Document:

Exhibit 10.19

 

Exhibit
10.19

BY E-MAIL AND OVERNIGHT MAIL

February 10, 2005

Mr. Philip Hertik

Windsor Health Group

215 Centerview Drive, Suite 300

Brentwood, TN 37027

Dear Phil:

     Subject to the vote of the shareholders, it is my pleasure to invite you to join the Board of
Directors of Tandem Health Care, Inc. (“the Board”). The next Board meeting is scheduled for March
3, 2005 at 11:00 AM (ET) by conference call. I invite you to join the Board on that call.

     As we have discussed, you will be reimbursed for expenses associated with attending meetings
and fulfilling your duties as a Director. Please submit these expenses to Sharon Mason, Corporate
Office Manager at the Maitland, Florida office.

     I am pleased to offer you a grant of 20,000 stock options at fair market value, subject to the
approval of the Board at the next meeting.

     You will receive $25,000 per year, payable quarterly, in advance for fulfilling all of your
duties as a Tandem Board member. Tandem has historically scheduled four quarterly in-person
meetings per year with additional conference calls as necessary. The frequency of these meetings
may increase as the needs of the Company require.

     If you are in agreement with the above, please sign two copies of this letter, and return one
to me.

     I am very excited about having you join the Tandem Health Care Board of Directors and I look
forward to a very successful relationship.

Sincerely,

/s/ Lawrence R. Deering

Lawrence R. Deering

Chairman and CEO

800 Concourse Parkway S., Suite 200, Maitland, FL 32751

Tel (407) 571-1550 Fax (407) 571-1599

 

 

Hertik Board Letter
Page 2

	 	 	 	 	 
	Agreed to in all respects:
	 
	 	 	 	 
	Date:

	 	February 11, 2005	 	 
	 
	 	 	 	 
	By:

	 	/s/ Philip Hertik	 	 
	 

	 	 

	 	 
	 

	 	Philip Hertik	 	 
	 
	 	 	 	 
	cc:

	 	William Matthes	 	 
	 

	 	Mark Visser	 	 
	 

	 	John Whitman	 	 
	 

	 	Rob Gluskin	 	 
	 

	 	Joe Conte	 	 
	 

	 	Gene Curcio	 	 
	 

	 	Rosemary Corsetti	 	 
	 

	 	Sharon Mason	 	 
	 

	 	Stephanie Ho	 	 

Hertik Board.doc 2/10/05Exhibit 10.20

 

Exhibit 10.20

AGREEMENT

          AGREEMENT, dated as of March 25, 1998, among TANDEM HEALTH CARE, INC., a Pennsylvania
corporation (the “Company”), HEALTH CARE REIT, INC., a Delaware corporation (the “REIT”), BEHRMAN
CAPITAL II L.P., a Delaware limited partnership (“Behrman”), STRATEGIC ENTREPRENEUR FUND II, L.P, a
Delaware limited partnership (collectively with Behrman, the
“Purchasers”), and Lawrence E. Deering
and Joseph D. Conte (collectively, the “Founders”).

          WHEREAS, the Company and the REIT are parties to a Warrant Agreement, dated February 27, 1998
(the “Warrant Agreement”); and

          WHEREAS, the Company and the Purchasers are parties to a Securities Purchase Agreement dated
as of March 24, 1998 (the “Purchase Agreement”); and

          WHEREAS, it is a condition to the consummation of the transactions contemplated by the
Purchase Agreement that the parties hereto clarify their understanding with respect to several
matters relating to the Warrant Agreement;

          NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, the
parties hereto hereby agree as follows:

          1. Definitions. Capitalized terms used herein and not otherwise defined shall have the
meanings set forth in the Purchase Agreement.

          2. Existing Capitalization of the Company. The parties hereto confirm and agree that
on the date hereof (i) there are 1,232,760 issued and outstanding shares of Common Stock of the
Company and (ii) the “Warrants” (as defined in the Warrant Agreement) are currently exercisable for
an aggregate 189,655 shares of Common Stock.

          3. Issuances of Securities to Purchasers. The REIT confirms and agrees that all
purchases of capital shares of the Company (including without limitation the Securities) by the
Purchasers pursuant to the Purchase Agreement (whether on the Initial Closing Date or on any
Subsequent Closing Date), shall be deemed to be fair market value purchases at the time thereof for
purposes of Section 10(c) of the Warrant Agreement and thus shall be disregarded in calculating the
number of shares of Common Stock to be issued upon exercise of any of the Warrants.

