Unassociated Document


     

    Exhibit
      10.1

    
 

    VOTING
      AGREEMENT

     

    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.

     


    
      
        
        

      

      
        
        

        
          

        

      

      
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    “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.

     

    2.  Agreement
      to Vote.

     

    (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


     


    
      
        
        

      

      
        
        

        
          

        

      

      
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    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 

     


    
      
        
        

      

      
        
        

        
          

        

      

      
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    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.

     

    3.  Proxy.

     

    (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.

     


    
      
        
        

      

      
        
        

        
          

        

      

      
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    (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 termination,
      amendment, acceleration or cancellation of, or require payment under, or result
      in the creation of any lien on the properties or assets of Parent pursuant
      to,
      any note, bond, mortgage, indenture, contract, agreement, lease, license,
      permit, franchise or other instrument or obligation to which Parent is a party
      or by which Parent or any of its respective properties is bound, except for
      any
      thereof that could not reasonably be expected to materially impair the ability
      of Parent to perform its obligations hereunder or under the Merger Agreement
      or
      to consummate the transactions contemplated hereby or thereby on a timely
      basis.

     

    5.  Representations
      and Warranties of Company.
      Company
      represents and warrants to each Stockholder as follows:

     

    (a)  Organization.
      Company
      is a corporation duly organized, validly existing and in good standing under
      the
      laws of the State of Maryland.

     

    (b)  Authority;
      Enforceability.
      Company
      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 Company’s board of directors and no other corporate
      proceedings on the part of Company are necessary to authorize the execution
      and
      delivery of this Agreement by Company and the consummation by it of the
      transactions contemplated hereby. This Agreement has been duly executed and
      delivered by Company and is a valid and legally binding obligation of Company,
      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.

     

    (c)  No
      Conflict.
      The
      execution and delivery of this Agreement by Company do not, and the performance
      of this Agreement by Company will not, (i) conflict with or violate the charter
      or by-laws of Company, (ii) conflict with or violate any law, rule, regulation
      or order applicable to Company 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 termination, amendment, acceleration
      or
      cancellation of, or require payment under, or result in the creation of any
      lien
      on the properties or assets of Company pursuant to, any note, bond, mortgage,
      indenture, contract, agreement, lease, license, permit, franchise or other
      instrument or obligation to which Company is a party or by which Company or
      any
      of its respective properties is bound, except for any thereof that could not
      reasonably be expected to materially impair the ability of Company to perform
      its obligations hereunder or under the Merger Agreement or to consummate the
      transactions contemplated hereby or thereby on a timely basis.

     


    
      
        
        

      

      
        
        

        
          

        

      

      
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    6.  Representations
      and Warranties of the Stockholders.
      Each
      Stockholder represents and warrants to Parent and Company as
      follows:

     

    (a)  Organization.
      If such
      Stockholder is not an individual, such Stockholder has been duly organized
      and
      is validly existing and in good standing under the laws of the jurisdiction
      of
      its organization.

     

    (b)  Authority.
      If such
      Stockholder is not an individual, such Stockholder has all necessary authority
      to enter into this Agreement, to perform its obligations hereunder and to
      consummate the transactions contemplated hereby, and the execution, delivery
      and
      performance of this Agreement by such Stockholder and the consummation by such
      Stockholder of the transactions contemplated hereby have been duly authorized
      by
      all necessary action on the part of such Stockholder.

     

    (c)  Enforceability.
      This
      Agreement has been duly executed and delivered by such Stockholder and is a
      valid and legally binding obligation of such Stockholder, 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 or equity, whether applied by a court of law
      or
      equity.

