X.X. XXXXXX & CO., INC.
0000 Xx. Xxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxx 00000
Merger & Acquisition Agreement
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___________, 1996
New York Health Care, Inc.
0000 XxXxxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000
Attn:
Gentlemen:
This will confirm the understanding and agreement (the "Agreement") between
X.X. Xxxxxx & Co., Inc. ("Xxxxxx") and New York Health Care, Inc. (the
"Company") as follows:
1. The Company hereby engages Xxxxxx, and Xxxxxx hereby accepts such
engagement, as the Company's agent for the purpose of (a) identifying
opportunities for a transaction involving the Company including, without
limitation, the sale of the Company, or any of its businesses, assets, or
properties, or the purchase by the Company of other companies, or any of
their businesses, assets, or properties, (b) advising the Company
concerning opportunities for such a transaction, whether or not identified
by Xxxxxx, and (c) as requested by the Company, participating on the
Company's behalf in negotiations concerning such a transaction or assisting
the Company in structuring such transaction.
2. For the purpose of this Agreement:
(a) A "Transaction" shall mean any transaction or series or combination of
transactions involving the Company, other than in the ordinary course of
trade or business, whereby, directly or indirectly, control of, or a
material interest in any businesses, assets or properties, is sold,
purchased, leased or otherwise transferred, including, without limitation,
a sale, purchase or exchange of capital stock or assets, a lease of assets
with or without a purchase option, a merger or consolidation, a tender or
exchange offer, a leveraged buy-out, a restructuring, a recapitalization, a
repurchase of capital stock, an extraordinary dividend or distribution
(whether cash, property, securities or a combination thereof), a
liquidation, the formation of a joint venture or partnership, a minority
investment or any other similar transaction.
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(b) "Consideration" shall mean the total value of all cash, securities,
other properly and any other consideration, including, without limitation,
any contingent, earned or other consideration paid or payable, directly or
indirectly, in connection with a Transaction and consideration shall be
determined at the closing. The value of any such securities (whether debt
or equity) or other property shall be determined as follows: (1) the value
of securities that are freely tradable in an established public market
shall be the last closing market price of such securities prior to the
public announcement of the Transaction; and (2) the value of securities
which are not freely tradable or which have no established public market,
or if the consideration consists of property other than securities, the
value of such securities or other property shall be the fair market value
thereof as mutually agreed by the Company and Xxxxxx. Consideration shall
also be deemed to include any indebtedness, including, without limitation,
pension liabilities, guarantees and other obligations assumed, directly or
indirectly, in connection with, or which survives the closing of, a
Transaction. If the consideration to be paid is computed or payable in any
foreign currency, the value of such foreign currency shall, for the
purposes hereof, be converted into U.S. Dollars at the prevailing exchange
rate on the dates on which such consideration is payable.
3. The term of Xxxxxx' engagement hereunder shall extend for two years from
the date hereof.
4. As compensation for the services rendered by Xxxxxx hereunder, the
Company shall pay Xxxxxx as follows:
(a) If the Company announces or enters into an agreement with respect to a
Transaction either during the term of Xxxxxx' engagement hereunder or at
any time during a period of 36 months following the date hereof, and, if
during the term hereof either the party or parties to the Transaction were
identified by Xxxxxx or Xxxxxx renders advice concerning the Transaction,
and such Transaction is thereafter consummated, then the Company shall pay
to Xxxxxx the following percentages of the total consideration paid in each
of such Transactions:
Percent Total Consideration
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5.0% on amounts up to $3,000,000 plus
3.5% on amounts between $3,000,001 and $5,000,000 plus
2.0% on amounts over $5,000,000
(b) For the purposes of subparagraph (a), Xxxxxx shall be deemed to have
identified the party or parties to a Transaction only if the opportunity is
at least briefly specifically described in a writing (which need not
identify the other parties) signed by Xxxxxx and received (with receipt
acknowledged in writing by the Company) prior
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to any negotiations between representatives of the Company and
representatives of the other party or parties to such Transaction and such
writing signed by Xxxxxx refers to the Company's obligations under this
Agreement.
(c) Compensation which is payable to Xxxxxx pursuant to subparagraph 4(a)
shall be paid by the Company to Xxxxxx.
5. The Company shall reimburse Xxxxxx for its pre-approved out-of-pocket
and incidental expenses incurred in connection with its engagement hereunder
promptly as requested, including the fees and expenses of its legal counsel and
those of any advisor retained by Xxxxxx.
