PURCHASE OPTION AGREEMENT
AMONG
MONARCH PROPERTIES, LP,
INTEGRATED HEALTH SERVICES, INC.
AND
LYRIC HEALTH CARE LLC
DATED AS OF JUNE __, 1998
Section Page
TABLE OF CONTENTS
Section Page
1. Grant of Option............................................................2
2. Option Period; Option Deposits.............................................2
3. Exercise of the Option.....................................................2
4. Sale and Purchase of the Properties........................................3
5. Purchase Price.............................................................3
6. Purchase Option Deposits...................................................4
7. Survey and Engineering.....................................................5
8. Examination of Title.......................................................5
9. Option Closing and Option Closing Date; Transaction Costs and Expenses.....6
10. Seller's Representations and Warranties....................................7
11. Settlement Requirements....................................................8
12. Covenants and Agreements of Seller.........................................8
13. Defaults...................................................................9
14. Notices....................................................................9
15. Assignment and Binding Effect.............................................10
16. Evidence of Title.........................................................10
17. General Provisions........................................................10
18. Survival of Provisions....................................................11
19. Severability..............................................................11
20. Governing Law.............................................................11
21. Memoranda of Purchase Option..............................................11
22. Agreements and Covenants by Lyric.........................................11
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PURCHASE OPTION AGREEMENT
THIS PURCHASE OPTION AGREEMENT (this "Option Agreement") is made and
entered into as of the ____ day of June, 1998 among Integrated Health Services,
Inc., a Delaware corporation, with principal offices at 00000 Xxx Xxx Xxxxxxxxx,
Xxxxxx Xxxxx, Xxxxxxxx 00000 ("Seller"), Monarch Properties, LP, a Delaware
limited partnership, with principal offices at 0000 Xxxxxxx Xxx Xxxxxxxxx,
Xxxxxx, Xxxxxxx 00000 ("Buyer") and Lyric Health Care LLC, a Delaware limited
liability company, with principal offices at 00000 Xxx Xxx Xxxxxxxxx, Xxxxxx
Xxxxx, Xxxxxxxx 00000 ("Lyric").
W I T N E S S E T H:
WHEREAS, Seller is the present owner of the Properties (hereinafter
defined), including the real property, improvements and personal property
constituting each of the health care facilities (individually, the "Facility"
or, collectively, the "Facilities"), situated at the addresses described on
Exhibit A hereto; and
WHEREAS, Seller has agreed to grant Buyer options to purchase each of the
Properties on the terms and conditions of this Option Agreement in consideration
of (i) the execution and delivery of the Facilities Purchase Agreement (the
"Facilities Purchase Agreement"), dated as of June __, 1998, among Seller, Buyer
and the entities described on Exhibit A to the Facilities Purchase Agreement and
(ii) Buyer's performance of its obligations under the Facilities Purchase
Agreement; and
WHEREAS, contemporaneously with the execution and delivery of the
Facilities Purchase Agreement (i) Lyric Health Care Holdings III, Inc. ("Lyric
III"), a wholly owned subsidiary of Lyric, executed a Master Lease (the "Master
Lease"), dated as of June ___, 1998, between Buyer and Lyric III, for the
leasing of the facilities sold to Buyer by the entities described on Exhibit A
to the Facilities Purchase Agreement and (ii) each of the entities described on
Exhibit A to the Facilities Purchase Agreement (collectively, "Facility
Subtenants"), each a wholly owned subsidiary of Lyric III, executed a Facility
Sublease ("Facility Sublease"), each dated as of June ___, 1998, between each
Facility Subtenant and Buyer, for the subleasing of the facilities sold to Buyer
by the Facility Subtenants under the Facilities Purchase Agreement.
NOW, THEREFORE, for and in consideration of the premises, and for other
good and valuable consideration, the receipt and sufficiency of which are
acknowledged by the parties, Seller, Buyer and Lyric agree as follows:
1. GRANT OF OPTION. Seller hereby grants and conveys to Buyer the
irrevocable and exclusive right and option (the "Option") to purchase any or all
of the Properties described on Exhibits B-1 through B-10 hereto from Seller,
upon the terms and conditions of this Option Agreement. The defined terms
"Properties" or "Property", as used in this Option Agreement, shall mean the
premises described on Exhibits B-1 through B-10 hereto, including the Facilities
located thereon. The defined term "Seller", as used in this Option Agreement,
shall include the subsidiary entities described on Exhibit A hereto.
2. OPTION PERIOD; OPTION DEPOSITS. The Option may be exercised by Buyer in
the manner specified in Section 3 hereof, at any time and from time to time
during the option period commencing on the Effective Date, as defined in the
Facilities Purchase Agreement (the "Option Date") and will contemporaneously
terminate at 12:00 midnight, Eastern Standard Time, on the date that is
twenty-four (24) months after the Option Date (the "Initial Term"). Such
expiration date of the Option is referred to herein as the "Expiration Date" and
the period from the Option Date to the Expiration Date is referred to as the
"Option Period".