     

    (d)  No
      Conflict.
      The
      execution and delivery of this Agreement by such Stockholder do not, and the
      performance of this Agreement by such Stockholder will not, (i) if such
      Stockholder is not an individual, conflict with or violate the certificate
      of
      incorporation or by-laws, or trust agreement or other organizational documents,
      of such Stockholder, (ii) conflict with or violate any law, rule, regulation
      or
      order applicable to such Stockholder or by which any of such Stockholder’s
      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 termination,
      amendment, acceleration or cancellation of, or require payment under, or result
      in the creation of any lien on the properties or assets of such Stockholder
      pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease,
      license, permit, franchise or other instrument or obligation to which such
      Stockholder is a party or by which such Stockholder or any of such Stockholder’s
      properties or assets is bound, except for any thereof that would not result
      in
      the imposition of a lien on such Stockholder’s Shares and would not reasonably
      be expected to materially impair the ability of such Stockholder to perform
      such
      Stockholder’s obligations hereunder or under the Merger Agreement or to
      consummate the transactions contemplated hereby or thereby on a timely
      basis.

     

    (e)  No
      Consent.
      The
      execution and delivery of this Agreement by such Stockholder do not, and the
      performance by such Stockholder of such Stockholder’s obligations hereunder will
      not, require such Stockholder to obtain any consent, approval, authorization
      or
      permit of, or to make any filing with or notification to, any Governmental
      Entity other than filings required under the Exchange Act disclosing the
      execution of this Agreement and the terms hereof.

     

    (f)  No
      Proceedings.
      There is
      no suit, action, investigation or proceeding pending or, to the knowledge of
      such Stockholder, threatened against such Stockholder at law or in equity before
      or by any Governmental Entity that could reasonably be expected to materially
      impair the ability of such Stockholder to perform such Stockholder’s obligations
      hereunder on a timely ba-

     


    
      
        
        

      

      
        
        

        
          

        

      

      
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    sis,
      and
      there is no agreement, commitment or law to which such Stockholder is subject
      that could reasonably be expected to materially impair the ability of such
      Stockholder to perform such Stockholder’s obligations hereunder on a timely
      basis.

     

    (g)  Ownership.
      Such
      Stockholder’s Existing Shares are owned beneficially and of record by such
      Stockholder except as indicated on Schedule I opposite such Stockholder’s name.
      Such Stockholder’s Existing Shares constitute all of the shares of Parent Common
      Stock or Company Common Stock, as the case may be, owned of record or
      beneficially by such Stockholder. Except for units of NHR/OP, L.P. which are
      convertible into Company Common Stock, all of the Existing Shares are issued
      and
      outstanding and, except as indicated on Schedule I opposite such Stockholder’s
      name, such Stockholder does not own, of record or beneficially, any warrants,
      options, convertible securities or other rights to acquire any shares of Parent
      Common Stock or Company Common Stock, as the case may be. Such Stockholder
      has
      not appointed or granted any proxy which is still effective with respect to
      any
      Shares. Such Stockholder has sole voting power, sole power of disposition,
      sole
      power to demand appraisal rights and sole power to agree to all of the matters
      set forth in this Agreement, in each case, with respect to all of such
      Stockholder’s Existing Shares, with no limitations, qualifications or
      restrictions on such rights, subject to applicable securities laws and the
      terms
      of this Agreement.

     

    (h)  No
      Encumbrances.
      Such
      Stockholder’s Shares and the certificates representing such Shares (if any) are
      now, and at all times during the term hereof will be, held by the Stockholder,
      or by a nominee or custodian for the benefit of the Stockholder, free and clear
      of all liens, claims, security interests, proxies, voting trusts or agreements,
      understandings or arrangements or any other encumbrances whatsoever, except
      as
      arising hereunder.

     

    (i)  No
      Finder’s Fees.
      Except
      as provided in the Merger Agreement, no broker, investment banker, financial
      adviser or other person is entitled to any broker’s, finder’s, financial
      adviser’s or other similar fee or commission in connection with the transactions
      contemplated hereby based upon arrangements made by or on behalf of such
      Stockholder for which Merger Subsidiary, Parent or Company or any of their
      respective Subsidiaries could be or become liable.

