OPTION AGREEMENT - PRIVATE
THIS OPTION AGREEMENT ("Agreement"), dated September 30, 1997, is entered
into between TRI-CITY HEALTH CENTRE, INC., a Texas not-for-profit corporation,
("Seller"), and NEWCARE HOSPITAL CORPORATION OR ITS ASSIGNS, a Nevada
corporation ("Purchaser"); collectively called the Parties.
RECITALS
A. Seller owns certain land, improvements, tangible personal property,
furniture, fixtures, equipment, cash and cash accounts, accounts receivable,
inventory, supplies, licenses and all other tangible and intangible property
situated in Dallas County, Texas, and utilized in the operation of Tri-City
Hospital, a 137 licensed bed osteopathic acute care hospital whose address is
0000 Xxxxxx Xxxx, Xxxxxx, Xxxxx 00000 and its accompanying facilities
(collectively called the "Hospital Property").
B. Seller desires to grant to Purchaser and Purchaser is desirous of
purchasing and obtaining from Seller an exclusive option to purchase such
Hospital Property from Seller under the terms and conditions set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements contained herein, the Parties hereby agree as follows:
ARTICLE 1: OPTION TO PURCHASE
1.1 Grant Of Option. Subject to the terms and conditions of this
Agreement, Seller hereby grants to Purchaser the exclusive, irrevocable option
(the "Option") to purchase from Seller all of the Hospital Property whether
now existing or hereafter acquired, free and clear of all liens, encumbrances
or liabilities.
1.2 Consideration, Expiration and Exercise of Option.
(a) In consideration of the grant of the Option to Purchaser from
Seller, the Purchaser shall pay to the Seller TWENTY-FIVE THOUSAND AND NO/100
DOLLARS ($25,000.00). Payment made by Purchaser for the option shall be non-
refundable to the Purchaser.
(b) Unless sooner exercised, the Option shall expire on September
30, 2002 (the "Expiration Date").
(c) Purchaser may exercise the Option by giving written notice to
Seller on or before the Expiration Date of Purchaser's intent to purchase the
Hospital Property (the "Notice of Exercise").
(d) If Purchaser fails to give notice to Seller as provided in this
Section 1.2, then Purchaser shall be deemed to have irrevocably waived all of
its rights under this Agreement, and the option shall automatically expire
without need for further documentation.
1.3 Purchase Price. If the Option is exercised, then the purchase price
("Purchase Price") for the Hospital Property shall be an amount equal to the
debt on the Hospital Property at such time as the Option is exercised (whether
tax-exempt bonds, capital leases, accounts payable, that certain capital
improvement loan described in the Management Agreement of even date herewith
or other debt), which shall be payable as follows:
The balance of the Purchase Price shall be paid by Purchaser at the
Closing (hereinafter defined) by extinguishment or assumption of the
hereinabove described debt then outstanding.
1.4 Adjustments and Costs.
(a) All accounts for water, sewer, gas, electrical, telephone and
other public utilities payable by Seller shall be transferred to Purchaser's
name effective as of the Closing Date.
(b) Seller and Purchaser shall each pay their own costs and
expenses (such as attorneys' and consultants' costs and expenses) incurred by
such party in connection with the transactions contemplated by this Agreement
not adjusted or allocated as set forth in this Section 1.4 or otherwise
provided for in this Agreement.
1.5 Independent Contract Consideration. Purchaser has delivered to
Seller TWENTY-FIVE THOUSAND AND NO/100 DOLLARS ($25,000.00) cash (the
"Independent Contract Consideration"), which amount has been bargained for and
agreed to as consideration for Purchaser's exclusive option to purchase the
Hospital Property and for Seller's execution and delivery of this Agreement.
The Independent Contract Consideration is in addition to and independent of
all other consideration provided in this Agreement and is nonrefundable in all
events.
1.6 Management Agreement. The execution of this Option Agreement is
expressly conditioned upon the execution of that certain Management Agreement
of even date herewith by and between the parties hereto.
ARTICLE 2: CLOSING
2.1 Closing. The closing of the transaction contemplated by this
Agreement shall occur at the offices of the Seller in Dallas, Texas, or such
other place, as agreed to by the Parties, at 10:00 a.m. on the first business
day which is not less than 60 days after the date on which Purchaser delivers
the Notice of Exercise to Seller, or on such other date as may be agreed by
the Parties (the "Closing Date").