6. Because Xxxxxx will be acting on behalf of the Company in connection
with this engagement, the Company agrees to indemnify Xxxxxx as set forth in a
separate letter agreement dated the date hereof between Xxxxxx and the Company.
7. Xxxxxx shall have the right to place advertisements in financial and
other newspapers and journals at its own expense describing its services to the
Company hereunder.
8. Any advice, either oral or written, provided to the Company by Xxxxxx
hereunder shall not be publicly disclosed or made available to third parties
without the prior written consent of Xxxxxx, until otherwise required by law. In
addition, Xxxxxx may not be otherwise publicly referred to without its prior
consent.
9. In connection with Xxxxxx' engagement, the Company will furnish Xxxxxx
with all information concerning the Company which Xxxxxx reasonably deems
appropriate and will provide Xxxxxx with reasonable access to the Company's
officers, directors, accountants, counsel and other advisors. The Company
represents and warrants to Xxxxxx that all such information concerning the
Company and its affiliates is and will be true and accurate in all material
respects and does not and will not contain any untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements
therein, in light of the circumstance under which such statements are made not
misleading. The Company acknowledges and agrees that Xxxxxx will be using and
relying upon such information supplied by the Company and its officers, agents
and others and any other publicly available information concerning the Company
and its affiliates and any prospective acquiror of the Company, its businesses
or assets without any independent investigation or verification thereof or
independent appraisal by Xxxxxx of the Company and businesses or assets.
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10. The Company represents and warrants to Xxxxxx that there are no
brokers, representatives or other persons which have an interest in compensation
due to Xxxxxx from any Transaction contemplated herein.
11. The benefits of this Agreement, together with the separate indemnity
letter, shall inure to the respective successors and assigns of the parties
hereto and of the indemnified parties hereunder and their successors, assigns
and representatives, and the obligations and liabilities assumed in this
Agreement by the parties hereto shall be binding upon their respective
successors and assigns.
12. This Agreement may not be amended or modified except in writing and
shall be governed by and construed in accordance with the laws of the State of
New York, without regard to principles of conflicts of laws.
Xxxxxx is delighted to accept this engagement and looks forward to working
with you on this assignment. Please sign this letter at the place indicated
below, whereupon it will constitute a binding agreement with respect to the
matters contained herein.
NEW YORK HEALTH CARE, INC.
By:____________________________
Authorized Officer
AGREED TO AND ACCEPTED:
X.X. XXXXXX & CO., INC.
By:____________________________
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Indemnification Agreement
_______________, 1996
X.X. Xxxxxx & Co., Inc.
0000 Xx. Xxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxx 00000-0000
In connection with the engagement pursuant to the Merger and Acquisition
Agreement between X.X. Xxxxxx & Co., Inc. (" Xxxxxx") and New York Health Care,
Inc. (the "Company") dated ____________, 1996, the Company hereby agrees to
indemnify and hold harmless Xxxxxx, its respective directors, officers,
controlling persons (within the meaning of Section 15 of the Securities Act of
1933 or Section 20(a) of the Securities Exchange Act of 1934), if any,
(collectively, "Indemnified Persons" and individually, an "Indemnified Person")
from and against any and all claims, liabilities, losses, damages and expenses
incurred by any Indemnified Person (including fees and disbursements of Xxxxxx'
and any Indemnified Person's counsel) which (A) are related to or arise out of
(i) actions taken or omitted to be taken (including any untrue statements made
or any statements omitted to be made) by the Company or (ii) actions taken or
omitted to be taken by an Indemnified Person with the Company's consent or in
conformity with the Company's instructions or the Company's actions or omissions
or (B) are otherwise related to or arise out of Xxxxxx' engagement, and will
reimburse Xxxxxx and any other Indemnified Person for all costs and expenses,
including reasonable fees of Xxxxxx' or any Indemnified Person's counsel, as
they are incurred, in connection with investigating, preparing for, or defending
any action, formal or informal claim, investigation, inquiry or other
proceeding, whether or not in connection with pending or threatened litigation,
caused by or arising out of or in connection with Xxxxxx acting pursuant to the
engagement, whether or not Xxxxxx or any Indemnified Person is named as a party
thereto and whether or not any liability results therefrom. The Company will
not, however, be responsible for any claims, liabilities, losses, damages, or
expenses pursuant to clause (B) of the preceding sentence which are finally
judicially determined to have resulted primarily from Xxxxxx' bad faith or gross
negligence. The Company also agrees that neither Xxxxxx nor any other
Indemnified Person shall have any liability to the Company for or in connection
with such engagement except for any such liability for claims, liabilities,
losses, damages, or expenses incurred by the Company which are finally
judicially determined to have resulted primarily from Xxxxxx' bad faith or gross
negligence.
