this agreement.
3. In furtherance of the foregoing, Creasman agrees not to commence any
legal or equitable proceeding, action or lawsuit against CCA with respect to any
Released Creasman Claim.
4. In furtherance of the foregoing, CCA agrees not to commence any legal or
equitable proceeding, action or lawsuit against Creasman with respect to any
Released CCA Claim.
5. CCA acknowledges that of the 64,693 shares of CCA common stock owned by
Creasman, (i) as of the date hereof, a total of 17,251 shares were fully paid
for by Creasman more than two (2) years ago, and (ii) as of February 1, 1997, an
additional 15,095 shares will have been fully paid for by Creasman for a period
of more than two (2) years. CCA agrees promptly to confirm, upon request, the
foregoing information in such manner and to such persons as may reasonably be
necessary in order to enable Creasman to effect sales of his shares in
compliance with Rule 144 of the Securities and Exchange Commission.
6. The parties acknowledge and agree that this Agreement constitutes the
release and settlement of all outstanding Released Creasman Claims and Released
CCA Claims, including, without limitation, the Lawsuit. Creasman agrees to have
the lawsuit dismissed with prejudice as soon as is reasonably practicable after
the date hereof.
7. This Agreement shall inure to the benefit of each person or entity which
now or hereafter may become jointly liable for, or shall be a guarantor or
surety of any Released Creasman Claims or Released CCA Claim.
8. This Agreement constitutes the entire agreement of the parties hereto
with respect to the subject matter hereof and may not be amended or modified
except in a writing executed by each of the parties hereto. This Agreement shall
be governed by the internal laws of the State of Florida applicable to contracts
executed, delivered and to be fully performed in said State, without regard to
contrary principles of conflict of laws.
-2-
<PAGE>
IN WITNESS WHEREOF, each of the undersigned has caused this Agreement to be
executed and delivered as of the date first above written.
/s/ Kenneth W. Creasman
-----------------------
Kenneth W. Creasman
COMMUNITY CARE OF AMERICA, INC.
By: /s/ Gary W. Singleton
---------------------
Name: Gary W. Singleton
Title: President and CEO
-3-
<PAGE>
STATE OF WISCONSIN )
) ss.:
COUNTY OF RACINE )
I, the undersigned Notary Public for the aforesaid jurisdiction, certify
that before me personally came Kenneth W. Creasman, to me known, who being by me
duly sworn, did depose and say that he resides at 363 Sedgwick Court, Naples, FL
33963; and that he is the person described in and which executed the foregoing
instrument.
Witness my hand and official seal this 14 day of January 1997.
Notary Public
/s/ Maureen Glynn
-----------------
Print Name:
[Seal]
My Commission Expires: August 30, 2000
STATE OF FLORIDA )
) ss.:
COUNTY OF COLLIER )
I, the undersigned Notary Public for the aforesaid jurisdiction, certify
that Gary W. Singleton came before me this day and acknowledged that he/she is
President & CEO of Community Care of America, Inc., a Delaware corporation, and
that by authority duly given and as the act of the corporation, the Agreement
was signed on behalf of said corporation.
Witness my hand and official seal this 30TH day of January 1997.
Notary Public
/s/ Susan P. Wilke
------------------
Print Name: Susan P. Wilke
[Seal]
My Commission Expires: 7/13/99
-4-
EXHIBIT 10.03(d)(ii)
EMPLOYMENT AGREEMENT
--------------------
THIS AGREEMENT made and entered into as of the 30th day of April, 1996, by
and between COMMUNITY CARE OF AMERICA, INC., a Delaware corporation,
(hereinafter referred to as the "Company"), and DAVID H. FATER (hereinafter
referred to as the "Employee").
W I T N E S S E T H:
--------------------
WHEREAS, the Employee is employed by the Company pursuant to an
Employment Agreement, dated as of June 26, 1995 (the "Employment Agreement");
and
WHEREAS, the Company and the Employee desire to amend and restate the
Employment Agreement on the terms and conditions set forth herein; and
WHEREAS, the Company is engaged in the business of owning and
operating rural health care facilities and networks through its subsidiaries and
tradenames; and
WHEREAS, in the course of his employment, and as a necessary
consequence thereof, Employee will receive information and acquire knowledge of
special procedures, processes, business conduct, and knowledge that is private,
proprietary, and secret to the Company in its business; and
WHEREAS, the business, as well as the success and profits of the
Company, depend in large part upon the maintenance of secrecy as to such
information, processes, procedures and knowledge as to the conduct of the
Company's business generally.
<PAGE>
NOW, THEREFORE, in consideration of the foregoing premises, the
mutual agreements herein contained, as well as the agreement to employ the
Employee or to continue to employ the Employee under the terms and conditions
contained herein, and intending to be legally bound hereby, it is agreed between
the parties hereto as follows:
ARTICLE I
EMPLOYMENT RELATIONSHIP
-----------------------
1.1 Employment. The Company hereby employs the Employee in the
position of Executive Vice President and Chief Financial Officer of the Company,
with such responsibilities as may be assigned to Employee from time to time by
the Chief Executive Officer of the Company. Employee shall report to and be
responsible to the Chief Executive Officer of the Company, for the period
hereinafter set forth, and the Employee hereby accepts such employment.
1.2 Exclusive Employment. During the continuation of the Employee's
employment by the Company hereunder, the Employee will, unless the Employee has
first received the prior written consent of the Company, devote the Employee's
entire business time, energy, attention, and skill to the services of the
Company and to the promotion of its interests, and covenants that during such
time the Employee will neither: (a) engage in, be employed by, be a director of
or be otherwise directly or indirectly interested in (i) any business or
activity competing with or of a nature similar to the businesses of the Company,
or (ii) any business or activity engaged in the owning, operation or management
of business or activity competing with or of a nature similar to the businesses
of the Company, nor (b) take any part in any activities detrimental to the best
interests of the Company.
- 2 -
<PAGE>
ARTICLE II
PERIOD OF EMPLOYMENT
2.1 Term. The term of employment under this Agreement shall begin as
of the date hereof, and shall end on June 26, 1997, unless sooner terminated
pursuant to the terms of this Agreement. Six (6) months prior to the expiration
of this Agreement, at the request of Employee, Company will discuss with
Employee Company's intentions regarding the renewal of this Agreement.
2.2 Termination For Cause. Company may terminate this Agreement with
cause and without any obligation to pay Employee further compensation upon the
occurrence of any one or more of the following events:
(a) Employee willfully or repeatedly fails to perform any
of his duties in any material respect or willfully or repeatedly
breaches any material term of this Agreement, which failure,
non-performance or breach is not corrected within fifteen (15) days
after written notice is delivered by the Company to the Employee
specifying said failure, non-performance or breach.
(b) Employee becomes disabled or is unable to perform his
normal duties, which condition persists for a period of sixty (60)
days or more, provided that Company has provided Employee with
disability insurance which shall begin to pay after said sixty (60)
day period expires, and provided further that, to any extent that the
disability insurance benefits payable to Employee are less than the
base salary being paid to Employee as of the date on which his
employment terminated, the Company shall continue payment of
Employee's salary to the extent of such deficiency until the date
which is two (2) years following the date of this Agreement;
(c) Employee is convicted of a felony;
(d) Employee is convicted of theft, larceny or
embezzlement of Company's tangible or intangible
property.
- 3 -
<PAGE>
2.3 Death of the Employee. In the event of the death of the Employee
during the term of his employment hereunder, this Agreement shall terminate
immediately and the Employee's estate shall thereupon be entitled to receive
such portion of the Employee's Base Salary as has been accrued through the date
of his death.
2.4 Change of Control.
(a) In the event of a Change of Control of the Company
during the term of the Employee's employment hereunder, the Employee
shall have the right, upon the giving of thirty (30) days' notice to
the Company within one hundred eighty (180) days following such
event, to terminate his employment under this Agreement. For purposes
of this Agreement, a "Change of Control of the Company" shall be
deemed to occur if (i) there shall be consummated (x) any
consolidation or merger of the Company in which the Company is not
the continuing or surviving corporation other than a merger of the
Company in which the holders of the Company's Common Stock
immediately prior to the merger have the same proportionate ownership
of common stock of the surviving corporation immediately after the
merger, or (y) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all, or
substantially all, of the assets of the Company, or (ii) the
stockholders of the Company shall approve any plan or proposal for
liquidation or dissolution of the Company, or (iii) any person (as
such term is used in Sections 13(d) and 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")), other than
Robert N. Elkins or any institutional investor, shall become the
beneficial owner (within the meaning of Rule 13-d3 under the Exchange
Act) of 20% or more of the Company's outstanding Common Stock, or
(iv) Robert N. Elkins shall cease to be a director of the Company.
(b) In the event that the Employee elects to terminate his
employment hereunder pursuant to Paragraph 2.4(a), above, the Company
shall pay to the Employee one hundred (100%) percent of his then
current Base Salary for a period of thirty-six (36) months following
the date of such termination, and all stock options granted to the
Employee pursuant to Section 3.5(a) hereof, and all options granted
to the Employee pursuant to Section 3.5(b) hereof for which the
vesting schedule has been accelerated in accordance with such Section
3.5(b), shall become fully vested as of the date of such termination.
(c) Notwithstanding anything herein to the contrary, the
present value of the payments and benefits to Employee, whether under
this Agreement or otherwise, which are includable in the computation
of "parachute payments" (as defined in Section 280G of the Internal
Revenue Code) shall not exceed 2.99 times the Employee's base amount,
all within the meaning and as computed under Section 280G of the
Code. Such determination shall be made by the regular independent
accountants retained by the Company immediately prior to the Change
of Control, whose determination shall be conclusive and binding on
the parties.
- 4 -
<PAGE>
2.5 Continuation of Benefits. Whenever under the provisions of this
Agreement the Employee shall be entitled to receive a continuation of his Base
Salary for a period of time following a termination or nonrenewal of his
employment under this Agreement, it is agreed that the Company also shall
continue to pay for or provide during such period of salary continuation the
insurance coverage provided for in Paragraph 3.3 of this Agreement.
2.6 Acceleration of Payments. If the Company fails to pay any salary
continuation installment referred to in this Article II or any benefit referred
to in Paragraph 2.5 within thirty (30) days after notice from the Employee or
his personal or legal representative that the installment or benefit was due and
payable, then the Employee or his personal or legal representative may declare
the entire unpaid balance of the salary continuation installments and the value
of all unpaid benefits to be immediately due and payable.
2.7 Death or Disability. The right of the Employee or his estate, as
of the case may be, to salary continuation installments under this Article II
shall not be affected by the Employee's death or disability after her employment
has terminated; and the Company shall continue to make those payments, until the
full amount thereof has been paid, notwithstanding the death or disability of
the Employee after the termination of this employment.
2.8 Acceleration of Options. If the Company terminates the Employee
without cause, all options which the Employee then holds to acquire securities
from the Company shall be accelerated and shall be immediately exercisable.
- 5 -
<PAGE>
ARTICLE III
COMPENSATION
------------
3.1 Base Salary. For all services rendered by Employee under this
Agreement, the Employee shall receive a base salary at a rate of $210,000.00 per
year ("Base Salary"). Employee's Base Salary shall be payable in accordance with
the pay period policy established by the Company from time to time. Said Base
Salary shall be reviewed one (1) year after the date hereof, and shall be
increased (i) by a percentage equal to the CPI percentage increase during the
first year of this Agreement and (ii) by such additional amount, if any, as may
be determined at the discretion of the Board of Directors of the Company.
3.2 Bonuses. Within ninety (90) days of the close of each calendar
year, the Company shall pay to Employee a cash bonus of up to thirty-five (35%)
percent of Employee's Base Salary for such year, such cash bonus to be
determined at the discretion of the Board of Directors of the Company.
3.3 Additional Benefits. Separate and apart from the Employee's cash
compensation as set forth above, the Company shall provide for (i) Employee's
coverage under the Company's standard life and health insurance package for
executives, (ii) an automobile allowance of $750 per month, and (iii) four (4)
weeks' paid vacation. Notwithstanding the foregoing, Employee has elected to
maintain his health insurance coverage under COBRA through June 30, 1996, in
addition to his coverage under the Company's health insurance plan. In
connection with the aforementioned maintenance of employee's health insurance
coverage under COBRA, Company shall pay the premiums with respect thereto during
the period of such maintenance, up to a maximum of $6,000 over such period.
- 6 -
<PAGE>
3.4 Reimbursement of Expenses. The Company shall reimburse Employee
at the rate of $.29 per mile for business use of his automobile, and for all
reasonable and necessary business expenses subject to such budgets and
documentation requirements as may be mandated from time to time by the Company.
ARTICLE IV
COVENANTS OF THE EMPLOYEE
-------------------------
4.1 Ownership and Return of Documents. The Employee agrees that all
memoranda, notes, records, papers or other documents and all copies thereof
relating to the Company's operations or businesses, some of which may be
prepared by the Employee, and all objects associated therewith in any way
obtained by the Employee shall be the Company's property. The Employee shall
not, except for Company's use, copy or duplicate any of the aforementioned
documents or objects, nor remove them from the Company's facilities nor use any
information concerning them except for the Company's benefit, either during the
Employee's employment or thereafter. The Employee agrees that the Employee will
deliver all of the aforementioned documents and objects that may be in his
possession to the Company on termination of the Employee's employment, or at any
other time on the Company's request, together with the Employee's written
certification of compliance with the provision of this paragraph.
4.2 Confidential Information. In connection with employment at the
Company, Employee will have access to confidential information consisting of
some or all of the following categories of information. Company and Employee
consider their relation one of confidence with respect to such information:
- 7 -
<PAGE>
(a) Financial Information, including but not limited to
information relating to the Company's earnings, assets, debts,
prices, pricing structure, volume of purchases or sales or other
financial data whether related to the Company or generally, or to
particular products, services, geographic areas, or time periods;
(b) Supply and Service Information, including but not
limited to information relating to goods and services, suppliers'
names or addresses, terms of supply or service contracts or of
particular transactions, or related information about potential
suppliers to the extent that such information is not generally known
to the public, and to the extent that the combination of suppliers or
use of a particular supplier, though generally known or available,
yields advantages to the Company details of which are not generally
known;
(c) Marketing Information, including but not limited to
information relating to details about ongoing or proposed marketing
programs or agreements by or on behalf of the Company, sales
forecasts, advertising formats and methods or results of marketing
efforts or information about impending transactions;
(d) Personnel Information, including but not limited to
information relating to employees' personal or medical histories,
compensation or other terms of employment actual or proposed
promotions, hirings, resignation, disciplinary actions, terminations
or reasons therefor, training methods, performance, or other employee
information; and
(e) Customer Information, including but not limited to
information relating to past, existing or prospective customers'
names, addresses or backgrounds, records of agreements and prices,
proposals or agreements between customers and the Company, status of
customers' accounts or credit, or related information about actual or
prospective customers as well as customer lists.
All of the foregoing are hereinafter referred to as "Trade Secrets."
During and after the employment by the Company, regardless of the reasons that
such employment ends, Employee agrees:
(aa) To hold all Trade Secrets in confidence and not
discuss, communicate or transmit to others, or make any unauthorized
copy of or use the Trade Secrets in any capacity, position or
business except as it directly relates to Employee's employment by
the Company;
(bb) To use the Trade Secrets only in furtherance of proper
employment related reasons of the Company to further the interests of
the Company;
(cc) To take all reasonable actions that Company deems
necessary or appropriate, to prevent unauthorized use or disclosure
of or to protect the Company's interest in the Trade Secrets; and
- 8 -
<PAGE>
(dd) That any of the Trade Secrets, whether prepared by
Employee or which may come into Employee's possession during
Employee's employment hereunder, are and remain the property of the
Company and its affiliates, and all such Trade Secrets, including
copies thereof, together with all other property belonging to the
Company or its affiliates, or used in their respective businesses,
shall be delivered to or left with the Company.
This Agreement does not apply to information that (i) becomes
generally available to the public other than as a result of a disclosure by
Employee, (ii) was available to Employee on a non- confidential basis prior to
the disclosure of such information to Employee by the Company, provided that the
source of such information was not known by Employee to be bound by a
confidentiality agreement with or other contractual, legal or fiduciary
obligation of confidentiality to the Company or any of its affiliates with
respect to such material, (iii) becomes available to Employee on a
non-confidential basis from a source other than the Company or its agents,
advisors or representatives provided that the source of such information was not
known by Employee to be bound by a confidentiality agreement with or other
contractual, legal or fiduciary obligation of confidentiality to the Company or
any of its affiliates with respect to such material, or (iv) is required to be
disclosed by judicial or administrative proceedings after Employee diligently
tries to avoid each disclosure and affords the Company the opportunity to obtain
assurance that compelled disclosures will receive confidential treatment.
4.3 Non-Solicitation and Non-Pirating. At all times following a
termination or the natural expiration of this Agreement, the Employee hereby
agrees that, without the express written consent of the Company, the Employee
will not, directly or indirectly, for the Employee or on behalf of any other
person, firm, entity or other enterprise:
(a) solicit any client or customer of the Company or in any
way divert or take away any client or customer of the Company who was
a client or customer of the Company while the Employee was an
employee of the Company under this Agreement (such period being
hereinafter referred to as the "Employment Period"); and
- 9 -
<PAGE>
(b) hire, entice away or in any other manner persuade any
employee, client, or customer of the Company who was an employee of
the Company during the Employment Period, to alter, modify or
terminate their relationship with the Company as an employee as the
case may be.