2.2 Closing Obligations of the Parties. The Parties shall execute and
deliver the following documents (the "Closing Documents") and otherwise cause
the following events to occur at the Closing, each being a condition precedent
to the others but all being deemed to have occurred simultaneously (and all
Closing Documents shall be in form and substance reasonably acceptable to
Seller and Purchaser):
(a) Seller shall execute, have acknowledged where appropriate, and
deliver to Purchaser the following items with respect to the Hospital
Property:
(i) a special warranty deed (the "Deed"), conveying to
Purchaser title to the Hospital Property, subject only to the Permitted
Exceptions.
(ii) a xxxx of sale and assignment (the "Xxxx of Sale")
conveying to Purchaser all of Seller's interests in the Hospital Property;
(iii) all the original leases and unrecorded agreements
affecting the Hospital Property;
(iv) an affidavit of Seller stating that Seller is not a
foreign person in compliance with the requirements of Section 1445(b)(20) of
the Internal Revenue Code; and
(v) such affidavits and other documents as may be required or
reasonably requested by Purchaser or its attorneys to effect the consummation
of the transactions contemplated hereby.
(b) Purchaser shall execute, have acknowledged where appropriate,
and deliver to Seller the following items:
(i) instruments necessary to provide the Purchase Price; and
(ii) such affidavits and other documents as may be required or
reasonably requested by Seller, its attorneys to effect the consummation of
the transactions contemplated hereby.
(c) Purchaser and Seller shall each execute settlement statements
showing payment of the costs of Closing. Prorated items and costs shall be
charged or credited to Seller and Purchaser as provided in Section 1.4.
(d) Seller shall surrender possession of the Hospital Property to
Purchaser.
(e) Seller shall, at its sole cost and expense, cause a title
company acceptable to both Parties to issue and deliver to Purchaser an
Owner's Policy of Title Insurance Form T-1 (the "Title Policy") in the full
amount of the Purchase Price, dated as of the Closing Date, insuring
Purchaser's fee simple title to the Hospital Property to be good and
indefeasible subject only to the Permitted Exceptions and the standard printed
exceptions, except as otherwise to be deleted as described herein, contained
in the usual form of the Title Policy except that:
(i) the exception as to area and boundaries shall be deleted
except for "any shortages in area" and such deletion shall be an expense of
Purchaser;
(ii) the exception as to restrictive covenants shall be
endorsed to show those restrictive covenants currently filed of record, or if
there are none, shall be deleted;
(iii) the exception as to taxes shall be limited to standby
fees and taxes for the current year and subsequent years, and subsequent
assessments for prior years due to changes in land usage or ownership endorsed
"Not yet due and payable"; and
(iv) the exception as to mechanics liens shall be deleted.
ARTICLE 3: TITLE
3.1 Owner's Title Evidence. Within 20 days after the date of the Notice
of Exercise, Seller shall deliver to Purchaser at Seller's expense the
following items relating to the Hospital Property:
(a) A preliminary title insurance commitment (the "Commitment")
showing the status of record title to the Hospital Property, together with
legible copies of all documents evidencing exceptions to title shown therein
or otherwise affecting the Hospital Property. Such preliminary title
insurance commitment shall commit the title company to insure title in the
Hospital Property in Purchaser in the amount of the Purchase Price. The
Commitment shall affirmatively provide for the deletion, at Seller's sole
expense, of all standard printed exceptions of Schedule B-2 thereof. On or
before Closing, Seller shall cause the Commitment to be endorsed so as to
change the effective date to a date not earlier than 3 days prior to closing;
(b) Two copies of a current ALTA survey (the "Survey") of the
Hospital Property, prepared by a registered Texas professional surveyor
("Surveyor") acceptable to the Parties. The Survey shall certify to Purchaser
that: (i) the Survey was made and staked on the ground by the Surveyor; (ii)
the Survey shows the location and dimensions of all improvements, highways,
streets, roads, railroads, rivers, creeks, or other waterways, fences, any
easements, and rights-of-way visible on the ground or reflected in the
Commitment, on or adjacent to the Hospital Property, if any; (iii) there are
no visible discrepancies, conflicts, or encroachments except as shown on the
Survey; (iv) the Hospital Property does or does not lie in the 100-year flood
plain as established by the U.S. Army Corp of Engineers or any other
governmental body; (v) the Survey is a true, correct, and accurate
representation of the Hospital Property; and (vi) the Survey sets forth the
number of total acres/square feet (whichever is applicable) comprising the
Hospital Property, together with a metes and bounds description thereof. All
easements and right-of-way shall be referenced to the recording information
applicable to the documents creating such easements or rights-of-way which
have been recorded with the County Clerk of Dallas County. The Survey shall
locate and xxxx all corners and angles of the Hospital Property's perimeter on
the ground with permanent, buried iron surveyor's stakes. The Survey shall:
(i) meet the requirement of a Category IA Survey, as promulgated by the Texas
Society of Professional Surveyors; and (ii) be sufficient to cause the title
company to delete (except for "shortages in area") the printed exception for
"discrepancies, conflicts or shortages in area or boundary lines, or
encroachments, or any overlapping of improvements" in the Title Policy; and
(iii) shall be acceptable to the title company for the purpose of deleting the
survey exception from the Title Policy.
