EXHIBIT 10.13
LEASE AGREEMENT
THIS LEASE AGREEMENT ("Lease") is made and entered into on this the 30th
day of September, 2003 and is effective as of the 1st day of October, 2003 (the
"Effective Date"), by and among MISSISSIPPI BAPTIST MEDICAL CENTER, INC., a
Mississippi corporation ("Baptist"), MISSISSIPPI BAPTIST HEALTH SYSTEMS, INC., a
Mississippi Corporation (together with Baptist, "Lessor"), MISSISSIPPI HOMECARE
OF XXXXXXX, LLC, a Mississippi Limited Liability Company ("Lessee"), MISSISSIPPI
HEALTH CARE GROUP, LLC, a Mississippi Limited Liability Company ("Parent"), LHC
GROUP, LLC, a Louisiana Limited Liability Company ("Guarantor").
WHEREAS, Lessor owns certain assets (the "Assets"), inventory and
supplies ("Inventory") utilized in the operations of a home health agency that
provides home health care services in Yazoo, Copiah, Xxxxxx and Xxxxx Counties,
Mississippi (the "Agency Operations"); and
WHEREAS, Lessor owns home health agency License Number 1294 issued by
the Mississippi State Department of Health Division of Licensure and
Certification that allows it to provide home health care services (the "Home
Health License"), and Lessor desires to lease said Home Health License and the
Assets to Lessee and to sell the Inventory to Lessee upon the terms and
conditions set forth herein; and
WHEREAS, Lessor possesses certain provider numbers for the operation of
the home health agency, namely Medicare Provider Number 257082, Medicaid
Provider Number 0770125, and Blue Cross Provider Number 000070264 (each a
"Provider Number" and collectively, the "Provider Numbers"), and Lessor desires
to lease those Provider Numbers to Lessee upon the terms and conditions set
forth herein; and
WHEREAS, Lessee desires to lease the Lessor's Home Health License, the
Assets and the Provider Numbers, to purchase the Inventory, and to provide
Agency Operations upon the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, Lessor and Lessee agree as follows:
1. Lease of Assets. Subject to the terms and conditions set forth herein,
beginning on October 1, 2003 (the "Commencement Date"), Lessor hereby
agrees to lease to Lessee and Lessee agrees to lease from Lessor the Home
Health License and the Provider Numbers, the terms of which are
incorporated herein by reference, on an exclusive basis during the Term of
this Lease (as hereinafter defined). Also leased herein, beginning on the
Commencement Date, are the Assets that are used by Lessor in the Agency
Operations and are more particularly described on the attached Exhibit A.
2. Lease Payments and Other Considerations.
a. Lease Payments. Lessee agrees that it shall pay the following rent
("Rent") to Lessor per contract year, payable in advance, in equal
monthly installments, during the Initial Term of this Lease (as
hereinafter defined) for the lease of the Home Health License and the
Assets:
THE SUM OF TWO HUNDRED FORTY-THREE THOUSAND AND NO/100 DOLLARS
($243,000.00) PER ANNUM, payable in monthly installments of $20,250.00
per month.
Lessee shall make such rental payments to Lessor at 0000 X. Xxxxx
Xxxxxx, Xxxxxxx, Xxxxxxxxxxx 00000, Attn: Xxxxx Xxxxxxx, or such other
address as Lessor may specify in writing to Lessee from time to time.
Rental payments shall be made on a monthly basis on or before the 5th
day of each month, beginning on October 1, 2003.
b. Assumption of Liabilities and Contracts. As of the Commencement Date
and in partial consideration for this Lease, Lessee hereby assumes the
payment and performance of (collectively the "Assumed Liabilities")
all payments and performances from and after the Commencement Date
under any and all of the Leases and Contracts as set forth on Schedule
4 and 5 to Exhibit A hereto (collectively the "Assumed Contracts"). On
the Commencement Date, Lessor hereby agrees to assign, transfer and
delegate all rights, obligations and duties of the Lessor under the
Assumed Contracts and Lessee shall accept such assignment and
delegation as of the Commencement Date and shall assume the payment
and performance under the Assumed Contracts from and after the
Commencement Date.
c. Accounts Receivable for Patients With Ongoing Episode of Care;
Accounts Receivable Generally. All accounts receivable and claims for
payment, whether billed or unbilled on the Commencement Date, for
services rendered by Lessor on or before the Commencement Date (the
"Ongoing Accounts Receivable") for Medicare patients in an ongoing
episode of care on the Commencement Date and who remain under care of
Lessee following the Commencement Date shall be allocated to Lessee on
an accrual basis for services rendered by Lessee; provided, however,
that Ongoing Accounts Receivable attributable to each Medicare patient
shall be allocated to Lessor according to a formula consisting of the
product of the total HHRG payment due for the current episode of care
for each Medicare patient and a fraction, the numerator of which shall
be the number of days elapsed from the beginning of the then current
episode of care for the patient through the Commencement Date and the
denominator of which is 60. All Ongoing Accounts Receivable shall be
collected by Lessee and promptly remitted to Lessor and Lessee, as
described in this paragraph.
i. All other Accounts Receivable, but not including the Ongoing
Accounts Receivable, shall be and remain the property of Lessor,
and Lessor shall have responsibility for collection of the same.