4.4 Non-Competition. In consideration of the Employee's employment
hereunder, and as an inducement to the execution and performance of the
Employment Agreement by the Company, the Employee hereby agrees that, for a
period of three (3) years following the natural expiration or any termination of
this Agreement, the Employee will not, without the express written consent of
the Company, directly or indirectly, for the Employee or on behalf of any other
person, firm, entity or other enterprise, be employed by, be a director or
manager of, act as a consultant for, be a partner in, have a proprietary
interest in, give advice to, loan money to or otherwise associate with, any
person, enterprise, partnership, association, corporation, joint venture or
other entity which is directly or indirectly in the business of providing
nursing home care, assisted living care, senior housing, home health care, adult
day care, primary care clinic services or medical transportation services of any
type within a twenty-five (25) mile radius of any nursing home or other health
care facility which is owned or operated by the Company as of the date on which
this Agreement shall have expired or terminated. Notwithstanding the foregoing,
in the event the Company terminates this Agreement other than pursuant to
Paragraph 2.2, above, Employee shall be bound by the non-competition
restrictions of this Paragraph 4.4 only for so long as Company elects to
continue to pay Employee's Base Salary hereunder, which election shall be at
Company's sole option. The provisions of this Paragraph 4.4 shall not be
construed to prohibit the Employee from owning up to 2% of the issued shares of
any company whose common stock is listed for trading on any national securities
exchange or on the NASDAQ National Market System.
- 10 -
<PAGE>
4.5 Necessary Restrictions. The Employee acknowledges that the
restrictions contained in Paragraphs 4.3 and 4.4 are reasonable and necessary to
protect the legitimate business interests of the Company and that any violation
thereof by him would result in irreparable harm to the Company. Accordingly, the
Employee agrees that upon the violation by his of any of the restrictions
contained in Paragraphs 4.3 or 4.4, the Company shall be entitled to obtain from
any court of competent jurisdiction a preliminary and permanent injunction as
well as any other relief provided at law, equity, under this Agreement or
otherwise. In the event any of the foregoing restrictions are adjudged
unreasonable in any proceeding, then the parties agree that the period of time
or the scope of such restrictions (or both) shall be adjusted to such a manner
or for such a time (or both) as is adjudged to be reasonable.
4.6 Prior Companies. Employee hereby represents and warrants to the
Company that (i) he is not bound by any agreement with any prior employer or
other party to refrain from using or disclosing any confidential information or
from competing with the business of such employer or other party, (ii) his
performance under this Agreement will not breach any other agreement by which he
is bound, and (iii) he has not brought with his to the Company, nor will he
bring or use in the performance of his responsibilities at the Company, any
materials or documents of a former employer which are not generally available to
the public.
4.7 Remedies For Breach. The Employee acknowledges that the covenants
contained in Article IV of this Agreement are independent covenants and that any
failure by the Company to perform its obligations under this Agreement (other
than the act of nonpayment which is not cured by the Company within thirty (30)
days of the receipt of written notice of said condition from the Employee) shall
not be a defense to enforcement of the covenants contained in Article
- 11 -
<PAGE>
IV, including but not limited to a temporary or permanent injunction. The
Employee acknowledges that damages in the event of Employee's breach of this
Article IV will be difficult, if not impossible, to ascertain and it is
therefore agreed that the Company, in addition to, and without limiting any
other remedy or right it may have, shall have the right to an injunction
enjoining the said breach. Employee agrees to reimburse Company for all costs
and expenses, including reasonable attorney's fees, incurred by Company because
of any breach of this Article.
ARTICLE V
ASSIGNMENT
----------
5.1 Prohibition of Employment Assignment. The Employee agrees on
behalf of the Employee and the Employee's heirs and executors, personal
representatives, and any other person or persons claiming any benefit under the
Employee by virtue of this Agreement, that this Agreement and the rights,
interests, and benefits hereunder shall not be assigned, transferred, pledged or
hypothecated in any way by the Employee or the Employee's heirs, executors and
personal representatives, and shall not be subject to execution, attachment or
similar process. Any attempt to assign, transfer, pledge, hypothecate or
otherwise dispose of this Agreement or any such rights, interests and benefits
thereunder contrary to the foregoing provision, or the levy of any attachment or
similar process thereupon shall be null and void and without effect and shall
relieve the Company of any and all liability hereunder.
5.2 Right of Company to Assign. This Agreement shall be assignable
and transferable by the Company to Company's transferee, assignee or any
successor-in-interest, parent, subsidiary or affiliate of Company, and shall
inure to the benefit of and be binding upon the Employee, the Employee's heirs
and personal representatives, and the Company and its successors and assigns.
Employee agrees to execute all documents necessary to ratify and effectuate such
assignment.
- 12 -
<PAGE>
5.3 Binding Effect If Transferred. In the event this Agreement is
transferred by Company, the term "Company" and "Company" used herein shall refer
to and be binding upon the Company's transferee or assignee.
ARTICLE VI
GENERAL
-------
6.1 Governing Law. This Agreement shall be subject to and governed by
the laws of the State of Florida, irrespective of the fact that the Employee may
be a resident of a different state.
6.2 Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the Company and the Employee and their respective heirs, legal
representatives, executors, administrators, successors and permitted assigns.
6.3 Entire Agreement. This Agreement constitutes the entire Agreement
between the parties and contains all of the agreements between the parties with
respect to the subject matter hereof; this Agreement supersedes any and all
other agreements, either oral or in writing, between the parties hereto with
respect to the subject hereof. No change or modification of this Agreement shall
be valid unless the same be in writing and signed by both parties hereto. No
waiver of any provisions of this Agreement shall be valid unless in writing and
signed by the person or party to be charged.
6.4 Severability. If any portion of this Agreement shall be for any
reason, invalid or unenforceable, the remaining portion or portions shall
nevertheless be valid, enforceable and carried into effect, unless to do so
would clearly violate the present legal and valid intention of the parties
hereto.
- 13 -
<PAGE>
6.5 Notices. All notices, demands, requests, consents, approvals or
other communications required or permitted hereunder shall be in writing and
shall be delivered by hand, registered or certified mail with return receipt
requested or by a nationally recognized overnight delivery service, in each case
with all postage or other delivery charges prepaid, and to the address of the
party to whom it is directed as indicated below, or to such other address as
such party may specify by giving notice to the other in accordance with the
terms hereof. Any such notice shall be deemed to be received (i) when delivered,
if by hand, (ii) on the next business day following timely deposit with a
nationally recognized overnight delivery service, or (iii) on the date shown on
the return receipt as received or refused or on the date the postal authorities
state that delivery cannot be accomplished, if sent by registered of certified
mail, return receipt requested.
If to the Company: Community Care of America, Inc.
3050 N. Horseshoe Drive, Suite 260
Naples, Florida 33942
Attn: President
If to the Employee: David H. Fater
751 Saint George's Court
Naples, Florida 33963
6.6 Independent Legal Counsel. Employee represents and warrants that
he has had the opportunity to seek the advice of independent legal counsel prior
to signing this Agreement, and that the Company has recommended to his that he
obtain such counsel.
6.7 Attorney's Fees. In the event of litigation concerning this
Agreement, the prevailing party shall be entitled to collect from the losing
party attorney's fees and costs, including those on appeal.
- 14 -
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Agreement to be
signed by its duly authorized officers and its corporate seal to be hereunto
affixed, and the Employee has hereunto set Employee's hand on the day and year
first above written.
COMPANY EMPLOYEE
- - ------- --------
COMMUNITY CARE OF AMERICA, INC.
a Delaware Corporation
By: /s/ Gary W. Singleton /s/ David H. Fater
- - --------------------------------- ------------------------------------
David H. Fater
Name: Gary W. Singleton
- - ---------------------------------
Title: President & CEO
- - ---------------------------------
- 15 -
EXHIBIT 10.03(d)(iii)
PERSONAL AND CONFIDENTIAL
January 31, 1997
Mr. David H. Fater
751 Saint George's Court
Naples, FL 33963
Dear David:
This is to summarize our agreement concerning the terms of your separation from
Community Care of America, Inc. (the "Company"). By signing this document, you
agree to the following:
1. By your execution hereof, you hereby confirm your resignation as an
employee and officer of the Company and its subsidiaries, and as a director
of its subsidiaries, effective as of January 31, 1997 (the "Termination
Date").
2. In full satisfaction of any and all amounts now or hereafter payable to you
under the Company's Supplemental Deferred Compensation Plan, the Company
shall pay to you a total sum of $25,000, payable in four equal installments
of $6,250 each, such installments to be paid on March 15, 1997, March 31,
1997, April 15, 1997, and April 30, 1997, respectively. It is agreed that
the Company's agreement to make such payments is in cancellation of the
prior promissory note of the Company to you dated September 13, 1996, in
the principal amount of $125,000, and the replacement note of the Company
in the same principal amount dated January 2, 1997. You agree to deliver
back to the Company for cancellation both of the said promissory notes upon
your execution of this Letter Agreement.
3. The Company hereby agrees: (i) to pay to you the amount of $6,000.00 in
full satisfaction of all obligations owed to you pursuant to the consulting
arrangement with ALDA, Inc., which amount shall be paid to you in four
equal installments of $1,500 each, with each installment to be paid,
respectively, on the same installment dates as provided for the payments
under Paragraph 3 hereof, and (ii) to pay to you or to health care
providers, as appropriate, any amounts owing pursuant to the Company's
health care plans, including the Exec-u-Care Plan, which have accrued as of
the date hereof.
4. The Company will pay to you a severance payment representing three (3)
weeks salary in the total amount of $12,454.00, which amount shall be paid
in two equal installments of $6,227 each, the first such installment to be
paid within five days following the execution of this agreement, and the
second such installment to be paid on February 28, 1997.
<PAGE>
Mr. David H. Fater
January 31, 1997
Page 2
5. You agree not to disclose to any person or entity any trade, technical or
technological secrets, details of organization, business affairs, or other
information of a proprietary or confidential nature relating to the
business of or belonging to the Company, its subsidiaries or affiliates.
You agree not to malign or make negative statements about the Company or
any of its officers, directors or employees. You agree to make only
positive statements about the Company and its officers, directors and
employees, and to act generally as a goodwill ambassador for the Company.
6. You, for yourself, your heirs and assigns, do hereby waive, relinquish,
release, acquit and forever discharge the Company, its subsidiaries,
affiliates, shareholders, directors, officers and employees of and from any
and all claims or rights that you may have or ever had against any of them,
whether arising in respect of your employment, termination, compensation,
benefits, or otherwise, including, without limitation, any claims arising
under any employment agreement or under the Civil Rights Act of 1964, the
Civil Rights Act of 1991, the Age Discrimination in Employment Act, or any
similar federal or state laws, rules, or regulations.
7. You agree that you will continue to be bound by all of the covenants and
restrictions set forth in Article IV of your Employment Agreement, dated
April__, 1996, with the Company (the "Employment Agreement"). Except for
the said Article IV and except for Article VI of the Employment Agreement,
the provisions of which shall also be applicable to this Letter Agreement,
all remaining terms and provisions of the Employment Agreement are hereby
terminated effective as of the Termination Date. For purposes of the
notices provision of Article VI of the Employment Agreement (and for any
notices hereunder), your address is as follows until we are notified
otherwise pursuant to said Article VI:
751 Saint George's Court
Naples, FL 33963
8. In the event that you materially violate any of the covenants contained in
this Letter Agreement, the Company may, at its election, forthwith cease
providing you with any of the payments under this Letter Agreement. In
addition, you acknowledge and agree that the amount of damages in the event
of your breach of this Letter Agreement will be difficult, if not
impossible, to ascertain. You therefore agree that the Company, in addition
to, and without limiting any other remedy or right it may have, shall have
the right to an injunction enjoining any breach of the covenants made by
you in this Letter Agreement.
<PAGE>
Mr. David H. Fater
January 31, 1997
Page 3
9. We have advised you of your right to consult an attorney. If you do not
choose to consult an attorney before execution of this Letter Agreement,
you have knowingly waived that right.
10. You acknowledge that you have read this Letter Agreement, understand its
contents, and have been given a period of 21 days to review and consider
this agreement, ask questions and have problems resolved.
11. You acknowledge that you are entering into this Letter Agreement
voluntarily and not as a result of any pressure, coercion or duress.
12. For a period of seven (7) days following your execution of this Letter
Agreement, you may revoke this Letter Agreement by written notice to the
Company. The Letter Agreement shall not become effective or enforceable
until the seven (7) day revocation period has ended.
13. This Letter Agreement sets forth the entire agreement and understanding
between us and shall supersede all prior agreements, documents or
discussions with respect to the matters herein covered. This Letter
Agreement may be amended, modified, or waived only by an instrument in
writing signed by the parties hereto.
Sincerely,
COMMUNITY CARE OF AMERICA, INC.
By:/s/ Gary W. Singleton
------------------------
Title:CEO
AGREED TO AND ACCEPTED:
/s/ David H. Fater 2/20/97
------------------------------
David H. Fater Date
cc: Personnel File
EXHIBIT 10.03(f)(ii)
PERSONAL AND CONFIDENTIAL
April 4, 1997
Mr. Gary W. Singleton
78 Southport Cove
Bonita Springs, FL 34134
Dear Gary:
This is to summarize our agreement concerning the terms of your separation from
Community Care of America, Inc. (the "Company"). By signing this document, you
agree to the following:
1. By your execution hereof, you hereby confirm your resignation as an
employee and officer of the Company and its subsidiaries, and as a director
of the Company and its subsidiaries, effective as of April 4, 1997 (the
"Termination Date").
2. In full satisfaction of any and all amounts now or hereafter payable to you
under the Company's Supplemental Deferred Compensation Plan, the Company
shall pay to you a total sum of $25,000, payable in a six (6) month
promissory note at an annual interest rate of seven (7) percent. The note
and any accrued interest shall become immediately due and payable in the
event of the sale of the Company. It is agreed that the Company's agreement
to make such payment is in cancellation of the prior promissory note of the
Company to you dated September 13, 1996, in the principal amount of
$125,000, and the replacement note of the Company in the same principal
amount dated January 2, 1997. You agree to deliver back to the Company for
cancellation both of the said promissory notes upon your execution of this
Letter Agreement.
3. The Company hereby agrees to continue your benefits under the Company's
health care plans, including the Exec-u-Care Plan, for a period of six
months from the Termination Date.
4. The Company agrees: (i) to pay to you a severance payment representing six
(6) months salary and automobile allowance in the total amount of
$154,500.00, which amount shall be paid without interest, in two initial
installments of $12,875.00 on April 15, 1997 and April 30, 1997 and
subsequent semi-monthly installments of $6,437.50 each for ten (10) months
thereafter, pursuant to a promissory note of the Company to be delivered to
you upon execution hereof, and (ii) to vest you in 25 percent of your
awarded options which will be repriced at at any general repricing level if
the Company's options are repriced prior to or at the sale of the Company.
You agree to provide reasonable consultation services to the
<PAGE>
Mr. Gary W. Singleton -2- April 4, 1997
Company as may be requested during this period. In the event of the sale of
the Company, the remaining severance will become immediately due and
payable.
5. You agree not to disclose to any person or entity any trade, technical or
technological secrets, details of organization, business affairs, or other
information of a proprietary or confidential nature relating to the
business of or belonging to the Company, its subsidiaries or affiliates.
Subject to a legal obligation or a fiduciary duty to others, you agree not
to malign or make negative statements about the Company or any of its
officers, directors or employees. You agree to initiate only positive
statements about the Company and its officers, directors and employees, and
to act generally as a goodwill ambassador for the Company.
6. With the exception of the above obligations of the Company, you, for
yourself, your heirs and assigns, do hereby waive, relinquish, release,
acquit and forever discharge the Company, its subsidiaries, affiliates,
shareholders, directors, officers and employees of and from any and all
claims or rights that you may have or ever had against any of them, whether
arising in respect of your employment, termination, compensation, benefits,
or otherwise, including, without limitation, any claims arising under any
employment agreement or under the Civil Rights Act of 1964, the Civil
Rights Act of 1991, the Age Discrimination in Employment Act, or any
similar federal or state laws, rules, or regulations.
7. You agree that you will continue to be bound by all of the covenants and
restrictions set forth in Article V of your Employment Agreement, dated
April 19, 1996, with the Company (the "Employment Agreement". Except for
the said Article V and except for Article VII of the Employment Agreement,
the provisions of which shall also be applicable to this Letter Agreement,
all remaining terms and provisions of the Employment Agreement are hereby
terminated effective as of the Termination Date. For purposes of the
notices provision of Article VII of the Employment Agreement (and for any
notices hereunder), your address is as follows until we are notified
otherwise pursuant to said Article VII:
78 Southport Cove
Bonita Springs, FL 34134
8. In the event that you materially violate any of the covenants contained in
this Letter Agreement, the Company may, at its election, forthwith cease
providing you with any of the payments under this Letter Agreement. In
addition, you acknowledge and agree that the amount of damages in the event
of your breach of this Letter Agreement will be difficult, if not
impossible, to ascertain. You therefore agree that the Company, in addition
to, and without limiting any other remedy or right it may have, shall have
the right to an injunction enjoining any breach of the covenants made by
you in this Letter Agreement.
9. We have advised you of your right to consult an attorney. If you do not
choose to consult an attorney before execution of this Letter Agreement,
you have knowingly waived that right.
<PAGE>
Mr. Gary W. Singleton -3- April 4, 1997
10. You acknowledge that you have read this Letter Agreement, understand its
contents, and have been given a period of 21 days to review and consider
this agreement, ask questions and have problems resolved.
11. You acknowledge that you are entering into this Letter Agreement
voluntarily and not as a result of any pressure, coercion or duress.
12. For a period of seven (7) days following your execution of this Letter
Agreement, you may revoke this Letter Agreement by written notice to the
Company. The Letter Agreement shall not become effective or enforceable
until the seven (7) day revocation period has ended.
13. This Letter Agreement sets forth the entire agreement and understanding
between us and shall supersede all prior agreements, documents or
discussions with respect to the matters herein covered. This Letter
Agreement may be amended, modified, or waived only by an instrument in
writing signed by the parties hereto.
Sincerely,
COMMUNITY CARE OF AMERICA, INC.
By: Deborah Lau
---------------
Title: President & Chief Executive Officer
-----------------------------------
AGREED TO AND ACCEPTED:
- - -------------------------------
Gary W. Singleton Date
cc: Personnel File
EXHIBIT 10.04 (e)(2)
AMENDMENT NO. 1 TO THE
COMMUNITY CARE OF AMERICA, INC.