 

 

          4. Vesting of Options.

          (a) Reference is made to: (i) the Class I Non-Qualified Stock Option Agreements, dated
as of March 25, 1998 between the Company and each of the Founders (the “Class I Option
Agreements”); (ii) the Class II Incentive Stock Option Agreements, dated as of March 25, 1998
between the Company and each of the Founders (the “Class II Option Agreements”); (iii) the Class
III Incentive Stock Option Agreements, dated as of March 25, 1998 between the Company and each of
the Founders (the “Class III Option Agreements”); and
(iv) the Class IV 
Non-Qualified Stock Option
Agreements, dated as of March 25, 1998 between the Company and each of the Founders (the “Class IV
Option Agreements,” and collectively with the Class I Option Agreements, the Class II Option
Agreements and the Class III Option Agreements, the “Option Agreements”). On the date hereof the
Company has granted stock options to the Founders pursuant to the Option Agreements. Half of the
stock options granted pursuant to the Class III Option Agreements and all of the stock options
granted pursuant to the Class IV Option Agreements, and all shares of Common Stock issued upon the
exercise of such options, shall be disregarded in calculating the number of shares of Common Stock
to be issued upon exercise of any of the Warrants. Further, options granted under the Class I
Option Agreements and the Class II Option Agreements, and one-half of the options granted under the
Class III Option Agreements, shall be disregarded in calculating the number of shares of Common
Stock to be issued upon exercise of any of the Warrants to the extent that such options are not
exercisable at the time of such exercise of the Warrants pursuant to the terms of the respective
Option Agreements. Further, the options granted under the Class I Option Agreements and the Class
II Option Agreements, and one-half of the options granted under the Class III Option Agreements,
that are exercisable at the time of an exercise of the Warrants and that would otherwise be
included under this paragraph (a) in calculating the number of shares of Common Stock to be issued
upon an exercise of the Warrants (the “Exercisable Options”) shall be disregarded in calculating
the number of shares of Common Stock to be issued upon an exercise of the Warrants to the extent,
but only to the extent, of the number thereof that equals the quotient of the total exercise price
payable upon the exercise of all of the Exercisable Options divided by the fair market value of a
share of Common Stock on the date of such exercise of the Warrants, determined in the reasonable
judgment of the Company’s Board of Directors. To the extent that the options granted under the
Class I Option Agreements and the Class II Option Agreements, and one-half of the options granted
under the Class III Option Agreements (and the shares of Common Stock issuable in respect of the
foregoing), are not excluded under the provisions of this paragraph (a), such options and shares
shall be included in calculating the number of shares of Common Stock to be issued upon exercise of
any of the Warrants. The REIT hereby agrees that any shares of Common Stock to be issued upon an
exercise of the Warrants pursuant to this Section 4(a) may, in lieu of issuance and delivery
thereof by the Company, be delivered by Lawrence R. Deering and Joseph D. Conte out of shares of
Common Stock then held by them.

          (b) The REIT confirms and agrees that, except as provided in paragraph (a) above, no
vesting of Option Shares under the Option Agreements, and no issuances of Option Shares upon
exercise of the options granted pursuant to the Option Agreements, shall result in

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any adjustment to the number of Warrant Units issuable upon exercise of the Warrants or to
the exercise price therefor, in each case pursuant to Section 10 of the Warrant Agreement. Without
limiting the generality of the foregoing, except as provided in paragraph (a) above, no such
adjustments shall be made in the event that the exercise price for such Option Shares at the time
of any such exercise is less than the fair market value thereof.

          5. Surrender of Shares by Founders. In the event that (i) any additional shares of
Common Stock are to be issued upon an exercise of the Warrants pursuant to Section 4(a) hereof and
(ii) such shares are not delivered by the Founders pursuant to the last sentence of Section 4(a),
each of the Founders shall at no cost surrender to the Company a number of shares of Common Stock
equal to one-half of the number of additional shares so issuable (with the result that the total
number of shares surrendered shall equal such number of additional shares). The Company shall
immediately cancel any shares of Common Stock so surrendered. Each of the Founders hereby covenants
and agrees that he shall at all times retain and possess a sufficient number of shares of Common
Stock to effect any such surrender.

          6. Put Right Pro Rata with Preferred Stock Payments. Any payments by the Company
pursuant to Section 1l(a), Section 1l(b) or Section 12(a) of the Warrant Agreement shall be made
on a pro rata basis with such payments (if any) by the Company as may then be payable in
respect of (i) the redemption of the Preferred Stock pursuant to paragraph 2 of the Articles of
Amendment or (ii) the Preferred Stock upon the liquidation, dissolution or winding up of the
Company pursuant to paragraph 3 of the Articles of Amendment.