2
ii. For purposes of illustration only, the following example of
allocation of Medicare Ongoing Accounts Receivable is provided:
(1) HHRG Payment Due: $3,000
(2) Episode Beginning Date: September 10, 2003
(3) Commencement Date: October 1, 2003
(4) $3,000 x (20/60) = $1,000 = amount allocated to Lessor for
services rendered to this patient prior to the Commencement
Date (and $2,000 allocated to Lessee).
d. Employees. As of the Commencement Date, Lessee shall offer employment
to all personnel employed by or on behalf of Lessor in respect of the
Agency Operations (the "Employees") immediately preceding the
Commencement Date. Such offers of employment shall be at least at
their current hourly rates of pay as reflected on Exhibit "D",
together with the other benefits customarily provided by Lessee to its
existing employees with the effective date of coverage being October
1, 2003, provided, however, that Lessee shall have the discretion to
modify such rates of pay and benefits as is consistent with prudent
management of the Agency Operations. Each person hired will be
required to complete all documents reasonably required by Lessee and
its affiliates of new employees. Lessee shall give all such employees
full credit for all accrued vacation, sick leave and holiday pay. To
the extent any Employees accept such employment, the tenure of such
employee shall be measured by Lessee from the date of hire by Lessor
of such employee for the determination of vacation, sick leave, work
preferences, eligibility for and vesting in pension and retirement
benefits (but not for purposes of benefit accruals under any pension
or retirement plan covering such employee) and similar benefits
related to the future Agency Operations. Lessee may terminate an
employee at any time with or without cause. Lessee assumes no other
claims or obligations, whether asserted or unasserted, for employee
benefits, including wage and hour, overtime, time off, deferred
compensation, pension, vacation, sick leave, holiday pay, bonuses or
other claims. Lessee represents that it has not been advised by any
governmental agency that it is in violation of any statute or
regulation governing employment practices. Lessee is and intends to
remain an equal opportunity employer.
e. Inventory. As of the Commencement Date, Lessor and Lessee shall have
conducted a review and accounting of the Inventory utilized by Lessor
in its home health operations and listed on Exhibit "E" attached
hereto. Exhibit "E" shall also include Lessor's cost for such
Inventory. As additional consideration for this Lease, Lessor shall
sell the Inventory to the Lessee and Lessee shall purchase from Lessor
the same, with the purchase price for such Inventory being Lessor's
cost for the same. The purchase price for the Inventory shall be paid
to Lessor at Closing.
f. Coordination Services. In consideration of the lease of the Assets,
Lessee agrees to provide to Lessor home health coordination services
as set forth in Appendix A hereto.
3
3. Security Interest. As security for payment of the Lease Payments and
Assumed Liabilities and any other amounts due under this Lease and
performance of all obligations under this Lease by Lessee, the Lessee
grants Lessor a first priority security interest in the Home Health
License, the Assets, including any Replacement Assets (the "Leased
Assets"), and the Inventory. Lessee further grants a security interest in
all other assets of the Lessee (the "Other Assets"), whether now owned or
hereafter acquired, including without limitation the following (all of the
Leased Assets and Other Assets being hereinafter called the "Collateral"),
and Lessor acknowledges it shall not have first priority security interest
in the portion of the Collateral constituting Other Assets: all personal
and fixture property of every kind and nature including without limitation
all goods (including inventory, equipment and any accessions thereto),
instruments (including promissory notes), documents, accounts (including
health-care-insurance receivables), chattel paper (whether tangible or
electronic), deposit accounts, letter-of-credit rights (whether or not the
letter of credit is evidenced by a writing), securities and all other
investment property, supporting obligations, any other contract rights or
rights to the payment of money, insurance claims and proceeds, and all
general intangibles (including all payment intangibles). The Lessee hereby
irrevocably authorizes the Lessor at any time and from time to time to file
in any filing office in any Uniform Commercial Code jurisdiction any
financing statements and amendments thereto that (a) indicate the
Collateral (i) as all assets of the Lessee or words of similar effect,
regardless of whether any particular asset comprised in the Collateral
falls within the scope of Article 9 of the Uniform Commercial Code of such
jurisdiction, or (ii) as being of an equal or lesser scope or with greater
detail, and (b) provide any other information required by part 5 of Article
9 of the Uniform Commercial Code of the State, or such other jurisdiction,
for the sufficiency or filing office acceptance of any financing statement
or amendment, including (i) whether the Lessee is an organization, the type
of organization and any organizational identification number issued to the
Lessee and, (ii) in the case of a financing statement filed as a fixture
filing a sufficient description of real property to which the Collateral
relates. The Lessee agrees to furnish any such information to the Lessor
promptly upon the Lessor's request. To further the attachment, perfection
and priority of, and the ability of the Lessor to enforce, the Lessor's
security interest in the Collateral, and without limitation on the Lessee's
other obligations in this Agreement, the Lessee agrees, in each case at the
Lessee's expense, to take such Collateral as required to ensure that the
Lessor maintains a security interest in the Collateral. Lessee agrees that
Lessor shall hold and possess a first priority security interest in the
Home Health License, the Assets and the Inventory during the Term of the
Lease (as hereinafter defined) and until all obligations under this Lease
have been irrevocably paid in full. Lessee agrees and acknowledges that
Lessor has acquired a secured interest in the cash collateral of the estate
as governed by 11 USC ss. 363 pursuant to this Section 3 and will not use
any cash of the estate or income generated by the Home Health License
without the written consent of Lessor, if Lessee files a petition under
Title 11 of the United States Code, hereinafter the "Bankruptcy Code". If
Lessee files a petition under the Bankruptcy Code or under any other
similar federal or state law, Lessee unconditionally and irrevocably agrees
that Lessor shall be entitled, and Lessee hereby
4
unconditionally and irrevocably consents, to relief from any automatic stay
so as to allow Lessor to exercise its rights and remedies under this
Agreement with respect to the rights and property subject to the security
interests, including taking possession of said Collateral. In such event,
Lessee hereby agrees that it shall not, in any manner, oppose or otherwise
delay any motion filed by Lessor for relief from the automatic stay.