SUPPLEMENTAL DEFERRED COMPENSATION PLAN
---------------------------------------
WHEREAS, Community Care of America, Inc. (the "Corporation") maintains the
Community Care of America, Inc. Supplemental Deferred Compensation Plan (the
"Plan"); and
WHEREAS, the Corporation has the power to amend the Plan in a way which
reduces participants' accrued benefits under the Plan, provided the Corporation
obtains the affected participants' respective consents to any such amendment;
and
WHEREAS, the Corporation desires to amend the Plan and the affected
participants desire to consent to such amendment.
NOW, THEREFORE, the Plan hereby is amended as follows, effective as of
August 1, 1996:
1. The second paragraph of Section 3.1 of the Plan hereby is amended in its
entirety to read as follows:
"No Employer Contribution Credits shall be allocated to
Participants' Employer Contribution Credit Accounts for the
Plan's first Plan Year (i.e., beginning January 1, 1995).
The aggregate Employer Contribution Credits credited to
Participants' Employer Contribution Credit Accounts for the
Plan's second Plan Year (i.e., beginning January 1, 1996)
shall be five hundred thousand dollars ($500,000). The
aggregate Employer Contribution Credits credited to
Participants' Employer Contribution Credit Accounts for
each Plan Year commencing on or after the first day of the
third Plan Year (i.e., January 1, 1997) shall be an amount,
if any, determined by the Employer, in its discretion. The
amount allocated to each Participant's Employer
Contribution Credit Account for each Plan Year for which
the Employer makes Employer Contribution Credits shall
equal the aggregate Employer Contribution Credits to the
Plan for the Plan Year multiplied by a fraction, the
numerator of which is one (1) and the denominator of which
is the total number of Participants as of the last day of
the Plan Year as of which the Employer Contribution Credit
is credited. Notwithstanding the preceding, in any Plan
Year in which a Change of Control occurs, the Employer
Contribution Credits credited to each Participant's
Employer Contribution Credit Account shall be an amount
that is not less than three (3) times the amount of the
Employer Contribution Credit credited to the Participant's
Employer Contribution Credit Account in the Plan Year among
the five (5) Plan Years ending with the Plan Year of the
<PAGE>
Change of Control in which the highest amount of Employer
Contribution Credits was credited to the Participant's
Employer Contribution Credit Account (without regard to
this sentence); provided, however, that, if the Plan Year
of the Change of Control is the Plan Year in which the
highest amount of Employer Contribution Credits is credited
to the Participant's Employer Contribution Credit Account
(without regard to this sentence), the amount credited to
the Participant's Employer Contribution Credit Account for
the Plan Year of the Change of Control shall be the amount
previously credited to the Participant's Employer
Contribution Credit Account during the Plan Year (without
regard to this sentence) plus two (2) times the amount
previously credited during the Plan Year. Employer
Contribution Credits for a Plan Year shall be credited to
each Participant who is actively employed (i) on the last
day of the Plan Year with respect to which the Employer
Contribution Credit is credited if no Change of Control
occurs during the Plan Year or (ii) the day before a Change
of Control occurs during the Plan Year if a Change of
Control occurs during the Plan Year."
2. Section 6.2(b) hereby is amended in its entirety to read as follows:
"(b) Timing and Manner of Payment. An aggregate amount
equal to the Participant's vested Account will be paid by
the Trust or the Employer upon the Participant's
termination of employment with the Employer, as provided by
Section 6.1, in a lump sum."
3. The names "Kenneth Creasman" and "James K. Burkhart" hereby are removed
from Schedule I of the Plan and the name "Gary W. Singleton" hereby is added to
Schedule I of the Plan.
IN WITNESS WHEREOF, the Corporation hereby evidences its adoption of the
above Amendment and the Plan participants affected by the above Amendment hereby
consent to the above Amendment by setting forth their signatures below.
WITNESS/ATTEST COMMUNITY CARE OF AMERICA, INC.
/s/ Annette E. Blair By: /s/ David H. Fater
- - ----------------------------- --------------------------
Print Name: Annette E. Blair Print Name: David H. Fater
PrintTitle: Executive VP & CFO
Date: 9/13/96
/s/ Annette E. Blair /s/ Deborah A. Lau
- - ----------------------------- --------------------------
Print Name: Annette E. Blair Deborah A. Lau
-2-
<PAGE>
/s/ Annette E. Blair /s/ David H. Fater
- - ----------------------------- --------------------------
Print Name: Annette E. Blair David H. Fater
/s/ Annette E. Blair /s/ William Krystopowicz
- - ----------------------------- --------------------------
Print Name: Annette E. Blair William Krystopowicz
-3-
EXHIBIT 10.04(e)(3)
RESOLUTIONS ADOPTED AT A
MEETING OF THE
BOARD OF DIRECTORS
OF
COMMUNITY CARE OF AMERICA, INC.
January 30, 1997
RESOLVED, that Section 3.1 of the Community Care of
America, Inc. Supplemental Deferred Compensation Plan (the "Plan") is
hereby amended by deleting therefrom the fifth sentence in its
entirety (which sentence begins with the words "Notwithstanding the
preceding,"), so that a Change of Control will not result in an
increase in the amount of the Employer Contribution Credit credited
to a Participant's account; and
FURTHER RESOLVED, that Section 5.2 of the Plan is hereby
amended to delete the provision therein which is to the effect that a
Participant shall become 100% vested in his or her account if such
Participant terminates employment with the Company for any reason
within one year following a Change of Control; and
FURTHER RESOLVED, that the president and any executive vice
president of the Company be, and each of them hereby is, authorized,
empowered and directed, in the name and on behalf of the Company, to
executive and deliver such documents, agreements, and instruments,
and to do or cause to be done all such other acts or things as each
of them may deem necessary or appropriate to effect the intent and to
accomplish the purposes of the transactions contemplated by these
resolutions, the taking of any such actions to be conclusive evidence
of the authority granted hereby.
SETTLEMENT AGREEMENT
--------------------
THIS SETTLEMENT AGREEMENT made and entered into as of the ____ day of
October, 1996 by and among DAVID L. FRIEDMAN of Boulder, Colorado, MICHAEL C.
TYLER, of Camden, Maine, MICHAEL B. PRIOR, of Portland, Maine, DANIEL J.
MAGUIRE, of Harpswell, Maine (referred to collectively as the "Individuals");
BIRCH GROVE MANAGEMENT COMPANY, INC., a Maine corporation, CEDAR RIDGE
MANAGEMENT, INC., a Maine corporation, CEDAR RIDGE NURSING CARE CENTER
ASSOCIATES, a Maine limited partnership, HARBOR HILL LIMITED LIABILITY COMPANY,
a Maine limited liability company, HOMEWOOD LIMITED PARTNERSHIP, a Maine limited
partnership, NURSING ADMINISTRATORS, INC., a Maine corporation, OAK GROVE
MANAGEMENT COMPANY, INC., a Maine corporation, PINE POINT NURSING CARE CENTER,
INC., a Maine corporation, RIVERRIDGE MANAGEMENT, INC., a Maine corporation,
RIVER RIDGE ASSOCIATES, a Maine general partnership, SANDY RIVER DEVELOPMENT,
INC., a Maine corporation, SANDY RIVER GROUP, a Maine corporation, SPRINGBROOK
ASSOCIATES, a Maine general partnership, SPRINGBROOK MANAGEMENT, INC., a Maine
corporation, SRG/HOMEWOOD, INC., a Maine corporation, SRG/WINDWARD GARDENS,
INC., a Maine corporation, THE WILLOWS MANAGEMENT COMPANY, INC., a Maine
corporation, WILSON STREAM MANAGEMENT, INC., a Maine corporation, WINDWARD
GARDENS LIMITED PARTNERSHIP, a Maine limited partnership, WOODFORD PARK NURSING
CARE CENTER, INC., a Maine corporation (collectively the "SRG Entities") and
SANDY RIVER HEALTH SYSTEM LLC, a Maine limited liability company, as agent for
the SRG Entities ("SRHS"), and COMMUNITY CARE OF AMERICA, INC., a Delaware
corporation with its principal place of business in Naples, Florida ("CCA") and
CCA OF MAINE, INC., a Delaware corporation with its principal place of business
in Naples, Florida ("CCA Maine") and CCA acting on behalf of MEDICAL SUPPLY OF
AMERICA and REHAB AMBASSADORS, such entities being affiliates of CCA
W I T N E S S E T H :
WHEREAS, Leon Bresloff, Mary Bayer, Richard Boisvert, Christine
Boisvert, David Sylvester, Sara Sylvester, Eleanor Goldberg and D. Wayne Silby,
High Valley Group, Inc. and Elder Solutions, Inc. (collectively the "Minority
Holders") and the Individuals entered into a certain Purchase Option Agreement
with CCA and CCA Maine dated June 23, 1995 (the "Option Agreement"); and
WHEREAS, CCA Maine entered into ten Management Agreements, all dated
June 23, 1995, with certain of the Individuals and of the SRG Entities with
respect to Woodford Park Nursing Care Center, Pine Point Nursing Care Center,
Marshwood Nursing Care Center, RiverRidge, Springbrook Nursing Care Center,
Sandy River Nursing Care Center, Cedar Ridge Nursing Care Center, Sedgewood
Commons, Harbor Hill and Windward Gardens, all nursing homes owned by certain of
the SRG Entities, as well as a letter of intent dated August 14, 1995 with
respect to The Willows, Oak Grove and Birch Grove (collectively the
"Facilities") (such
<PAGE>
Management Agreements are referred to collectively herein as the "Management
Agreements"); and
WHEREAS, CCA Maine sent the SRG Entities a written notice on July 14,
1996 stating its intention to terminate the Management Agreements; and
WHEREAS, CCA and/or CCA Maine have entered into a number of other
written agreements with certain of the Individuals, Minority Holders and/or SRG
Entities, more particularly described on Exhibit A attached hereto and made a
part hereof (collectively the "Miscellaneous Agreements"); and
WHEREAS, certain of the SRG Entities commenced suit, for injunctive
and other relief, in Superior Court, Androscoggin County, in a civil action
captioned Nursing Administrators, Inc. v. Community Care of America, Inc., et
al., Docket No. CV-96-____ (the "Lawsuit"); and
WHEREAS, the parties to this Agreement have determined that it is in
their mutual best interests to terminate the Management Agreements, modify the
Option Agreement and terminate or continue certain of the Miscellaneous
Agreements and to enter into a comprehensive financial settlement of their
mutual obligations, all on the terms and conditions set forth in this Agreement;
and
WHEREAS, as part of the consideration for this settlement, SRHS is
assuming the obligation to settle any claims owed by CCA to the SRG Entities;
NOW THEREFORE, for valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Termination of Management Agreements. Subject to the terms and
conditions of this Agreement, the Management Agreements and the letter of intent
dated August 14, 1995 with respect to Birch Grove, Oak Grove and The Willows are
hereby terminated effective the date of this Agreement. At the closing of the
settlement described in this Agreement, CCA Maine shall assign to SRHS all
accrued, unpaid management fees under the Management Agreements by assignment in
form and substance similar to that attached hereto as Exhibit B.
2. Limited Continuation of Option Agreement. The time during which
the option granted by the Option Agreement may be exercised, as provided in
Section 3 of the Option Agreement, is hereby made to expire at the close of
business on January 2, 1997. In the event CCA Maine exercises the option granted
in the Option Agreement pursuant to the terms of the Option Agreement on or
before January 2, 1997, and notwithstanding anything to the contrary contained
in the Option Agreement, CCA of Maine (a) shall pay as an additional
non-refundable deposit $480,000 as a condition of, and at the time of, such
exercise, in immediately available funds paid by wire transfer to SRHS as agent
and (b) shall have a period of 30 days after exercise, subject to the next
sentence, in which to close on its purchase of the Facilities. In no event shall
the Option Agreement extend beyond 5:00 PM February 3, 1997, even if the option
2
<PAGE>
has been exercised. The Option Agreement shall be deemed modified by this
Section and by other provisions of this Agreement specifically amending,
changing or modifying the Option Agreement. The Option Agreement shall be
construed together with this Agreement, and to the extent there are any
inconsistencies between the Option Agreement and this Agreement, this Agreement
shall be controlling.
3. Miscellaneous Agreements. Exhibit A attached hereto identifies
those of the Miscellaneous Agreements which shall survive and those which shall
be terminated effective as of the date of this Agreement. As to those
Miscellaneous Agreements listed on Exhibit A that are to terminate effective the
date of this Agreement, neither party shall have further liability to the other.
CCA and CCA Maine agree that they shall continue to perform their respective
obligations under those Miscellaneous Agreements that shall survive the closing
of the settlement described in this Agreement. SRHS shall be responsible for and
shall have the benefit of all cost reports and exceptions to the Routine Cost
Limitations ("RCLs"). CCA Maine shall send all work relating to 1995 Medicare
RCLs , including all work papers, diskettes and other materials to SRHS and SRHS
shall complete the 1995 Medicare RCLs. In addition, any other agreements between
CCA and/or CCA Maine and Leon Bresloff and Mary Bayer are not affected by this
Agreement.
4. Offset of Claims. In consideration of CCA and CCA Maine waiving,
canceling and forgiving all amounts due (including any interest accrued thereon)
by certain of the SRG Entities with respect to the Facilities and more
particularly described on Exhibit C attached hereto and made a part hereof
(collectively the "Working Capital Lines"), the SRG Entities and the
Individuals, for themselves and their successors and assigns, hereby forever
waive and relinquish all claims against CCA and CCA Maine asserted in the
Lawsuit, but not including those obligations of CCA and CCA Maine undertaken,
continued or modified pursuant to this Agreement. In consideration of the
foregoing waiver and relinquishment by certain of the SRG Entities of all claims
against CCA and CCA Maine asserted in the Lawsuit, but not including those
obligations of CCA and CCA Maine undertaken, continued or modified pursuant to
this Agreement, CCA and CCA Maine, for themselves and their successors and
assigns, do hereby waive, cancel and forgive all amounts due under the Working
Capital Lines (including any interest accrued thereon). Upon executing this
Settlement Agreement, CCA Maine hereby authorizes and directs its attorney John
P. Doyle, Jr. to execute and to deliver to those SRG Entities that are liable on
the Working Capital Lines discharges and UCC-3 terminations of all mortgages and
financing statements securing the Working Capital Lines. CCA and CCA Maine shall
deliver the original Working Capital Line promissory notes to SRHS as agent
marked "paid in full." CCA and CCA Maine shall provide such evidence as the SRG
Entities shall request showing that NationsBank of Florida, N.A., has consented
to the cancellation of the Working Capital Lines and the return of the
collateral for the same.
5. Modification of Stock Options and Put Option with Respect to the
Individuals and Minority Holders.
3
<PAGE>
(a) With respect to the rights granted by CCA and CCA Maine to the
Individuals to acquire shares of common stock of CCA (the "Stock Options") in
and pursuant to those certain Stock Option Agreements between each of the
Individuals and CCA dated July 11, 1995, (collectively the "Stock Option
Agreements"), and notwithstanding any provisions in the Stock Option Agreements
to the contrary dealing with the vesting of the Stock Options, CCA and CCA Maine
agree that all of the shares of the common stock of CCA subject to the Stock
Options, for a total of twenty thousand (20,000) shares, are as of the date of
this Agreement fully vested with respect to the Stock Options, and, as to such
twenty thousand (20,000) shares, the Stock Options shall be nonforfeitable and
immediately exercisable, and, upon exercise thereof, all stock so acquired shall
be freely tradeable.
(b) With respect to the rights granted by CCA and CCA Maine under
Section 9(j) of the Option Agreement to require the purchase of common stock of
CCA previously issued to each of the Individuals and the Minority Holders in
connection with the payment of the deposit under Section 8(a) of the Option
Agreement (the "Put Option") covering the shares of CCA common stock held by the
Individuals, such Put Option shall continue in full force and effect, as
modified by this Section, and CCA hereby agrees that it is liable with respect
to the Put Option. Without regard to any limitations as to percentages of such
stock to be put or as to dates for such puts, all shares of stock under the Put
Option are hereby exercised and CCA acknowledges and agrees to such exercise.
The Individuals agree they shall not demand payment for the stock hereby put to
CCA until the earlier to occur of (i) February 28, 1997 or (ii) the sale of all
or substantially all of the assets of CCA or the sale of a majority of the
issued and outstanding shares of stock of CCA to a third party, or the merger of
CCA with or into another entity, or any similar type of transaction (each, a
"Sale Transaction"). If the sale of CCA is structured as a stock-for-stock
transaction, the Individuals and Minority Holders hereby agree to accept, in
lieu of cash, shares of stock in the acquiring entity in an amount that results
in the Individuals and Minority Holders receiving stock in the acquiring entity
of a market value on the date of closing equal to the value of the shares in CCA
held by the Individuals and Minority Holders at the price under the Put Option,
and provided that the stock of the acquiring entity is fully registered and
freely tradeable upon issuance to the Individuals and Minority Holders.
6. Continuation and Extension of Put Rights with Respect to Maine
Head Trauma Center. The put options granted to the Individuals in the Stock
Purchase Agreement (the "MHTC Agreement") among CCA, CCA Maine, Maine Head
Trauma Center, Inc. and the Individuals and others dated as of November 1, 1995
(the "MHTC Put Options") shall continue in full force and effect, and the dates
contained in Section 2.1(j) of the MHTC Agreement governing the period during
which the MHTC Put Options may be exercised are hereby changed as follows: The
shares subject to the First Put Period (as defined in the MHTC Agreement) and
the Second Put Period (as defined in the MHTC Agreement) are hereby exercised
and shall be paid at the same time as those Put Option rights set forth in
Section 5(b) above and the MHTC Agreement shall be deemed to be amended
accordingly. The Put Option price shall be as provided in the MHTC Agreement.