(c) A certificate or certificates of taxes due covering the
Hospital Property prepared by the Treasurer of Dallas County, Texas.
3.2 Title Defects. If Purchaser objects to any matter contained in the
Commitment, or on the Survey or if Purchaser asserts the existence of any
encumbrance, encroachment or defect in or objection to title which renders
title to any portion of the Hospital Property unmarketable (any of which is
called a "Defect of Title"), Purchaser shall give written notice to Seller of
all Defects of Title within 15 days after the delivery of the Commitment and
the Survey or any updates to the Commitment or the Survey disclosing a Defect
of Title, but in no event later than Closing. Any item to which Purchaser
does not object shall be deemed accepted by Purchaser (the "Permitted
Exceptions"). After receipt of such notice, Seller shall immediately proceed
to remove or cure all Defects of Title specified in the notice from Purchaser.
If all such Defects of Title are not removed or cured prior to or within ten
days after the receipt of such notice, Purchaser may elect: (a) to accept
title to the Hospital Property subject to the uncured Defects of Title; or (b)
to terminate this Agreement.
ARTICLE 4: REPRESENTATIONS AND WARRANTIES
4.1 Seller's Representations and Warranties. Seller represents and
warrants to Purchaser as follows:
Seller is a not-for-profit corporation duly organized, validly existing and
in good standing under the laws of the State of Texas and has full power and
authority to enter into this Agreement and to fulfill its obligations
hereunder.
Seller has the full right, power and authority to sell and convey the
property, and has taken all action necessary to authorize the execution and
delivery of this Agreement by Seller and the performance of its obligations
hereunder.
This Agreement and all documents contemplated hereby have been or will be
duly authorized and executed (and acknowledged where necessary) by the Parties
named as signatories in those documents, and all other necessary actions have
been or will be taken, so that this Agreement and all documents contemplated
herein are valid and binding upon Seller.
The Hospital Property does not contain asbestos or material containing
asbestos.
The Hospital Property does not contain PCBs or PCB Items, as those terms
are defined in 40 C.F.R. Part 761.
The Hospital Property does not contain above ground or underground storage
tanks, as those terms are defined in 42 U.S.C. Section 691 et seq. of the
Resource Conservation Recovery Act ("RCRA").
There is and has been no release of petroleum into the environment from an
above ground or underground storage tank at the Hospital Property, as those
terms are defined in RCRA.
There is and has been no release or threatened release, other than
federally permitted releases, of hazardous substances or pollutants or
contaminants into the environment from or through the Hospital Property as
those terms are defined in 42 U.S.C. Sections 9601 et seq. of the
Comprehensive Environmental Response, Compensation and Liability Act
("CERCLA");
The Hospital Property is in compliance with all applicable federal, state
and local environmental statutes, regulations, ordinances, and any permits,
approvals, or judicial or administrative orders issued thereunder.
The Hospital Property contains no conditions that could result in recovery
by any governmental or private party of remedial or removal costs, natural
resource damages, property damages, damages for personal injuries, other
costs, expenses or damages, or could result in injunctive relief, arising from
any alleged injury or threat of injury to health, safety, or the environment
relating to the Hospital Property.
The Hospital Property has full and free access to and from public highways,
streets and/or roads adjacent to the Hospital Property and Seller has no
actual knowledge of any fact or condition which would result in the
termination of such access.
Seller has not received any notices or demands from any mortgagee of the
Hospital Property or from any state, municipal or county government or any
agency thereof with regard to the Hospital Property.
Seller has not received any notice of, and has no other knowledge or
information of, any pending or contemplated change in any applicable law,
ordinance or restriction, or of any pending or threatened or judicial or
administrative action; or of any action pending or threatened by adjacent
landowners; or of any natural or artificial condition upon the Hospital
Property, or any party thereof, any of which would result in any material
change in the condition of the Hospital Property, or any part thereof, or in
any way limited or impede the operation of the Hospital Property, or any part
thereof, for any purpose.