Lessor's enforcement of the right granted herein for relief from the
automatic stay is subject to the approval of the bankruptcy court in which
the case is then pending. Lessee represents to Lessor that it has
considered and evaluated the prospects and feasibility of the
reorganization of its business under Chapter 11 of the Bankruptcy Code,
including the sale of the business, the sale of all or substantially all of
its assets, the restructuring of its assets and liabilities, and a
liquidation. Lessee represents to Lessor that, based on the foregoing
consideration and evaluation, if Lessee is unable to comply with, or
otherwise defaults under this Lease, Lessee will not then have any
realistic prospect of an effective reorganization. If Lessee files a
petition under the Bankruptcy Code or under any other similar federal or
state law, Lessee hereby unconditionally and irrevocably agrees that it
shall not, in any manner, oppose or challenge any assertion by Lessor that
Lessee does not have any realistic prospect of an effective reorganization
unless, and only to the extent that, there has been a material change or
material changes in the circumstances of Lessee from the date hereof, which
was or were not contemplated by or in this Lease. It shall be presumed that
there has not been a material change in the circumstances of Lessee unless
each and every such change is specifically identified by Lessee and
supported with adequate and competent evidence thereof. However, in the
event that Lessee does file a petition in bankruptcy, Lessee agrees to
execute all documents necessary and to take all such further actions as may
be required to transfer the Home Health License and Assets to Lessor.
Lessee further agrees to provide Lessor with any and all reasonable
assurances of its security that Lessor may request, including the execution
of documents acknowledging Lessor's security interests and the provision of
Lessee's, Guarantor's and Parent's financial statements, provided that any
such request is made during the Term of this Lease (as hereinafter defined)
unless all obligations under this Lease have not been irrevocably paid and
satisfied in full in which case this obligation shall extend until such
time as all obligations under this Lease have been irrevocably paid and
satisfied in full.
4. Term of Lease. The initial term of this Lease shall be for a period of five
(5) years beginning on the Commencement Date (the "Initial Term"). The
Initial Term, plus any Renewal Term(s) (as hereinafter defined), constitute
the term of this Lease (the "Term").
a. This Lease automatically shall be extended for one (1) consecutive
five (5) year term (a "Renewal Term") unless Lessor shall give written
notice to the Lessee of its desire to terminate one hundred eighty
(180) days prior to the expiration of the Initial Term.
b. Upon conclusion of the second year of the Initial Term, either party
may terminate this Lease with or without cause by giving at least one
hundred eighty (180) days prior written notice to the other party of
its desire to terminate the Lease.
5
c. This Lease may be further extended for up to two (2) consecutive
Renewal Terms, provided that the parties agree in writing to extend
the Lease for an additional Renewal Term one hundred eighty (180) days
prior to the expiration of the current Renewal Term.
d. The parties agree that the terms of such Renewal Term shall be upon
the same terms as set forth in this Lease, or upon similar terms,
except that the Rent for the Renewal Term shall be negotiated in good
faith between the parties at least ninety (90) days prior to the end
of the immediately preceding Initial Term or Renewal Term (as the case
may be) and shall be no less than the greater of (i) fair market value
of this Lease, calculated for the period of the Renewal Term or (ii)
the sum of the Rent due during the then existing Term plus an
adjustment amount equal to the Rent due during the then existing Term
multiplied by the average consumer price index ("CPI") for the
immediately preceding contract year. Upon termination or other
expiration of this Lease for any reason other than an exercise of the
Option (as hereinafter defined), Lessee agrees that it shall return
the Home Health License, the Provider Numbers and Assets to Lessor,
take all such regulatory and legal actions (at Lessee's expense) as
may be necessary or expedient to transfer the Home Health License, the
Provider Numbers and Assets to Lessor, and execute all necessary
documents in connection therewith.
5. Option Rights.
a. In partial consideration for this Lease, Lessee hereby is granted an
option to purchase the Home Health License and the Assets (the "Buy
Option") which may be exercised in the event that the Lessor gives
notice of its intention not to renew the Lease at the end of the
Initial Term or any Renewal Term or the Lessor terminates the Lease
without cause pursuant to Section 4.b. of this Agreement. In the event
Lessee desires to exercise the Buy Option, Lessee must give Lessor at
least sixty (60) days prior written notice of its intention to
exercise the Buy Option. The price of exercising the Buy Option shall
be Three Hundred Percent (300%) of the Lessee's Earnings before
interest, taxes, depreciation and amortization ("EBITDA") for the
fiscal year ending prior to the exercise of the option, calculated as
set forth herein, plus the sum of Five Hundred Thousand Dollars
($500,000), but in the event that 300% EBITDA equals zero or is a
negative number, the exercise price for the Buy Option as set forth in
this Section 5.a. shall not be less than the sum of Five Hundred
Thousand Dollars ($500,000), all of which shall be payable in cash or
certified funds to Lessor at the Option Closing (as hereinafter
defined).
b. In partial consideration for this Lease, Lessor hereby is granted a
right to require the Lessee to purchase from Lessor the Home Health
License and the Assets (the "Put Option") which may be exercised in
the event that the Lessee gives notice of its intention not to renew
the Lease at the end of the Initial Term or any Renewal Term
6
or the Lessee terminates the Lease pursuant to Section 4.b. of this
Agreement. In the event Lessor desires to exercise the Put Option,
Lessor must give Lessee at least sixty (60) days prior written notice
of its intention to exercise the Put Option. The price of exercising
the Put Option (the "Put Option Price") shall be Three Hundred Percent
(300%) of the Lessee's EBITDA for the fiscal year ending prior to the
exercise of the option, calculated as set forth herein, plus the sum
of Five Hundred Thousand Dollars ($500,000), but in the event that
300% of Lessee's EBITDA as calculated herein equals zero or is a
negative number, the Put Option Price as set forth in this Section
5.b. shall not be less than the sum of Five Hundred Thousand Dollars
($500,000), all of which shall be payable in cash or certified funds
to Lessor at the Option Closing (as hereinafter defined). Lessee and
its Parent further agree to provide to Lessor (i) annual financial
statements of Lessee, Parent and Guarantor and (ii) annual Medicare
cost reports with respect to the operations of Lessee within the
ninety (90) day period following the end of each fiscal year occurring
during the Term of this Lease. In the event that the State of
Mississippi ceases to require a Certificate of Need for home health
licensure during the Term of the Lease, the fair market value of the
License and the Leased Assets, as determined by an independent
appraiser or certified public accountant agreeable to the parties,
shall be substituted for the Five Hundred Thousand Dollars ($500,000)
portion of the Put Option Price as set forth in this Section 5.b.