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<PAGE>
7. Appointment of Agent with Respect to Put Option. The holders of
the rights described in Sections 5 and 6 above hereby irrevocably appoint James
N. Broder, Esquire, Curtis Thaxter Stevens Broder & Micoleau, One Canal Plaza,
Portland, Maine 04412 as agent to hold the shares of stock to be tendered under
Sections 5 and 6 and to deliver the certificates evidencing said shares upon
tender of payment as required hereunder. In the event CCA fails to make payment
of or to otherwise perform under this Agreement, CCA agrees that such holders
shall be entitled to recover from CCA their reasonable legal fees and expenses
in addition to any other damages incurred by reason of CCA's said failure. CCA
waives any conflict of interest arising from Mr. Broder's serving as escrow
agent under this Section and releases Mr. Broder from all liability except for
that arising from his intentional tortious acts.
8. Additional Consideration for Settlement. The consideration for the
Settlement described herein shall be the mutual offset described in Section 4
above. In addition, CCA and CCA Maine agree jointly and severally to pay to
SRHS, as agent for the SRG Entities and the Individuals, including, without
limitation, David L. Friedman, without offset or deduction, $50,000 in
immediately available funds, as follows: $25,000 on or before November 15, 1996,
and $25,000 on the earlier to occur of (i) February 28, 1997, or (ii) the
closing of a Sale Transaction, in payment of legal fees and expenses paid or
accrued by the SRG Entities and the Individuals, including David L. Friedman,
between September 15, 1996 and the closing of this Agreement.
9. Rehab Ambassadors. CCA represents and warrants to the SRG Entities
and the Individuals that One Hundred Twenty Thousand Dollars ($120,000.00)
previously paid to CCA in July or August 1996 was applied on that date to the
account of Rehab Ambassadors, an affiliate of CCA. Provided the $120,000 payment
was made to Rehab Ambassadors, the SRG Entities agree that they shall continue
to use the services of Rehab Ambassadors, except that the SRG Entities shall
have the right to terminate Rehab Ambassadors severally on thirty (30) days
notice. In addition, Rehab Ambassadors will be treated the same as other trade
payables, i.e., shall be paid no sooner or later than any other accounts payable
of the SRG Entities. The amounts owing to Rehab Ambassadors as of August 31,
1996 are as shown on Exhibit D hereto and are hereby confirmed by CCA and Rehab
Ambassadors.
10. Office Lease. SRHS shall enter into a Sublease with CCA Maine in
form and substance similar to that attached hereto as Exhibit E. The rent
payable by SRHS shall be the rent payable by CCA Maine to Dead River Properties,
the Landlord under the Lease. The Sublease shall be for an initial term expiring
on February 14, 1997 with the right to extend for additional six month terms.
CCA and CCA Maine acknowledge that all furniture, fixtures, machinery and
equipment located on the premises described in the Sublease belong to SRHS. Any
additions, accessions, modifications or substitutions to such equipment are
hereby transferred, sold and conveyed to SRHS.
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<PAGE>
11. Continuation of Workers Compensation Program. The SRG Entities
agree to continue utilizing the workers compensation program currently covering
the SRG Entities' employees until the end of the current policy term, which is
March 31, 1997.
12. No Amounts Owed to Medical Supply. CCA and CCA Maine acknowledge
and confirm that none of the SRG Entities and none of the Individuals owes any
sums whatsoever to Medical Supply of America, an affiliate of CCA.
13. Representations and Warranties of CCA and CCA Maine. CCA and CCA
Maine jointly and severally warrant and represent to the Individuals and the SRG
Entities as follows:
a. Each of CCA and CCA Maine is a validly created
corporation in good standing under the laws of Delaware and has been authorized
by all necessary corporate action to execute and deliver this Agreement and to
complete the transactions described herein. Certified corporate resolutions to
that effect will be delivered to SRHS within 5 days of execution of this
Agreement.
b. Neither CCA nor CCA Maine is required to obtain the
consent of any party in order to enter into this Agreement and to perform its
respective obligations hereunder.
c. Except for the Lawsuit, there is no litigation pending or
threatened, nor any proceeding before any other court or tribunal either pending
or threatened against CCA or CCA Maine that would have a material adverse effect
upon the performance by CCA or CCA Maine of their respective obligations under
this Agreement.
d. Except for an assignment in favor of NationsBank of
Florida, N.A., CCA Maine is the holder of the promissory notes, security
agreements, and all other documents and instruments evidencing or securing the
Working Capital Lines, has not assigned or transferred the Working Capital
Lines, and has the right to discharge and terminate the same as required by the
terms of this Agreement. NationsBank of Florida N.A. has consented to the terms
of this Settlement Agreement.
14. Representations and Warranties by the SRG Entities. The SRG
Entities jointly and severally warrant to CCA and CCA Maine as follows:
a. Each of the SRG Entities is a validly created
corporation, general partnership, limited partnership or limited liability
company, as the case may be, in good standing under the laws of Maine and has
been authorized by all necessary corporate action to execute and deliver this
Agreement and to complete the transactions described herein.
b. None of the SRG Entities is required to obtain the
consent of any party in order to enter into this Agreement and to perform its
respective obligations hereunder.
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<PAGE>
c. Except for the Lawsuit, there is no litigation pending or
threatened, nor any proceeding before any other court or tribunal either pending
or threatened against any of the SRG Entities that would have a material adverse
affect upon the performance by the SRG Entities of their respective obligations
under this Agreement.
15. Indemnification by CCA and CCA of Maine. CCA and CCA Maine, and
their respective successors and assigns, shall jointly and severally indemnify
and defend the SRG Entities, the Individuals, and their respective successors,
assigns, heirs and personal representatives from and against any and all
liability, costs, damages, and claims arising from or in any way related to (i)
all claims, demands and liabilities by or in favor of Rehab Ambassadors arising
from or in any way related to the $120,000 payment referred to in Section 9
above, including whether or not such payment was in fact received by Rehab
Ambassadors, (ii) all claims, demands and liabilities (including fines) that may
be imposed upon or asserted against the SRG Entities by reason of operational
matters within the Facilities arising from actions or omissions of CCA Maine or
any affiliates between August 15, 1995 and August 14, 1996 and (iii) any breach
of the representations and warranties set forth in Section 13 above. Upon the
happening of any event covered by this indemnity, CCA and CCA Maine shall pay
the amount of such loss upon demand. This indemnity shall also cover all costs
associated with collection or enforcement of this indemnity, including
reasonable attorneys' fees. This indemnity shall continue in full force and
effect for a period of six (6) years from the closing of this settlement.
16. Indemnification by SRG Entities. The SRG Entities and their
respective successors and assigns, shall jointly and severally indemnify and
defend CCA, CCA Maine, and their respective successors and assigns, from and
against any and all liability, costs, damages, and claims arising from or in any
way related to (i) any breach of the representations and warranties set forth in
Section 14 above, and (ii) any claims by the Minority Holders arising from the
settlement described in this Agreement, except with respect to continuing
obligations of CCA or CCA Maine to certain of the Minority Holders as described
in Sections 3, 5 and 6 above. This indemnity shall also cover all costs
associated with collection or enforcement of this indemnity, including
reasonable attorneys' fees. This indemnity shall continue in full force and
effect for a period of six (6) years from the closing of this settlement.
17. Closing. The closing of the settlement described in this
Agreement shall take place on October ___, 1996. At the closing:
a. CCA shall execute and deliver original termination
statements and mortgage discharges releasing all of the mortgages and all of the
UCC-1 financing statements covering the Facilities, in form for proper recording
and filing at the appropriate public office.
b. CCA Maine shall execute and deliver the Assignment with
respect to unpaid management fees, the form of which is attached hereto as
Exhibit B.
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<PAGE>
c. CCA Maine and SRHS shall execute the Sublease, the form
of which is attached hereto as Exhibit E.
d. The parties shall execute such other and further
documents as shall be necessary to complete the settlement described in this
Agreement.
18. Release by CCA and CCA of Maine. CCA and CCA of Maine, for
themselves and their respective successors and assigns, hereby remise, release
and forever discharge and, by these presents, do, for themselves and for their
agents and representatives, hereby remise, release and forever discharge the SRG
Entities, the Individuals and the Facilities and their respective heirs,
successors, agents, attorneys, personal representatives and assigns of and from
all claims, debts, demands, actions, causes of action, covenants, contracts,
controversies, agreements, promises, doings, omissions, variances, damages,
executions, claims, rights, liabilities, suits, dues, sums and sums of money,
accounts, reckonings, presentments, liens and any other claim of whatsoever kind
or nature, whether known or unknown, of every name and nature, either at law or
in equity or otherwise, which CCA and CCA Maine, or either of them, ever had,
now have or which may result in the future from the existing or past state of
things, from the beginning of time to the date of closing specified in Section
17 above, arising from, or in any way relating to, the Management Agreements,
the Option Agreement (except as provided below), and those Miscellaneous
Agreements listed on Exhibit A attached hereto that are being terminated
pursuant to this Agreement, as well as the Lawsuit. This release shall not cover
or apply to any obligations of the SRG Entities or the Individuals under this
Agreement, including, without limitation, the indemnities set forth in Section
16 above, or under the Option Agreement as it has been modified by this
Agreement, all of which obligations shall continue in full force and effect.
19. Release by the Individuals and the SRG Entities. The Individuals
and the SRG Entities, for themselves and their respective heirs, successors and
assigns, hereby remise, release and forever discharge and, by these presents,
do, for themselves and for their agents and representatives, hereby remise,
release and forever discharge CCA and CCA Maine and their respective successors,
assigns, agents and attorneys of and from all claims, debts, demands, actions,
causes of action, covenants, contracts, controversies, agreements, promises,
doings, omissions, variances, damages, executions, claims, rights, liabilities,
suits, dues, sums and sums of money, accounts, reckonings, presentments, liens
and any other claim of whatsoever kind or nature, whether known or unknown, of
every name and nature, either at law or in equity or otherwise, which the
Individuals and the SRG Entities, or any of them, ever had, now have or which
may result in the future from the existing or past state of things, from the
beginning of time to the date of closing specified in Section 17 above, arising
from, or in any way relating to, the Management Agreements, the Option Agreement
(except as provided below), and those Miscellaneous Agreements listed on Exhibit
A attached hereto that are being terminated pursuant to this Agreement, as well
as the Lawsuit. This release shall not cover or apply to (i) any obligations of
CCA or CCA Maine under this Agreement, including, without limitation, the
indemnities set forth in Section 15 above and under the Option Agreement, Stock
Option Agreement and MHTC Agreement, as they have been modified by this
Agreement, all of which
8
<PAGE>
obligations shall continue in full force and effect, or to (ii) any liability of
CCA or CCA Maine arising from operation of the Facilities, other than the third
party reimbursement or other financial obligations that have been addressed by
this Agreement. The parties' intent is that this release shall not cover
obligations owed by CCA and CCA Maine as Manager to patients and with respect to
day-to-day operations of the Facilities.
20. Further Assurances. The parties to this Agreement agree that they
shall perform all such further acts and execute all such further documents as
may be necessary or required in order to complete the transactions described in
this Agreement.
21. Miscellaneous. Time is of the essence. This Agreement sets forth
the entire Agreement of the parties and supersedes all prior agreements and
understandings, whether oral or written. No modification or waiver of any
provision of this Agreement shall be effective unless the same shall be in
writing and executed by all parties hereto. All notices, demands, and other
communications under this Agreement shall be in writing and shall be deemed to
have been duly given to the recipient if mailed by certified mail,
postage-prepaid, or if by sent by hand delivery or by reputable overnight
delivery service, address to the recipient at the following addresses:
If to CCA and CCA Maine:
3050 North Horseshoe Drive
Suite 260
Naples, Florida 33942
with a copy to:
Michael Blass, Esquire
Blass & Driggs
461 Fifth Avenue, 19th Floor
New York, New York 10017
If to any of the SRG Entities or Individuals:
c/o Sandy River Development
183 Middle Street
P.O. Box 110
Portland, Maine 04112
with a copy to:
James N. Broder, Esquire
Curtis Thaxter Stevens Broder &
Micoleau LLC
One Canal Plaza--P.O. Box 7320
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<PAGE>
Portland, Maine 04112
Any party may change addresses by providing written notice of such change to the
other parties hereto. All representations and warranties made by the parties in
this Agreement shall survive the delivery of this Agreement shall continue in
full force and effect. This Agreement shall be binding upon and shall inure the
benefit of the parties and their respective successors, assigns, heirs and
personal representatives. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. The representations,
warranties and indemnities contained in Sections 13, 14, 15 and 16 of this
Agreement shall survive the closing of the settlement described herein. This
Agreement shall be construed under the laws of the State of Maine. Section
headings used in this Agreement are for convenience only and shall not affect
the construction of this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the day and year first written above.
WITNESS: COMMUNITY CARE OF AMERICA,
INC.
_________________________________ By:_______________________________
Name:
Title:
CCA OF MAINE, INC.
_________________________________ By:_______________________________
Name:
Title:
MEDICAL SUPPLY OF AMERICA
BY: COMMUNITY CARE OF
AMERICA, INC., its duly
authorized agent
_________________________________ By:_______________________________
Name:
Title:
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<PAGE>
REHAB AMBASSADORS
BY: COMMUNITY CARE OF
AMERICA, INC., its duly
authorized agent
_________________________________ By:______________________________
Name:
Title:
CEDAR RIDGE MANAGEMENT, INC.
_________________________________ By:_______________________________
David L. Friedman, its President
BIRCH GROVE MANAGEMENT
COMPANY, INC.
_________________________________ By:_______________________________
David L. Friedman, its President
CEDAR RIDGE NURSING CARE
CENTER ASSOCIATES
BY: SANDY RIVER GROUP, its
General Partner
_________________________________ By:_______________________________
David L. Friedman, its President
HARBOR HILL LIMITED LIABILITY
COMPANY
_________________________________ By:_______________________________
David L. Friedman, its Member
HOMEWOOD LIMITED PARTNERSHIP
11
<PAGE>
BY: SEDGEWOOD LIMITED
LIABILITY COMPANY, its
General Partner
_________________________________ By:_______________________________
David L. Friedman, its Member
NURSING ADMINISTRATORS, INC.
_________________________________ By:_______________________________
David L. Friedman, its President
OAK GROVE MANAGEMENT
COMPANY, INC.
_________________________________ By:_______________________________
David L. Friedman, its President
PINE POINT NURSING CARE CENTER,
INC.
_________________________________ By:_______________________________
David L. Friedman, its President
RIVER RIDGE MANAGEMENT, INC.
_________________________________ By:_______________________________
David L. Friedman, its President
RIVER RIDGE ASSOCIATES
BY: SANDY RIVER GROUP, its
General Partner
_________________________________ By:_______________________________
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<PAGE>
David L. Friedman, its President
SANDY RIVER DEVELOPMENT, INC.
_________________________________ By:_______________________________
David L. Friedman, its President
SANDY RIVER GROUP
_________________________________ By:_______________________________
David L. Friedman, its President
SPRINGBROOK ASSOCIATES
BY: SANDY RIVER GROUP, its
General Partner
_________________________________ By:_______________________________
David L. Friedman, its President
SPRINGBROOK MANAGEMENT, INC.
_________________________________ By:_______________________________
David L. Friedman, its President
SRG/HOMEWOOD, INC.
_________________________________ By:_______________________________
David L. Friedman, its President
SRG/WINDWARD GARDENS, INC.
_________________________________ By:_________________________________
David L. Friedman, its President
13
<PAGE>
THE WILLOWS MANAGEMENT
COMPANY, INC.
_________________________________ By:_______________________________
David L. Friedman, its President
WILSON STREAM MANAGEMENT,
INC.
_________________________________ By:_______________________________
David L. Friedman, its President
WINDWARD GARDENS LIMITED
PARTNERSHIP
BY: WINDWARD GARDENS
LIMITED LIABILITY COMPANY,
its General Partner
_________________________________ By:_______________________________
David L. Friedman, its Member
WOODFORD PARK NURSING CARE
CENTER, INC.
_________________________________ By:_______________________________
David L. Friedman, its President
SANDY RIVER HEALTH SYSTEM LLC
_________________________________ By:_______________________________
David L. Friedman, its Member
- - --------------------------------- ----------------------------------
David L. Friedman
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<PAGE>
- - --------------------------------- ----------------------------------
Michael C. Tyler
- - --------------------------------- ----------------------------------
Michael B. Prior
- - --------------------------------- ----------------------------------
Daniel J. Maguire
LIMITED JOINDER
The undersigned, being all of the Minority Holders identified above,
hereby join in this Settlement Agreement for the purpose of agreeing to the
provisions of Sections 5(b), 6 and 7 above, as applicable.
WITNESS:
- - --------------------------------- ---------------------------------
Leon Bresloff
- - --------------------------------- ---------------------------------
Mary Bayer
- - --------------------------------- ---------------------------------
D. Wayne Silby
- - --------------------------------- ---------------------------------
Richard Boisvert
- - --------------------------------- ---------------------------------
Christine Boisvert
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<PAGE>
- - --------------------------------- ---------------------------------
Eleanor Goldberg
- - --------------------------------- ---------------------------------
David Sylvester
- - --------------------------------- ---------------------------------
Sarah Sylvester
HIGH VALLEY GROUP, INC.
_________________________________ By:______________________________
Its:
ELDER SOLUTIONS, INC.
_________________________________ By:______________________________
Its:
- - --------------------------------- ---------------------------------
Anne Hess
- - --------------------------------- ---------------------------------
Terri-Lee Brown
- - --------------------------------- ---------------------------------
Judith Smith
- - --------------------------------- ---------------------------------
Robert Gass
- - --------------------------------- ---------------------------------
Marc Sarkady
16
<PAGE>
- - --------------------------------- ---------------------------------
Peter Troast
17
<PAGE>
SETTLEMENT AGREEMENT--LIST OF EXHIBITS
Exhibit A: Miscellaneous Agreements.
Exhibit B: Form of Assignment of unpaid management fees.
Exhibit C: List of Working Capital Lines.