4.2 Purchaser's Representations and Warranties. Purchaser represents and
warrants as follows:
(a) Purchaser has full power and authority to enter into this
Agreement and to fulfill its obligations hereunder.
(b) This Agreement and all documents contemplated hereby have been
duly authorized and executed (and acknowledged where necessary) by the Parties
named as signatories in those documents, and all other necessary actions have
been taken, so that this Agreement and all documents contemplated herein are
valid and binding upon Purchaser.
4.3 Pre-Closing Covenants of Seller. Following execution of this
Agreement and prior to Closing, Seller shall:
(a) pay all taxes and assessments affecting the Hospital Property
prior to the date such taxes and assessments are legally due and owing.
(b) not encumber or permit to be encumbered the Hospital Property
in any manner that would materially impact the use of the Hospital Property.
(c) not engage in or permit any action on the Hospital Property
that would materially impact the value or use of the Hospital Property.
(d) not sell or otherwise dispose of the Hospital Property outside
of the ordinary course of business without the consent of NewCare.
ARTICLE 5: RISK OF LOSS
If, between the date of this Agreement and the Closing Date, any material
part of the Hospital Property is materially damaged or destroyed by fire or
other casualty, or if any material part of the Hospital Property is taken in
condemnation or under the right of eminent domain, whether material or not, or
proceedings for such taking shall be pending or threatened, Purchaser shall
have the right to terminate this Agreement by notice given to Seller within 10
days after receiving notice thereof. Seller shall promptly notify Purchaser
of each occurrence of the kind specified above and shall give Purchaser such
information relating thereto as Purchaser may thereafter reasonably request.
Alternatively, Purchaser may elect to purchase the Hospital Property
notwithstanding the damage or taking, without any abatement or diminution of
the Purchase Price, in which case Seller shall, on the Closing Date, deliver
to Purchaser any insurance proceeds or condemnation awards received by Seller
as a result of any occurrence specified herein and assign to Purchaser all of
Seller's right, title and interest in and to any insurance proceeds or
condemnation awards resulting from any such occurrence that have not yet been
received by Seller on that date. Seller shall cooperate with and assist
Purchaser in collecting any such proceeds or awards.
ARTICLE 6: INDEMNIFICATION
Seller shall, immediately and on demand, indemnify, defend and hold
harmless Purchaser and its (partners, officers, shareholders, directors),
together with all of their agents, affiliates, officers, directors, insurors
and employees (individually "Indemnified Party" and collectively "Indemnified
Parties") from and against any and all liabilities, judgments, injunctive
relief, costs and expenses, including without limitation legal fees and
disbursements, consultant fees, and costs and expenses incurred in
investigating, responding to discovery, or defending, involving claims,
demands, actions and causes of action, whether rightfully or wrongfully
brought or filed, to which any Indemnified Party may be subject arising out of
or relating in whole or in part to (i) ownership of the Hospital Property by
Seller, (ii) any actual or alleged contamination of the Hospital Property or
adjacent or neighboring land of, any hazardous or toxic substance, pollutant
or contaminant, petroleum, gasoline or diesel fuel, crude oil or any fraction
thereof, or any other substance regulated by or defined under any federal,
state, or local environmental statute (collectively referred to herein as
"Hazardous Substances"), (iii) any alleged injury or threat of injury to
health, safety or the environment relating to the Hospital Property or
adjacent or neighboring land, (iv) any actual or alleged noncompliance with
any federal, state or local environmental statutes, regulations, ordinances or
any permits, approvals or judicial or administrative orders issued thereunder,
giving rise to liability under any federal, state or local environmental
statutes or ordinances, or (v) any claim by any governmental or private party
for remedial or removal costs, natural resource damages, property damages,
damages for personal injuries, or corrective action costs under common law or
any federal, state, or local environmental statute. The foregoing indemnity
shall be binding upon Seller whether or not any contamination by or presence
or release of Hazardous Substances was caused by Seller, whether or not Seller
has knowledge of such contamination, presence or release, whether or not such
contamination, presence or release was foreseeable or unforeseeable or whether
or not such contamination, presence or release is disclosed in or acknowledged
by any report, document, study or information obtained by or submitted or
provided to Purchaser.