c. Upon termination or other expiration of this Lease without the prior
exercise of either Lessee's Buy Option or Lessor's Put Option (each an
"Option" and collectively, the "Options"), the Options expire without
any residual rights accruing to Lessee or Lessor, as the case may be,
as a result of said expiration. Lessor and Lessee further agree to
release the other from any obligations resulting or arising from the
Options once the Options have expired without exercise.
d. Unless a different closing date is selected by the mutual written
agreement of the parties, the closing date for the exercise of the
Option (the "Option Closing") shall be that date which is sixty (60)
days following the date that notice of exercise of the Option was
received by such party or its agent. Notice of exercise of the Put
Option may be given simultaneously with a notice of material breach,
and if so given, the rights and obligations of the parties pursuant to
the Put Option being exercised shall govern, except that in the case
of simultaneous notice of material breach and exercise of the Put
Option, the Option Closing shall take place thirty (30) days following
the date that notice of material breach was received by such party or
its agent.
e. For purposes of this Lease, EBITDA shall be determined in accordance
with Generally Accepted Accounting Principles ("GAAP"). Under no
circumstances shall any overhead payment, management fee,
distribution, dividend or other payment payable directly or indirectly
to Lessee, Parent or Guarantor or to any affiliate or related party of
any of Lessee, Parent or Guarantor on account of this Lease or the
7
Agency Operations contemplated herein exceed thirteen percent (13%) of
the gross revenue of Lessee, and any such payment made in
contravention of this paragraph shall be excluded in the calculation
of EBITDA.
6. Default and Termination. In the event of a material breach of this Lease by
either party (each a "Default Event"), the other party may, at any time
after giving thirty (30) days written notice of the breach, terminate this
Lease by a further written notice of termination; provided, however, if the
breaching party, prior to receiving such notice of termination, has cured
the breach, this Lease shall remain in full force and effect, subject to
the Option rights described in Section Five (5) herein. Notwithstanding the
preceding sentence, Lessor shall have the right to terminate this Lease
immediately upon the occurrence of any of the following events (each a
"Termination Event"):
a. failure or refusal by Lessee to pay Rent or any other sum or payment
when due hereunder to Lessor;
b. failure of Lessee to maintain the Home Health License in good standing
or failure of Lessee to maintain its Medicare and Medicaid provider
certification in good standing;
c. inability of Lessee to operate a home health care agency due to loss
of license or accreditation, fire, natural disaster, change of laws,
sale or other disposition of Lessee, or a change of laws,
accreditation standards, or other cause beyond Lessee's control;
d. violation of laws, regulations, or applicable agency policy that is
applicable to the operation of a home health agency where such
violation has a likelihood of jeopardizing the Home Health License or
Medicare and Medicaid provider certification of Lessee or has a
substantial likelihood of imposing a material fine;
e. change of standards by an approved accrediting body or in state or
federal laws or regulations, including, but not limited to, changes in
the law or regulations concerning home health licensure, beyond
Lessee's control;
f. cancellation, termination, or reduction of insurance coverage as set
forth in Section Fifteen (15) hereof;
g. violation of law by Lessee or its agents and which is likely to result
in material financial injury to Lessee;
h. the Lessee institutes or consents to any proceeding under the
Bankruptcy Code of the United States or any other applicable
liquidation, conservatorship, bankruptcy, moratorium, rearrangement,
receivership, insolvency, reorganization or similar
8
debtor relief laws (collectively the "Debtor Relief Laws") relating to
it or to all or any part of its property, or is unable or admits in
writing its inability to pay its debts as they mature, or makes an
assignment for the benefit of creditors; or applies for or consents to
the appointment of any receiver, trustee, custodian, conservator,
liquidator, rehabilitator or similar officer for it or for all or any
part of its property; or any receiver, trustee, custodian,
conservator, liquidator, rehabilitator or similar officer is appointed
without the application or consent of the Lessee; or any proceeding
under a Debtor Relief Law relating to the Lessee or to all or any part
of its property is instituted without its consent; or any judgment,
writ, warrant of attachment or execution or similar process is issued
or levied against all or any material part of its property;
i. vacating of any of the Leased Premises (as that term is defined in
each of the Leases listed on Schedule 4 to Exhibit A) (collectively as
defined in each Lease, the "Leased Premises") by Lessee;
j. encumbering or otherwise pledging as security any of Lessee's property
without the consent of Lessor;
k. failure of Lessee to fully and timely perform the covenants,
obligations or agreements of Lessee under this Agreement within thirty
(30) days after the date Lessee receives written notice of such
failure of performance;
1. LHC Group, LLC fails to own, directly or indirectly, at least 90% of
Lessee or Lessee enters into a management or similar agreement for the
operation of Lessee with any party other than the Guarantor without
the prior written approval of Lessor.
Notwithstanding anything to the contrary contained in this Section Six (6),
this Lease shall continue for at least the period of time required to
transfer patients so as not to jeopardize their medical care.