Exhibit D: Rehab Ambassadors Payables.
Exhibit E: Form of Sublease.
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<PAGE>
EXHIBIT A
MISCELLANEOUS AGREEMENTS
MISCELLANEOUS AGREEMENTS BEING TERMINATED:
1. Side letter to David L. Friedman from CCA and CCA Maine dated June
23, 1995 re depreciation recapture.
2. Side letter between Harbor Hill Limited Liability Company and CCA
dated June 23, 1995, as amended, re Harbor Hill start-up.
3. Side letter between CCA and David L. Friedman dated June 23, 1995
re automobile leases.
4. Consulting Agreement dated July 10, 1995 between CCA and Sandy
River Development, Inc.
5. Services Agreement dated June 23, 1995 between CCA Maine and Sandy
River Development, Inc.
6. Development Agreement term sheet dated June 30, 1995 between CCA
and Sandy River Development, Inc.
7. Replacement Promissory Note in the original principal amount of
$21,846.61 dated July 12, 1991 made by River ridge Management, Inc. in favor of
Amethyst E.G. Mountfort Revocable Trust and endorsed to CCA Maine.
8. Replacement Promissory Note in the original principal amount of
$21,704.31 dated August 6, 1991 made by River ridge Management, Inc. in favor of
Amethyst E.G. Mountfort Revocable Trust and endorsed to CCA Maine.
9. Replacement Promissory Note in the original principal amount of
$14,470.20 dated August 2, 1991 made by River ridge Management, Inc. in favor of
Christine Boisvert and endorsed to CCA Maine.
10. Replacement Promissory Note in the original principal amount of
$14,564.40 dated July 15, 1991 made by River ridge Management, Inc. in favor of
Christine Boisvert and endorsed to CCA Maine.
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<PAGE>
11. Replacement Promissory Note in the original principal amount of
$8,000 dated August 4, 1992 made by River ridge Management, Inc. in favor of
Christine Boisvert and endorsed to CCA Maine.
12. Replacement Promissory Note in the original principal amount of
$12,000 dated August 7, 1992 made by River ridge Management, Inc. in favor of
David L. Friedman and endorsed to CCA Maine.
13. Side letter to David Fater from David Friedman dated August 10,
1995 re Owner Entities' working capital loans.
14. Non-Competition Agreements of various dates between CCA Maine and
Richard Boisvert and Christine Boisvert, Sara Sylvester, David Sylvester,
Eleanor Goldberg, David Friedman, Michael Tyler, Michael Prior, Daniel Maguire
and Sandy River Development, Inc.
MISCELLANEOUS AGREEMENTS CONTINUING IN FULL FORCE AND EFFECT:
1. The MHTC Agreement and all documents and instruments executed in
connection therewith, as modified by this Agreement.
2 The Stock Options, as modified by this Agreement.
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<PAGE>
EXHIBIT B
ASSIGNMENT
KNOW ALL PERSONS BY THESE PRESENTS, that CCA OF MAINE, INC., a
Delaware corporation with a place of business in Naples, Florida (the
"Assignor"), for valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, hereby grants, transfers, assigns, sets over and delivers
to SANDY RIVER HEALTH SYSTEM LLC, a Maine limited liability company with a place
of business in Portland, Maine (the "Assignee"), all accrued, unpaid management
fees due to assignor under those certain Management Agreements dated June 23,
1995 with Assignor as manager with respect to Woodford Park Nursing Care Center,
Pine Point Nursing Care Center, Marshwood Nursing Care Center, RiverRidge,
Springbrook Nursing Care Center, Sandy River Nursing Care Center, Cedar Ridge
Nursing Care Center, Sedgewood Commons, Harbor Hill and Windward Gardens.
This Assignment is the assignment referred to in Section 1 of that
certain Settlement Agreement by and among Assignor, Assignee and others. This
Assignment is subject to and shall be construed consistently with such
Settlement Agreement.
IN WITNESS WHEREOF, CCA of Maine, Inc. has caused this Assignment to
be executed by _____________________________, its ________________, thereunto
duly authorized, this _____ day of October, 1996.
WITNESS: CCA OF MAINE, INC.
_________________________________ By:_______________________________
Its:
Print Name:
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<PAGE>
EXHIBIT C
LIST OF WORKING CAPITAL LINES
NAME OF FACILITY FACE AMOUNT OF OUTSTANDING
LINE AMOUNT AS OF
August 14, 1996
Windward Gardens Limited Partnership $145,000 $
Revolver
Windward Gardens Term Note $200,000 $
Homewood Limited Partnership Revolver $450,000 $
Nursing Administrators, Inc. Revolver $325,000 $
Springbrook Management Revolver $350,000 $ *
RiverRidge Management Revolver $570,000 $ *
Cedar Ridge Management Revolver $225,000 $ *
Pine Point Nursing Care Center, Inc. $150,000 $
Revolver
Wilson Stream Management Revolver $200,000 $
Woodford Park Nursing Care Center, Inc. $300,000 $
Revolver
* Includes principal amount of SRG land loans with respect to land
adjacent to these Facilities.
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<PAGE>
EXHIBIT D
SUMMARY
ACCOUNTS PAYABLE DUE TO
REHAB AMBASSADORS
AS OF AUGUST 31, 1996
Sandy River Nursing Care Center $ 93,062.89
Marshwood Nursing Care Center $ 68,747.24
Springbrook Nursing Care Center $ 89,807.52
Pine Point Nursing Care Center $ 30,495.82
Woodford Park Nursing Care Center $ 45,756.67
TOTAL: $327,870.14
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<PAGE>
EXHIBIT E
SUBLEASE
SUBLEASE made this ______ day of October, 1996, by and between CCA OF
MAINE, INC., a Delaware corporation with a place of business in Portland, Maine
("Landlord") and SANDY RIVER HEALTH SYSTEM LLC, a Maine limited liability
company with a place of business in Portland, Maine ("Tenant")
W I T N E S S E T H:
WHEREAS, Landlord is tenant under that certain Lease dated November
14, 1995 (the "Prime Lease") with Dead River Company, acting by and through its
division, Dead River Properties, as Landlord (the "Prime Landlord") with respect
to approximately 3,838 square feet of office space in Prime Landlord's building
known as Atlantic Place and located at Darling Avenue and Foden Road, South
Portland, Maine; and
WHEREAS, Landlord wishes to sublease such space to Tenant upon the
terms and conditions contained in this Sublease and in the Prime Lease;
NOW, THEREFORE, for valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Premises Subleased. Landlord subleases to Tenant, and Tenant
subleases from Landlord, the entire space leased to Landlord by Prime Landlord
under the terms of the Prime Lease, with all rights in common with others in
common areas in Prime Landlord's building (collectively the "Premises").
2. Term; Right to Renew. The term of this Sublease shall be for six
months beginning on the date of this Lease and ending on February ___, 1997.
Provided Tenant is not in default under this Sublease, Tenant may renew this
Sublease for successive terms, each of six months' duration, upon the terms and
conditions contained herein, provided Tenant gives written notice to Landlord of
Tenant's election to renew at least sixty (60) days before the end of the
then-current term.
3. Rent. Tenant covenants and agrees to pay rent during the term in
the amount of ____________________________________________ Dollars ($__________)
per month, payable in advance on the first day of each month during the term.
Rent for partial months shall be prorated.
4. Utilities. Tenant shall pay all charges for gas, electricity,
lights, heat, water, sewer and telephone or other communication service used,
rendered or supplied to the Premises.
<PAGE>
5. Use of Premises. Tenant shall use the Premises only for the
purposes allowed in Section 4.1 of the Prime Lease.
6. Maintenance and Repair. Tenant acknowledges that the Premises are
in reasonable condition as of the date of this Sublease. Tenant shall at all
times maintain the Premises in the same order and repair as they are in at the
commencement of the term, reasonable use and wear and damage by fire or other
casualty only excepted; shall keep all fixtures and equipment in the Premises,
including without limitation all heating, plumbing, electrical and mechanical
fixtures and equipment in the same operating condition as they are in on the
date of this Sublease, reasonable use and wear and damage by fire or casualty
only excepted. At the end of the term, Tenant shall surrender the Premises to
Landlord in the same condition as they were in on the date of this Sublease,
reasonable use and wear and damage by fire or other casualty only excepted.
Tenant shall make no alterations or modifications to the Premises without the
Landlord's written consent, which consent shall not be unreasonably withheld.
7. Insurance. Tenant shall maintain a policy of general liability
insurance insuring Landlord and Tenant, said policy to be in the amounts
required of the tenant under the Prime Lease. The policy shall name Landlord as
an additional insured.
8. Indemnification. Except for claims arising before the date of this
Lease, and except for claims arising at any time due in whole or in part to
Landlord's negligence or wilful acts, Tenant shall indemnify and hold Landlord
harmless from and against any and all claims for injury to persons or damage to
property in or about the Premises or arising in any way from the use or
condition of the Premises, and against any costs or damages which Landlord may
incur by reason of the assertion of any such claims.
9. Assignment and Subletting. Tenant shall not assign this Sublease
or sublet the Premises or any part thereof without the prior written consent of
Landlord, which consent shall not be unreasonably withheld. Landlord represents
and warrants to Tenant that Landlord has received all approvals from Prime
Landlord that are necessary in order for Landlord to enter into this Sublease.
10. Damage or Destruction by Fire, Eminent Domain or Casualty. In the
event that the Premises or any part thereof shall be taken by eminent domain or
shall be so damaged or destroyed by fire or unavoidable casualty, that the
Premises are thereby rendered untenantable, then either Landlord or Tenant may
terminate this Sublease upon written notice to the other and the rent shall be
prorated as of the date of such termination.
11. Tenant's Property. All property of every kind of Tenant's or
Tenant's employees or invitees which may be on the Premises during the term or
any occupancy by Tenant thereof, shall be at the sole risk and hazard of Tenant.
2
<PAGE>
12. Default. If Tenant shall default in the performance of any of its
obligations hereunder, and such default is not cured within fifteen (15) days of
the date of a written notice from Landlord if the default is a failure to pay
rent, or thirty (30) days from the date of a written notice from Landlord in the
case of other defaults, including any default under the Prime Lease, or if
Tenant shall file or have filed against it a petition in bankruptcy or if an
assignment shall be made by Tenant for the benefit of creditors, then in any of
such cases Landlord may lawfully, immediately and at any time thereafter,
without further notice or demand, and without prejudice to any other remedies,
terminate this Sublease by written notice addressed to Tenant at the Premises,
and upon such mailing this Sublease shall terminate.
13. Successors and Assigns; Incorporation of the Prime Lease. The
provisions of this Sublease shall be binding upon and inure to the benefit of
the respective successors and assigns of Landlord and Tenant. The Prime Lease is
incorporated herein by reference and a copy of the Prime Lease is attached
hereto as Exhibit A. Tenant shall abide by all terms and conditions of the Prime
Lease.
14. Settlement Agreement. This Sublease is the Sublease referred to
in Section 10 of that certain Settlement Agreement dated as of October ___, 1996
by and among Landlord, Tenant and others, and shall be subject to and construed
consistently with, such Settlement Agreement.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Sublease
as of the date first above written.
WITNESS: CCA OF MAINE, INC., Landlord
_________________________________ By:______________________________
Its:
SANDY RIVER HEALTH SYSTEM
LLC, Tenant
_________________________________ By:______________________________
Its Member
3
EXHIBIT 10.22(o)
AMENDMENT TO THE OCTOBER 27, 1996
SETTLEMENT AGREEMENT
--------------------
THIS AMENDMENT TO THE OCTOBER 27, 1996 SETTLEMENT AGREEMENT is made and
entered into as of this 1st day of March, 1997, by and among DAVID L. FRIEDMAN
of Boulder, Colorado, individually and is his capacity as Trustee of the
AMETHYST E.G. MONTFORT REVOCABLE TRUST, MICHAEL C. TYLER of Camden, Maine,
MICHAEL B. PRIOR of Portland, Maine, DANIEL J. MAGUIRE of Harpswell, Maine,
TERRI-LEE BROWN of Bangor, Maine, ROBERT B. GASS and JUDITH EPSTEIN GASS of
Boulder, Colorado, ANNE HESS of Stillwater, Maine, MARK SARKADY of Boston,
Massachusetts, PETER R. TROAST of South Freeport, Maine, JUDITH SMITH of
Orrington, Maine, CHRISTINE M. BOISVERT of Springvale, Maine, RICHARD A.
BOISVERT of Springvale, Maine, MARY T. BAYER of Portland, Maine, LEON M.
BRESLOFF of Portland, Maine, ELEANOR J. GOLDBERG of Portland, Maine, D. WAYNE
SILBY of Washington D.C., DAVID P. SYLVESTER of Waterville, Maine, SARA J.
SYLVESTER of Waterville, Maine (each referred to as a "Holder" and collectively
as the "Holders"), BIRCH GROVE MANAGEMENT COMPANY, INC., a Maine corporation,
CEDAR RIDGE MANAGEMENT, INC., a Maine corporation, CEDAR RIDGE NURSING CARE
CENTER ASSOCIATES, a Maine limited partnership, HARBOR HILL LIMITED LIABILITY
COMPANY, a Maine limited liability company, HOMEWOOD LIMITED PARTNERSHIP, a
Maine limited partnership, NURSING ADMINISTRATORS, INC., a Maine corporation,
OAK GROVE MANAGEMENT COMPANY, INC., a Maine corporation, PINE POINT NURSING CARE
CENTER, INC., a Maine corporation, RIVERRIDGE MANAGEMENT, INC., a Maine
corporation, RIVER RIDGE ASSOCIATES, a Maine general partnership, SANDY RIVER
DEVELOPMENT, INC., a Maine corporation, SANDY RIVER GROUP, a Maine corporation,
SPRINGBROOK ASSOCIATES, a Maine general partnership, SPRINGBROOK MANAGEMENT,
INC., a Maine corporation, SRG/HOMEWOOD, INC., a Maine corporation, SRG/WINDWARD
GARDENS, INC., a Maine corporation, THE WILLOWS MANAGEMENT COMPANY, INC., a
Maine corporation, WILSON STREAM MANAGEMENT, INC., a Maine corporation, WINDWARD
GARDENS LIMITED PARTNERSHIP, a Maine limited partnership, WOODFORD PARK NURSING
CARE CENTER, INC., a Maine corporation (collectively the "SRG Entities") and
SANDY RIVER HEALTH SYSTEM LLC, a Maine limited liability company, as agent for
the SRG Entities ("SRHS"), and COMMUNITY CARE OF AMERICA, INC., and CCA OF
MAINE, INC., both being Delaware corporations with their principal places of
business in Naples, Florida (collectively "CCA") and CCA acting on behalf of
MEDICAL SUPPLY OF AMERICA and REHAB AMBASSADORS, such entities being affiliates
of CCA.
W I T N E S S E T H:
WHEREAS, certain of the Holders and CCA entered into a certain Purchase
Option Agreement, dated June 23, 1995 (the "Option Agreement"); and
WHEREAS, certain of the Holders and CCA entered into a certain Stock
Purchase Agreement, dated November 1, 1995 (the "Purchase Agreement"); and
<PAGE>
WHEREAS, pursuant to the Option Agreement and the Purchase Agreement CCA
issued to the Holders an aggregate of 219,798 shares of common stock, par value
$.0025 per share, of CCA (the "CCA Shares") and granted to the Holders the right
to require CCA to purchase the CCA Shares back from the Holders at stated prices
and terms (the "Put Option"); and
WHEREAS, in October, 1996, certain of the SRG Entities commenced suit
against CCA, for injunctive and other relief, in the State of Maine, Superior
Court (Androscoggin County), Docket No. CV-96-___ (the "Lawsuit); and
WHEREAS, all the parties to this Amendment entered into a Settlement
Agreement dated October 27, 1996 (the "Settlement Agreement"), attached hereto
as Exhibit A, to resolve the issues raised by the Lawsuit and to modify certain
portions of the Option Agreement; and
WHEREAS, pursuant to the Settlement Agreement, CCA acknowledged that the
Holders had exercised the Put Option and the Holders agreed not to demand
payment on the Put Option from CCA until the earlier of a "Sale Transaction" as
defined in the Settlement Agreement or February 28, 1997; and
WHEREAS, pursuant to Section 5(b) of the Settlement Agreement, the Holders
have now properly demanded payment from CCA of the stock put to CCA; and
WHEREAS, CCA has failed to timely pay for the stock put to CCA pursuant to
the Settlement Agreement and now seeks to amend the Settlement Agreement with
respect to its payment obligation; and
WHEREAS, the parties to this Amendment have determined that it is in their
mutual best interest to amend Sections 5(b), 6 and 7 of the Settlement
Agreement, on the terms and conditions set forth in this Amendment; and
WHEREAS, except as specifically amended herein, the Settlement Agreement
remains in full force and effect.
NOW, THEREFORE, for valuable consideration, the receipt and sufficient of
which are hereby acknowledged, the parties amend Sections 5(b), 6 and 7 of the
Settlement Agreement as follows:
1. AMOUNT TO BE PAID BY CCA. In full satisfaction and discharge of its
obligation to purchase the common stock of CCA pursuant to Sections 5(b) and 6
of the Settlement Agreement, CCA shall pay to the Holders the aggregate sum of
Two Million One Hundred Eighty-One Thousand Seven and 19/100 Dollars
($2,181,007.19), payable as follows:
2
<PAGE>
(i) CCA shall pay to the Holders Five Hundred Thousand Dollars
($500,000.00) in cash simultaneously with the execution by all parties of
this Amendment; and
(ii) On the earlier of either (a) September 1, 1997, or (b) the sale
of all or substantially all of the assets of CCA or the sale of a majority
of the issued and outstanding shares of stock of CCA to a third party, or
the merger of CCA with or into another entity, or any similar type of
transaction, CCA will pay to the Holders the remaining principal, One
Million Six Hundred Eighty-One Thousand Seven and 19/100 Dollars
($1,681,007.19), together with interest accruing from February 28, 1997 on
the principal amount outstanding from time to time at the rate of 8.50% per
annum. CCA shall pay interest to Holders on the thirtieth (30th) day of
every month until final payment, commencing with the first interest payment
due on or before April 30, 1997.