ARTICLE 7: DEFAULT AND REMEDIES
In the event that Purchaser or Seller fails to perform or comply with any
of its obligations or the terms contained in this Agreement, the injured party
shall have all rights and remedies available at law or in equity, including
damages, specific performance and termination of this Agreement, which
remedies shall be cumulative and not exclusive, except for circumstances where
an exclusive remedy is otherwise specified elsewhere in this Agreement.
ARTICLE 8: MISCELLANEOUS MATTERS
8.1 Recording. Neither party shall record this Agreement or any
memorandum of it without the consent of the party hereto, and any recording
without such consent shall be a material default hereunder.
8.2 Assignment. Purchaser may assign its rights hereunder without the
prior written consent of the Seller.
8.3 Notices. All notices and other communications under this Agreement
shall be in writing and shall be deemed to have been duly given (a) on the
date of delivery, if delivered personally on the party to whom notice is
given, or if made by telecopy directed to the party to whom notice is to be
given at the telecopy number listed below, or (b) on receipt, if mailed to the
party to whom notice is to be given by first class mail, registered or
certified, return receipt requested, postage prepaid and properly addressed as
follows:
To Seller:
Tri-City Health Centre, Inc.
0000 Xxxxxx Xxxx
Xxxxxx, Xxxxx 00000
Attn: Chairman of the Board
To Purchaser:
NewCare Hospital Corporation
0000 Xxxx Xxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attn: President
8.4 Attorneys' Fees. Should any litigation be commenced between the
Parties concerning the Hospital Property, this Agreement or the rights and
duties of either Seller or Purchaser in relation thereto, whether it be an
action for damages, or equitable or declaratory relief, or to collect any
indemnity provided for herein, the prevailing party in such litigation, in
addition to such other relief as may be granted by the court, shall also be
entitled to collect all of its costs in such action, including the costs of
investigation, settlement, expert witnesses and reasonable sums as and for
attorneys' fees together with all additional costs incurred in enforcing or
collecting any judgment rendered.
ARTICLE 9: INTERPRETATION OF AGREEMENT
9.1 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas.
9.2 Headings. The article and section headings in this Agreement are for
convenience only and shall not be used in its interpretation or considered
part of this Agreement.
9.3 Effect of Agreement. The entire agreement of the Parties is herein
written and the Parties are not bound by any agreements, understandings,
conditions or inducements otherwise than are expressly set forth and
stipulated hereunder. No provision of this Agreement shall be altered,
amended, revoked or waived except by an instrument in writing signed by the
party to be charged with such amendment, revocation or waiver. This Agreement
shall be binding upon and shall inure to the benefit of the Parties and their
respective successors and assigns.
9.4 Severability. If any clause or provision of this Agreement is
illegal, invalid or unenforceable under applicable present or future laws,
then it is the intention of the Parties that the remainder of this Agreement
shall not be affected but shall remain in full force and effect.
9.5 Survival and Benefit. The following provisions shall survive the
closing: Article 4, Article 6, Section 8.4, and Article 9. Seller
acknowledges that all of the conditions to this Agreement are for the sole
benefit of Purchase and that Purchaser may unilaterally waive the same.
9.6 Time. Time is of the essence of this Agreement. If any of the
conditions or obligations in this Agreement are not timely met by Purchaser or
Seller (including but not limited to tendering funds and signing of closing
documents on or before the Closing Date), then Purchaser or Seller, as the
case may be, shall be deemed to be in default hereunder, and the non-defaulting
party may, at its option, exercise its rights under Article 7.
9.7 Additional Instruments. Each Party hereto shall, from time to time,
execute and deliver such additional instruments and documents as the other
Party or its counsel may reasonably request to effectuate the intent of this
Agreement.
9.8 Compliance with Laws, Ordinances and Regulations. In performing the
obligations, covenants and conditions of this Agreement, Seller and Purchaser
shall comply with all applicable laws, ordinances and regulations.
ARTICLE 10: ATTORNEY GENERAL APPROVAL
10.1 Contingent on Approval. The purchase of the Hospital Property by
NewCare pursuant to this Agreement is subject to and contingent upon the
review and approval by the Attorney General of the State of Texas of either
(a) this agreement, or (b) the purchase of the Hospital Property pursuant to
this agreement.
IN WITNESS WHEREOF, the Parties have duly executed it as of this day and
year first above written.
SELLER:
TRI-CITY HEALTH CENTRE, INC.
By: /s/ Xxxxxxx Xxxxxxx
Title: Chairman, Board of Directors
PURCHASER:
NEWCARE HOSPITAL CORPORATION
By: /s/ Xxxxxx Xxxxxxxxx
Title: President