     

    7.  Agreements
      of the Stockholders.

     

    (a)  Restrictions
      on Transfer; Proxies; Non-Interference.(i)
      Each
      Stockholder of Company hereby agrees, until the Termination Time, not to (A)
      sell, transfer, pledge, encumber, grant, assign or otherwise dispose of, enforce
      any redemption agreement with Company or enter into any contract, option or
      other arrangement or understanding with respect to or consent to the offer
      for
      sale, sale, transfer, pledge, encumbrance, grant, assignment or other
      disposition of, record or beneficial ownership of any of such Stockholder’s
      Shares (whether acquired heretofore or hereafter) or any interest in any of
      the
      foregoing, except to Parent, (B) in connection with any Company Takeover
      Proposal, vote, agree to vote, grant any proxy or power of attorney to vote,
      deposit into a voting trust or enter into a voting agreement with respect to,
      any of such Stockholder’s Shares except for, with, by or on behalf of Merger
      Subsidiary or Parent or (C) take any action that would make any
      representation or warranty of such Stockholder contained herein untrue or
      incorrect or have the effect of preventing such Stockholder from performing
      such
      Stockholder’s obligations under this Agreement, or that would otherwise
      materially hinder or delay Parent from consummating the Merger.

     


    
      
        
        

      

      
        
        

        
          

        

      

      
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    (ii) Each
      Stockholder of Parent hereby agrees, until the Termination Time, not to take
      any
      action that would make any representation or warranty of such Stockholder
      contained herein untrue or incorrect or have the effect of preventing such
      Stockholder from performing such Stockholder’s obligations under this
      Agreement.

     

    (b)  Non-Solicitation.
      Each
      Stockholder of Company acknowledges that such Stockholder has received a copy
      of, and read, the Merger Agreement, including Section 4.02 thereof. Such
      Stockholder agrees to comply with the provisions of the Merger Agreement to
      the
      extent applicable to Company’s Representatives, and, without limiting the
      foregoing, agrees to, and to cause such Stockholder’s Representatives to, comply
      with Section 4.02 thereof (for this purpose, the term “Company Takeover
      Proposal” shall include any inquiry, expression of interest, proposal or offer
      with respect to any matter described in Section 7(a) hereof).

     

    (c)  Information.
      (i) Each
      Stockholder of Company hereby agrees, until the Termination Time, to notify
      Parent promptly of (A) the number of any additional shares of Company
      Common Stock and the number and type of any other Shares of Company Common Stock
      acquired by such Stockholder, if any, after the date hereof and (B) any
      such inquiries or proposals that are received by, any such information that
      is
      requested from, or any such negotiations or discussions that are sought to
      be
      initiated or continued with, such Stockholder of Company with respect to any
      matter described in Section 7(a) or 7(b).

     

    (ii) Each
      Stockholder of Parent hereby agrees, until the Termination Time, to notify
      Company promptly of the number of any additional shares of Parent Common Stock
      and the number and type of any other Shares of Parent Common Stock acquired
      by
      such Stockholder, if any, after the date hereof.

     

    (d)  Waiver
      of Appraisal Rights.
      Each
      Stockholder of Company hereby waives any rights of appraisal or rights to
      dissent from the Consolidation, the Merger and each of the other transactions
      contemplated by the Merger Agreement that such Stockholder may
      have.

     

    (e)  Stop
      Transfer.
      Each
      Stockholder of Company will not request Company to, and Company will not,
      register the transfer (book-entry or otherwise) of any certificate or
      uncertificated interest representing any of such Stockholder’s Shares, unless
      such transfer is made in compliance with this Agreement. 

     

    8.  Further
      Assurances.
      From
      time to time, at Parent’s or Company’s request and without further
      consideration, each Stockholder shall execute and deliver such additional
      documents and take all such further action as may be reasonably necessary or
      desirable to consummate and make effective the transactions contemplated by
      this
      Agreement. Without limiting the generality of the foregoing, no Stockholder
      shall enter into an agreement or arrangement (or alter, amend or terminate
      any
      existing agreement or arrangement) if such action would materially impair the
      ability of such Stockholder to effectuate, carry out or comply with all of
      the
      terms of this Agreement.

