EXHIBIT 10.38
SECOND AMENDMENT TO
AGREEMENT FOR SALE OF NURSING HOME PROPERTIES
AND AGREEMENT RELATING TO
TRANSITION OF NURSING HOME OPERATIONS
This Second Amendment to Agreement for Sale of Nursing Home
Properties and Agreement Relating to Transition of Nursing Home Operations (this
"Amendment") is made and entered into as of the 29th day of October, 2001, by
and among the Entities set forth on Schedule 1 hereto (collectively, the
"Xxxxxxx Entities"), FC Properties, LLC, a Florida limited liability company
(f/k/a NMC of Florida, LLC, a Florida limited liability company) ("Buyer"), and
Florida Health Care Properties, LLC, a Florida limited liability company
("Lessee").
WITNESSETH:
WHEREAS, the Xxxxxxx Entities and Buyer are parties to that
certain Agreement for Sale of Nursing Home Properties, dated as of July 13,
2001, as amended by that certain Addendum to Agreement for Sale of Nursing Home
Properties, dated as of July 13, 2001, and as further amended by that certain
First Amendment to Agreement for Sale of Nursing Home Properties, dated as of
August 30, 2001 (as further amended, supplemented or otherwise modified from
time to time, the "Purchase Agreement"; capitalized terms not otherwise defined
herein shall have the definitions provided therefore in the Purchase Agreement);
WHEREAS, Buyer and Lessee have entered into that certain
Master Transaction Agreement, dated as of September 4, 2001, and certain related
agreements, pursuant to which Lessee has agreed to become the lessee and,
through wholly-owned subsidiaries, the operator, of the Facilities upon the
closing of the transactions contemplated by the Purchase Agreement;
WHEREAS, Buyer has requested that the Xxxxxxx Entities extend
the Closing Date and the dates for delivery of certain financing commitments
under the Purchase Agreement;
WHEREAS, the Xxxxxxx Entities and Buyer wish to amend the
Purchase Agreement as more specifically provided herein and the Xxxxxxx
Entities, Buyer and Lessee wish to enter into certain agreements relating to the
early transition of operations of the Facilities to Lessee on the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing, and for
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties hereto agree as follows:
1. Amendments to the Purchase Agreement.
(a) Section 2.2 Purchase Price. Section 2.2 of the Purchase
Agreement is hereby amended and restated in its entirety to read as follows:
In consideration of the transfer of the Purchased Assets as
described herein, Buyer shall pay the Xxxxxxx Entities the sum
of One Hundred Sixty-Five Million Dollars ($165,000,000) (as
otherwise adjusted pursuant to Section 14.16 hereof, the
"Purchase Price") to be paid in a combination of immediately
available funds and a promissory note delivered from Buyer to
the Xxxxxxx Entities, as described in Section 8.2.12 hereof,
at Closing. The Purchase Price will be allocated as specified
in Exhibit C attached hereto.
(b) Section 2.3.4 Xxxxxxx Money. Section 2.3.4 of the Purchase
Agreement is hereby amended by deleting the reference to "September 15, 2001"
wherever it appears therein and replacing it with "5:00 p.m. Central Time on
December 2, 2001."
(c) Section 3.1 Closing and Effective Times. Buyer and the
Xxxxxxx Entities agree that Section 3.1 of the Purchase Agreement is hereby
amended and restated in its entirety to read as follows:
The Closing pursuant to this Agreement (the "Closing") shall
take place at the offices of Xxxxxx & Xxxxxxx, 000 Xxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx (or, at Buyer's request, at the
offices of Buyer's lender or its lender's counsel in New York,
New York; provided that in any case the Closing hereunder and
the closing of Buyer's financing arrangements with its senior
and junior lender(s) shall take place in the same city) on
December 31, 2001, or at an earlier date at the election of
Buyer, or such other date as the parties may agree in their
sole discretion (the "Closing Date"), to be effective as of
the Effective Time. The parties hereto may by mutual consent
(given or withheld in their sole discretion) expressed in
writing fix another time to be the Effective Time or the
Closing Date or another location for the Closing, subject to
Article 12 hereof.
(d) Section 7.1.15 Accuracy of Representations and Warranties.