Buyer is hereby granted three (3) successive options to renew the Option as
to any or all of the Properties for an additional period of one (1) year for
each such renewal option (such renewal periods are referred to, collectively, as
the "Renewal Terms", and, individually, as the "Renewal Term"), with each
Renewal Term under the same terms and conditions otherwise stated herein. Buyer
may exercise its right to exercise the aforesaid renewal options by (a)
providing written notice in each instance to Seller (in accordance with Section
15 hereof) no less than thirty (30) days prior to the Expiration Date of the
Initial Term or any Renewal Term and (b) paying to Seller, for each Renewal
Term, a deposit (a "Purchase Option Deposit") with respect to each Property as
to which Buyer wishes to extend the Option in an amount equal to one-half of one
percent (0.5%) of the Purchase Price (as described for the applicable Property
or Properties on Exhibit A hereto).
If the Option has not been exercised by Buyer prior to the Expiration Date
(subject to renewal under this Section 2 or extension under Section 8 hereof),
the Option shall automatically expire and be of no further force or effect. The
date of each such exercise of the Option by Buyer, in the manner specified in
Section 3 hereof, is referred to in this Option Agreement as an "Exercise Date".
3. EXERCISE OF THE OPTION. Buyer may exercise the Option at any time and
from time to time during the Option Period by giving written notice thereof to
Seller in the manner provided in Section 15 hereof, indicating one or more of
the Properties that Buyer wishes to acquire from Seller (the Properties so
indicated being referred to herein as the "Designated Properties"). From and
after any Exercise Date, this Option Agreement shall be deemed for all purposes
to be a legally enforceable contract between Buyer and Seller for the sale and
purchase of the Designated Properties upon the terms and conditions herein
provided. If Buyer fails to exercise the Option in the manner provided in this
Option Agreement, in respect
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of some or all of the Properties, prior to the expiration of the Option Period,
the Option shall expire with respect to those Properties as to which Buyer has
not exercised this Option (the "Unexercised Properties"), and no party hereto
shall thereafter have any rights, liabilities or obligations whatsoever under
this Option Agreement with respect to the Unexercised Properties.
4. SALE AND PURCHASE OF THE PROPERTIES.
(a) Upon each exercise of the Option by Buyer, Seller shall sell the
Designated Properties to Buyer and Buyer shall purchase the Designated
Properties from Seller in the manner and upon the terms and conditions set forth
in this Option Agreement.
(b) Buyer's decision to exercise the Option and to purchase some or
all of the Properties shall not be deemed a waiver of any breach of
representation, warranty or covenant of any of the parties hereto or, upon
execution, in the Facilities Purchase Agreement and the parties shall retain all
rights and remedies with respect thereto.
5. PURCHASE PRICE.
(a) If Buyer exercises the Option and purchases some or all of the
Properties pursuant to Section 4 hereof, then in consideration of the sale and
conveyance of the Designated Properties from Seller to Buyer, at the Option
Closing (as defined in Section 9 hereof), Buyer shall pay to Seller the amounts
designated for each of the Properties on Exhibit A hereto (the "Purchase
Price").
If Buyer exercises the Option on a date that is more than six (6) months
from the Option Date, the Purchase Price Buyer shall pay to Seller at the Option
Closing for each of the Properties shall be the greater of (i) the amounts
designated for each of the Properties on Exhibit A hereto or (ii) six and
one-half (6.5) or seven (7) (as designated for each of the Properties on Exhibit
A hereto) times the Facility's EBITDARM for the trailing twelve (12) month
period from the date the Option is exercised by Buyer.
(b) For purposes of this Section 5, the following definitions shall
apply:
(i) "EBITDARM" means, with respect to a Facility, the sum of (A)
Cash Flow from Operations of such Facility for the period, (B) all charges for
taxes counted in determining the consolidated net income of such Facility for
such period and (C) any management fee used to calculate the Facility's net
income for the period.
(ii) "Cash Flow from Operations" means, for any period, the sum
of (A) net income exclusive of extraordinary gains and extraordinary losses, (B)
depreciation, (C)
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amortization, (D) other non-cash charges deducted in determining net income, (E)
Interest Expense and (F) Lease Payments.
(iii) "Interest Expense" means, for any period, interest expense,
net of interest income, determined in conformity with GAAP.
(iv) "Lease Payments" means, for any period, the aggregate
payments payable during such period by the Facility under all leases and rental
agreements, other than capital leases and health care facility leases.
(c) The Purchase Price shall be reduced by the amount equal to the
applicable Property's Purchase Option Deposits, as defined in Section 6 hereof.
The Purchase Price shall be paid in immediately available U.S. funds at the
Option Closing.