          7. Priority of Registration Rights.

          (a) Upon the exercise of a “Demand Registration” (as defined in Schedule I to the Warrant
Agreement), the Purchasers and the Founders shall have “piggy-back” rights to register shares for
sale to the public as set forth in Section 6 of the Registration Rights Agreement;
provided that the number of shares requested to be so included by the Purchasers and
Founders may be reduced (pro rata based upon the number of shares of Common Stock so
requested to be registered, and before any such reduction to the number of “Warrant Shares” (as
defined in the Warrant Agreement) requested to be so registered) if and to the extent that the
managing underwriter shall be of the opinion that such inclusion would adversely affect the
marketing of the securities to be sold.

          (b) In the event that the holders of the Warrant Shares wish, pursuant to Section 2(b) of
Schedule I to the Warrant Agreement, to exercise “piggy-back” registration rights upon a
registration of securities by the Company that has been requested pursuant to Section 4 of the
Registration Rights Agreement, the number of Warrant Shares requested to be so included may be
reduced (pro rata based upon the number of Warrant Shares and “Founders Stock” (as defined
in the Registration Rights Agreement) so requested to be registered, and before any such reduction
to the number of shares of “Restricted Stock” (as defined in the Registration Rights Agreement)
requested to be so registered) if and to the extent that the managing underwriter shall

3

 

be of the opinion that such inclusion would adversely affect the marketing of the
securities to be sold.

          8. Miscellaneous.

          (a) All covenants and agreements contained in this Agreement by or on behalf of any of
the parties hereto shall bind and inure to the benefit of the respective successors, heirs and
assigns of the parties hereto whether so expressed or not.

          (b) All notices, requests, consents and other communications hereunder shall be in writing and
shall be delivered personally or by nationally recognized overnight courier, or mailed by
first-class registered mail, postage prepaid, addressed as follows:

     if to the Company or the Founders, to Tandem Health Care, Inc., Persimmon Road,
Sewickley, Pennsylvania 15143, Attention: Lawrence R. Deering;

     if
to the Purchasers, to Berhman Capital, 126 E.
56th
 Street, New York, New York 10022,
with a copy to Reboul, MacMurray, Hewitt, Maynard & Kristol, 45 Rockefeller Plaza, New York,
New York 10111, Attention: Joshua A. Leuchtenburg, Esq.; and

     if to the REIT, to Health Care REIT, Inc., One SeaGate, Suite 1500, P.O. Box 1475,
Toledo, Ohio 43603-1475, Attention: President;

or, in any case, at such other address or addresses as shall have been furnished in writing to the
other parties hereto. Any notice or other communication pursuant to this Agreement shall be deemed
to have been duly given or made and to have become effective when delivered in hand to the party to
which directed or if sent by first-class registered mail, postage prepaid and properly addressed as
set forth above, at the earlier of (i) the time when received by the addressee or (ii) the fifth
business day following the dispatch thereof

          (c) This Agreement shall be governed by and construed in accordance with the laws of
the State of New York, except to the extent that the Warrant Agreement is amended hereby, in which
case this Agreement shall be governed by and construed in accordance with the laws of the
Commonwealth of Pennsylvania.

          (d) This Agreement constitutes the entire agreement of the parties with respect to the
subject matter hereof and may not be modified or amended except in a writing executed by the
parties.

          (e) In the event of a conflict between the terms hereof and the terms of the Warrant
Agreement, the terms hereof shall govern. Except as modified herein, the terms of the Warrant
Agreement continue to be in full force and effect.

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          (f) This Agreement may be executed in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same instrument.

5

 

          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of
the date first above written.

	 	 	 	 	 	 	 
	 	 	TANDEM HEALTH CARE, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Lawrence R. Deering	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Chairman and Chief	 	 
	 

	 	 	 	Executive Officer	 	 
	 
	 	 	 	 	 	 
	 	 	BEHRMAN CAPITAL II, L.P.	 	 
	 
	 	 	 	 	 	 
	 

	 	By :
	 	Behrman Brothers, L.L.C.

General Partner	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

	 	/s/ Darryl Behrman	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Managing Member	 	 
	 
	 	 	 	 	 	 
	 	 	STRATEGIC ENTREPRENEUR FUND II, L.P.
	 
	 	 	 	 	 	 
	 

	 	By:

	 	/s/ Darryl Behrman	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	General Partner	 	 
	 
	 	 	 	 	 	 
	 	 	/s/ Lawrence R Deering
	 	 
	 	 	 	 	 
	 	 	Lawrence R Deering
	 	 
	 
	 	 	 	 	 	 
	 	 	/s/ Joseph D. Conte
	 	 
	 	 	 	 	 
	 	 	Joseph D. Conte
	 	 
	 
	 	 	 	 	 	 
	 	 	HEALTH CARE REIT. INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ George L. Chapman	 	 
	 

	 	 	 	 	 	 
	 	 	Name George L. Chapman	 	 
	 	 	Title: CHAIRMAN, CEO & PRESIDENT

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