7. Remedies. Upon the occurrence of a Default Event or a Termination Event,
Lessor may:
a. Accelerate all Rents due under this Lease; and/or
b. Terminate this Lease, in which event Lessee shall immediately
surrender the Assets (including the Substitute Assets) and Leased
Premises to Lessor as herein provided, and if Lessee fails to
surrender the Assets (including the Substitute Assets) and Leased
Premises, Lessor may, without prejudice to any other remedy which
Lessor may have for possession of the Leased Premises, expel or remove
Lessee and any other person who may be occupying the Assets (including
the Substitute Assets) and Leased Premises, or any part thereof. In
such event Lessee shall transfer to Lessor
9
as liquidated damages all inventory maintained in the Leased Premises
and Lessee's equipment located in the Leased Premises to Lessor;
and/or
c. Enter upon and take possession of the Assets (including the Substitute
Assets) and Leased Premises and expel or remove Lessee and any other
person who may be occupying the Assets (including the Substitute
Assets) and Leased Premises or any part thereof without terminating
this Lease, and exercise Lessor's good faith efforts to relet the
Leased Premises, on behalf of Lessee, on the best terms, conditions
and rents; and in such event Lessor may seek such damages and remedies
as are available at law or in equity including any cost or expense
incurred by Lessor in connection with the reletting of the Leased
Premises or any deficiency in total financial consideration that may
arise by reason of such reletting; and/or
d. Protect, exercise and enforce its rights as a secured party with
respect to the Collateral in accordance with applicable law including
the right to retain the Collateral in full or partial satisfaction of
the obligations due under this Lease.
8. Surrender of Possession. Upon the expiration or termination of the Lease
Term, howsoever effected, Lessee shall forthwith surrender the Leased
Premises and the Assets (including the Substitute Assets) (as defined in
Section Seventeen (17) herein) to Lessor, free and clear of all claims,
liens, security interests and other encumbrances (except those existing on
the Effective Date), and other encumbrances approved in writing by Lessor
during the Lease Term and in as good working order and condition as on the
Effective Date, ordinary wear and tear excepted. Lessor's Assets and
Substitute Assets shall be surrendered to Lessor and all equipment
surrendered shall have an aggregate functional capability at least equal to
the aggregate functional capability of the equipment and Assets owned by or
leased by Lessor and leased to Lessee as of the Commencement Date. Lessor
shall have the option to purchase all or any portion of the inventory on
hand as of the expiration or termination of this Lease for a purchase price
equal to the lesser of the cost to Lessee or the market value of such
inventory so purchased. If Lessor exercises such purchase option, Lessee
shall execute and deliver to Lessor such bills of sale and assignments and
other documents as Lessor may require. All assets owned by Lessee and not
purchased by Lessor shall remain the sole and exclusive property of Lessee
upon termination or expiration of this Lease. To the extent Lessor does not
exercise Lessor's purchase option in respect of Lessee's equipment or
inventory as described herein, Lessee may remove Lessee's equipment or
inventory from the Leased Premises upon the expiration or termination
without cause of the Lease Term; provided, however, that Lessee shall be
responsible for and shall immediately repair any damage to the Leased
Premises caused by the removal of Lessee's equipment.
9. Representations and Warranties of Lessor. Lessor hereby represents and
warrants to Lessee as follows:
10
a. Lessor is a non-profit corporation duly organized and validly existing
under the laws of the State of Mississippi;
x. Xxxxxx has full and complete authority from its Board of Directors to
enter into this Lease and to execute all instruments incident hereto,
and to carry out the provisions of such documents;
c. The signatures appearing for Lessor on this Lease have been affixed
pursuant to such specific authority as, under applicable law, is
required to bind Lessor;
d. This Lease constitutes a legal, valid and binding obligation of
Lessor, enforceable in accordance with its terms;
e. As of the date hereof, and as of the Effective Date, the Assets and
the Home Health License will be free and clear of all liens and
encumbrances, except as disclosed on Exhibit "B" hereto, the terms of
which are incorporated herein by reference;
f. The Home Health License is in full force and effect, and (to the
knowledge of Lessor) no event has occurred which results in, whether
presently or with the passage of time, a material event of default
thereunder; and
x. Xxxxxx is the true and correct owner of the Home Health License.
10. Representations and Warranties of Lessee. Lessee hereby represents and
warrants to Lessor as follows:
a. Lessee is a limited liability company duly organized and validly
existing under the laws of the State of Mississippi;
b. Lessee has full and complete authority from its Manager and Members to
enter into this Lease and to execute all instruments incident hereto,
and to carry out the provisions of such documents;
c. The signatures appearing for Lessee on this Lease have been affixed
pursuant to such specific authority as, under applicable law, is
required to bind Lessee; and
d. This Lease constitutes a legal, valid and binding obligation of
Lessee, enforceable in accordance with its terms.
11. Representations and Warranties of Guarantor and Parent. Guarantor and
Parent hereby represent and warrant to Lessor as follows:
11
a. Guarantor is a limited liability company duly organized and validly
existing under the laws of the State of Louisiana, and Parent is a
limited liability company duly organized and validly existing under
the laws of the state of Mississippi;
b. Guarantor and Parent each have full and complete authority from their
respective Managers and Members to enter into this Lease and to
execute all instruments incident hereto, and to carry out the
provisions of such documents;
c. The signatures appearing for Guarantor and Parent on this Lease have
been affixed pursuant to such specific authority as, under applicable
law, is required to bind Lessee; and
d. This Lease constitutes a legal, valid and binding obligation of
Guarantor and of Parent, enforceable in accordance with its terms.
12. Covenants of Lessor. During the Term of this Lease, Lessor covenants that
it shall take all actions reasonably necessary to assist Lessee in
maintaining the Home Health License in good standing.