(d) The Purchase Price for any Facility acquired by Buyer hereunder
shall be subject to adjustment on the date that is twelve (12) months after the
Option Closing (the "Purchase Price Adjustment Date") if six and one-half (6.5)
or seven (7) (as designated for each of the Properties on Exhibit A hereto)
times the Facility's EBITDARM for the trailing twelve (12) month period from the
Option Closing to the Purchase Price Adjustment Date (the "Adjusted Purchase
Price") is an amount that is more than ten percent (10%) above the actual
Purchase Price paid for the Facility at the Option Closing (the "Closing
Purchase Price"). Within thirty (30) days after the Purchase Price Adjustment
Date, Buyer shall provide Seller with the Facility's certified financial
statements for the twelve (12) month period preceding the Purchase Price
Adjustment Date and a calculation of the Facility's Adjusted Purchase Price. If
the Facility's financial statements indicate that the Adjusted Purchase Price is
more than ten percent (10%) above the Closing Purchase Price, then Buyer shall
immediately pay to Seller the full amount of the difference between the Closing
Purchase Price and the Adjusted Purchase Price (the "Purchase Price Adjustment")
by wire transfer to an account designated by Seller. If Buyer is required to pay
Seller the Purchase Price Adjustment, then Lyric shall cause the Facility
Subtenant to amend the Facility Sublease executed and delivered on the Option
Closing Date in accordance with Section 22 hereof to increase the Base Rent by
an amount equal to the Purchase Price Adjustment multiplied by the Base Rent
Factor, as defined and determined in Section 22 hereof.
6. PURCHASE OPTION DEPOSITS. (a) At the Option Closing, as defined in
Section 9 hereof, the Purchase Price for each Designated Property shall be
reduced by the amount of all Purchase Option Deposits paid by Buyer with respect
to such Property. The deduction of the Purchase Option Deposits from the
Purchase Price shall apply to the Buyer or to any assignee of Buyer.
(b) In the event that Buyer or any assignee of Buyer fails to exercise
its Option prior to the Expiration Date (subject to any extension pursuant to
Section 8 hereof) to
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purchase any of the Properties under this Purchase Option Agreement, the
applicable Purchase Option Deposits with respect to all Nonexercised Properties
shall be non-refundable to Buyer (or any assignee of Buyer) and forfeited by
Buyer (or any assignee of Buyer). Notwithstanding this provision, however, in
the event that Buyer elects to exercise its Option with respect to any of the
Properties hereunder, but (a) Buyer terminates its exercise of the Option
because it is determined that, with respect to the Designated Property, Seller
has breached any representation, warranty or covenant contained under this
Option Agreement or the Facilities Purchase Agreement or failed to comply with
or perform any of the covenants, agreements or obligations to be performed by
Seller under the terms and provisions of this Option Agreement or the Facilities
Purchase Agreement or (b) Buyer terminates its exercise of the Option with
respect to any Designated Properties pursuant to Section 8 hereof by reason of
any Objectionable Defects, then the Purchase Option Deposits with respect to
such Properties shall be fully refundable to Buyer without deduction or offset.
7. SURVEY AND ENGINEERING. Buyer shall at all times during the Option
Period and before the Option Closing have the privilege of going upon any of the
Properties with its agents or engineers as needed to inspect, examine, survey
and otherwise do what Buyer deems necessary in the engineering and planning for
development of any of the Properties. Said privilege shall include the right to
make soil tests, borings, percolation tests and tests to obtain other
information necessary to determine surface, subsurface and topographic
conditions; provided, however, that Buyer shall hold Seller harmless from any
damages incurred through the exercise of such privilege. Buyer and Seller agree
that in the event of the exercise of the Option, Buyer may obtain a survey of
any of the Properties (the "Survey") to be made by a surveyor duly licensed
within the states where each of the Properties is located, to determine the true
and accurate legal description of any of the Properties. Buyer and Seller hereby
further agree that the legal description of each of the Properties to be set
forth in the special warranty deeds from Seller referred to in Section 11 hereof
shall be based upon and shall conform to the Survey.
8. EXAMINATION OF TITLE. Buyer shall have until the applicable Option
Closing Date (as defined in Section 9 hereof) within which to examine title to
any of the Properties, and Buyer, prior to the end of such period, shall advise
Seller of any defects or objections affecting the marketability of title with
respect to any Designated Property, as represented by Seller in Section 10
hereof, disclosed by such examination (a "Defect"), other than (a) real property
ad valorem taxes and unpaid installments of assessments that are not yet due and
payable, (b) recorded utility easements which do not impose any monetary
obligation on the owner of the Property and which do not materially interfere
with the use of or access to the Property, (c) rights of the patients of the
Facility, (d) any state of facts an accurate survey would disclose, provided
that such facts do not render title unmarketable, (e) financing statements and
liens on personalty filed more than seven (7) years prior to the Option Closing
Date and not renewed, or filed against personalty no longer located on the
Property, (f) zoning regulations and ordinances that are not violated by the
existing structures or present use thereof
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and that do not render title unmarketable, (g) such other matters as the Title
Company (as defined in the Facilities Purchase Agreement) shall be willing,
without special premium, to omit as exceptions to coverage or to except with
insurance against collection out of or enforcement against the Property, and (h)
non-material encumbrances which have arisen after the Effective Date other than
by voluntary encumbrance of Seller (herein referred to collectively, as the
"Permitted Exceptions") (Defects other than Permitted Exceptions are herein
called "Objectionable Defects"). Seller shall then have a reasonable time, not
less than thirty (30) days from the date of notice of such Objectionable Defect
from Buyer, to cure such Objectionable Defect and shall in good faith exercise
reasonable diligence to cure such Objectionable Defect. If Seller fails or
refuses to cure any valid Objectionable Defect prior to the Option Closing Date
for any of the Designated Properties or the thirty (30) day cure period,
whichever is less, in addition to the other rights and remedies that Buyer may
have in law or in equity, Buyer may, at its option: (x) cure any such
Objectionable Defect, in which event the Purchase Price for the Designated
Property shall be reduced, in addition to any Purchase Option Deposits (if any),
by an amount equal to the reasonable costs and expenses incurred by Buyer in
connection with Buyer's to cure such Objectionable Defect; (y) accept title to
the Designated Property subject to such Objectionable Defect or Objectionable
Defects; or (z) any combination of the above. If Buyer elects to cure such
Objectionable Defect pursuant to subsection (x) hereof, Buyer at its option,
upon giving notice to Seller, may extend the Option Closing Date (and if
necessary, the Expiration Date) for the Designated Property for ninety (90)
days. If any Defect shall not have been cured within such period, Buyer may
exercise its option under either subsection (x) or (y) hereof.