2. MEANS OF PAYMENT. All amounts to be paid by CCA pursuant to Section 1
above shall be paid as follows: by wire transfer to: Key Bank, One Canal Plaza,
Portland, Maine 04101, ABA #011200608; for the account of: Curtis Thaxter
Stevens Broder & Micoleau LLC, client escrow account #002-1929-0. Payment shall
be deemed to have been made on the date on which the wire transfer is complete.
3. SECURITY FOR PAYMENT. As security for payment, simultaneously with the
execution by all parties of this Amendment, CCA shall deliver to James N.
Broder, as escrow agent for Holders, a Promissory Note of CCA, dated as of March
1, 1997 in the principal amount of One Million Six Hundred Eighty-One Thousand
Seven and 19/100 Dollars ($1,681,007.19) payable to Holders, such Note in form
and substance identical to that attached hereto as Exhibit B. As stated in
Exhibit B, interest shall accrue from February 28, 1997 on the principal amount
outstanding from time to time at the rate of 8.50% per annum; the Note shall
require CCA to pay interest to Holders on the thirtieth (30th) day of every
month until final payment, commencing with the first interest payment due on or
before April 30, 1997.
4. SALE OF SHARES.
(a) The Holders agree to deliver to John Hock of Smith Barney, Inc.,
Philadelphia, Pennsylvania, (or other stock broker identified by CCA if John
Hock is unwilling to accept delivery of the CCA Shares) all certificates
representing the CCA Shares, together with duly executed stock powers and such
other documents as may be reasonably necessary or appropriate to effect the
transfer of the CCA Shares as aforesaid. The Holders agree through John Hock to
sell all of the CCA Shares over a period of thirty (30) days, commencing no
later than August 1, 1997 (the "Sale Period"), to the extent legally permissible
under Rule 144 of the Securities and Exchange Commission under the Securities
Act of 1933, as amended ("Rule 144"). CCA agrees to furnish a legal opinion to
Holders and John Hock that the proposed sale of the CCA Shares complies with
Rule 144. CCA further agrees to (i) indemnify and hold harmless the Holders and
their agents from any claim against the Holders and/or their Agents made by
3
<PAGE>
anyone arising out of or relating to the sale of the CCA Shares; (ii) pay all
legal costs, including attorneys fees, incurred by Holders related to any such
claim; and (iii) assume the defense of any such claim. The Holders will instruct
John Hock that the sale of the CCA Shares shall not at any time, in the
aggregate, exceed Sixty Thousand (60,000) shares during any period of five (5)
consecutive business days. CCA shall have no recourse to the Holders in the
event John Hock fails to follow the foregoing instructions. The proceeds from
the sale of the CCA Shares, net of all brokerage commissions and other expenses,
shall be paid to the Holders in the manner described in Section 2 and
automatically shall offset and reduce amounts owing under the Promissory Note on
a dollar-for-dollar basis. The amount of such payment shall be applied first
against unpaid fees and costs of collection of the note, then against accrued
and unpaid interest and then against principal. Payment of the proceeds shall be
made by wire transfer pursuant to the instructions set forth in Section 2 of
this Amendment.
5. APPOINTMENT OF AGENT WITH RESPECT TO HOLDERS' RECEIPT OF PAYMENTS FROM
CCA. The Holders irrevocably appoint James N. Broder, Esquire, Curtis Thaxter
Stevens Broder & Micoleau LLC, One Canal Plaza, Portland, Maine 04101 as agent
(the "Escrow Agent") to receive all payments from CCA and/or proceeds from the
sale of CCA Shares, as provided for in this Amendment. The Holders agree that
upon receipt of any payments, the funds received, net of the Escrow Agent's
expenses shall be disbursed according to the percentages set forth in Exhibit C
attached hereto. Expenses include the Escrow Agent's fees for services since
January 31, 1997 in connection with the Settlement Agreement, expenses incurred
in connection with the negotiation and execution of this Amendment and such
other expenses related to the delivery of CCA Shares and collection of funds as
described herein. Payments from Escrow Agent to Holders shall be made by check
drawn on the Curtis Thaxter Stevens Broder & Micoleau LLC client escrow account.
The Holders expressly release the Escrow Agent from all liability arising from
his service as Escrow Agent, except for his intentional tortious acts, it being
acknowledged by the Holders that the Escrow Agent's willingness to serve is
premised on this release of Escrow Agent. The Holders also authorize Escrow
Agent to deliver the certificates evidencing the CCA Shares as required in
Section 4 of this Amendment.
6. REPRESENTATIONS AND WARRANTIES OF CCA AND CCA MAINE. CCA and CCA Maine
jointly and severally warrant and represent to the Holders, the SRG Entities and
SRHS as follows:
(a) Each of CCA and CCA Maine is a validly created corporation in good
standing under the laws of Delaware and has been authorized by all necessary
corporate action to execute and deliver this Amendment and to complete the
transactions described herein. Certified corporate resolutions to that effect
will be delivered to Agent within five (5) days of execution of this Amendment;
(b) Neither CCA nor CCA Maine is required to obtain the consent of any
party in order to enter into this Amendment and to perform its respective
obligations hereunder.
4
<PAGE>
(c) Accept as disclosed on Exhibit D attached hereto, there is no
litigation pending or threatened, nor any proceeding before any other court or
tribunal either pending or threatened against CCA or CCA Maine that would have a
material adverse effect upon the performance by CCA or CCA Maine of their
respective obligations under this Amendment.
7. REPRESENTATIONS AND WARRANTIES BY THE SRG ENTITIES. The SRG Entities
jointly and severally warrant to CCA and CCA Maine as follows:
(a) Each of the SRG Entities is a validly created corporation, general
partnership, limited partnership or limited liability company, as the case may
be, in good standing under the laws of Maine and has been authorized by all
necessary corporate action to execute and deliver this Amendment and to complete
the transactions described herein.
(b) None of the SRG Entities is required to obtain the consent of any
party in order to enter into this Amendment and to perform its respective
obligations hereunder.
8. REPRESENTATIONS AND WARRANTIES BY SRHS. SRHS jointly and severally
warrant to CCA and CCA Maine as follows:
(a) SRHS is a validly created corporation, general partnership,
limited partnership or limited liability company, as the case may be, in good
standing under the laws of Maine and has been authorized by all necessary
corporate action to execute and deliver this Amendment and to complete the
transactions described herein.
(b) SRHS is required to obtain the consent of any party in order to
enter into this Amendment and to perform its respective obligations hereunder.
9. REPRESENTATIONS AND WARRANTIES BY THE HOLDERS. The Holders jointly and
severally warrant to CCA and CCA Maine as follows:
(a) None of the Holders is required to obtain the consent of any party
in order to enter into this Amendment and to perform his/her respective
obligations hereunder.
10. MISCELLANEOUS. This Amendment to the Settlement Agreement contains the
entire agreement between the parties with respect to the amendment of the
Settlement Agreement and the terms of this Amendment are actual and not a mere
recital. As modified in this Amendment, the Settlement Agreement remains in full
force and effect and the parties ratify and reaffirm their obligations to one
another thereunder. CCA reaffirms its existing obligation contained in paragraph
7 of the Settlement Agreement that in the event CCA fails to make payment of or
to otherwise perform under this Amendment and/or Settlement Agreement, the
Holders shall be entitled to recover from CCA their reasonable legal fees and
expenses in addition to any other damage incurred by reason of CCA's said
failure. CCA agrees to pay Holders' legal fees and expenses incurred in
negotiating and finalizing this Amendment within (ten) 10 days of
5
<PAGE>
presentment of a statement. This Amendment may be executed in counterparts all
of which taken together shall constitute one enforceable instrument. The
undersigned state that each has read this Amendment and knows the contents
thereof and signs the same of its own free act. This Amendment shall be governed
in accordance with the laws of the State of Maine.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
first above written.
COMMUNITY CARE OF AMERICA, INC.
By:__________________________________
Deborah A. Lau, President and Chief
Executive Officer
CCA OF MAINE, INC.
By:__________________________________
Deborah A. Lau, President and Chief
Executive Officer
-------------------------------------
David L. Friedman individually and as Trustee
of the Amethyst E.G. Montfort Revocable
Trust
-------------------------------------
Michael C. Tyler
-------------------------------------
Michael B. Prior
6
<PAGE>
-------------------------------------
Daniel J. Maguire
-------------------------------------
Terri Lee Brown
-------------------------------------
Robert B. Gass
-------------------------------------
Judith Epstein Gass
-------------------------------------
Anne Hess
-------------------------------------
Mark Sarkady
-------------------------------------
Peter R. Troast
-------------------------------------
Judith Smith
-------------------------------------
Christine M. Boisvert
7
<PAGE>
-------------------------------------
Richard A. Boisvert
-------------------------------------
Mary T. Bayer
-------------------------------------
Leon M. Bresloff
-------------------------------------
Eleanor J. Goldberg
-------------------------------------
D. Wayne Silby
-------------------------------------
David P. Sylvester
-------------------------------------
Sara J. Sylvester
BIRCH GROVE MANAGEMENT
COMPANY, INC.,
By:_______________________________
David L. Friedman, its President
8
<PAGE>
CEDAR RIDGE MANAGEMENT, INC.,
By:_______________________________
David L. Friedman, its President
CEDAR RIDGE NURSING CARE CENTER
ASSOCIATES,
By: SANDY RIVER GROUP, its
General Partner
By:_______________________________
David L. Friedman, its President
HARBOR HILL LIMITED LIABILITY
COMPANY
By:_______________________________
David L. Friedman, its President
HOMEWOOD LIMITED PARTNERSHIP
By:_______________________________
David L. Friedman, its President
NURSING ADMINISTRATORS, INC.
By:_______________________________
David L. Friedman, its President
9
<PAGE>
OAK GROVE MANAGEMENT
COMPANY, INC.
By:_______________________________
David L. Friedman, its President
PINE POINT NURSING CARE CENTER,
INC.
By:_______________________________
David L. Friedman, its President
RIVERRIDGE MANAGEMENT, INC.
By:_______________________________
David L. Friedman, its President
RIVER RIDGE ASSOCIATES
By: SANDY RIVER GROUP, its
General Partner
By:_______________________________
David L. Friedman, its President
SANDY RIVER DEVELOPMENT, INC.
By:_______________________________
Michael C. Tyler, its President
10
<PAGE>
SANDY RIVER GROUP
By:_______________________________
David L. Friedman, its President
SPRINGBROOK ASSOCIATES
By:_______________________________
SANDY RIVER GROUP, its
General Partner
By:_______________________________
David L. Friedman, its President
SPRINGBROOK MANAGEMENT, INC.
By:_______________________________
David L. Friedman, its President
SRG/HOMEWOOD, INC.
By:_______________________________
David L. Friedman, its President
SRG/WINDWARD GARDENS, INC.
By:_______________________________
David L. Friedman, its President
THE WILLOWS MANAGEMENT
COMPANY, INC.
By:_______________________________
David L. Friedman, its President
11
<PAGE>
WILSON STREAM MANAGEMENT, INC.
By:_______________________________
David L. Friedman, its President
WINDWARD GARDENS LIMITED
PARTNERSHIP
By:_______________________________
WINDWARD GARDENS
LIMITED LIABILITY COMPANY,
its General Partner
By:_______________________________
David L. Friedman, its President
WOODFORD PARK NURSING CARE
CENTER, INC.
By:_______________________________
David L. Friedman, its President
SANDY RIVER HEALTH SYSTEM LLC
By:_______________________________
David L. Friedman, its Member
12
WARRANT NO. C-1 379,900 SHARES
NO SALE, OFFER OR TRANSFER OF THIS WARRANT SHALL BE
MADE UNLESS A REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, WITH RESPECT TO
SUCH
TRANSACTION IS THEN IN EFFECT OR SUCH TRANSFER IS EXEMPT FROM
REGISTRATION UNDER SUCH ACT.
AMENDED AND RESTATED WARRANT
TO SUBSCRIBE FOR AND PURCHASE SHARES OF
COMMON STOCK OF
COMMUNITY CARE OF AMERICA, INC.
This certifies that, for value received, Integrated Health Services,
Inc., a Delaware corporation (the "Holder"), or its registered assigns, is
entitled, subject to the terms and conditions of this Warrant, at any time or
from time to time at or after 5:00 p.m., New York time, on April 15, 1997 (the
"Commencement Date"), and at or before 5:00 P.M., New York time, on April 15,
2002 (the "Expiration Date"), to subscribe for and purchase an aggregate of
Three Hundred Seventy Nine Thousand Nine Hundred (379,900) fully paid and
nonassessable shares of the common stock, $.0025 par value ("Common Stock"), of
Community Care of America, Inc. (the "Company"), at the Purchase Price (as
defined herein), upon surrender of this Warrant and payment of the Purchase
Price to the Company at the address set forth herein for notices to the Company
or at such other place as the Company may designate by written notice to the
Registered Holder. The number of shares of Common Stock issuable upon exercise
of this Warrant and the Purchase Price are subject to adjustment and change as
provided herein (any reference hereinafter to Purchase Price shall mean the
Purchase Price as adjusted pursuant the terms of this Warrant).
1. CERTAIN DEFINITIONS.
As used in this Warrant the following terms shall have the following
respective meanings:
"COMMON STOCK DEEMED OUTSTANDING" means, at any given time, the
number of shares of Common Stock actually outstanding at such time, plus the
number of shares of Common Stock deemed to be outstanding pursuant to Sections
4.1(i) and 4.l(ii) hereof regardless of whether the Options or Convertible
Securities are actually exercisable at such time, but excluding any shares of
Common Stock issuable upon exercise of the IHS Warrants.
"CONVERTIBLE SECURITIES" shall mean any stock or securities directly
or indirectly convertible into Common Stock.
"IHS WARRANTS" shall mean this Warrant and Warrant No. W-2, issued to
the Holder on even date herewith, and any warrants delivered in substitution or
exchange therefor as provided herein and therein.
-1-
<PAGE>
"MARKET PRICE" as to any security on any day shall mean the closing
sale price of such security as reported for such day pursuant to the
consolidated quotation system or any other transaction reporting plan under
Section 11A of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), or, if there have been no sales so reported for such day, the average of
the best bid and best offer prices quoted under the consolidated quotation
system or any other such transaction reporting plan as of 4:00 P.M., New York
time, on such day, or, if on any day such security is not so quoted, the average
of the best bid and best offered prices on such day in the domestic
over-the-counter market as reported by any electronic communications network, as
such term is used in Rule 11Acl-1(a)(8) under the Exchange Act or by the
National Quotation Bureau, Incorporated, or any similar successor or comparable
organization. If at any time such security is not listed on any domestic
securities exchange or quoted under a transaction reporting plan or in the
domestic over-the-counter market, the "Market Price" shall be the fair value
thereof determined jointly by the Company and the Registered Holders; provided
that if such parties are unable to reach agreement as to the Market Price, the
Market Price shall be determined by appraisal as set forth in Section 12 of this
Warrant.
"NOTE" shall mean the Subordinated Note, dated as of December 27,
1996, executed by the Company pursuant to that certain Revolving Credit
Agreement, dated as of December 27, 1996, between the Company and the Holder.
"OPTIONS" means any rights, warrants or options to subscribe for or
purchase Common Stock or Convertible Securities.
"PERSON" shall mean any natural person and any corporation,
partnership, limited liability company, limited liability partnership, joint
venture, association, joint-stock partnership, trust, unincorporated
organization or government or other agency or political subdivision thereof.
"PURCHASE PRICE" shall mean a price per share of $1.9375, as such
price may be adjusted from time to time pursuant to Section 4 hereof.
"REGISTERED HOLDER" shall mean any Person in whose name this Warrant
is registered upon the books and records maintained by the Company.
"SUBSIDIARY" shall mean, with respect to any Person, any corporation,
limited liability company, partnership, association or other business entity of
which (i) if a corporation, a majority of the total voting power of shares of
stock entitled (without regard to the occurrence of any contingency) to vote in
the election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof, or (ii) if a limited
liability company, partnership, association or other business entity, a majority
of the partnership or other similar ownership interest thereof is at the time
owned or controlled, directly or indirectly, by that Person or one or more
Subsidiaries of that Person or a combination thereof. For purposes hereof, a
Person or Persons shall be deemed to have a majority ownership interest in a
limited liability company, partnership, association or other business
-2-
<PAGE>
entity if such Person or Persons shall be allocated a majority of limited
liability company, partnership, association or other business entity gains or
losses or shall be or control any managing director or general partner of such
limited liability company, partnership, association or other business entity.
"UNDERLYING COMMON STOCK" shall mean (i) the shares of Common Stock
issued or issuable upon exercise of the Warrant and (ii) any Common Stock issued
or issuable with respect to the securities referred to in clause (i) above by
way of stock dividend or stock split or in connection with a combination of
shares, recapitalization, merger, consolidation, or other reorganization.
"WARRANT" as used herein, shall include this Warrant and any warrant
delivered in substitution or exchange therefor as provided herein.
2. EXERCISE.
2.1 EXERCISE PERIOD. The Warrant shall be exercisable in whole
or in part from and after 9:00 A.M., New York time, on the Commencement Date.
