VOTING
AGREEMENT, dated as of December 20, 2006 (this “
Agreement ”), between NATIONAL HEALTHCARE CORPORATION,
a Delaware corporation (“ Parent ”), and
NATIONAL HEALTH REALTY, INC., a Maryland corporation (“
Company ”), and each stockholder of Parent and Company
whose name and signature is set forth on the signature page hereof
(collectively, the “ Stockholders ,” and each, a
“ Stockholder ”).
WHEREAS,
Davis Acquisition Sub LLC, a Delaware corporation and a
wholly-owned subsidiary of NHC/OP (“ Merger Subsidiary
”), NHC/OP, L.P., a Delaware limited partnership (“
NHC/OP ”), Parent and Company are, concurrently with
the execution hereof, entering into an Agreement and Plan of Merger
(the “ Merger Agreement ”);
WHEREAS,
pursuant to the Merger Agreement, a successor to Company will merge
with and into Merger Subsidiary, with Merger Subsidiary being the
surviving entity (the “ Merger ”), and upon the
consummation of the Merger each share of common stock of the
successor to Company, par value $0.01 per share, will be converted
into the right to receive the Merger Consideration;
WHEREAS,
each Stockholder is the record and/or beneficial owner of such
number of shares of common stock of Parent, par value $0.01 per
share (the “ Parent Common Stock ”), or shares
of common stock of Company, par value $0.01 per share (the “
Company Common Stock ”) as the case may be, as is set
forth opposite such Stockholder’s name on Schedule I
hereof (collectively, the “ Existing Shares
”);
WHEREAS,
each Stockholder acknowledges that Merger Subsidiary, NHC/OP,
Parent and Company are entering into the Merger Agreement in
reliance on the representations, warranties, covenants and other
agreements of such Stockholder set forth in this Agreement and
would not enter into the Merger Agreement if each such Stockholder
did not enter into this Agreement.
NOW,
THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth
herein and in the Merger Agreement, and intending to be legally
bound hereby, Parent, Company and each Stockholder agree as
follows:
1.
Defined Terms . Capitalized terms used herein without
definition shall have the meanings assigned to such terms in the
Merger Agreement. The following words have the meanings given to
them below.
“
beneficial ownership ” has the meaning set forth in
Rule 13d-3 under the Exchange Act.
“
Consolidation ” means the consolidation of Company
with its wholly-owned subsidiary pursuant to the Articles of
Consolidation, as a result of which a new Maryland corporation
shall be formed which (i) shall assume the corporate name
“National Health Realty, Inc.,” (ii) shall have as
its outstanding stock only the stock of Company outstanding
immediately prior to the effectiveness of such consolidation, and
(iii) shall succeed to the business, properties, assets and
rights and become subject to all of the obligations and liabilities
of Company, including the Merger Agreement.
-2-
“
Exchange Act ” means the Securities Exchange Act of
1934, as amended.
“
person ” has the meaning specified in
Sections 3(a)(9) and 13(d)(3) of the Exchange Act.
“
Representative ” with respect to any person who is an
individual, any affiliate of such person (including any family
member or any entity controlled by such person), or any agent,
representative or advisor of such person, including any investment
banker, attorney or accountant retained by such person or any of
such person’s affiliates.
“
Shares ” means, (i) with respect to each
Stockholder of Company, all Existing Shares of such Stockholder
that are shares of Company Common Stock, and any shares of Company
Common Stock, beneficial ownership of which is acquired by such
Stockholder after the date hereof, including, without limitation,
shares acquired by purchase or upon the exercise, conversion or
exchange of any option, warrant or convertible security, and
(ii) with respect to each Stockholder of Parent, all Existing
Shares of such Stockholder that are shares of Parent Common Stock,
and any shares of Parent Common Stock, beneficial ownership of
which is acquired by such Stockholder after the date hereof,
including without limitation, shares acquired by purchase or upon
the exercise, conversion or exchange of any option, warrant or
convertible security.
“
Support Documents ” means this Agreement and all other
agreements, instruments and other documents executed and delivered
by each Stockholder in connection with this Agreement.
“
Termination Time ” means the earliest of the
following: (i) the time at which Parent and Company give joint
written notice to each of the Stockholders that the Termination
Time has occurred; (ii) the Effective Time; and (iii) the
time at which the Merger Agreement terminates pursuant to
Section 7.01 thereof.