9. OPTION CLOSING AND OPTION CLOSING DATE; TRANSACTION COSTS AND EXPENSES.
(a) Subject to extension under Section 8 hereof, the consummation of
the sale by Seller and the purchase by Buyer of any of the Designated Properties
(the "Option Closing") shall be at such offices and at such specific time and
date (the "Option Closing Date") as shall be designated by Buyer in a written
notice to Seller not less than five (5) business days prior to the Option
Closing Date. At the Option Closing, Seller shall (and shall cause the
applicable party to) execute and deliver to Buyer (i) the Joinder Agreement, in
the form of Exhibit B hereto, whereby each subsidiary of Seller that transfers
the Designated Property to Buyer under this Option Agreement will become a party
to the Facilities Purchase Agreement for purposes of the representations,
warranties and covenants contained therein, (ii) the applicable Transaction
Documents (as defined in the Facilities Purchase Agreement), (iii) a Facility
Sublease, in a form substantially similar to that executed and delivered by the
Facility Subtenants and (iv) a special warranty deed conveying good,
indefeasible and insurable title to each of the applicable Properties to Buyer,
free and clear of all liens, special assessments, easements, reservations,
restrictions and encumbrances whatsoever, excepting only the Permitted
Exceptions.
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(b) At each Option Closing and as an adjustment to the Purchase Price,
Seller shall pay all costs of the transaction and the expenses related to the
ownership and operation of the Designated Properties as described in Article V
of the Facilities Purchase Agreement, including, but not limited to, state and
county transfer or excise taxes due on the transfer of the applicable Properties
and all assessments, recording fees and taxes related to the recording of the
corresponding deeds. In addition, Seller shall also pay any and all fees, costs
and disbursements of Buyer in acquiring the applicable Properties, including,
but not limited to, a commitment fee equal to fifty (50) basis points times the
Purchase Price Buyer shall pay to Seller at the Option Closing for each of the
Properties, the costs and premiums of Buyer's title policies, the survey costs,
UCC search and termination fees, Deferred Maintenance Adjustment (as defined in
the Facilities Purchase Agreement) and Buyer's reasonable and documented
attorneys' fees, costs and disbursements.
10. SELLER'S REPRESENTATIONS AND WARRANTIES. To induce Buyer to enter into
this Option Agreement and to purchase each of the Properties as hereinafter
provided, Seller makes the following representations and warranties as of the
date hereof:
(a) Seller owns good, indefeasible and insurable title to each of the
Properties, free and clear of any and all mortgages, liens, encumbrances,
charges, claims, restrictions, pledges, security interest or impositions except
the Permitted Exceptions and ad valorem taxes for the year of the sale;
provided, however, that Seller shall defend, indemnify and hold harmless Buyer
or any assignee of Buyer from any and all liabilities, obligations, losses,
demands, judgments, actions, suits, causes of action, claims, proceedings,
investigations, citations, matters, damages, penalties, sanctions, costs,
expenses, and disbursements (including, without limitation, reasonable and
documented attorney's fees and expenses), whether or not subject to litigation,
arising out of or in connection with, incurred or in any way attributable to any
deficiency, if any, between good, indefeasible and insurable title and
marketable title.
(b) That Seller has not received any notice that any of the Properties
or any portion or portions thereof is or will be subject to or affected by (i)
any special assessments, whether or not presently a lien thereon or (ii) any
condemnation or similar proceeding; and
(c) That there are no material actions, suits or proceedings of any
kind or nature whatsoever, legal or equitable, affecting any of the Properties
or any portion or portions thereof or relating to or arising out of the
ownership of any of the Properties, in court or by any federal, state, county,
or municipal department, commission, board or agency or other governmental
instrumentality.
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11. SETTLEMENT REQUIREMENTS.
(a) Buyer's obligation to accept title to any Designated Property
shall be subject to each of the following conditions being in effect at any
applicable Option Closing Date:
(i) there shall not be outstanding any Objectionable Defect with
respect to such Property;
(ii) a waiver of liens shall have been signed and delivered to
Seller by all parties performing work for Seller on such Designated Property up
to the Option Closing Date or, if no liens exist, a Seller's affidavit that no
such liens exist;
(iii) the satisfaction of all title requirements and conditions
set forth under the Title Commitment (as defined in the Facilities Purchase
Agreement) and this Option Agreement; and
(iv) each and every one of the representations, warranties and
covenants described in Section 10 hereof and Articles VII and VIII of the
Facilities Purchase Agreement being true and correct as of any Option Closing
Date.