Promptly after receipt by an Indemnified Person under this Agreement of
notice of the commencement of any action, such Indemnified Person will, if a
claim in respect thereof is to be made against the Company under this Agreement,
notify the Company of the commencement thereof, but the omission so to notify
the Company will not relieve the Company from any liability
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which it may have to any Indemnified Person. In case any such action is brought
against any Indemnified Person, and it notifies the Company of the commencement
thereof, the Company will be entitled to participate in, and, to the extent that
it may wish, reasonably assume the defense thereof, subject to the provisions
herein stated, and upon a notice from the Company to such Indemnified Person of
its election to assume the defense thereof, the Company will not be liable to
such Indemnified Person under this Agreement for any legal or other expenses,
subsequently incurred by such Indemnified Person in connection with the defense
thereof, other than reasonable costs of investigation, unless the Company shall
not pursue the action to its final conclusion. The Indemnified Person shall have
the right to employ separate counsel in any such action and to participate in
the defense thereof, but the fees and expenses of such counsel shall not be at
the expense of the Company if the Company has assumed the defense of the action
with counsel reasonably satisfactory to the; provided that if the Indemnified
Person shall have been advised by its counsel that there may be one or more
legal defenses available to the Indemnified Person which differ from those
available to the Company the Company shall be liable for any legal and other
expense incurred by the Indemnified Person in connection with the defense of the
action (in which case the Company shall not have the right to assume the defense
of such action on behalf of the Indemnified Person, it being understood,
however, that the Company shall not, in connection with any one such action or
separate but substantially similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys for the
Indemnified Persons.) The Company agrees that the Company will not, without the
prior written consent of Xxxxxx, settle or compromise or consent to the entry of
any judgment in any pending or threatened claim, action, suit or proceeding in
respect of which indemnification may be sought hereunder (whether or not Xxxxxx
or any Indemnified Person is an actual or potential party to such claim, action,
suit or proceeding) unless such settlement, compromise or consent includes an
unconditional release of Xxxxxx and each other Indemnified Person hereunder from
all liability arising out of such claim, action, suit or proceeding.
In order to provide for just and equitable contribution, if a claim for
indemnification is made pursuant to these provisions but is found in a final
judgment by a court of competent jurisdiction (not subject to further appeal)
that such indemnification is not available for any reason (except, with respect
to indemnification sought solely pursuant to clause (B) of the first paragraph
hereof, for the reasons specified in the second sentence thereof), even though
the express provisions hereof provide for indemnification in such case, then the
Company, on one hand, and Xxxxxx, on the other hand, shall contribute to such
claim, liability, loss, damage or expense for which such indemnification or
reimbursement is held unavailable in such proportion as is appropriate to
reflect the relative benefits to the Company, on one hand, and Xxxxxx, on the
other hand, in connection with the transactions contemplated by the engagement,
subject to the limitation that in any event Xxxxxx' aggregate contribution to
all losses, claims, damages, liabilities and expenses to which contribution is
available hereunder shall not exceed the amount of fees actually received by
Xxxxxx pursuant to the engagement.
The foregoing right to indemnity and contribution shall be in addition to
any rights that Xxxxxx and/or any other Indemnified Person may have at common
law or otherwise and shall
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remain in full force and effect following the completion or any termination of
your engagement. The Company hereby consents to personal jurisdiction and to
service and venue in any court in which any claim which is subject to this
agreement is' brought against Xxxxxx or any other Indemnified Person.
It is understood that, in connection with Xxxxxx' engagement, Xxxxxx may
also be engaged to act for the Company in one or more additional capacities,
embodied in one or more separate written agreements. This indemnification shall
apply to said engagement, any such additional engagement(s) (whether written or
oral) and any modification of said engagement or such additional engagement(s)
and shall remain in full force and effect following the completion or
termination of said engagement or such additional engagements.
The Company further understands that if Xxxxxx is asked to act for the
Company as dealer manager in an exchange or tender offer or as an underwriter in
connection with the issuance of securities by the Company or to furnish the
Company a financial opinion letter or in any other formal capacity, such further
action may be subject to a separate agreement containing provisions and terms to
be mutually agreed upon.
Very truly yours,
NEW YORK HEALTH CARE, INC.
By: _______________________________
AGREED TO AND ACCEPTED:
X. X. XXXXXX & CO., INC.
By:____________________________
Authorized Officer
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