Section 7.1.15 of the Purchase Agreement is hereby amended by deleting the
reference to "Section 7.1.10" where it appears therein and replacing it with
"Section 7.1.11."
(e) Section 8.2.12 Financing Commitments. Section 8.2.12 of the
Purchase Agreement is hereby amended and restated in its entirety to read as
follows:
8.2.12. Financing Commitments. Upon learning of any material problems,
issues or concerns discovered by Buyer's senior and/or junior lenders
and/or equity providers in the course of such lenders' and/or equity
providers' diligence process with respect to the Facilities, including,
without limitation, any problems, issues or concerns identified by
third-party consultants, Buyer shall promptly inform the Xxxxxxx
Entities of such problems, issues or concerns. Buyer shall use its
reasonable efforts to keep itself informed of the results of the
lenders' and equity providers' diligence process in a timely manner and
shall cooperate with any efforts by the Xxxxxxx Entities to obtain
further information relating to any such problems, issues or concerns
raised by the lenders' diligence process. Buyer shall meet with and/or
discuss with the Xxxxxxx Entities such problems, issues or concerns,
and Buyer shall cooperate with and assist the Xxxxxxx Entities to meet
with and/or discuss such problems, issues or concerns with Buyer and
its lenders and/or equity providers. On or before 5:00 p.m. Central
Time, December 1, 2001, Buyer shall deliver to the Xxxxxxx Entities a ,
signed application from each of its senior
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and junior lender(s) financing the Purchase Price that contain all
material terms of such loans and all requirements for funding (the
"Applications"). Further, Buyer shall provide to Seller on or before
5:00 p.m. Central Time on December 1, 2001, a schedule reflecting the
equity providers contributing funds to Buyer, and Seller shall have
the right to meet with and/or discuss such issues as may be reasonably
appropriate with such equity providers (together with the
Applications, the "Commitment Letters").
Buyer's failure to timely deliver the Commitment Letters shall permit
the Xxxxxxx Entities, at their option, by written notice to Buyer,
delivered to Buyer not later than the fifth (5th) business day after
the required date for such delivery by Buyer, to terminate this
Agreement. For all other requirements of Buyer under this Section
8.2.12, in the event that Buyer fails to perform, the Xxxxxxx Entities
shall give Buyer notice of Buyer's failure to perform, including a
reasonably detailed explanation of the required obligation and
requested steps for Buyer to take to perform such obligation. Upon such
notice, Buyer shall have three (3) business days to either (i) perform
the required obligation or (ii) provide to the Xxxxxxx Entities a plan
reasonably acceptable to the Xxxxxxx Entities outlining Buyer's
proposed manner of performing the required obligation. If Buyer shall
fail to timely act under either clause (i) or clause (ii) of the
immediately preceding sentence or to diligently pursue the plan
described in clause (ii), then the Xxxxxxx Entities may, at their
option, by written notice to Buyer delivered to Buyer not later than
the fifth (5th ) business day after the required date for such
performance by Buyer, terminate this Agreement. If the Xxxxxxx Entities
have not timely terminated this Agreement pursuant to this paragraph,
such termination rights shall be waived.
In the event of any termination pursuant to the preceding paragraph,
the Escrow Agent shall pay the Escrowed Deposit to Buyer and the
Xxxxxxx Entities shall retain the Diligence Deposit. Notwithstanding
anything herein to the contrary, the aggregate contributions from the
senior and junior lenders and equity providers (net of all origination,
commitment and other fees, prepayments, reserves and other deductions
of any nature whatsoever) available to Buyer to finance the Purchase
Price and any other amounts owing by Buyer hereunder at the Closing
shall total at least One Hundred Fifty-Five Million Dollars
($155,000,000), and all deliveries by Buyer under this Section 8.2.12
shall evidence such availability or Buyer shall be deemed not to have
made the deliveries required hereunder; provided, however that nothing
herein shall obligate Buyer to actually incur junior or mezzanine
financing at Closing if all funds that would have been provided by such
junior or mezzanine financing are replaced with equity contributions
obtained by Buyer (other than pursuant to Section 9.6 hereof). As
partial financing of the Purchase Price, upon the Closing, the Xxxxxxx
Entities, or their affiliates, shall provide Buyer with a secured loan
in an original principal amount of Twenty Million Dollars
($20,000,000) substantially on the terms and conditions set forth on
Exhibit A attached hereto (the loan made by the Xxxxxxx Entities is
referred to on such Exhibit as the "B Note.).