(b) At any Option Closing, the Seller shall (or shall cause the
applicable party to):
(i) duly execute and deliver to Buyer the agreements described in
Section 9 hereof;
(ii) deliver possession of each of the Designated Properties to
Buyer (or any lessee of Buyer), free and clear of any indebtedness and security
liens relating thereto (other than Permitted Exceptions); and
(iii) pay all of the costs, fees and expenses associated with the
conveyance of each of the Properties to Buyer, in accordance with the terms of
Article V of the Facilities Purchase Agreement and this Option Agreement.
(c) At any Option Closing, Buyer shall deliver the Purchase Price for
each of the Designated Properties due under Section 5 hereof, subject to the
adjustment and prorations made pursuant to Sections 6 and 8 hereof, and reduced
by the costs and expenses described in Section 9 hereof.
12. COVENANTS AND AGREEMENTS OF SELLER. Seller hereby further covenants and
agrees that from and after the date hereof until any Option Closing Date, Seller
shall not grant
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or otherwise create or consent to or permit the creation of any easement,
restriction, lien, assessment or encumbrance affecting any of the Properties or
any portion or portions thereof except to the extent that same would constitute
Permitted Exceptions hereunder. Seller further covenants and agrees that from
and after the date hereof until any Option Closing Date, Seller shall not sell,
convey or transfer any of the Properties or any portion or portions thereof.
13. DEFAULTS. In the event Buyer exercises the Option to purchase any or
all of the Properties, but Seller breaches any warranty or representation as
contained in this Option Agreement or the Facilities Purchase Agreement or fails
to comply with or perform any of the covenants, agreements or obligations to be
performed by Seller under the terms and provisions of this Option Agreement or
the Facilities Purchase Agreement, Buyer shall be entitled to exercise any and
all rights and remedies available to Buyer at law or in equity. If Buyer fails
to comply with any of the covenants, agreements or obligations to be performed
by Buyer under the terms and provisions of this Option Agreement or the
Facilities Purchase Agreement, then Seller shall be entitled to exercise any and
all rights and remedies available to Seller at law or in equity.
14. NOTICES. All communications, notices and disclosures required or
permitted by this Option Agreement shall be in writing and shall be deemed to
have been given on the date when delivered personally to the other party at the
address below, or five (5) days after being deposited in the United States mail,
certified or registered mail, postage prepaid, return receipt requested or when
delivered by a nationally recognized overnight delivery service with signed
receipt, and addressed as follows, unless and until either of such parties
notifies the other in accordance with this Section of a change of address:
If to Seller Integrated Health Services, Inc.
or Lyric: 00000 Xxx Xxx Xxxxxxxxx
Xxxxxx Xxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx
Telephone Number: 000-000-0000
Fax Number: 000-000-0000
Copy to: Blass & Xxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
Telephone Number: 000-000-0000
Fax Number: 000-000-0000
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If to Buyer: Monarch Properties, LP
0000 Xxxxxxx Xxx Xxxxxxxxx - Xxxxx 000
Xxxxxx, Xxxxxxx 00000
Attention: Xxxx X. Xxxxx
Telephone Number: 000-000-0000
Fax Number: 000-000-0000
Copy to: LeBoeuf, Lamb, Xxxxxx & XxxXxx, L.L.P.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxx X. Xxxxxx, Xx., Esq.
Telephone Number: 000-000-0000
Fax Number: 000-000-0000
15. ASSIGNMENT AND BINDING EFFECT. Buyer's rights, interests and
obligations under this Option Agreement may not be sold or assigned by Buyer, in
whole or in part, without the written consent of Seller, which consent shall not
be unreasonably withheld or delayed; provided, however, Buyer may assign this
Option Agreement, in whole or in part, to an affiliate of Buyer without the
written consent of Seller. The parties to this Option Agreement mutually agree
that this Option Agreement shall be binding upon and inure to the benefit of the
parties hereto, their successors and assigns.
16. EVIDENCE OF TITLE. Seller agrees to deliver to Buyer, or Buyer's
counsel, as soon as reasonably possible after each exercise of the Option,
copies of all title information in possession of or available to Seller with
respect to the Designated Properties specified in such Option exercise,
including, but not limited to: title insurance policies, attorney's opinions on
title, boundary surveys, covenants, leases, easements and deeds relating
thereto.
17. GENERAL PROVISIONS. No failure of either party to exercise any power
given hereunder or to insist upon strict compliance with any obligation
specified herein, and no custom or practice at variance with the terms hereof,
shall constitute a waiver of either party's right to demand exact compliance
with the terms hereof. This Option Agreement and any other written agreement
referred to herein by and between the parties hereto, contain the entire
agreement of the parties hereto, and no representations, inducements, promises
or agreements, oral or otherwise, between the parties not embodied herein shall
be of any force or effect. Any amendment to this Option Agreement shall not be
binding upon any of the parties hereto unless such amendment is in writing and
executed by all parties hereto. This Option Agreement may be executed in
multiple counterparts, each of which shall constitute an original, but all of
which taken together shall constitute one and the same agreement. Seller and
Buyer agree that such documents as may be legally necessary or otherwise
appropriate to carry out the terms of this Option Agreement shall be executed
and delivered by each party at any Option Closing.
