EXHIBIT 10.23
Execution Copy
FIRST AMENDMENT TO SETTLEMENT AGREEMENT
THIS FIRST AMENDMENT TO SETTLEMENT AGREEMENT (this
"Amendment") is made and entered into as of the 27 day of October, 2003, by and
among:
MARINER HEALTH CARE, INC., a Delaware corporation ("Mariner"),
formerly known as Mariner Post-Acute Network, Inc. ("MPAN") and successor by
merger to Mariner Health Group, Inc., a Delaware corporation ("MHG"),
individually and on behalf of each of its subsidiaries and affiliates identified
on Exhibit A attached hereto and made a part hereof (individually, a "Mariner
Entity") and collectively, the ("Mariner Entities"); and
BELLEAIR EAST MEDICAL INVESTORS, LTD. (L.P.) ("Belleair
East"), DALLAS MEDICAL INVESTORS, LTD. (L.P.) ("Dallas Medical"), DENVER MEDICAL
INVESTORS, LTD. (L.P.) ("Denver Medical"), FT. BEND MEDICAL INVESTORS, LTD.
(L.P.) ("Ft. Bend Medical"), HOUSTON-NORTHWEST MEDICAL INVESTORS, LTD. (L.P.)
("Houston-Northwest Medical"), MELBOURNE HEALTHCARE ASSOCIATES, LTD. ("Melbourne
Healthcare"), NORTHWEST HEALTHCARE, L.P. ("Northwest Healthcare"), ORANGE
HEALTHCARE, LTD. (L.P.) ("Orange Healthcare"), PINELLAS III HEALTHCARE, LTD.
(L.P.) ("Pinellas III Healthcare"), POLK HEALTHCARE, L.P. (LTD.) ("Polk
Healthcare"), PT. CHARLOTTE HEALTHCARE, LTD. (L.P.) ("Pt. Charlotte
Healthcare"), SOUTH DENVER HEALTHCARE ASSOCIATES, LTD. (L.P.) ("South Denver
Healthcare"), and TALLAHASSEE HEALTHCARE ASSOCIATES, LTD. (L.P.) ("Tallahassee
Healthcare"), (Belleair East, Dallas Medical, Denver Medical, Ft. Bend Medical,
Houston-Northwest Medical, Melbourne Healthcare, Northwest Healthcare, Orange
Healthcare, Pinellas III Healthcare, Polk Healthcare, Pt. Charlotte Healthcare,
South Denver Healthcare, and Tallahassee Healthcare being collectively referred
to herein as the "Landlords"); and
ARLINGTON HEIGHTS MEDICAL INVESTORS, LTD. ("Arlington"), VILLA
MEDICAL INVESTORS, LTD. ("Villa Medical") KENANSVILLE MEDICAL INVESTORS, LTD
("Kenansville"), CREEK FOREST, LIMITED ("Creek Forest"), FT. WORTH MEDICAL
INVESTORS, LTD. ("Ft. Worth Medical"), XXXXXX X. XXXXXXX ("Xxx Xxxxxxx"), XXXXXX
X. XXXXXXX, XX. ("Xxxxxx Xxxxxxx"), SUN CITY CENTER ASSOCIATES, LTD. (L.P.)
("Sun City Associates"), THE CHARLOTTE XXXX XXXXXXX IRREVOCABLE TRUST DATED
NOVEMBER 1, 1991, acting through Xxxxxxx X. Xxxxxxx, as Trustee (the "CRK
Trust"), XXXXXXX PARTNERS, L.P. ("Xxxxxxx Partners"), THE XXXXXX X. XXXXXXX, XX.