     

    9.  Notices.
      All
      notices and other communications hereunder shall be in writing and shall be
      deemed duly given (1) on the date of delivery if delivered personally, or by
      telecopy or telefacsimile, upon confirmation of receipt, (2) on the first
      business day following the date of dispatch if delivered by a recognized
      next-day courier service, or (3) on the fifth business day following the date
      of
      mail-

     


    
      
        
        

      

      
        
        

        
          

        

      

      
        -9-

      

    


    ing
      if
      delivered by registered or certified mail, return receipt requested, postage
      prepaid. All notices hereunder shall be given the relevant party at the address
      stated in the Merger Agreement, in the case of Parent and Company, and on
      Schedule I hereto, in the case of the Stockholders, or at any other address
      as
      the party may specify for this purpose by notice to the other party pursuant
      to
      this Section 9.

     

    10.  No
      Waivers.
      No
      failure or delay by Parent, Company or any Stockholder in exercising any right,
      power or privilege under any Support Document shall operate as a waiver of
      that
      right, power or privilege. A single or partial exercise of any right, power
      or
      privilege shall not preclude any other or further exercise of that right, power
      or privilege or the exercise of any other right, power or privilege. The rights
      and remedies provided in the Support Documents shall be cumulative and not
      exclusive of any rights or remedies provided by law.

     

    11.  Amendments,
      Etc.
      No
      amendment, modification, termination or waiver of any provision of any Support
      Document shall be effective unless it shall be in writing and signed and
      delivered by Parent, Company and each affected Stockholder, and then it shall
      be
      effective only in the specific instance and for the specific purpose for which
      it is given.

     

    12.  Successors
      and Assigns; Third Party Beneficiaries.

     

    (a)  Except
      pursuant to the Consolidation, no party shall assign any of such party’s rights
      or remedies or delegate any of such party’s obligations or liabilities, in whole
      or in part, under any Support Document. Any assignment or delegation in
      contravention of this Section 12 shall be void ab initio
      and shall
      not relieve the assigning or delegating party of any obligation under any
      Support Document.

     

    (b)  The
      provisions of each Support Document shall be binding upon and inure solely
      to
      the benefit of the parties hereto and their respective permitted heirs,
      executors, legal representatives, successors and assigns, and no other
      person.

     

    13.  Governing
      Law.
      This
      Agreement and each other Support Document shall be governed by and construed
      in
      accordance with the laws of the State of Delaware, except as it relates to
      shares of Maryland corporations in a way specifically governed by Maryland
      law

     

    14.  Severability
      of Provisions.
      If any
      term or other provision of any Support Document is invalid, illegal or incapable
      of being enforced by any law or public policy, all other terms and provisions
      of
      such Support Document shall nevertheless remain in full force and effect so
      long
      as the economic or legal substance of the transactions contemplated hereby
      is
      not affected in any manner materially adverse to any party. Upon such
      determination that any term or other provision is invalid, illegal or incapable
      of being enforced, the parties shall negotiate in good faith to modify such
      Support Document so as to effect the original intent of the parties as closely
      as possible in an acceptable manner in order that the transactions contemplated
      hereby are consummated as originally contemplated to the greatest extent
      possible.

     

    15.  Headings
      and References.
      Article
      and section headings in each Support Document are included for the convenience
      of reference only and do not constitute a part of the Support Document for
      any
      other purpose. References to articles and sections in any Support Document
      are
      references to the sections of the Support Document unless the context shall
      require otherwise. Any of the 

     


    
      
        
        

      

      
        
        

        
          

        

      

      
        -10-

      

    


    terms
      defined in this Agreement may, unless the context otherwise requires, be used
      in
      the singular or the plural, depending on the reference. The use in this
      Agreement of the word “include” or “including,” when following any general
      statement, term or matter, shall not be construed to limit such statement,
      term
      or matter to the specific items or matters set forth immediately following
      such
      word or to similar items or matters, whether or not nonlimiting language (such
      as “without limitation” or “but not limited to” or words of similar import) is
      used with reference thereto, but rather shall be deemed to refer to all other
      items or matters that fall within the broadest possible scope of such general
      statement, term or matter.