13. Covenants of Lessee. Lessee covenants that during the Term of this Lease,
it shall:
a. Maintain the insurance coverages provided for in Section Fifteen (15)
below at its sole cost and expense;
b. Only operate a home health care agency and, at Lessee's sole cost,
maintain all authorizations, licenses and permits necessary for the
operation of the home health care agency and utilize the Home Health
License and all other authorizations, licenses or permits necessary
for operation in substantial compliance with all Federal, state and
local laws and regulations;
c. Make the payments provided for in Section Two (2) above as and when
such payments become due and owing and pay as and when due the Assumed
Liabilities and perform all obligations under the Assumed Contracts
and this Lease Agreement;
d. Take all actions necessary to obtain and maintain in full force and
effect the Home Health License and Medicaid and Medicare provider
agreements and to obtain and maintain all permits necessary for the
operation of the home health care agency;
e. Not encumber in any way or place a lien upon or permit a lien to
attach to the Home Health License or any of its property without the
prior written consent of Lessor;
12
f. Obtain such financing and all governmental approvals necessary for the
Agency operations and to effect capital improvements and expenditures
as are consistent with prudent management and fiscally responsible
home health care operations.
g. At Lessee's sole cost and expense, keep and maintain its property in
good working order and condition, ordinary wear and tear excepted. In
this regard, Lessee shall be responsible for the maintenance, repair
and replacement, if necessary, of all its trade fixtures, equipment,
machinery, and other property including the Assets leased hereunder.
Routine maintenance, repair and replacement operations undertaken by
Lessee with respect to the Assets and Leased Premises pursuant to
Lessee's obligations hereunder shall not require Lessor's consent.
Lessee acknowledges that Lessor shall have no obligations concerning
repairs to or maintenance of the Assets or the Leased Premises leased
hereunder or for any other property of the Lessee.
h. Lessee shall be responsible for and shall pay prior to delinquency any
and all federal, state or local taxes incurred or assessed in
connection with Lessee's operation of its business, including all
taxes with respect to the Assets and the Leased Premises, including,
without limitation, federal and state income taxes, franchise taxes,
FICA, FUTA, unemployment taxes and other applicable taxes.
14. Medicare Provisions. Lessor shall cause to be properly prepared, signed and
timely filed all claims, cost reports or other documentation required by
the Medicare, Medicaid and any other third-party payor programs for the
Agency Operations prior to the Commencement Date; provided that the Lessor
and Lessee agree to share equally the costs to file the Lessor's final cost
reports. Copies of such claims and reports shall be supplied to Lessee upon
written request. To the extent any such programs determine, on the basis of
such closing cost reports or otherwise, that amounts are due to Lessor in
respect of periods prior to the Commencement Date, Lessee shall be entitled
to such amounts and shall increase dollar for dollar the next installment
payment of Rent by such amount. To the extent that any such closing cost
reports indicate that amounts are due to the Medicare, Medicaid or other
third party payor programs, such amounts shall constitute a current
liability of Lessor as of the Commencement Date and Lessee shall assume
liability for the same, shall timely pay such amounts and shall decrease
dollar for dollar the next installment payment of Rent by such amount.
15. Insurance. Lessee agrees that from and after the Commencement Date until
termination of this Lease, it shall obtain and maintain at Lessee's sole
cost (i) comprehensive general and professional liability insurance of not
less than One Million Dollars ($1,000,000.00) per claim and Three Million
Dollars ($3,000,000.00) in the aggregate; and (ii) property and casualty
insurance in the amount of not less than One Million Dollars ($1,000,000)
per claim and (iii) worker's compensation insurance as required by law in
the State of Mississippi. Such insurance policies shall be issued by a
company licensed to do business in Mississippi, which company shall have
and maintain an A. M. Best rating of at least an "A" during the
13
Term of the Lease, and which policy shall name Lessor and Lessee as
insureds. Lessee shall provide documentary evidence of such coverage to
Lessor, and Lessee shall notify Lessor immediately of any change in
coverage. The parties shall notify each other of any claims initiated
against them in connection with the Home Health License within five (5)
business days of receipt of notice of said claim.
16. Disposition of Obsolete Equipment. Lessor and Lessee recognize that
portions of Lessor's Assets may become inadequate, obsolete, worn out,
unsuitable, undesirable or unnecessary in the Agency Operations. In any
instance in which Lessee in its sound discretion determines that any items
of Lessor's Assets have become inadequate, obsolete, worn out, unsuitable,
undesirable or unnecessary in the Agency Operations, Lessee may remove such
items of Lessor's Assets from the Leased Premises and (on behalf of Lessor)
sell, trade-in, exchange or otherwise dispose of the same without any
responsibility or accountability to Lessor therefor; provided, however,
that Lessee shall substitute other equipment having equal or greater
utility (but not necessarily the same function) in the Agency Operations,
and provided further that such removal and substitution shall not impair
the Agency Operations. All such substitute equipment or assets and all
additions to the Agency Records by the Lessee (the "Substitute Assets")
shall constitute equipment or assets of Lessee and shall be held by Lessee
on the same terms and conditions as items originally comprising the
equipment and Assets of Lessor, provided, however, that Lessee grants to
Lessor, with respect to the Substitute Assets, the right to purchase the
Substitute Assets at the termination of this Lease for the purchase price
equal to the book value of said Substitute Assets, which value shall be
fixed and determined as of the date of termination of this Lease. Lessee
will not remove or permit the removal of any of Lessor's Assets from the
Leased Premises except in accordance with the provisions of this Section
Sixteen (16).