IRREVOCABLE TRUST DATED NOVEMBER 1, 1991, acting through Xxxxxxx X. Xxxxxxx, as
Trustee (the "SBKJR Trust"), and SBK, L.L.C. ("SBK-LLC") (Arlington, Villa
Medical, Kenansville, Creek Forest, Ft. Worth Medical, Xxx Xxxxxxx, Xxxxxx
Xxxxxxx, Sun City Associates, the CRK Trust, Xxxxxxx Partners, the SBKJR Trust
and SBK-
LLC together with the Landlord, being collectively referred to herein as the
"Xxxxxxx Entities"); and
WITNESSETH
WHEREAS, the Mariner Entities and the Xxxxxxx Entities are
parties to that certain Settlement Agreement dated as of January 25, 2002 (the
"Original Settlement Agreement"), pursuant to which they settled certain claims
between various Mariner Entities, on the one hand, and various Xxxxxxx Entities,
on the other, all as more particularly set forth therein; and
WHEREAS, the Original Settlement Agreement provided, among
other things, that as a material inducement for the Mariner Entities to enter
into the Original Settlement Agreement, Sun City Associates would enter into a
management agreement (the "Management Agreement") with MPAN or its affiliated
designee for the management of the Lake Towers Retirement Center and the Sun
Terrace Nursing Center (collectively, the "Sun City Facilities"), on the terms
provided in the form of a management agreement attached as an exhibit to the
Original Settlement Agreement, but as of the date specified in the Original
Settlement Agreement, the Xxxxxxx Entities had not complied; and
WHEREAS, the Xxxxxxx Entities have requested that the Mariner
Entities waive the noncompliance by Sun City Associates with its obligation to
provide the Management Agreement with respect to the Sun City Facilities as
required under the Original Settlement Agreement, and the Mariner Entities are
willing to do so upon the terms, and subject to the conditions, set forth
herein; and
WHEREAS, as an additional material inducement for the Mariner
Entities to enter into the Original Settlement Agreement, Kenansville and Living
Centers - Southeast, Inc., a Delaware corporation and a wholly owned subsidiary
of MPAN ("LC - Southeast") entered into a lease agreement with respect to the
92-bed nursing facility located in Kenansville, North Carolina, more
particularly known as Guardian Care of Kenansville (the "Kenansville Facility"),
on terms and conditions set forth in the form of the Kenansville Lease attached
to the Original Settlement Agreement, but Kenansville thus far has failed to
deliver exclusive possession of the Kenansville Facility to LC - Southeast, free
and clear of all rights of other tenants in possession, notwithstanding that the
Xxxxxxx Entities have represented to the Mariner Entities that it was the intent
of Kenansville and the current tenant in possession of the Kenansville Facility
(the "Current Kenansville Tenant") that such tenant's lease expired on June 30,
2002; and
WHEREAS, the Xxxxxxx Entities have requested that the Mariner
Entities modify certain terms of the Original Settlement Agreement pertaining to
the obligation of the Xxxxxxx Entities to deliver exclusive possession of the
Kenansville Facility as well as terms governing the obligations of the Xxxxxxx
Entities in the event they fail to deliver exclusive possession of the
Kenansville Facility as provided in the Original Settlement Agreement;
NOW, THEREFORE, for and in consideration of the foregoing
premises and the mutual covenants and promises set forth herein, and for other
good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereto, intending to be legally bound, hereby amend the Original Settlement
Agreement, and further agree, as follows:
1. DEFINITIONS. All capitalized terms used in this Amendment
but not defined herein shall have the meanings ascribed to such terms in the
Original Settlement Agreement.