“
Voting Shares ” means, (i) with respect to each
Stockholder of Company, such Stockholder’s Shares, not
including Shares that are the subject of unexercised options,
warrants, rights or convertible securities, and (ii) with
respect to each Stockholder of Parent, such Stockholder’s
Shares, not including Shares that are the subject of unexercised
options, warrants, rights or convertible securities.
(a) In
order to induce Merger Subsidiary and Parent to enter into the
Merger Agreement, each Stockholder of Company hereby agrees that,
from and after the date hereof and until the Termination Time, at
any meeting of the stockholders of Company, however called, or in
connection with any written consent of the stockholders of Company,
such Stockholder shall appear at each such meeting, in person or by
proxy, or otherwise cause such Stockholder’s Voting Shares to
be counted as present thereat for purposes of establishing a
quorum, and each such Stockholder shall vote (or cause to be voted)
or act by written consent with respect to all of its Voting Shares
that are beneficially owned by each such Stockholder or its
affiliates or as to which such Stockholder has, directly or
indirectly, the right to vote or direct the voting, (i) in
favor of adoption and approval of the Merger Agreement, the
Consolidation and the Merger and the approval of the terms thereof
and each of the other actions contemplated by the Merger Agreement
and this Agreement; (ii) against any action or agreement that
would result in a breach of any covenant, representation or
warranty or any other obligation or agreement of Company contained
in the Merger Agreement or of any Stockholder of Company contained
in this Agreement; (iii) against
-3-
any Company
Takeover Proposal; and (iv) against any other action,
agreement or transaction (other than the Merger Agreement and the
transactions contemplated thereby) that is intended, or could
reasonably be expected, to impede, interfere or be inconsistent
with, delay, postpone, discourage or materially adversely affect
the Consolidation, the Merger or the performance by each of the
Stockholders of Company of such Stockholder’s obligations
under this Agreement, including, but not limited to (A) any
extraordinary corporate transaction, such as a merger,
consolidation or other business combination involving Company or
any of its Subsidiaries (other than the Consolidation or the
Merger); (B) a sale, lease or transfer of a material amount of
assets of Company or any of its Subsidiaries or a reorganization,
recapitalization or liquidation of Company or any of its
Subsidiaries; (C) a material change in the policies or
management of Company; (D) an election of new members to the
board of directors of Company; (E) any material change in the
present capitalization or dividend policy of Company or any
amendment or other change to Company’s articles of
incorporation (other than as contemplated in the Merger Agreement);
or (F) any other material change in Company’s corporate
structure (other than as contemplated in the Merger Agreement) or
business. Each Stockholder of Company hereby agrees that such
Stockholder will not enter into any voting or other agreement or
understanding with any person or entity or grant a proxy or power
of attorney with respect to such Stockholder’s Shares prior
to the Termination Time (other than a proxy or power of attorney to
an officer of Parent that may be exercised solely in accordance
with this Section 2 and except as provided in Section 3
below) or vote or give instructions in any manner inconsistent with
clauses (i), (ii), (iii) or (iv) of the preceding
sentence. Each Stockholder of Company hereby agrees, during the
period commencing on the date hereof and ending on the Termination
Time, not to vote or execute any written consent in lieu of a
stockholders meeting or vote, if such consent or vote by the
stockholders of Company would be inconsistent with or frustrate the
purposes of the other covenants of such Stockholder pursuant to
this paragraph.
(b) In
order to induce Company to enter into the Merger Agreement, each
Stockholder of Parent hereby agrees that, from and after the date
hereof and until the Termination Time, at any meeting of the
stockholders of Parent, however called, or in connection with any
written consent of the stockholders of Parent, such Stockholder
shall appear at each such meeting, in person or by proxy, or
otherwise cause such Stockholder’s Voting Shares to be
counted as present thereat for purposes of establishing a quorum,
and each such Stockholder shall vote (or cause to be voted) or act
by written consent with respect to all of its Voting Shares that
are beneficially owned by each such Stockholder or its affiliates
or as to which such Stockholder has, directly or indirectly, the
right to vote or direct the voting, (i) in favor of the
establishment and issuance of the Series A Convertible
Preferred Stock of Parent (including any related amendment to the
certificate of incorporation of Parent) pursuant to and in
accordance with the Merger Agreement and in favor of adoption and
approval of this Agreement; (ii) against any action or
agreement that would result in a breach of any covenant,
representation or warranty or any other obligation or agreement of
any Stockholder of Parent contained in this Agreement; and
(iii) against any other action, agreement or transaction that
is intended, or could reasonably be expected, to impede, interfere
or be inconsistent with, delay, postpone, discourage or materially
adversely affect the performance by each of the Stockholders of
Parent of such Stockholder’s obligations under this
Agreement. Each Stockholder of Parent hereby agrees that such
Stockholder will not enter into any voting or other agreement or
understanding with any person or entity or grant a proxy or power
of attorney with respect to such Stockholder’s Shares prior
to the Termination Time (other than a proxy or power of attorney to
an officer of Company that may be exercised solely in accordance
with this Section 2 and except as provided in Section 3
below) or vote or give instructions in any manner inconsistent with
clauses (i), (ii) or (iii) of the preceding sentence.