     

    16.  Entire
      Agreement.
      The
      Support Documents embody the entire agreement and understanding of each of
      the
      parties hereto, and supersede all other written or oral prior agreements or
      understandings, with respect to the subject matters of the Support
      Documents.

     

    17.  Enforcement.
      The
      parties agree that irreparable damage would occur in the event that any of
      the
      provisions of any Support Agreement were not performed in accordance with their
      specific terms or were otherwise breached. It is accordingly agreed that the
      parties shall be entitled to an injunction or injunctions to prevent breaches
      of
      the Support Agreements and to enforce specifically the terms and provisions
      of
      the Support Agreements in any court of the United States or of the State of
      New
      York court sitting in the Borough of Manhattan, City of New York, this being
      in
      addition to any other remedy to which they are entitled at law or in
      equity.

     

    18.  Fees
      and Expenses.
      Whether
      or not the Merger is consummated, all costs and expenses incurred in connection
      with the Support Documents and the transactions contemplated hereby and thereby
      shall be paid by the party incurring such expense.

     

    19.  Counterparts.
      This
      Agreement may be signed in any number of counterparts, each of which shall
      be an
      original, with the same effect as if all signatures were on the same
      instrument.

     

    20.  Officers
      and Directors.
      Notwithstanding anything to the contrary in this Agreement, in the event a
      Stockholder is a director or officer of Parent or Company, nothing in this
      Agreement is intended or shall be construed to require such Stockholder, in
      his
      or her capacity as a director or officer of Parent or Company, to act or fail
      to
      act in accordance with his or her duties under applicable law in such capacity.
      Furthermore, no Stockholder who is or becomes (during the term hereof) a
      director or officer of Parent or Company makes any agreement or understanding
      herein in his or her capacity as a director or officer, and nothing herein
      will
      limit or affect, or give rise to any liability to any Stockholder in such
      Stockholder’s capacity as a director or officer of Parent or Company. For the
      avoidance of doubt, nothing in this Section 20 shall in any way limit, modify
      or
      abrogate any of the obligations of the Stockholders hereunder, including
      (a) to vote the Shares in accordance with the terms of this Agreement and
      (b) in the case of Stockholders of Company, to not transfer any of such
      Stockholders’ Shares except as permitted under Section 7(a)
      above.

     

    21.  Waiver
      of Jury Trial.
      Each party to this Agreement, as a condition of such party’s right to enforce or
      defend any right under or in connection with this Agreement or any other Support
      Document, waives any right to a trial by jury in any action to enforce or defend
      any right under this Agreement or any other Support Document and agrees that
      any
      action shall be tried before a court and not before a
      jury.

     


    
      
        
        

      

      
        
        

        
          

        

      

      
        -11-

      

    


    IN
      WITNESS
      WHEREOF, Parent, the Company and each of the undersigned Stockholders have
      caused this Agreement to be duly executed as of the day and year first above
      written.

     

    NATIONAL
      HEALTHCARE CORPORATION

     

    By: /s/
      R.
      Michael Ussery

    Name: R.
      Michael
      Ussery

    Title: Senior
      V.P., Operations

     

     

    NATIONAL
      HEALTH REALTY, INC.

     

    By: /s/
      Robert G. Adams

    Name: Robert
      G.
      Adams

    Title: President

     


    
      
        
        

      

      
        
        

        
          

        

      

      
        -12-

      

    


    STOCKHOLDERS
      OF PARENT:

     

    


     

    /s/
      James Paul Abernathy  

    Name:
      James Paul Abernathy

    


    


    


    /s/
      Robert G. Adams   

    Name:
      Robert G. Adams

    


    


    


    /s/
      W.
      Andrew Adams   

    Name:
      W.
      Andrew Adams

    


    


    


    /s/
      Ernest G. Burgess, III  

    Name:
      Ernest G. Burgess, III

    


    


    


    /s/
      Emil E. Hassan   

    Name:
      Emil
      E. Hassan

    


    


    


    /s/
      Richard F. LaRoche, Jr.  