17. Conditions Precedent to this Lessee's Obligation to Lease. All obligations
of Lessee pursuant to this Lease are subject to the fulfillment of each of
the following conditions at or prior to the Commencement Date:
a. The representations and warranties of Lessor contained herein above
shall have been true and correct as of the date hereof and shall be
true and correct on and as of the Commencement Date with the same
force and effect as though made on and as of the Commencement Date;
x. Xxxxxx shall have performed all of its obligations to be performed or
complied with on or before the Commencement Date;
c. On the Commencement Date, no suit, action or other proceeding of any
kind or nature shall be pending before any court of competent
jurisdiction against Lessee in which damages may be awarded against it
in connection with this Lease or the consummation of the transactions
contemplated hereby, and no injunction or decree
14
or order shall have been entered and outstanding by any court of
competent jurisdiction which prohibits the Lease pursuant to the terms
hereof;
d. Lessee shall have obtained the consent of the Division of Health
Planning and Resource Development of the Mississippi State Department
of Health and the consent of the Division of Licensure and
Certification of the Mississippi State Department of Health to the
lease of the Home Health License in accordance with the terms hereof;
and
e. Lessee shall have notified the Centers for Medicare and Medicaid
Services and the Mississippi Division of Medicaid of the lease of the
Medicare and Medicaid Provider Numbers to Lessee; and
x. Xxxxxx shall deliver or cause to be delivered the following documents
to the Lessee on or before the Commencement Date in a form reasonably
acceptable to the parties and their respective counsel:
i. Any and all documents required by the Mississippi State
Department of Health in connection with its review and approval
of the lease of the Home Health License in accordance with the
terms hereof, provided, however, that Lessee shall have notified
Lessor to provide such documents;
ii. Any and all documents required by the Centers for Medicare
and Medicaid Services and from the Mississippi Division of
Medicaid in connection with its review and approval of the
Lease and change of ownership of the Home Health License in
accordance with the terms hereof, provided, however, that
Lessee, in a timely manner, shall have notified Lessor to
provide such documents;
iii. A closing certificate confirming that the Lessor's
representations and warranties are true and correct on the
Commencement Date; and
iv. Such other documents and things as reasonably may be
requested by Lessee.
Lessor and Lessee agree to cooperate with one another and use its best
efforts to cause all of the conditions precedent to be satisfied on or
before the Effective Date.
18. Conditions Precedent to Lessor's Obligations to Lease. All obligations of
Lessor pursuant to this Lease are subject to the fulfillment of each of the
following conditions on or prior to the Effective Date:
a. The representations and warranties of Lessee contained herein shall
have been true and correct as of the date hereof, and shall be true
and correct as of the
15
Commencement Date with the same force and effect as though made on and
as of the Commencement Date;
b. Lessee shall have performed all of its obligations and agreements, and
complied with all of their conditions contained herein to be performed
or complied with on or before the Commencement Date;
c. On the Commencement Date, no suit, action or other proceeding of any
kind or nature shall be pending before any court of competent
jurisdiction against Lessor in which damages may be awarded against it
in connection with this Lease or the consummation of the transactions
contemplated hereby, and no injunction or decree or order shall have
been entered and outstanding by any court of competent jurisdiction
which prohibits the Lease pursuant to the terms hereof;
d. Lessee shall have obtained the consent of the Division of Health
Planning and Resource Development of the Mississippi State Department
of Health and the consent of the Division of Licensure and
Certification of the Mississippi State Department of Health to the
lease of the Home Health License in accordance with the terms hereof;
and
e. Lessee shall have obtained the consent of the Centers for Medicare and
Medicaid Services and from the Mississippi Division of Medicaid to the
Lease; and
f. Lessee shall have notified the Centers for Medicare and Medicaid
Services and from the Mississippi Division of Medicaid of the lease of
the Medicaid and Medicare Provider Numbers to Lessee; and
g. Lessee shall deliver the following documents to Lessor on or before
the Effective Date in a form reasonably acceptable to the parties and
their respective counsel:
i. A closing certificate confirming that the Lessee's
representations and warranties contained herein are true and
correct as of the Commencement Date.
ii. Such other documents and things as reasonably may be requested by
Lessor.
Lessee and Lessor agree to cooperate with one another and use their best
efforts to cause all of the conditions precedent to be satisfied on or
before the Effective Date.
19. Indemnification by Lessor. Lessor agrees that it shall indemnify and hold
harmless Lessee and Guarantor against and in respect of:
16
a. Any and all damage or deficiency resulting from any
misrepresentations, breach of warranty or non-fulfillment of any
agreement on the part of Lessor under this Lease or from any
misrepresentations in or omission from any certificate or other
instrument furnished to Lessor hereunder;
b. Any claim for finder's fees or brokerage or other commissions by any
person, firm or entity, arising by reason of any services alleged to
have been rendered to or at the instance of Lessor with respect to
this Lease or any of the transactions contemplated hereby;
c. Any and all claims that may be made against Lessee and/or Guarantor
arising out of or relating to the operation of the home health care
agency pursuant to the use of the Home Health License (including the
Medicare and Medicaid provider agreements and any overpayment
liabilities) arising prior to the Commencement Date; and
d. Any and all actions, suits, proceedings, demands, assessments,
judgments, costs and legal or other expenses reasonably incident to
any of the foregoing.
20. Indemnification by Lessee and Guarantor. Lessee and Guarantor agree that
they shall indemnify and hold Lessor harmless, against and in respect to:
a. Any and all damage or deficiency resulting from any misrepresentation,
breach of warranty or non-fulfillment of any agreement on the part of
Lessee under this Lease or from any misrepresentation and omission
from any certificate or instrument furnished to Lessee hereunder;
b. Any claim for finder's fees or brokerage or other commissions by any
person, firm or entity arising by reason of any services alleged to
have been rendered to or at the instance of Lessee with respect to
this Lease or any of the transactions contemplated hereby;
c. Any and all claims that may be made against Lessor arising out of or
relating to the use of the Assets or operation of the home health care
agency (including the Medicare and Medicaid provider agreements and
any overpayment liabilities) arising on or after the Commencement
Date; and
d. Any and all actions, suits, proceedings, demands, assessments,
judgments, costs, legal and other expenses incident to any of the
foregoing.
