EXHIBIT 10.2
SETTLEMENT AND RELEASE AGREEMENT
This Settlement and Release Agreement (the "Agreement") is entered into
and effective as of 11:30, CST, on August 31, 2001 by and between Texas
Diversicare Limited Partnership, a Texas limited partnership (the "Partnership")
and Diversicare Leasing Corp., a Tennessee corporation ("DLC").
RECITALS
WHEREAS, The Partnership executed and delivered a Wraparound Promissory
Note (the "Wraparound Note") in the original amount of $ 7,500,000, dated August
30, 1991 to Diversicare Nursing Centers, Inc., a Florida corporation, which was
assigned by Counsel Nursing Properties, Inc. (successor to Diversicare Nursing
Centers, Inc. by merger) to DLC on August 10, 1994;
WHEREAS, The Partnership is the owner of six nursing homes located in
the state of Texas, in the counties of Xxxxxxxx, Goliad, Lampasas, Refugio and
XxXxxx;
WHEREAS, The six nursing homes are known as Xxxxxxx Trail Nursing and
Rehabilitation Center, Goliad Nursing and Rehabilitation Center, Hillcrest Manor
Nursing and Rehabilitation Center, Lampasas Nursing and Rehabilitation Center,
Refugio Nursing and Rehabilitation Center, and Yorktown Nursing and
Rehabilitation Center (collectively the "Nursing Homes");
WHEREAS, the Wraparound Note is secured by all of the real and personal
property of the Nursing Homes pursuant to a Wraparound Deed of Trust dated
August 30, 1991 (the "Wraparound Deed of Trust" and collectively with the
Wraparound Note, the "Wraparound Mortgage") executed by the Partnership;
WHEREAS, The Wraparound Note provides for a balloon payment of the
remaining principal balance of approximately $ 6,500,000 on August 30, 2001;
WHEREAS, The Partnership failed to make the required payment on August
30, 2001, and is now in default under the Wraparound Mortgage;
WHEREAS, DLC has sent written notice to the Partnership demanding
payment and informing the Partnership of its intent to foreclose on the assets
of the Partnership if payment is not received immediately.
WHEREAS, The Partnership has informed DLC that it does not have
available sufficient assets to pay the outstanding amount under the Wraparound
Note; and
WHEREAS, DLC and the Partnership have agreed to the transfer of the
assets of the Partnership to DLC in full settlement of the outstanding amounts
under the Wraparound Note in exchange for the release of all remaining
obligations of the Partnership under the Wraparound Mortgage. The parties have
agreed to this settlement and release in lieu of DLC foreclosing on the Nursing
Homes which secure the Wraparound Mortgage.
NOW, THEREFORE, in consideration of the mutual premises, the conveyance
of the real and personal property of the Nursing Homes to DLC in lieu of
foreclosure, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties, intending to be
legally bound hereby, agree as follows:
1 Satisfaction of Wraparound Mortgage. DLC hereby accepts the
transfer and conveyance of the real estate and personal
property from the Partnership made concurrently herewith in
full payment and satisfaction of the Wraparound Promissory
Note and all amounts due under the Wraparound Promissory Note
for principal, interest, penalty, late fees and all other sums
due thereunder.
2 DLC Release of the Partnership. DLC does hereby irrevocably
and unconditionally release and forever discharge the
Partnership, and its general partner and their respective
directors, officers, successors and assigns (collectively, the
"Indemnified Persons") of and from any and all claims,
demands, actions, causes of action, rights, remedies or suits
which DLC ever had, now has or might hereafter have against
the Partnership, under, arising out of, relating to or
connected with (i) the Wraparound Promissory Note, (ii) the
Wraparound Deed of Trust, and (iii) any other documents or
instruments evidencing, securing or otherwise relating to the
Wraparound Mortgage. DLC agrees that, from and after the date
hereof, the Partnership shall not have any debts, liabilities
or obligations to DLC under or in respect of the Wraparound
Mortgage. Anything herein to the contrary notwithstanding, it
is understood and agreed that the release by DLC of the
Partnership set forth in this Paragraph 2 does not and shall
not be deemed to modify, amend, release or otherwise affect in
any manner whatsoever the liabilities and obligations of the
Partnership under (i) the Partnership Services Agreement
entered into between the Partnership, Diversicare
Incorporated, an Ontario corporation and Counsel Property
Corporation, an Ontario corporation, dated as of November 2,
1990 (the "Partnership Services Agreement") as assigned to DLC
pursuant to an Assignment and Assumption Agreement dated May
10, 1994, or (ii) the Guaranteed Return Loan Security
Agreement (the "Guaranteed Return Agreement") between the same
parties and dated the same date.
3 Release of Liens and Collateral Security. DLC hereby releases
and discharges in full all liens, mortgages, pledges, charges,
security interests and other encumbrances granted by the
Partnership in favor of DLC as security for the obligations of
the Partnership under the Wraparound Mortgage, including
without limitation the Wraparound Deed of Trust, the
Wraparound Promissory Note and any financing statements filed
with respect to the foregoing.
4 Delivery of Documents. In connection herewith, (i) the
Partnership shall execute and deliver to DLC appropriate
warranty deeds to the Nursing Homes and bills of sale for the
personal property located thereon; (ii) DLC shall execute and
deliver to the Partnership a full release of the lien
evidenced by the Wraparound Deed of Trust and shall execute
and deliver to the Partnership a full release and termination
of any UCC-1 and UCC-3 Financing Statements relating to the
Nursing Homes and the security interest of DLC evidenced
thereby; and (iii) DLC shall deliver to the Partnership the
executed original of the Wraparound Promissory Note. DLC shall
clearly xxxx the Wraparound Promissory Note to indicate the
satisfaction of the indebtedness and obligations with respect
to the
Wraparound Mortgage Note evidenced thereby and the release and
discharge of the Partnership from any further liability or
obligation with respect thereto.
5 Cooperation. At all times following the execution of this
Agreement, each party agrees to cooperate in good faith with
the others to execute and deliver, or cause to be executed and
delivered, such documents, and to do, or cause to be done,
such other acts or things as might be necessary or as might be
reasonably requested by any other party to give effect the
intent of this Agreement and assure that the benefits of this
Agreement are realized by each of the parties hereto.
6 Amendment; Modification. This Agreement may not be amended or
modified except by a written instrument executed by all of the
parties hereto.
7 Governing Law. This Agreement shall be construed and enforced
in accordance with the laws of the State of Texas.
8 Multiple Counterparts. This Agreement may be executed
simultaneously in one or more counterparts, each of which
shall be deemed to be an original, but all of which together
shall constitute one and the same instrument.
9 Captions. The captions of paragraphs of this Agreement have
been inserted solely for convenience and reference, and shall
not control or affect the meaning or construction of any
provisions of this Agreement.
10 Binding Effect. This Agreement shall be binding upon and shall
inure to the benefit of each of the parties hereto and their
respective legal representatives, successors and assigns.
IN WITNESS WHEREOF, intending to be legally bound, each of the
undersigned has executed this Agreement as of the time and date set forth above.
TEXAS DIVERSICARE LIMITED
PARTNERSHIP, by its General Partner,
DIVERSACARE GENERAL PARTNER, INC.
By: /s/ Xxxxxxx X. Xxxxx
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Authorized Signing Officer
DIVERSICARE LEASING CORP.
By: /s/ Xxxxxxx X. Council III
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Authorized Signing Officer