2.2 EXERCISE PROCEDURE.
(i) This Warrant shall be deemed to have been exercised when the Company
has received all of the following items:
(a) an Election to Purchase in the form attached hereto as Exhibit A,
properly completed and executed by the Person (the "Purchaser")
exercising all or part of the purchase rights represented by this
Warrant;
(b) this Warrant;
(c) if this Warrant is not registered in the name of the Purchaser, an
Assignment or Assignments in the form set forth in Exhibit B hereto
evidencing the assignment of this Warrant to the Purchaser, in which
case the Registered Holder shall have complied with the provisions
set forth in Section 7.1 hereof; and
(d) either (1) a check or wire transfer payable to the Company in an
amount equal to the product of the Purchase Price multiplied by the
number of shares of Common Stock being purchased upon such exercise
(the "Aggregate Exercise Price"), (2) a written notice to the Company
that the Purchaser is exercising the Warrant (or a portion thereof)
by authorizing the Company to withhold from issuance a number of
shares of Common Stock issuable upon such exercise of the Warrant
which when multiplied by the Market Price of Common Stock is equal to
the Aggregate Exercise Price (and such withheld shares of Common
Stock shall no longer be issuable under this Warrant), or (3) if the
Holder holds the Note, a written notice to the Company that the
Holder is exercising the Warrant (or a portion thereof) by
authorizing the Company to withhold and apply such amount of
principal or
-3-
<PAGE>
accrued but unpaid interest under the Note (whether or not then due)
as is equal to the Aggregate Purchase Price (and such amount of
principal or accrued and unpaid interest under the Note shall no
longer be payable to the Holder).
(ii) Certificates for shares of Common Stock purchased upon exercise of
this Warrant shall be delivered by the Company to the Purchaser
within three (3) business days after the date of the exercise,
together with cash in lieu of any fraction of a share of Common Stock
that would be issuable upon such exercise in an amount equal to the
Market Price of such fractional share as of the date of exercise. No
fractional shares of Common Stock or scrip representing fractional
shares of Common Stock shall be issued upon an exercise of this
Warrant. Unless this Warrant has expired or all of the purchase
rights represented hereby have been exercised, the Company shall
prepare a new Warrant, substantially identical hereto, representing
the rights formerly represented by this Warrant which have not
expired or been exercised and shall within such three (3) business
day period deliver such new Warrant to the Purchaser.
(iii) The shares of Common Stock issuable upon the exercise of this Warrant
shall be deemed to have been issued to the Purchaser at the time of
exercise, and the Purchaser shall be deemed for all purposes to have
become the record holder of such Common Stock at such time.
(iv) The Company shall not close its books against the transfer of this
Warrant or of any share of Common Stock issued or issuable upon the
exercise of this Warrant in any manner which interferes with the
timely exercise of this Warrant. The Company shall from time to time
take all such action as may be necessary to assure that the par value
per share of the unissued Common Stock acquirable upon exercise of
this Warrant is at all times equal to or less than the Purchase Price
then in effect.
(v) The Company shall assist and cooperate with any Registered Holder or
Purchaser to make any governmental filings or obtain any governmental
approvals required prior to or in connection with any exercise of
this Warrant (including, without limitation, making at the Company's
own expense any filings required to be made by the Company).
3. EXPIRATION DATE.
The Warrant evidenced hereby may not be exercise after 5:00 P.M., New
York time, on the Expiration Date with respect to the shares of the Common Stock
as to which the Warrant may be exercised and, to the extent not exercised by the
Expiration Date, the Warrant evidenced hereby shall become void.
4. ADJUSTMENTS.
Subject to the provisions of this Section 4, the Purchase Price and
the number of shares of the Common Stock as to which the Warrant may be
exercised shall be subject to adjustment from time to time as hereinafter set
forth:
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4.1 EFFECT ON PURCHASE PRICE AND NUMBER OF SHARES OF CERTAIN EVENTS.
If and whenever on or after the Commencement Date, the Company issues or sells,
or in accordance with this Section 4.1 is deemed to have issued or sold, any
share of Common Stock for a consideration per share less than the Purchase Price
in effect immediately prior to such time, then immediately upon such issuance or
sale the Purchase Price shall be reduced pursuant to this Section 4.1 to a new
Purchase Price determined by dividing (A) the sum of (x) the product derived by
multiplying the Purchase Price in effect immediately prior to such issue or sale
times the number of shares of Common Stock Deemed Outstanding immediately prior
to such issue or sale, plus (y) the consideration, if any, received by the
Company upon such issue or sale, by (13) the number of shares of Common Stock
Deemed Outstanding immediately after such issue or sale. Upon each such
adjustment of the Purchase Price, the number of shares of Common Stock issuable
upon the exercise of this Warrant (to the extent not theretofore exercised)
shall be increased to a number determined by multiplying the number of such
shares so purchasable immediately prior to such adjustment by a fraction, the
numerator of which shall be the Purchase Price in effect immediately prior to
such adjustment and the denominator of which shall be the Purchase Price in
effect immediately after such adjustment. For purposes of determining the
Purchase Price as adjusted under this Section 4.1, the following shall be
applicable:
(i) ISSUANCE OF RIGHTS OR OPTIONS. If on or after the Commencement Date
the Company in any manner issues, grants or sells any Options and the
price per share for which a share of Common Stock is issuable upon
the exercise of any such Option, or upon conversion or exchange of
any Convertible Security issuable upon exercise of such Option, is
less than the Purchase Price in effect immediately prior to the time
of the granting or sale of such Option, then the total maximum number
of shares of Common Stock issuable upon the exercise of such Options,
or upon conversion or exchange of the total maximum amounts of such
Convertible Securities issuable upon the exercise of such Options,
shall be deemed to be outstanding for purposes of determining the
Common Stock Deemed Outstanding and to have been issued and sold by
the Company at such time for such price per share. For purposes of
this Section 4. l(i), the "price per share for which a share of
Common Stock is issuable" shall be equal to the sum of the amount of
consideration (if any) received or receivable by the Company with
respect to the issuance, grant, or sale of the Option, plus the
amount of consideration (if any) that would be received by the
Company with respect to exercise of the Option in full plus the
amount of consideration (if any) that would be received by the
Company with respect to conversion or exchange in full of any
Convertible Security issuable upon exercise of such Option, all
divided by the total number of shares of Common Stock issuable upon
exercise of the Option and conversion or exchange of the Convertible
Security. No further adjustment of the Purchase Price shall be made
upon the actual issue of such Common Stock or of such Convertible
Security upon the exercise of such Options or upon the actual issue
of such Common Stock upon conversion or exchange of such Convertible
Security.
(ii) ISSUANCE OF CONVERTIBLE SECURITIES. If on or after the Commencement
Date the Company in any manner issues, grants, or sells any
Convertible Security and the price per share for which a share of
Common Stock is issuable upon conversion or exchange thereof is less
than the Purchase Price in effect immediately prior to the time of
such issue or sale, then the maximum number
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of shares of Common Stock issuable upon conversion or exchange of
such Convertible Securities shall be deemed to be outstanding for
purposes of determining the Common Stock Deemed Outstanding and to
have been issued and sold by the Company at such time for such price
per share. For the purposes of this Section 4. l(ii), the "price per
share for which a share of Common Stock is issuable" shall be equal
to the sum of the amount of consideration (if any) received or
receivable by the Company with respect to the issuance, grant or sale
of the Convertible Security plus the amount of consideration (if any)
that would be received by the Company with respect to the conversion
or exchange of such Convertible Security in full, all divided by the
total number of shares of Common Stock issuable upon conversion or
exchange of the Convertible Security. No further adjustment of the
Purchase Price shall be made upon the actual issue of such Common
Stock upon conversion or exchange of any Convertible Security, and if
any such issue or sale of such Convertible Security is made upon
exercise of any Options for which adjustments of the Purchase Price
has been or is to be made pursuant to other provisions of this
Section 4, no further adjustment of the Purchase Price shall be made
under this Section 4. l(ii) by reason of such issue or sale.
(iii) CHANGE IN OPTION PRICE OR CONVERSION RATE. If the amount to be
received by the Company upon the exercise of any Options outstanding
as of the Commencement Date, the additional consideration, if any,
payable upon the issuance, conversion, or exchange of any Convertible
Securities outstanding as of the Commencement Date, or the rate at
which any Convertible Securities outstanding as of the Commencement
Date are convertible into or exchangeable for Common Stock changes at
any time after the Commencement Date, then such Option or Convertible
Security and the Common Stock deemed issuable upon exercise,
conversion or exchange thereof shall be deemed for purposes of this
Section 4.1 to have been issued, granted or sold as of the date of
such changes and the Purchase Price shall be adjusted as provided
herein; provided that no such change shall at any time cause the
Purchase Price hereunder to be increased.
(iv) TREATMENT OF EXPIRED OPTIONS AND UNEXERCISED CONVERTIBLE SECURITIES.
Upon the expiration of any Option described in Section 4. l(i) or the
termination of any right to convert or exchange any Convertible
Securities described in Section 4.1(ii) without the exercise or
conversion in whole or in part of such Option or Convertible
Security, the Purchase Price then in effect and the number of shares
of Common Stock issuable hereunder shall be adjusted immediately to
the Purchase Price and the number of shares of Common Stock which
would have been in effect at the time of such expiration or
termination had such Option or Convertible Securities, never been
issued, granted or sold; provided that if such expiration or
termination would result in an increase in the Purchase Price then in
effect, such increase shall not be effective until thirty (30) days
after written notice thereof has been given to the Registered Holder.
For purposes of this Section 4.1, the expiration or termination of
any Option or Convertible Security which was outstanding as of the
Commencement Date shall not cause the Purchase Price hereunder to be
adjusted unless, and only to the extent that, a change in the term of
such Option or Convertible Security caused it to be deemed to have
been issued after the Commencement Date pursuant to Section 4.1(iii).
(v) CALCULATION OF CONSIDERATION RECEIVED. If any Common Stock, Options
or Convertible Securities are issued or sold or deemed to have been
issued or sold for cash, the
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consideration received therefor shall be deemed to be the net amount
received by the Company therefor. In case any Common Stock, Options
or Convertible Securities are issued or sold for a consideration
other than cash, the amount of the consideration other than cash
received by the Company shall be the fair value of such
consideration, except where such consideration consists of
securities, in which case the amount of consideration received by the
Company shall be the Market Price thereof as of the date of receipt.
In case any Common Stock Options or Convertible Securities are issued
to the owners of the non-surviving entity in connection with any
merger in which the Company is the surviving corporation, the amount
of consideration therefor shall be deemed to be the fair value of
such portion of the net assets and business of the non-surviving
entity as is attributable to such Common Stock Options or Convertible
Securities, as the case may be. The fair value of any consideration
other than cash or securities shall be determined jointly by the
Company and the Registered Holder. If such parties are unable to
reach agreement, such fair value shall be determined by appraisal
pursuant to Section 12.
(vi) INTEGRATED TRANSACTIONS. In case any Option is issued in connection
with the issue or sale of other securities of the Company, together
comprising one integrated transaction in which no specific
consideration is allocated to such Options by the parties thereto,
the Options shall be deemed to have been issued without
consideration.
(vii) EACH SERIES A SEPARATE SECURITY. In case an agreement relating to
Options or Convertible Securities provides that more than one
Purchase Price, conversion or exchange provisions are applicable to
the securities issuable thereunder, then the securities subject to
each different exercise price, conversion or exchange provisions
shall be deemed to be subject to separate Options or Convertible
Securities for purposes of applying this Section 4.1.
(viii) TREASURY SHARES. The Common Stock outstanding at any given time does
not include shares owned or held by or for the account of the Company
or any Subsidiary, and the disposition of any shares so owned or held
shall be considered an issue or sale of Common Stock.
(ix) RECORD DATE. If the Company takes a record of the holders of Common
Stock for the purpose of entitling them (A) to receive a dividend or
other distribution payable in Common Stock, Options or in Convertible
Securities or (B) to subscribe for or purchase Common Stock, Options
or Convertible Securities, then such record date shall be deemed to
be the date of the issue or sale of the shares of Common Stock deemed
to have been issued or sold upon the declaration of such dividend or
the making of such other distribution or the date of the granting of
such right of subscription or purchase, as the case may be.
4.2 SUBDIVISION OR COMBINATION OF COMMON STOCK. If the Company at any
time subdivides (by any stock split, stock dividend, recapitalization or
otherwise) one or more classes of its outstanding shares of Common Stock into a
greater number of shares, the Purchase Price in effect immediately prior to such
subdivision shall be proportionately reduced and the number of shares of Common
Stock obtainable upon exercise of this Warrant (to the extent not theretofore
exercised) shall be proportionally increased. If the Company at any time
combines (by reverse stock split or
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otherwise) one or more classes of its outstanding shares of Common Stock into a
smaller number of shares, the Purchase Price shall be proportionately increased
and the number of shares of Common Stock issuable upon exercise of this Warrant
(to the extent not theretofore exercised) shall be proportionally decreased.
4.3 REORGANIZATION RECLASSIFICATION, CONSOLIDATION, MERGER, OR SALE.
Any recapitalization, reorganization, reclassification, spin-off, consolidation,
merger, sale, or distribution of the Company's assets or other transaction, in
each case which is effected in such a way that the holders of Common Stock are
entitled to receive (either directly or upon subsequent liquidation) stock
securities or assets with respect to or in exchange for Common Stock is referred
to herein as "Organic Change." Prior to the consummation of any Organic Change,
the Company shall make appropriate provision (in form and substance satisfactory
to the Registered Holders) to insure that each of the Registered Holders shall
thereafter have the right to acquire and receive, in lieu of or in addition to
(as the case may be) the shares of Common Stock immediately theretofore
acquirable and receivable upon the exercise of such Warrant, such shares of
stock securities or assets as may be issued or payable with respect to or in
exchange for the number of shares of Common Stock immediately theretofore
issuable upon exercise of the Warrant had such Organic Change not taken place.
In any such case, the Company shall make appropriate provision (in form and
substance satisfactory to the Registered Holders) with respect to such Holders'
rights and interests to insure that the provisions of this Section 4, Section 5,
and Section 6 hereof shall thereafter be applicable to the Warrant (including,
in the case of any such consolidation, merger or sale in which the successor
entity or purchasing entity is other than the Company, an immediate reduction in
the Purchase Price to the value of the Common Stock reflected by the terms of
such consolidation, merger or sale, and a corresponding immediate adjustment in
the number of shares of Common Stock issuable upon exercise of this Warrant (to
the extent not theretofore exercised), if the value so reflected is less than
the Purchase Price in effect immediately prior to such consolidation, merger or
sale). The Company shall not effect any such spin-off, consolidation, merger or
sale, unless prior to the consummation thereof, the successor entity (if other
than the Company) resulting from spin-off, consolidation, or merger or the
entity purchasing such assets assumes by written instrument (in form and
substance satisfactory to the Registered Holders), the obligation to deliver to
each such holder such shares of stock securities or assets as, in accordance
with the foregoing provisions, such holder may be entitled to acquire.
4.4 CERTAIN EVENTS. If any event occurs of the type contemplated by
the provisions of this Section 4 but not expressly provided for by such
provisions (including, without limitation, the granting of stock appreciation
rights, phantom stock rights or other rights with equity features or
equity-based valuation or any dividend or distribution of the capital stock
issued by any Person other than the Company), then the Company's Board of
Directors shall make an appropriate adjustment in the Purchase Price and the
number of shares issuable upon exercise of this Warrant (to the extent not
theretofore exercised) so as to protect the rights of the Registered Holders;
provided that no such adjustment shall increase the Purchase Price as otherwise
determined Pursuant to this Section 4.
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<PAGE>
4.5 CALCULATION OF PURCHASE PRICE: NOTICES.
(i) All calculations of the Purchase Price under this Section 4 shall be
computed to the nearest One-Thousandth (1/l000th) of a cent.
(ii) Immediately upon any adjustment of the Purchase Price, the Company
shall give written notice thereof to the Registered Holder, setting
forth in reasonable detail and certifying the calculation of such
adjustment, provided however, that such notice shall not be deemed to
be conclusive as to the Purchase Price calculation. At the request of
the Registered Holder, the Company shall certify the Purchase Price
of and the number of shares for which a Warrant at the time may be
exercised.
(iii) The Company shall give written notice to the Registered Holder at
least thirty (30) days prior to the date on which the Company closes
its books or takes a record (A) with respect to any subdivision or
combination of the Common Stock that is subject to Section 4.2, or
any other dividend or distribution upon the Common Stock, (B) with
respect to any pro rata subscription offer to holders of Common Stock
or (C) for determining rights to vote with respect to any Organic
Change, dissolution or liquidation.
(iv) The Company shall also give written notice to the Registered Holder
at least thirty (30) days prior to the date on which any Organic
Change, dissolution or liquidation shall take place.
4.6 EXCLUDED TRANSACTIONS. The provisions of this Section 4 shall not
apply to the exercise of the IHS Warrants.
4.7 EXPRESSION OF PURCHASE PRICE AND NUMBER OF SHARES. Irrespective
of any adjustments or change in the Purchase Price or the number of securities
actually purchasable under the Warrant, the Warrants theretofore and thereafter
issued may continue to express the purchase price and the number of securities
purchasable thereunder as the Purchase Price and the number of securities
purchasable were expressed in the Warrant when initially issued.
5. NO RIGHTS OR LIABILITIES AS STOCKHOLDERS AND NOTICE TO REGISTERED
HOLDER.
Nothing contained herein shall be construed as conferring upon the
Registered Holder the right to vote or to consent or to receive notice as a
stockholder in respect of the meetings of stockholders for the election of
directors of the Company or any other matter, or any other rights whatsoever as
a stockholder of the Company; provided, however, that in the event that:
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(a) the Company shall take a record of the holders of its Common Stock or
other stock or securities for the purpose of entitling them to
receive any dividend or other distribution, or any right to subscribe
for or purchase any shares of stock of any class or any other
securities or to receive any other right;
(b) the Company shall take action to accomplish any capital
reorganization, or reclassification of the capital stock of the
Company, or a consolidation or merger of the Company into, or a sale
of all or substantially all of its assets to, another corporation;
(c) the Company shall take action to redeem or convert any or all of
outstanding Common Stock or other stock or securities of the Company;
or
(d) the Company shall take action looking to a voluntary dissolution,
liquidation or winding up of the Company;
then, and in each such case, the Company shall mail or cause to be mailed to the
Registered Holder of this Warrant a notice specifying, as the case may be, (i)
the date on which a record is to be taken for the purpose of such dividend,
distribution or right, or (ii) the date on which such reorganization,
reclassification, spin-off, consolidation, merger, conveyance, dissolution,
liquidation, winding-up, redemption or conversion is to take place, and the
time, if any, is to be fixed, as of which the holders of record of Common Stock
or such other stock or securities shall be entitled to exchange their shares of
Common Stock or such other stock or securities for securities or other property
deliverable upon such reorganization, reclassification, consolidation, merger,
conveyance, dissolution, liquidation, winding-up, conversion or redemption. Such
notice shall be delivered at least thirty (30) days prior to the date therein
specified.