(f) Section 10.1.1 Accuracy of Representations and Warranties.
Section 10.1.1 of the Purchase Agreement is hereby amended by deleting the
reference to "Section 7.1.10" where it appears therein and replacing it with
"Section 7.1.11."
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(g) Section 12.1 Termination. The last sentence of Section 12.1
of the Purchase Agreement is hereby amended and restated in its entirety to read
as follows:
Either party may terminate this Agreement if the Closing has not
occurred on or prior to December 31, 2001; provided the Buyer may elect
to extend such December 31, 2001 deadline for closing by ten (10)
business days, so long as the Xxxxxxx Entities are reasonably satisfied
that Buyer's lenders and equity providers financing the Purchase Price
will fund their respective portions of the Purchase Price, and Buyer
will otherwise be ready to close the transactions contemplated hereby,
within such ten (10) business day period.
2. Agreements Relating to the Transition of Nursing Home Operations. In
consideration of the amendments to the Purchase Agreement contained herein,
including, without limitation, extending the Closing Date to December 31, 2001,
Buyer hereby agrees as follows in order to permit the Xxxxxxx Entities to
transition the operation of the Facilities to Lessee:
(a) Buyer agrees that the Xxxxxxx Entities and Lessee may enter
into a lease, or other similar arrangement, and related agreements (including,
without limitation, an option to purchase the Facilities upon a termination of
the Purchase Agreement) with Lessee to allow the transition of operations of the
Facilities from the Xxxxxxx Entities to Lessee (the "Transition Arrangements"),
and, in the event the transactions contemplated by the Purchase Agreement do not
close other than as a result of a material breach by the Xxxxxxx Entities
thereunder that is reasonably within their control, any such Transition
Arrangements shall not be considered a breach of or in conflict with the
Purchase Agreement, and Buyer shall have no rights or remedies of any kind or
nature whatsoever arising therefrom, including, without limitation, any Break-Up
Fee or other damages related thereto. In order to permit the Xxxxxxx Entities
and Lessee to enter into the Transition Arrangements, (i) Buyer hereby
acknowledges and agrees that the Xxxxxxx Entities may discuss, negotiate and/or
enter into the Transition Arrangements with Lessee and (ii) in the event Buyer
or any of its affiliates have entered into any contract, instrument or other
agreement (whether written or oral), including, without limitation, the Master
Transaction Agreement, with Lessee that in any manner restricts or prohibits
Lessee or any of its affiliates from discussing, negotiating and/or entering
into any Transition Arrangements with the Xxxxxxx Entities, Buyer, on behalf of
itself and its affiliates, hereby releases Lessee and its affiliates from all
such restrictions or prohibitions; and
(b) Buyer, the Xxxxxxx Entities and Lessee agree that upon the
transfer of fee title to, leasehold title to, or right to manage, as applicable,
the Facilities pursuant to the occurrence of a Closing under the Purchase
Agreement, Buyer shall become the fee or leasehold owner, as applicable, of such
Facilities and, upon such occurrence, the Transition Arrangements shall
terminate, and Lessee shall continue as the operator of such Facilities pursuant
to the Master Lease Agreement and related agreements between Buyer and Lessee.
Lessee confirms that such agreements are in full force and effect and are hereby
ratified and confirmed, subject to the provisions of this Agreement.
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3. Miscellaneous.
(a) Captions. Section captions used in this Amendment are for
convenience only, and shall not affect the construction of this Amendment.
(b) Governing Law. This Amendment shall be a contract made under
and governed by the laws of the State of Florida, without regard to conflict of
laws principles. Whenever possible each provision of this Amendment shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Amendment shall be prohibited by or invalid under
such law, such provision shall be ineffective to the extent of such prohibition
or invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Amendment.