2. MODIFICATION AND REAFFIRMATION OF KENANSVILLE OBLIGATION.
Kenansville hereby reaffirms its obligations under Section 3 of the Original
Settlement Agreement, subject to the following modifications, to which
Kenansville, the other Xxxxxxx Entities, LC - Southeast and the other Mariner
Entities mutually agree. Notwithstanding anything to the contrary contained in
the Original Settlement Agreement:
(a) Kenansville shall, (i) no later than November 15, 2003,
initiate all necessary legal proceedings and file all necessary
pleadings with a court of competent jurisdiction, to obtain a
declaratory judgment that the lease under which the Current Kenansville
Tenant occupies the Kenansville Facility has expired in accordance with
its terms, (ii) diligently prosecute such declaratory judgment action,
and if the declaratory judgment action is successful, then pursue
eviction action to successful result or until the exhaustion of all
available appeals, and (iii) until such declaratory judgment action,
and if the declaratory judgment action is successful, until the
eviction has been carried out or all available appeals have been
exhausted, report to Mariner's General Counsel or Vice President of
Real Estate periodically regarding the progress of such declaratory
judgment and eviction action as material developments occur, but in any
event no less frequently than monthly; and
(b) Upon fulfilling the obligations set forth in (a) above,
all references to the Two Hundred Fifty Thousand Dollars ($250,000)
price adjustment in connection with Tenant's option to purchase the
Woodwind Lakes Nursing Facility as a result of Kenansville's failure to
deliver possession of the Kenansville Facility to Tenant or one of
Tenant's affiliates by June 30, 2002 shall be deleted from Section 3 of
the Original Settlement Agreement and shall be void and of no further
effect whatsoever.
3. WAIVER OF MANAGEMENT AGREEMENT OBLIGATIONS. Upon the
consummation of the Closing Date (as defined below), the Mariner Entities shall
be deemed to have waived their right to enforce the obligation of Sun City
Associates to enter into the Management Agreement, and shall be deemed to have
released and forever discharged any claim against the Xxxxxxx Entities with
respect to such failure.
3.a AMENDMENT FEE. In consideration of the Mariner Entities
agreeing to amend the Original Settlement Agreement as provided in Sections 2
through 3 above, the Xxxxxxx Entities will pay the Mariner Entities Ten Dollars
($10) on the Closing Date (as defined below).
4. Closing. The transactions contemplated in Sections 2
through 3 of this Amendment shall be effective upon, and only upon, the
consummation of the transactions contemplated by the forms of asset purchase
agreements (the "Asset Purchase Agreements") attached to the Master Transaction
Agreement between certain of the Xxxxxxx Entities, the
Mariner Entities and certain other parties of even date herewith (the "Master
Transaction Agreement"), and at the "Closing Date" specified in such forms. In
the event the Closing Date as specified in the Asset Purchase Agreements shall
not have occurred on or before December 31, 2003 (or such later date as the
parties hereto shall have agreed in writing), then and in such event the
provisions of Sections 2 through 3 hereof shall be deemed to have been null and
void, and of no force or effect, to the same extent as if this Amendment had
never been executed and delivered. Nothing contained herein, however, shall
diminish or impair the rights or remedies of any party to the Asset Purchase
Agreement in the event of a failure of the transactions contemplated thereby, or
any of them, to occur.
5. DUE AUTHORIZATION. Each of the Xxxxxxx Entities hereby
represents and warrants that (a) such entities are duly authorized to enter into
this Amendment; and (b) the person purporting to execute this Amendment on
behalf of each of the Xxxxxxx Entities has been duly authorized to execute and
deliver this Amendment, including all exhibits thereto, on behalf of and so as
to bind each such party. Each of the Mariner Entities covenants to use
commercially reasonable efforts to obtain the ratification from each of their
respective Boards of Directors of the execution and delivery of this Agreement
by the Person executing this Agreement on behalf of each such entity so that
this Agreement becomes the binding obligations of each such entity.
6. ASSIGNMENT, PREDECESSORS, SUCCESSORS, AND ASSIGNS. This
Amendment shall be binding upon and shall inure to the benefit of the parties
hereto and their legal representatives, successors, and assigns.
7. NO LIABILITY. The parties to this Amendment each deny
liability to the other with regard to the various claims that are released under
this Amendment, and nothing contemplated hereby or provided for herein shall in
any way or manner be construed as an admission of any allegation, fact or
liability or any act of wrongdoing.
8. CONSTRUCTION. The parties hereto hereby mutually
acknowledge and represent that they have been fully advised by their respective
legal counsel of their rights and responsibilities under this Amendment, that
they have read, know and understand completely the contents hereof, and that
they have voluntarily executed and delivered the same. The parties hereto
further hereby mutually acknowledge that they have had input into the drafting
of this Amendment and that, accordingly, in any construction to be made of this
Amendment, it shall not be construed for or against any party, but rather shall
be given a fair and reasonable interpretation, based on the plain language of
this Amendment and the expressed intent of the parties.