    Name:
      Richard F. LaRoche, Jr.

    


    


    


    /s/
      Lawrence C. Tucker   

    Name:
      Lawrence C. Tucker

    


    


    


    


     


    
      
        
        

      

      
        
        

        
          

        

      

      
        -13-

      

    


    STOCKHOLDERS
      OF COMPANY: 

    


    


    


    /s/
      James Paul Abernathy  

    Name:
      James Paul Abernathy

    


    


    


    /s/
      Robert G. Adams   

    Name:
      Robert G. Adams

    


    


    


    /s/
      W.
      Andrew Adams   

    Name:
      W.
      Andrew Adams

    


    


    


    /s/
      Ernest G. Burgess, III  

    Name:
      Ernest G. Burgess, III

    


    


    


    /s/
      James R. Jobe   

    Name:
      James R. Jobe

    


    


    


    /s/
      Richard F. LaRoche, Jr.  

    Name:
      Richard F. LaRoche, Jr.

    


    


    


    /s/
      Joseph M. Swanson   

    Name:
      Joseph M. Swanson

    


    



    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    



    Schedule
      I

     

    
      	
              Stockholder
                of Parent

            	
              Notice
                Address

            	
              Number
                of

              Existing
                Shares

            
	
              James
                Paul Abernathy

               

            	
              2102
                Greenland Dr.

              Murfreesboro,
                TN 37130

               

            	
              10,473

               

            
	
              Robert
                G. Adams

               

            	
              100
                Vine St. Ste. 1400

              Murfreesboro,
                TN 37130

               

            	
              354,932

               

            
	
              W.
                Andrew Adams

               

            	
              100
                Vine Street, Suite 1200

              Murfreesboro,
                TN 37130

               

            	
              1,093,652

               

            
	
              Ernest
                G. Burgess, III

               

            	
              7097
                Franklin Road 

              Murfreesboro,
                TN 37128

               

            	
              146,204

               

            
	
              Emil
                E. Hassan

               

            	
              1704
                Irby Lane

              Murfreesboro,
                TN 37127

               

            	
              6,000

               

            
	
              Richard
                F. LaRoche, Jr.

               

            	
              2103
                Shannon Dr.

              Murfreesboro,
                TN 37129

               

            	
              343,951

               

            
	
              Lawrence
                C. Tucker

               

            	
              140
                Broadway 

              New
                York, NY 10005

               

            	
              720,155

               

            


    

    


    


    
      	
              Stockholder
                of Company

            	
              Notice
                Address

            	
              Number
                of

              Existing
                Shares

            
	
              James
                Paul Abernathy

               

            	
              2102
                Greenland Dr.

              Murfreesboro,
                TN 37130

               

            	
              8,187

               

            
	
              W.
                Andrew Adams

               

            	
              100
                Vine Street, Suite 1200

               

              Murfreesboro,
                TN 37130

               

            	
              1,257,681

               

            
	
              Robert
                G. Adams

               

            	
              100
                Vine St. Ste. 1400

              Murfreesboro,
                TN 37130

               

            	
              436,309

               

            
	
              Ernest
                G. Burgess, III

               

            	
              7097
                Franklin Road 

              Murfreesboro,
                TN 37128

               

            	
              140,000

               

            
	
              James
                R. Jobe

               

            	
              707
                Regal Drive

              Murfreesboro,
                TN 37129 

               

            	
              0

               

            
	
              Joseph
                M. Swanson

               

            	
              1188
                Park Avenue 

              Murfreesboro,
                TN 37129

               

            	
              5,000

               

            
	
              Richard
                F. LaRoche, Jr.

               

            	
              2103
                Shannon Dr.

              Murfreesboro,
                TN 37129

               

            	
              372,714