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18. SURVIVAL OF PROVISIONS. None of the covenants, warranties or agreements
set forth in this Agreement shall survive as to any Designated Property after
the Option Closing of such Property.
19. SEVERABILITY. This Option Agreement is intended to be performed in
accordance with, and only to the extent permitted by, all applicable laws,
ordinances, rules and regulations. If any provision of this Option Agreement or
the application thereof to any person or circumstance shall, for any reason and
to any extent, be invalid or unenforceable, the remainder of this Option
Agreement and the application of such provision to other persons or
circumstances shall not be affected thereby but rather shall be enforced to the
greatest extent permitted by law.
20. GOVERNING LAW. This Option Agreement shall be construed, interpreted
and enforced as to any Property in accordance with the laws of the particular
state where such Property is located, without regard to provisions governing
conflicts of law.
21. MEMORANDA OF PURCHASE OPTION. Buyer and Seller shall execute and
deliver to each other Memoranda of Option to Purchase Real Estate for recording
purposes immediately upon execution of this Option Agreement. Any party, at
Seller's expense, shall have the right to record such Memoranda of Option to
Purchase Real Estate for the purposes of giving notice of Buyer's interest in
each of the Properties.
22. AGREEMENTS AND COVENANTS BY LYRIC. Lyric covenants and agrees that at
each Option Closing, Lyric shall and shall cause Lyric III and the Facility
Subtenants to execute and deliver (a) the Joinder Agreement, in the form of
Exhibit B hereto, (b) the applicable Transaction Documents (as defined in the
Facilities Purchase Agreement) and (c) a Facility Sublease. The Base Rent (as
defined in the Master Lease) to be paid under the Facility Sublease shall be
determined based upon the greater of (i) ten percent (10%) of the Purchase Price
Buyer shall pay to Seller at the Option Closing or (ii) the Purchase Price
multiplied by the yield on the ten-year U.S. Treasury Note in effect on the
Option Closing Date plus four hundred and fifty (450) basis points (the "Base
Rent Factor"). The initial Term of the Facility Sublease shall be no less than
ten (10) years, with the First Renewal Term, the Second Renewal Term and the
Third Renewal Term (as each is defined in the Master Lease) for periods of ten
(10) years each.
SIGNATURE PAGE FOLLOWS
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IN WITNESS WHEREOF, the parties hereto have caused this Purchase Option
Agreement to be duly executed and delivered as a sealed instrument as of the day
and year first above written.
INTEGRATED HEALTH SERVICES, INC.
By:
-----------------------------------------
Name: Xxxxxx X. Xxxxx
---------------------------------------
Title: Senior Vice President
--------------------------------------
(Seal)
MONARCH PROPERTIES, LP
By: MP Operating, Inc.
Its: General Partner
By:
-----------------------------------------
Name: Xxxx X. Xxxxx
---------------------------------------
Title: President and Chief Executive Officer
--------------------------------------
(Seal)
LYRIC HEALTH CARE LLC
By: Integrated Health Services, Inc.
Its: Member
By:
-----------------------------------------
Name: Xxxxxx X. Xxxxx
---------------------------------------
Title: Senior Vice President
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ACKNOWLEDGMENTS
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
I, the undersigned, a Notary Public in and for said County, in said State,
hereby certify that Xxxxxx X. Xxxxx, a Senior Vice President of Integrated
Health Services, Inc., a Delaware corporation, is signing the foregoing
instrument and who is known to me, acknowledged before me on this date that,
being informed of the contents of said instrument, he, as such officer and with
full authority, executed the same voluntarily on behalf of said corporation on
the day the same bears date.
Given under my hand and official seal, this ____ day of June, 1998.
(Seal)
-----------------------------------
Notary Public
My commission expires:
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STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
I, the undersigned, a Notary Public in and for said County, in said State,
hereby certify that Xxxx X. Xxxxx, the President and Chief Executive Officer of
MP Operating, Inc., a Delaware corporation, which is the General Partner of
Monarch Properties, LP, a Delaware limited partnership, is signing the foregoing
instrument and who is known to me, acknowledged before me on this day that,
being informed of the contents of said instrument, he as such officer and with
full authority, executed the same voluntarily on behalf of said partnership on
the day the same bears date.
Given under my hand and official seal, this ____ day of June, 1998.
-----------------------------------
Notary Public
My commission expires:
(Seal)
-----------------------------------
ACKNOWLEDGMENTS (CONTINUED)
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
I, the undersigned, a Notary Public in and for said County, in said State,
hereby certify that Xxxxxx X. Xxxxx, a Senior Vice President of Integrated
Health Services, Inc., a Delaware corporation, which is a Member of Lyric Health
Care LLC, a Delaware limited liability company, is signing the foregoing
instrument and who is known to me, acknowledged before me on this date that,
being informed of the contents of said instrument, he, as such officer and with
full authority, executed the same voluntarily on behalf of said company on the
day the same bears date.
Given under my hand and official seal, this ____ day of June, 1998.