9. ENTIRE AGREEMENT. The Original Settlement Agreement, as
amended by this Amendment, constitutes the entire understanding among the
parties with respect to the subject matter hereof, superseding all negotiations,
all prior discussions, preliminary agreements, representations, warranties, and
understandings of the parties, whether oral, written or implied, as to the
subject matter hereof. No supplement, modification, or amendment of any of the
Original Settlement Agreement or this Amendment shall be binding unless executed
in writing by all parties affected thereby. No waiver of any term, provision or
condition of any of the Original Settlement Agreement or this Amendment, in any
one or more instances, shall be deemed to be or be construed as a further or
continuing waiver of any such term, provision or
condition or as a waiver of any other term, provision or condition of this
Amendment or the Original Settlement Agreement. No failure to act shall be
construed as a waiver of any term, provision, condition or rights granted
hereunder.
10. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be an original, so that all of which taken
together shall constitute one and the same instrument.
11. SEVERABILITY. In the event that any part of this Amendment
shall be found to be illegal or in violation of public policy, or for any reason
unenforceable at law. such finding shall not invalidate any other part hereof
12. CHOICE OF LAW. This Agreement shall be interpreted under,
and construed in accordance with, the laws of the State of Georgia, without
taking into account the conflict of laws principles thereof.
13. REAFFIRMATION. The parties hereto hereby reaffirm the
Original Settlement Agreement, as herein modified, and except as expressly
modified herein, the Original Settlement Agreement remains unchanged and in full
force and effect.
14. THIRD PARTY BENEFICIARIES. No provision contained in this
Amendment is intended to confer any rights or remedies under or by reason of
this Amendment on any person or entity other than the parties hereto.
15. No REPRESENTATIONS AND WARRANTIES. Except as expressly set
forth in this Amendment, none of the parties hereto makes any representation or
warranty, written or oral, express or implied.
16. PAYMENT OF EXPENSES. Each party hereto shall bear its own
legal, accounting, due diligence and other expenses incurred in connection with
the preparation and negotiation of this Amendment and the consummation of the
transactions contemplated hereby, whether or not the Closing occurs.
17. ATTORNEYS' FEES. In the event of any dispute or
controversy arising out of this Amendment, including in connection with the
interpretation of any term or condition of this Amendment, the enforcement of
the Original Settlement Agreement, as herein amended, damages for breach of any
provision thereof, or in the situation where any provision of the Original
Settlement Agreement, as herein amended, is validly asserted as a defense, the
prevailing party shall be entitled to recover costs of suit, including
reasonable attorneys' fees actually incurred, from the other party in addition
to any other available remedy.
18. CONSENT TO JURISDICTION AND VENUE. The parties hereto
consent to the determination by the Bankruptcy Court without a jury trial and in
a contested matter as a "core proceeding" (as such term is defined in 28 U.S.C.
Section 157 or any successor provision) of any and all disputes concerning this
Amendment, including disputes involving the validity, interpretation, effect, or
enforcement of this Amendment, and the parties agree that the Bankruptcy Court
shall be the exclusive forum to hear, determine and enter appropriate orders and
judgments regarding
all such disputes until the closing of the Chapter 11, after which any and all
disputes arising out of this Amendment shall be adjudicated by any court of
competent jurisdiction.
19. NOTICES. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then five
(5) business days after) it is sent by registered or certified mail, return
receipt requested, postage prepaid, and addressed to the intended recipient as
set forth below:
If to the Mariner
Entities, or any of them: c/o Mariner Health Care, Inc.
Xxx Xxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attention: C. Xxxxxxxxx Xxxxxx
President and Chief
Executive Officer
With copies to: Mariner Health Care, Inc.
Xxx Xxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attention: Carolina Den Xxxx-Xxxxx,
Esq.