(c) Counterparts. This Amendment may be executed in any number of
counterparts and by the different parties on separate counterparts, and each
such counterpart shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same Amendment.
(d) Successors and Assigns. This Amendment shall be binding upon
Buyer and the Xxxxxxx Entities and their respective successors and assigns, and
shall inure to the sole benefit of Buyer and the Xxxxxxx Entities and the
successors and assigns of Buyer and the Xxxxxxx Entities.
(e) References. Any reference to the Purchase Agreement contained
in any notice, request, certificate, or other document executed concurrently
with or after the execution and delivery of this Amendment shall be deemed to
include this Amendment unless the context shall otherwise require.
(f) Continued Effectiveness. Notwithstanding anything contained
herein, the terms of this Amendment are not intended to and do not serve to
effect a novation as to the Purchase Agreement. The Purchase Agreement as
amended hereby remains in full force and effect.
[SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed on their respective behalf, by their respective
duly authorized officers, as of the date first above written.
FC PROPERTIES, LLC, a Florida limited XXXXXXX ENTERPRISES - FLORIDA,
liability company (f/k/a NMC of INC., a California corporation
Florida, LLC, a Florida limited
liability corporation company)
By: Formation Capital, LLC, its By:
sole manager -------------------------------
Name:
-----------------------------
By: Title:
------------------------ ----------------------------
Name:
----------------------
Title:
XXXXXXX HEALTH AND REHABILITATION XXXXXXX SAVANA CAY MANOR, INC.,
SERVICES, INC., a a California corporation
California corporation
By: By:
--------------------------------- -------------------------------
Name: Name:
------------------------------- -----------------------------
Title: Title:
------------------------------ ----------------------------
VANTAGE HEALTHCARE CORPORATION, a XXXXXXXX HEALTH CARE, INC., a
Delawae corporation Florida corporation
By: By:
--------------------------------- -------------------------------
Name: Name:
------------------------------- -----------------------------
Title: Title:
------------------------------ ----------------------------
FLORIDA HEALTH CARE PROPERTIES, LLC,
a Florida limited liability company
By: Title:
------------------------ ----------------------------
Name:
----------------------
Title:
---------------------
[SIGNATURE PAGE TO SECOND AMENDMENT TO PURCHASE AGREEMENT]
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SCHEDULE 1
XXXXXXX ENTITIES
XXXXXXX ENTERPRISES - FLORIDA, INC., a California corporation
XXXXXXX HEALTH AND REHABILITATION SERVICES, INC., a California corporation
XXXXXXX SAVANA CAY MANOR, INC., a California corporation
VANTAGE HEALTHCARE CORPORATION, a Delaware corporation
XXXXXXXX HEALTH CARE, INC., a Florida corporation
EXHIBIT A
LOAN TERMS
Set forth below are the general terms and conditions under which the Xxxxxxx
Entities will enter into negotiations to purchase a junior participation in a
first mortgage loan ("B Note") made to FC Properties, LLC by its senior lender,
e.g., Salomon Brothers Realty Corp. ("SSB"), as outlined below.
Mortgage Structure Total First mortgage debt not greater than
$102,500,000 secured by Collateral Pool 1 and
Collateral Pool 2.
o Pool 1 first mortgage debt not greater than
$80,000,000 consisting of an A and a B Note.
o Pool 2 first mortgage debt of $22,500,000.
Collateral Pool 1 Properties acceptable to SSB, which have an
allocated total cost of at least $139,000,000 and
annual lease payments of at least $19,000,000.
A Note Senior participation in first mortgage debt
secured by Collateral Pool 1.
B Note Junior participation in first mortgage debt
secured by Collateral Pool 1. B Note will have an
initial principal amount of $20,000,000, a zero
coupon with an accrual rate equal to the higher of
10% or one month LIBOR plus 750 bps.
B Note Loan Fee 1.5% of original principal amount, due and payable
at closing.
Loan Term Five years.
B Note Premium Payments Amount required to pay off the B Note will
increase over time. The precise amounts and
related time periods will be negotiated.
Release of Property Property will be released on same terms as under
loan made by SSB. None of the first mortgage
release proceeds will be applied to the B Notes
until payment in full of the A Notes.