(Seal)
-----------------------------------
Notary Public
My commission expires:
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EXHIBIT A
PURCHASE OPTION AGREEMENT PROPERTIES
FACILITY NAME ADDRESS BEDS SUBSIDIARY NAME STATE OF
INCORPORATION
Integrated Health Services 0000 X. Xxxxxxx Xx. 203 Integrated Health Services of Florida
at Greenbriar Xxxxx, Xxxxxxx 00000 Green Briar, Inc.
000-000-0000
000-000-0000 (fax)
Henderson SNF #1 1180 Lake Xxxx 140 IHS Acquisition Xx. 000, Xxxxxxxx
Xxxxxxxxx, Xxxxxx 00000 Inc.
000-000-0000
000-000-0000 (fax)
Henderson SNF #2 1180 Lake Xxxx 124 IHS Acquisition Xx. 000, Xxxxxxxx
Xxxxxxxxx, Xxxxxx 00000 Inc.
000-000-0000
000-000-0000 (fax)
Xxxxxxxx Xxxxxx Xxxx 0000 Xxxxxx Xxxx 120 IHS Acquisition Xx. 000, Xxxxxxxx
Xxxxxx, Xxxxx 00000 Inc.
000-000-0000
000-000-0000 (fax)
Heritage Manor Canton 000 Xxxx Xxxxxxx Xxxxxx 110 IHS Acquisition Xx. 000, Xxxxxxxx
Xxxxxx, Xxxxx 00000 Inc.
000-000-0000
000-000-0000 (fax)
Xxxxxxxx Xxxx 0000 Xxxxxxx Xxxx 204 IHS Acquisition No. 151, Delaware
Xxxxxxxxx, Xxxxx 00000 Inc.
000-000-0000
000-000-0000 (fax)
FACILITY NAME IHS PURCHASE EBITDARM
OWNED/ PRICE FACTOR
Integrated Health Services Leased $23,342,709 6.5
at Greenbriar
Henderson SNF #1 Leased $6,198,925 6.5
(Horizon)
Xxxxxxxxx SNF #2 Leased $5,490,476 6.5
(Horizon)
Heritage Forest Lane Leased $4,357,769* 7.0
(Horizon)
Heritage Manor Canton Leased $7,644,903* 7.0
(Horizon)
Heritage Oaks Leased $13,868,153* 7.0
(Horizon)
A-1
FACILITY NAME ADDRESS BEDS SUBSIDIARY NAME STATE OF
INCORPORATION
Heritage Place 825 West Xxxxxxx 149 IHS Acquisition Xx. 000, Xxxxxxxx
Xxxxxxxx, Xxxxx 00000 Inc.
000-000-0000
000-000-0000 (fax)
Xxxxxxxx Xxxxxxx 0000 Xxxxxxxxxx Xxxxx 280 IHS Acquisition Xx. 000, Xxxxxxxx
Xxxxxxxxxx, Xxxxx 00000 Inc.
000-000-0000
000-000-0000
Xxxxxxxx Xxxx Xxxxx 0000 Xxxxxxxxx Xx. 193 IHS Acquisition Xx. 000, Xxxxxxxx
Xx Xxxx, Xxxxx 00000 Inc.
000-000-0000
000-000-0000 (fax)
Winterhaven Nursing 6534 Steubner - Airline 160 IHS Acquisition No. 151, Delaware
Home Xxxxxxx, Xxxxx 00000 Inc.
000-000-0000
000-000-0000 (fax)
FACILITY NAME IHS PURCHASE EBITDARM
OWNED/ PRICE FACTOR
LEASED
Heritage Place Leased $9,635,179* 7.0
(Horizon)
Heritage Village Leased $12,559,668 7.0
(Horizon)
Mountain View Place Leased $8,708,349 6.5
(Horizon)
Winterhaven Nursing Leased $12,925,498* 7.0
Home (Horizon)
TOTAL: $104,731,629
* Purchase Price shall include any applicable pre-payment penalties under
existing facility leases.
A-2
EXHIBIT B
JOINDER TO FACILITIES PURCHASE AGREEMENT
THIS JOINDER TO FACILITIES PURCHASE AGREEMENT (this "Joinder") is made as
of the ___ day of _________, 1998, among MONARCH PROPERTIES, LP ("Purchaser"), a
Delaware limited partnership, INTEGRATED HEALTH SERVICES, INC. ("IHS"), a
Delaware corporation, each of the entities described on attached Exhibit A (the
"Sellers") and [Insert New Seller] ("New Seller"), a [Insert State] corporation.
BACKGROUND
A. Sellers, IHS and Purchaser are parties to a Facilities Purchase
Agreement, dated as of June __, 1998, as amended from time to time (the
"Purchase Agreement"), whereby Sellers sold the Sellers' Assets to Purchaser.
The Purchase Agreement and all instruments, documents and agreements executed in
connection therewith, or related thereto are referred to in this Joinder,
collectively, as the "Existing Transaction Documents". All capitalized terms not
otherwise defined herein shall have the meanings ascribed thereto in the
Purchase Agreement.