Vice President of Real
Estate and Associate
General Counsel; and
Powell, Goldstein, Xxxxxx & Xxxxxx
LLP
000 Xxxxxxxxx Xxxxxx, X.X.
00xx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
If to the Xxxxxxx
Entities, or any of them: c/o SBK Capital, LLC
0000 Xxxxxxx Xxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx
Title: Sole Member
With a copy to: Smith, Bassett, Xxxxxxx & Xxxxxx
0000 Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Any party may send any notice, request, demand, claim, or other
communication hereunder to the intended recipient at the address set forth above
using any other means (including personal delivery, expedited courier, messenger
service, facsimile, telex, ordinary
mail, or electronic mail). Any Party may change the address to which notices,
requests, demands, claims, and other communications hereunder are to be
delivered by giving the other Parties notice in the manner herein set forth.
20. HEADINGS. The descriptive headings of the several
paragraphs of this Amendment are inserted for convenience of reference only and
do not constitute a part of this Amendment.
IN WITNESS WHEREOF, this Amendment has been executed and
delivered by authorized officers of each of the Mariner Entities and the Xxxxxxx
Entities, or by authorized signatories thereof, as of the day and year first
above written.
MARINER HEALTH CARE, INC.
/s/ Xxxx. X. Xxxxxx
-------------------------
By: Xxxx. X. Xxxxxx
Its: Sr. V.P.
BELLEAIR EAST MEDICAL INVESTORS, LTD. (L.P.),
DALLAS MEDICAL INVESTORS, LTD. (L.P.),
DENVER MEDICAL INVESTORS, LTD. (L.P.),
FT. BEND MEDICAL INVESTORS, LTD. (L.P.),
HOUSTON-NORTHWEST MEDICAL INVESTORS, LTD. (L.P.),
MELBOURNE HEALTH CARE ASSOCIATES, LTD.,
NORTHWEST HEALTHCARE, L.P.,
ORANGE HEALTHCARE, LTD. (L.P.),
PINELLAS III HEALTHCARE, LTD. (L.P.),
POLK HEALTHCARE, L.P. (LTD.),
PT. CHARLOTTE HEALTHCARE, LTD. (L.P.),
SOUTH DENVER HEALTHCARE ASSOCIATES, LTD. (L.P.),
TALLAHASSEE HEALTHCARE ASSOCIATES, LTD. (L.P.)
/s/ Xxxxxx X. Xxxxxxx
---------------------
By: Xxxxxx X. Xxxxxxx
Sole Member of SBK, L.L.C., General Partner
ARLINGTON HEIGHTS MEDICAL
INVESTORS, LTD.
By: Xxxxxx X. Xxxxxxx
Its: General Partner
By: /s/ Xxxxxx X. Xxxxxxx
----------------------
VILLA MEDICAL INVESTORS, LTD.
By: Xxxxxx X. Xxxxxxx
Its: General Partner
By: /s/ Xxxxxx X. Xxxxxxx
----------------------
KENANSVILLE MEDICAL INVESTORS, LTD.
By: Xxxxxx X. Xxxxxxx
Sole Member of SBK, L.L.C., General Partner
By: /s/ Xxxxxx X. Xxxxxxx
----------------------
CREEK FOREST, LIMITED
By: Xxxxxx X. Xxxxxxx
Sole Member of SBK, L.L.C., General Partner
By: /s/ Xxxxxx X. Xxxxxxx
----------------------
FT. WORTH MEDICAL INVESTORS, LTD.
/s/ Xxxxxx X. Xxxxxxx
----------------------
By: Xxxxxx X. Xxxxxxx
Its: General Partner
/s/ XXXXXX X. XXXXXXX
----------------------
XXXXXX X. XXXXXXX
/s/ XXXXXX X. XXXXXXX, XX.
--------------------------
XXXXXX X. XXXXXXX, XX.
SUN CITY CENTER ASSOCIATES, L.P.
By: Xxxxxx X. Xxxxxxx
Sole Member of SBK, L.L.C., General Partner
By: /s/ Xxxxxx X. Xxxxxxx
----------------------
THE CHARLOTTE XXXX XXXXXXX
IRREVOCABLE TRUST DATED
NOVEMBER 1, 1991
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------------
Xxxxxxx X. Xxxxxxx
Its Trustee
XXXXXXX PARTNERS, L.P.