6. DUTY TO REGISTER COMMON STOCK.
The shares of Common Stock issuable under this Warrant shall be
subject to all of the terms and conditions of that certain Registration Rights
Agreement between Holder and the Company, dated as of January 13, 1997, with the
same effect as though this Warrant was included within the term "Warrants" as
defined in such Registration Rights Agreement.
7. TRANSFERS AND EXCHANGES.
7.1 WARRANT TRANSFERABLE. Subject to the transfer conditions referred
to in the legend endorsed hereon, this Warrant and all rights hereunder
(including those under the Purchase Agreement) are transferable, in whole or in
part, without charge to the Registered Holder, upon surrender of this Warrant
with a properly executed Assignment (in the form of Exhibit B hereto) at the
principal office of the Company. The Company shall record on its books the
transferee as the Registered Holder of the portion of this Warrant transferred
pursuant to this Section 7.1.
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7.2 WARRANT EXCHANGEABLE FOR DIFFERENT DENOMINATIONS. This Warrant is
exchangeable, upon the surrender hereof by the Registered Holder at the
principal office of the Company, for new Warrants of like teens representing in
the aggregate the purchase rights hereunder, and each of such new Warrants shall
represent such portion of such rights as is designated by the Registered Holder
at the time of such surrender. The date the Company initially issues this
Warrant shall be deemed to be the "Date of Issuance" hereof regardless of the
number of times new certificates representing the unexpired and unexercised
rights formerly represented by this Warrant shall be issued. All Warrants
representing portions of the rights hereunder are referred to herein as the
"Warrants."
8. VALID ISSUANCE AND PAYMENT OF TAXES.
All shares of Common Stock issued upon the exercise of this Warrant
shall be validly issued, fully paid and non-assessable, and the Company shall
pay all taxes and other governmental charges that may be imposed in respect of
the issue or delivery thereof. The Company shall not be required to pay any tax
or other charge imposed in connection with any transfer involved in the issuance
of any certificate for shares of Common Stock in any name other than that of the
Registered Holder of this Warrant, and in such case the Company shall not be
required to issue or deliver any stock certificate or security until such tax or
other charge has been paid, or it has been established that no tax or other
charge is due.
9. MUTILATED OR MISSING WARRANTS.
In case any of the Warrants shall be mutilated, lost, stolen or
destroyed, the Company shall issue and deliver in exchange and substitution for,
and upon cancellation of the mutilated Warrant, or in lieu of, and in
substitution for, the Warrant lost, stolen or destroyed, a new Warrant of like
tenor and representing an equivalent right or interest, but only upon receipt of
reasonable evidence of such loss, theft, or destruction of such Warrant.
10. RESERVE.
The Company hereby represents and covenants that it has reserved and
at all times there shall be reserved for issuance such number and type of
securities as the Registered Holders are entitled to receive upon exercise of
the IHS Warrants. Prior to the issuance of any equity securities (or any
instrument exercisable for or convertible into equity securities) and whenever
otherwise required to satisfy this Section 10, the Company will amend its
Certificate of Incorporation to the extent necessary to ensure that there is
reserved for issuance a sufficient number and type of securities as the
Registered Holders of the IHS Warrants are entitled to receive upon exercise
thereof.
11. NO IMPAIRMENT.
The Company will not, by amendment of its Certificate of
Incorporation or bylaws, or through reorganization, consolidation, merger,
dissolution, issue or sale of securities, sale of assets or any other voluntary
action, avoid or seek to avoid the observance or performance of any of the terms
of this Warrant, but will at all times in good faith assist in the carrying out
of all such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the Registered Holders against
impairment. Without limiting the generality of the foregoing, the Company (a)
shall not increase the par value of any shares issuable upon exercise of this
Warrant above the Purchase Price and (b) will take all such action as may be
necessary or appropriate in order that the
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Company may validly and legally issue fully paid and non-assessable shares of
Common Stock upon exercise of this Warrant.
12. APPRAISAL.
In case of any dispute as to valuation of a security under this
Agreement, the fair value of such security shall be determined by an appraiser
without any discount for liquidity or restrictions under the Securities Act.
This appraisal process shall be instituted within fourteen (14) days after a
party to this Agreement notifies the other party of its desire to submit the
issue to an appraiser. In the event that, within seven (7) days after a party to
this Agreement notifies the other party of its desire to submit the issue to an
appraiser, the parties do not agree on a single appraiser to determine the fair
value of such security, the fair value of such security shall be determined,
without any discount for liquidity or restrictions under the Securities Act, by
the majority determination of a panel of three (3) appraisers who shall be
selected in the following manner: the Company shall select one (1) appraiser and
the Registered Holder entitled to exercise this Warrant for the greatest number
of shares of Common Stock (in the event there shall be more than one Registered
Holder), on behalf of all of the Registered Holders, shall select one (1)
appraiser and the two (2) appraisers selected by the Company and the Registered
Holder shall jointly select a third appraiser. The appraiser selected jointly by
the parties and, if applicable, each member of the appraisal panel shall be an
individual who personally and whose Affiliates shall not have a previous
business relationship with either party. The appraiser and, if applicable, the
appraisal panel shall endeavor to complete the appraisal as soon as practicable.
The determination of such appraiser and, if applicable, the appraisal panel
shall be final and binding on the Company and the Registered Holders, and the
fees and expenses of such appraisal shall be borne equally by the Company, on
the one hand, and the Registered Holders on the other.
13. NOTICES.
Except as may be otherwise provided herein, all notices and other
communications required or permitted hereunder shall be in writing and shall be
conclusively deemed to have been duly given (a) when hand delivered to the other
party, (b) when received when sent by facsimile to number set forth below
(provided, however, that notices given by facsimile shall not be effective
unless either (i) a duplicate copy of such facsimile notice is promptly given by
one of the other methods described in this Section 13, or (ii) the receiving
party delivers a written confirmation of receipt for such notice either by
facsimile or any other method described in this Section 13) and (c) the next
business day after deposit with a national overnight delivery service, postage
prepaid, addressed to the parties as set forth below with next-business-day
delivery guaranteed, provided that the sending party receives a confirmation of
delivery from the delivery service provider.
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TO: THE REGISTERED HOLDER TO: THE COMPANY
Integrated Health Services, Inc. Community Care of America, Inc.
10065 Red Run Boulevard 3050 North Horseshoe Drive
Owings Mills, MD 21117 Naples, FL 33942
Fax No.: (410) 998-8747 Fax No.: (941) 435-0087
Attn: Marshall A. Elkins, Esq. Attn: Deborah A. Lau, President
A party may change or supplement the addresses given above, or designate
additional addresses, for purposes of this Section 13 by giving the other party
written notice of the new address in the manner set forth above.
14. HEADINGS.
The headings in this Warrant are for purposes of convenience in
reference only, and shall not be deemed to constitute a part hereof.
15. GOVERNING LAW.
This Warrant shall be construed and enforced in accordance with, and
governed by, the laws of the State of New York without regard to provisions
regarding choice of laws.
16. SEVERABILITY.
If any term, provision, covenant or restriction of this Warrant is
held by a court of competent jurisdiction to be invalid, void or unenforceable,
the remainder of the terms, provisions, covenants and restrictions of this
Warrant shall remain in full force and effect and shall in no way be affected,
impaired or invalidated.
17. NO INCONSISTENT AGREEMENTS.
The Company will not on or after the date of this Warrant enter into
any agreement which is inconsistent with the rights granted to the Registered
Holders of this Warrant or otherwise conflicts with the provisions hereof. The
Company hereby represents and warrants that the rights granted to the Registered
Holders hereunder do not in any way conflict with and are not inconsistent with
the rights granted to holders of the Company's securities under any other
agreements, except rights that have been waived.
18. SATURDAYS, SUNDAYS, AND HOLIDAYS.
If the Expiration Date falls on a Saturday, Sunday, or legal holiday,
the Expiration Date shall automatically be extended until 5:00 p.m. the next
business day.
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19. AMENDED AND RESTATED WARRANT. This Warrant amends and
restates in its entirety that certain Warrant No. C-1 issued by the Company to
Holder for 379,900 shares, dated April 15, 1997.
IN WITNESS WHEREOF, Community Care of America, Inc. has caused this
Warrant to be signed manually by a duly authorized officer of the Company on
this 15th day of April, 1997.
COMMUNITY CARE OF AMERICA, INC.
By: /S/ DEBORAH A. LAU,
-----------------------
Deborah A. Lau, President
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EXHIBIT A
ELECTION TO PURCHASE
To: Community Care of America, Inc.
_______________________________
_______________________________
_______________________________
The undersigned hereby elects to exercise the Warrant represented by
the within Warrant Certificate to purchase shares of the Common Stock issuable
upon the exercise of the Warrant and requests that certificates for such shares
shall be issued in the name of:
___________________________________
(Name)
___________________________________
(Address)
___________________________________
(Taxpayer number)
and be delivered to:_______________
___________________________________
(Name)
___________________________________
(Address)
and, if said number of shares of the Common Stock shall not be all the shares of
the Common Stock evidenced by the within Warrant Certificate, that a new Warrant
Certificate for the balance remaining of such said shares be registered in the
name of:
___________________________________
(Name)
___________________________________
(Address)
___________________________________
(Taxpayer number)
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<PAGE>
and delivered to the undersigned at the address below stated.
Dated: ________________________, 19
Name of holder of Warrant Certificate
_________________________________
(please print)
_________________________________
(Address)
_________________________________
(Signature)
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EXHIBIT B
ASSIGNMENT
(to be executed by the registered holder
to effect a transfer of the within Warrant)
FOR VALUE RECEIVED _____________________________________________________________
hereby sells, assigns, and transfers unto ______________________________________
________________________________________________________________________________
(Name)
________________________________________________________________________________
(Address)
________________________________________________________________________________
the right to purchase the ________ shares of Common Stock evidenced by this
Warrant, and does hereby irrevocably constitute and appoint ___________________
to transfer the said right on the books of the Company, with full power of
substitution.
Dated:_________________
_____________________________
(Signature)
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REIMBURSEMENT AGREEMENT
REIMBURSEMENT AGREEMENT (the "Agreement"), dated as of April 14,
1997, by and between INTEGRATED HEALTH SERVICES, INC., a Delaware corporation
having an address at 10065 Red Run Boulevard, Owings Mills, Maryland 21117
("IHS"), and COMMUNITY CARE OF AMERICA, INC., a Delaware corporation having an
address at 3050 N. Horseshoe Drive, Naples, Florida 33942 ("CCA").
WITNESSETH:
WHEREAS, CCA has entered into that certain Loan and Security
Agreement with Daiwa Healthco-2 LLC ("Daiwa") dated as of December 23, 1996 (the
"Loan Agreement");
WHEREAS, as a condition to extending to CCA certain accommodations
under the Loan Agreement, Daiwa has required that IHS provide a guaranty (the
"Daiwa Guaranty") securing the repayment of all amounts owing from CCA to Daiwa
under the Loan Agreement in excess of the Basic Borrowing Amount, as well as the
payment of any and all reasonable costs and expenses (including reasonable
counsel fees and expenses) paid or incurred by Daiwa in enforcing its rights
under the Daiwa Guaranty;
WHEREAS, CCA has entered into a letter agreement with Health and
Retirement Properties Trust ("HRPT") dated as of April 14, 1997 (the "Letter
Agreement");
WHEREAS, in accordance with the Letter Agreement, HRPT has required
that IHS provide a guaranty (the "HRPT Guaranty") securing certain obligations
owed by CCA to HRPT;
WHEREAS, as a condition to providing the Daiwa Guaranty and the HRPT
Guaranty, IHS requires that CCA agree to reimburse IHS for any amounts that
become payable by IHS in respect of the Daiwa Guaranty and the HRPT Guaranty.
NOW, THEREFORE, in consideration of the mutual promises hereinafter
set forth, and for other good and valuable consideration, the parties hereby
agree as follows:
1. Subject to any waiver by IHS of the right to subrogation or
reimbursement contained in the Daiwa Guaranty and/or the HRPT Guaranty, CCA
shall, on demand, reimburse IHS for any amounts paid by IHS on behalf of CCA in
accordance with the terms of the Daiwa Guaranty and/or the HRPT Guarantee,
including any costs, fees, charges and expenses (including reasonable legal fees
and expenses of counsel) arising out of the negotiation, preparation or issuance
of, or performance under, the Daiwa Guaranty and/or the HRPT Guarantee
(collectively, the "Reimbursement Obligations").
<PAGE>
2. Any and all amounts which become owing to IHS by CCA in respect of
the Reimbursement Obligations shall bear interest, from the date such amounts
are advanced by IHS under the applicable guaranty until paid in full, at the
rate of fifteen (15%) percent per annum.
3. This Agreement shall remain in full force and effect until all of
the Reimbursement Obligations shall have been fully, finally and irrevocably
satisfied and IHS has been fully, finally and irrevocably released from all
obligations with respect to the Daiwa Guaranty and the HRPT Guaranty.
4. All agreements between CCA and IHS herein are hereby expressly
limited so that in no contingency or event whatsoever, shall the amount paid or
agreed to be paid to IHS for the use, forbearance or detention of money
hereunder exceed the maximum permissible under applicable law. If, from any
circumstance whatsoever, the fulfillment of any provision hereof, at the time
performance of such provision shall be due, shall involve transcending the limit
of validity prescribed by law, then, IPSO FACTO, the obligation to be fulfilled
shall be reduced to the limit of such validity, and if from any circumstance IHS
should ever receive as interest an amount which would exceed the highest lawful
rate, such amount which would be excessive interest shall be applied to the
reduction of the principal of the Reimbursement Obligations and not to the
payment of interest.
5. Any notice or other communication by either party to the other
shall be in writing and shall be given and be deemed to have been duly given,
upon the date delivered if delivered personally or upon the date received if
mailed postage pre-paid, registered, or certified mail, addressed as follows:
TO CCA: Community Care of America, Inc.
3050 North Horseshoe Drive, Suite 260
Naples, Florida 33942
Attention: President
TO IHS: Integrated Health Services, Inc.
10065 Red Run Boulevard
Owings Mills, MD 21117
Attention: General Counsel
or to such other address, and to the attention of such other person or officer
as either party may designate in writing by notice.
6. The substantive laws of the State of Maryland shall govern the
validity, construction, enforcement and interpretation of this Agreement and all
other documents and instruments referred to herein, unless otherwise specified
therein. Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited or invalid under
2
<PAGE>
applicable law, such provision shall be ineffective only to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement.
7. Neither this Agreement nor any provision hereof may be changed,
waived, discharged or terminated orally, but only by an instrument in writing
signed by the party against which enforcement of the change, waiver, discharge
or termination is sought. This Agreement shall be binding upon CCA and its
successors and assigns, and shall inure to the benefit of and be enforceable by
the IHS and its successors and assigns.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the day and year first written above.
INTEGRATED HEALTH SERVICES, INC.
By: _____________________________
Name:
Title:
COMMUNITY CARE OF AMERICA, INC.
By: _____________________________
Name:
Title:
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EXHIBIT 21.01
Subsidiaries of the Company
<TABLE>
<CAPTION>
JURISDICTION OF NAME(S) UNDER WHICH
SUBSIDIARY(+) INCORPORATION SUBSIDIARY DOES BUSINESS
------------- ------------- ------------------------
<S> <C> <C> <C> <C> <C> <C>
ECA Holdings, Inc. Delaware *
ECA Properties, Inc. Delaware Grandview Manor
Community Care of Delaware Community Care of America at Ainsworth
Nebraska, Inc. Community Care of America at Ashland
Community Care of America at Aurora
Community Care of America at Blue Hill
Community Care of America at Central City
Community Care of America at Edgar
Community Care of America at Exeter
Community Care of America at Gretna
Community Care of America at Sutherland
Community Care of America at Utica
Community Care of America at Waverly
W.S.T. Care, Inc. Nebraska Crestview Care Center
Quality Care of Nebraska Community Care of America at Lyons
Lyons, Inc.
Quality Care of Nebraska Community Care of America at Columbus
Columbus, Inc.
MeritWest, Inc. Pennsylvania *
MTC West, Inc. Delaware *
Community Care of America Delaware Georgiana Doctors Hospital; Reliable
of Alabama, Inc. Home Health Services, d/b/a
Georgiana Home Health Agency; Rural
Health Clinic, d/b/a Georgiana Health
Clinic; Kinsey Clinic; Family Rural
Medical Clinic; Jeff Voreis, M.D.,
in association with Community Care of
America, Inc.; Livingston Nursing
Home; Southgate Village
CCA of Maine, Inc. Delaware *
Maine Head Trauma Maine Maine Head Trauma Center
Center, Inc.
CCA of Midwest, Inc. Delaware Coolidge Center
Southern Care Centers, Inc.
Luling/SCC, Inc. Community Care of America at Luling
Dublin/SCC, Inc. Community Care of America at Dublin
Marietta/SCC, Inc. Community Care of America at Marietta
Macon/SCC, Inc. Community Care of America at Macon
College Park/SCC, Inc. Community Care of America at College Park
Glenwood/SCC, Inc. Community Care of America at Connor
</TABLE>
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+ Indirect subsidiary is indicated by indentation
* Not applicable
Each subsidiary is wholly-owned by its immediate parent.
<PAGE>
The names of particular subsidiaries which, if considered in the
aggregate as a single subsidiary, would not have constituted a significant
subsidiary (as defined in Rule 1-02(w) of Regulation S-X) as of December 31,
1996 are omitted.
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