Each Stockholder of Parent hereby agrees, during the period
commencing on the date hereof and ending on the Termination Time,
not to vote or execute any written consent in lieu of a
-4-
stockholders
meeting or vote, if such consent or vote by the stockholders of
Parent would be inconsistent with or frustrate the purposes of the
other covenants of such Stockholder pursuant to this
paragraph.
(a) As
security for its obligations under Section 2 hereof, each
Stockholder of Company hereby grants to, and appoints, Robert
Adams, Donald Daniel and John Lines, in their respective capacities
as officers of Parent, and any individual who shall hereafter
succeed to any such officer of Parent, and any other person
designated in writing by Parent, each of them individually, such
Stockholder’s proxy and attorney-in-fact (with full power of
substitution) to vote or act by written consent, to the fullest
extent permitted by and subject to applicable law, with respect to
such Stockholder’s Shares in accordance with Section 2
hereof. THIS PROXY IS COUPLED WITH AN INTEREST, SHALL BE
IRREVOCABLE AND SHALL TERMINATE AT THE TERMINATION TIME. Each
Stockholder of Company will take such further action or execute
such other instruments as may be necessary to effectuate the intent
of this proxy and hereby revokes any proxy previously granted by
such Stockholder with respect to such Stockholder’s
Shares.
(b) As
security for its obligations under Section 2 hereof, each
Stockholder of Parent hereby grants to, and appoints, Robert Adams,
Donald Daniel and John Lines, in their respective capacities as
officers of Company, and any individual who shall hereafter succeed
to any such officer of Company, and any other person designated in
writing by Company, each of them individually, such
Stockholder’s proxy and attorney-in-fact (with full power of
substitution) to vote or act by written consent, to the fullest
extent permitted by and subject to applicable law, with respect to
such Stockholder’s Shares in accordance with Section 2
hereof. THIS PROXY IS COUPLED WITH AN INTEREST, SHALL BE
IRREVOCABLE AND SHALL TERMINATE AT THE TERMINATION TIME. Each
Stockholder of Parent will take such further action or execute such
other instruments as may be necessary to effectuate the intent of
this proxy and hereby revokes any proxy previously granted by such
Stockholder with respect to such Stockholder’s
Shares.
4.
Representations and Warranties of Parent . Parent represents
and warrants to each Stockholder as follows:
(a)
Organization . Parent is a corporation duly organized,
validly existing and in good standing under the laws of the State
of Delaware.
(b) Authority;
Enforceability . Parent has the requisite corporate power and
authority to enter into this Agreement and to carry out its
obligations hereunder. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have
been duly authorized by Parent’s board of directors and no
other corporate proceedings on the part of Parent are necessary to
authorize the execution and delivery of this Agreement by Parent
and the consummation by it of the transactions contemplated hereby.
This Agreement has been duly executed and delivered by Parent and
is a valid and legally binding obligation of Parent, enforceable in
accordance with its terms, except as may be limited by bankruptcy,
insolvency or other similar laws affecting the rights and remedies
of creditors generally, and subject to general principles of
equity, whether applied by a court of law or equity.
-5-
(c) No
Conflict . The execution and delivery of this Agreement by
Parent do not, and the performance of this Agreement by Parent will
not, (i) conflict with or violate the certificate of
incorporation or by-laws of Parent, (ii) conflict with or
violate any law, rule, regulation or order applicable to Parent or
by which any of its properties or assets is bound, or
(iii) conflict with, result in any breach of or constitute a
default (or an event that with notice or lapse of time or both
would become a default) under, or give to others any rights of
terminati
|