B. On the date hereof, pursuant to a Purchase Option Agreement, dated as of
June ___, 1998, among Purchaser, IHS and Lyric Health Care LLC ("Lyric") (the
"Option Agreement"), New Seller has sold the Designated Property (as defined in
the Option Agreement) listed on Exhibit A hereto to Purchaser. In accordance
with Section 22 of the Option Agreement, New Seller is delivering this Joinder
to Purchaser in order for New Seller to assume, adopt and become a Seller under
the Purchase Agreement in respect of the Designated Property.
C. Contemporaneously with the sale of the Designated Property to Purchaser,
the equity ownership interest of IHS in New Seller has been transferred by IHS
to Lyric Health Care Holdings III, Inc., a wholly owned subsidiary of Lyric, and
New Seller has become affiliated with Sellers. In accordance with Section 22 of
the Option Agreement, Lyric has requested that New Seller execute and deliver
this Joinder to join into the Purchase Agreement, subject to the terms and
conditions hereof.
NOW, THEREFORE, with the foregoing Background incorporated by reference and
made a part hereof and intending to be legally bound, the parties agree as
follows:
B-1
1. Joinder.
(a) As of the date hereof, New Seller joins in, assumes, adopts and
become a Seller under the Purchase Agreement. All references to Seller or
Sellers contained in the Purchase Agreement and the Existing Transaction
Documents are hereby deemed for all purposes to also refer to and include New
Seller as a Seller and New Seller hereby agrees to comply with all of the terms
and conditions of the Purchase Agreement and the Existing Transaction Documents
as if it were an original signatory thereto.
(b) Without limiting the generality of the provisions of subparagraph
(a) above, New Seller is thereby liable, on a joint and several basis, along
with all other Sellers for all existing and future obligations incurred at any
time by any one or more Sellers under the Purchase Agreement and the Existing
Transaction Documents, as they are amended hereby or as they may be hereafter
amended, modified, supplemented or replaced.
2. Representations and Warranties. New Seller, Sellers and IHS represent
and warrant to Purchaser that:
(a) As to the Designated Property, all representations and warranties
made to Purchaser under Article VII of the Purchase Agreement are true and
correct as to the date hereof.
(b) The execution and delivery by New Seller, each Seller and IHS of
this Joinder and the performance by each of the transactions herein contemplated
(i) are and will be within their powers, (ii) have been authorized by all
necessary corporate action, and (iii) are not and will not be in contravention
of any order of any court or other agency of government, of law or any other
indenture, agreement or undertaking to which such New Seller, Seller and/or IHS
is a party or by which the property of New Seller, any Seller and/or IHS is
bound, or be in conflict with, result in a breach of, or constitute (with due
notice and/or lapse of time) a default under any such indenture, agreement or
undertaking or result in the imposition of any lien, charge or incumbrance of
any nature on any of the properties of New Seller, any Seller and/or IHS.
(c) This Joinder and any assignment, instrument, document, or
agreement executed and delivered in connection herewith, will be valid, binding
and enforceable in accordance with its respective terms.
(d) No Event of Default has occurred under the Master Lease or any of
the other Existing Transaction Documents.
3. Effectiveness Conditions. This Joinder shall be effective and New Seller
shall be deemed a Seller under the Purchase Agreement and the Existing
Transaction
B-2
Documents upon completion of the following conditions precedent (all documents
to be in form and substance satisfactory to Purchaser and Purchaser's counsel):
(a) Execution and delivery of this Joinder;
(b) Certified copies of (i) the resolutions of New Seller's board of
directors authorizing the execution of this Joinder, and each document required
to be delivered under Section 22 of the Option Agreement and (ii) New Seller's
articles of incorporation and bylaws;
(c) Incumbency Certificate for New Seller identifying all authorized
officers with specimen signatures; and
(d) All agreements, instruments and documents requested by Purchaser
to effectuate and implement the terms hereof and the Existing Transaction
Documents.
4. Ratification of Existing Transaction Documents. Except as expressly set
forth herein, all of the terms and conditions of the Purchase Agreement and the
Existing Transaction Documents are hereby ratified and confirmed and continued
unchanged and in full force and effect. All references to the Purchase Agreement
shall mean the Purchase Agreement, as modified by this Joinder.
5. Governing Law. This Joinder shall be governed by, construed and enforced
in accordance with the laws of the State of New York.
6. Counterparts. This Joinder may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original,
and such counterparts together shall constitute one and the same respective
agreement.
SIGNATURE PAGES FOLLOW
B-3
IN WITNESS WHEREOF, the parties have executed this Joinder To Facilities
Purchase Agreement as of the day and year first above written.
SELLERS:
[INSERT SELLERS]
By:
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Name: Xxxxxx X. Xxxxx
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Title: Senior Vice President
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IHS:
INTEGRATED HEALTH SERVICES, INC.
By:
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Name: Xxxxxx X. Xxxxx
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Title: Senior Vice President
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NEW SELLER:
[INSERT NEW SELLER]
By:
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Name: Xxxxxx X. Xxxxx
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Title: Senior Vice President
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B-4
PURCHASER:
MONARCH PROPERTIES, LP
By: MP Operating, Inc.
Its: General Partner
By:
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Name: Xxxx X. Xxxxx
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Title: President and Chief Executive Officer
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B-5