By: /s/ Xxxxxx X. Xxxxxxx, Xx.
---------------------------------------------
Xxxxxx X. Xxxxxxx, Xx., authorized agent
THE XXXXXX X. XXXXXXX, XX.
IRREVOCABLE TRUST DATED
NOVEMBER 1, 1991
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------------
Xxxxxxx X. Xxxxxxx
Its Trustee
SBK, L.L.C.
By: Xxxxxx X. Xxxxxxx
Its Sole Member
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------------
EXHIBIT A
LIST OF MARINER SUBSIDIARIES
Corporation State of Incorporation
----------- ----------------------
American Medical Insurance Billing Services, Inc. GA
Amerra Properties, Inc. DE
APS Pharmacy Management, Inc. TX
Beechwood Heritage Retirement Community, Inc. MD
Xxxxx Center Nursing Care/Austell, Inc. GA
Bride Brook Nursing & Rehabilitation Center, Inc. CT
Cambridge Bedford, Inc. MI
Cambridge East, Inc. MI
Cambridge North, Inc. MI
Cambridge South, Inc. MI
Clintonaire Nursing Home, Inc. MI
Compass Pharmacy Services of Texas, Inc. DE
Compass Pharmacy Services, Inc. MA
Cornerstone Health Management Company DE
Devcon Holding Company DE
EH Acquisition Corp. Ill GA
GCI Health Care Centers, Inc. DE
GCI Rehab, Inc. CA
GCI-Wisconsin Properties, Inc. WI
GranCare Home Health Services, Inc. CA
GranCare of Michigan, Inc. MI
GranCare South Carolina, Inc. SC
GranCare, LLC DE
Heritage Nursing Home, Inc. MI
Heritage of Louisiana, Inc. LA
IHS Rehab Partnership, Ltd. TX
LCR, Inc. DE
Living Centers LTCP Development Company DE
Living Centers of Texas, Inc. DE
Living Centers-East, Inc. DE
Living Centers-Rocky Mountain, Inc. NV
Living Centers-Southeast, Inc. NC
Long Ridge Nursing and Rehabilitation Center, Inc. CT
Longwood Rehabilitation Center, Inc. MA
Mariner Health at Bonifay, Inc. DE
Mariner Health Care Management Company DE
Mariner Health Care of Atlantic Shores, Inc. DE
Mariner Health Care of Deland, Inc. DE
1st Amend to Settlement Agmt
National Heritage Realty, Inc. XX
Xxxxxxxxxxx East Nursing Center, Inc. MI
Xxxxxxxxx Nursing & Rehabilitation Center, Inc. CT
Pinnacle Care Corporation of Huntington TN
Pinnacle Care Corporation of Nashville TN
Pinnacle Care Corporation of Xxxxxxxx Bay TN
Pinnacle Care Corporation of Wilmington TN
Pinnacle Pharmaceutical Services, Inc. TN
Prism Care Centers, Inc. MA
Prism Health Group, Inc. MA
Prism Home Care, Inc. MA
Prism Home Care Company, Inc. MA
Prism Home Health Services, Inc. MA
Prism Hospital Ventures, Inc. TX
Prism Rehab Systems, Inc. MA
Professional Rx Systems, Inc. FL
Rehability Health Services, Inc. TX
Renaissance Mental Health Center, Inc. WI
Sassaquin Nursing & Rehabilitation, Inc. MA
Seventeenth Street Associates Limited Partnership WV
Summit Hospital of Southeast Arizona, Inc. GA
Summit Hospital of Southwest Louisiana, Inc. GA
Summit Institute for Pulmonary Medicine and Rehabilitation, Inc. GA
Summit Institute of Austin, Inc. GA
Summit Medical Holdings, Ltd. DE
Summit Medical Management, Inc. GA
Tampa Medical Associates, Inc. FL
Tri-State Health Care, Inc. WV
Westbury Associates, L.P. GA
Windward Health Care, Inc. MA
1st Amend to Settlement Agmt