21. Notice. Any notice or request to be given or furnished under this Lease by
the parties shall be in writing and shall be delivered personally or sent
via facsimile transmission or registered or certified mail, postage prepaid
or by prepaid overnight delivery service, at the addresses or facsimile
numbers listed below. A notice or request shall be deemed to be given (i)
when
17
delivered personally, (ii) when sent by facsimile transmission, or if sent
by certified mail or overnight delivery service, at the time of delivery as
indicated on the duly completed U.S. Postal Service return receipt or at
the time of package pickup as indicated on the records of or certificates
provided by the overnight delivery service.
a. LESSEE:
Mississippi HomeCare of Xxxxxxx, LLC
Attn: Xxxxx X. Xxxxx
0000 Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
Xxxxxxx X. XxxXxxxxx, Esq.
Xxxxxxxxx Law Firm
0000 Xx. Xxxx Xxxxxx
Xxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
LESSOR:
Xxxxxxx X. Grete, Esq.
Mississippi Baptist Medical Center, Inc.
Administration
0000 X. Xxxxx Xxxxxx
Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
and
Mississippi Baptist Health Systems, Inc.
Attn: Xxxxx Xxxxxxx
0000 X. Xxxxx Xxxxxx
Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
18
with a copy to:
Xxxxxxx X. Grete, Esq.
Mississippi Baptist Health Systems, Inc.
Administration
0000 X. Xxxxx Xxxxxx
Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
and
Xxxx X. Xxxxxx, Esq.
Xxxxxxx Xxxxxx Winter & Stennis, P.A.
000 X. Xxxxx Xxxxxx
Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
22. Survival. Each of the parties' respective representations, warranties and
covenants as contained in this Lease or in any document given or famished
under or in connection with this Lease or the transactions contemplated
hereby shall survive the Effective Date to the full extent necessary for
the protection of the parties. The parties specifically acknowledge that
the provisions of this Lease must survive in order to allow them the
benefit of their respective bargains.
23. Expenses of the Transaction. The parties agree that each of them shall be
responsible for the payment from their separate funds of their respective
expenses, including without limitation, their respective legal and
accounting fees, incurred in connection with this Lease and the
transactions contemplated hereby.
24. Further Assurances. The parties shall, without further consideration,
execute and deliver any and all such further instruments, documents and
agreements as may be reasonably necessary or appropriate to carry out the
terms and provisions of this Lease and the transactions contemplated
hereby.
25. Assignment. Lessee may not assign any rights or obligations under this
Lease, except with Lessor's prior written consent.
26. Amendments. This Lease may be amended only by a written agreement executed
by the parties; however, the parties hereto agree to modify the lists of
Inventory and Assets purchased or leased hereunder as may be necessary on
or after the Commencement Date in order to accurately reflect the Assets
and Inventory purchased or leased hereunder.
19
27 Waiver. No modification, waiver or discharge of any provision or breach of
this Lease shall be effective unless it is so done in writing and signed by
the party affected thereby.
28. Entire Agreement. This Lease, together with the exhibits and schedules
attached hereto and made a part hereof by reference, including the leases
and assignments of leases of the facilities as listed on Schedule 4 to
Exhibit "A" and attached hereto and incorporated herein by reference, and
the documents to be delivered in accordance with the terms hereof,
constitute the entire agreement between the parties with respect to the
transactions contemplated hereby and supersedes all other oral and/or
written agreements or understanding among the parties with respect thereto.
29. Governing Law. The parties agree that this Lease shall be governed by and
construed in accordance with the laws of the State of Mississippi. No
presumption shall be deemed to exist in favor of or against any party as a
result of the negotiation and/or preparation of this Lease.
30. Counterparts. This Lease may be executed in one or more counterparts, each
of which shall be deemed an original, and all of which shall constitute but
one and the same instrument.
31. Binding Effect. This Lease shall be binding upon, inure to the benefit of,
and be enforceable by the parties hereto, their respective successors,
permitted assigns, and their legal and/or personal representatives.
32. Guaranty. Parent and Guarantor are made a party to this Lease and are bound
with Lessee, jointly and severally, for the faithful execution of all of
the obligations to be performed on the Lessee's part, including but not
limited to the rental payments under Section Two (2) hereof, and Parent and
Guarantor furthermore waive all rights to a release from this obligation
due to the Lessor's failure to protest for non-payment of rent or due to
granting of any extensions or indulgences to Lessee or any modification of
this Lease, or due to the filing of a bankruptcy petition by or against
Lessee or discharge in bankruptcy, or upon Lessee's insolvency or
appointment of a receiver. Parent, Guarantor and Lessee agree that in event
of a default hereunder, Lessor may proceed against Lessee, Guarantor or
Parent in any order for fulfillment of the obligations pursuant to this
Lease.
[remainder of this page intentionally blank]
20
IN WITNESS WHEREOF, the parties hereto have caused this Lease to be
executed as of this the 3Oth day of September 2003 and effective for all
purposes as of the Effective Date.
MISSISSIPPI BAPTIST MISSISSIPPI BAPTIST HEALTH
MEDICAL CENTER, INC., LESSOR SYSTEMS, INC., LESSOR
By: /s/ Xxxxxxx York By: /s/ Xxxxxxx York
------------------------------- -------------------------
Title: CFO Title: CFO
---------------------------- ----------------------
LHC GROUP, LLC MISSISSIPPI HOMECARE OF XXXXXXX, LLC
GUARANTOR LESSEE
By: LHC GROUP, LLC, Manager
By: /s/ Xxxxx X. Xxxxx By: /s/ Xxxxx X. Xxxxx
------------------------------- --------------------------------
Xxxxx X. Xxxxx, Manager Xxxxx X. Xxxxx, Manager
MISSISSIPPI HEALTH CARE GROUP, LLC
PARENT
By: /s/ Xxxxx X. Xxxxx
-------------------------------
Xxxxx X. Xxxxx, Manager
