EXHIBIT 10.22
AGREEMENT OF PURCHASE AND SALE OF ASSETS
-----------------------------------------
INTRODUCTION AND RECITALS
This Agreement of Purchase and Sale of Assets (the "Agreement") is made and
entered into this 24th day of November, 1997, by and between Xxxxxx Xxxxx-South
Texas Health Care, Inc., a Texas corporation ("Seller") and Summit Care Texas,
LP, a Texas limited partnership or its affiliated nominee, ("Buyer" or "Summit
Care").
RECITALS
--------
WHEREAS, Seller is:
(i) The lessee of a certain One Hundred and Ninety Four (194)-bed
nursing facility, commonly known as Briarcliff Nursing and
Rehabilitation Center, located at 0000 Xxxxx Xxxx Xxxx, XxXxxxx,
Xxxxx 00000, more particularly described on Exhibit 1.01(a)(i)
hereto and hereby incorporated herein by reference (the "Facility"),
pursuant to a lease, dated July 1, 1993, by and between Seller, as
"Lessee" and Xxxxx Xxxxx, as "Lessor," as amended by that certain
First Amendment to Lease, dated April 9, 1996, (collectively the
"Lease"), between Seller and Xxxxx & Xxxxx Family Limited
Partnership, a Texas partnership and successor-in-interest to Xxxxx
Xxxxx, as "Lessor," copies of which are also attached as part
Exhibit 1.01(a)(i) hereto and hereby incorporated herein by
reference (hereinafter, the term "Owner" shall be used to refer to
both Xxxxx Xxxxx and to Xxxxx & Xxxxx Family Limited Partnership
during their respective ownership of the Facility); and
(ii) A party to that certain "Option Agreement," dated August 2, 1992, as
amended by that certain Amendment to Option Agreement, dated April
9, 1996 (collectively the "Option Agreement"), copies of which are
attached as Exhibit 1.01(a)(ii) hereto and hereby incorporated
herein by reference, whereby Owner has granted Seller an option to
purchase fee title to the Facility, exercisable on the terms therein
set forth; and
(iii) The fee owner of a certain parcel of vacant land comprising
approximately 1.8 acres, situated adjacent to the Facility (the
"Adjacent Land"), more particularly described on Exhibit
1.01(a)(iii) hereto and hereby incorporated herein by reference,
subject to that certain deed of trust dated October 26, 1995 ("Trust
Deed"), to Xxxxx Xxxxxxx, as "Trustee," a copy of which is also
attached as part of Schedule 1.01(a) (iii) hereto and hereby
incorporated by reference; and
(iv) The owner or lessee of all supplies, machinery, equipment, fixtures,
inventory and all other items of personal property utilized in the
operation of all of the foregoing, as hereinafter defined; and
WHEREAS, the Seller desires to sell and assign Buyer desires to purchase
and assume the Seller's interest in the Facility, and the Assets of Seller, as
more fully defined herein, on the terms and conditions set forth in this
Agreement;
NOW, THEREFORE, in consideration of the mutual promises of the parties
and for other good and valuable consideration, the parties agree as follows:
ARTICLE I
---------
PURCHASE AND SALE OF ASSETS
---------------------------
1.01 Description of Assets. Subject to the terms and conditions of this
---------------------
Agreement, as of the Closing Date, as defined in Article IX herein, Seller shall
convey, assign and transfer to Buyer and Buyer shall accept good and
indefeasible title to the following assets as the same may exist on the Closing
Date (collectively referred to as the "Assets").
(a) All of Seller's right, title and interest in and to the
Facility, including without limitation, the real property, structures, fixtures,
paving, surfacing and improvements therein (collectively referred to as the
"Premises"), which real property is more particularly described on Exhibit
1.01(a)(i) attached hereto, and which shall be conveyed to Buyer pursuant to an
assignment of Seller's interest in the Lease and Option Agreement, with the
written consent of the Owner thereto;
(b) All personal property, except supplies, as defined below, such
as furniture, fixtures, vehicles, and equipment located in and upon the Premises
as of the Closing or used in the operation of the Premises as a nursing facility
(the "Personal Property"), more particularly described on Exhibit 1.01(b)
attached hereto;
(c) Seller's interest in any and all leases, contracts, service
contracts and other agreements used in the operation of the Facility which Buyer
has expressly agreed to assume in addition to the Lease and Option Agreement,
copies of which are attached hereto as set forth in Exhibit 1.01(c) ("the
Contracts");
(d) Seller's interest in any and all patient records and agreements,
personnel records, provider agreements, records of inspection of the Facility by
local, state and federal agencies, records of construction, architectural plans
of the improvements on the Premises, including as built plans and surveys,
construction
2
contracts and specifications, as such presently exist in and upon the Premises;
(e) All of Seller's right, title and interest in and to the use of the
name "Briarcliff Nursing and Rehabilitation Center";
(f) All of Seller's right, title and interest in and to any and all
drugs, medicines, foods, linens or other supplies used in connection with the
operation of the Facility, but in any event not less than the normal and usual
operating compliment of supplies necessary to last ten (10) days in the ordinary
course of Seller's business operations at the Facility (the "Supplies"); and
(g) All of Seller's right, title and interest in and to any and all
licenses, permits and authorizations obtained in connection with the operation
of the Facility which are transferable, copies of which are attached hereto as
Exhibit 1.01(g).
1.02 Liabilities and Assets Excluded. The following tangible and
-------------------------------
intangible assets and liabilities of Seller are being retained by Seller and are
expressly excluded from the Assets being Purchased by or transferred to Buyer:
(a) Seller's cash on hand, or in bank accounts and investments;
(b) Seller's accounts receivable as of the Closing Date;
(c) All of Seller's leases, contracts, service contracts or other
commitments, if any, not expressly assumed by Buyer as provided on Exhibit
1.01(c) hereto;
(d) Any and all property of patients held by Seller as security for or
in lieu of payment for Seller's accounts receivable;
(e) Any and all debts, obligations or liabilities of Seller relating
to the Assets, unless expressly assumed herein by Buyer on Exhibit 1.01(c)
attached hereto;
(f) Any and all liabilities of Seller for injuries, damages, acts or
omissions relating to the Facility or the Assets prior to the Closing Date;
(g) Any and all claims of or obligations to the United States under
the Medicare Program, or to the State of Texas under the Medicaid Program, or
other third-party payors, arising out of the operations of the Assets prior to
the Closing Date;
3
(h) Any and all federal and state tax liabilities including for sales
tax payable with respect to periods prior to the Closing and sales, use or
excise tax payable with respect to the within transaction and the assets
transferred hereunder;
(i) Seller's proprietary computer software, and those proprietary
forms and manuals owned by or developed for Seller for use at the Facility; and
(k) All other items of personal property set forth on Exhibit 1.02
hereto (collectively, the "Excluded Assets").
ARTICLE II
----------
PURCHASE PRICE
--------------
The purchase price (the "Purchase Price") which Buyer agrees to pay and
Seller agrees to accept for the Assets is Three Million Nine Hundred Thousand
Dollars ($3,900,000.00), to be paid to Seller in accordance with the provisions
of this Article II.
2.01 Xxxxxxx Money Deposit. Seller acknowledges that Buyer has deposited
---------------------
the sum of One Hundred Thousand Dollars ($100,000.00) as an xxxxxxx money
deposit ("Deposit") with Xxxxx Xxxxxx, Senior Vice President and Escrow Officer,
First American Title Company, Houston, Texas ("Escrow Holder"), to be held in an
interest-bearing escrow account pending the Closing and subject to the terms and
conditions of this Agreement, to be applied to the payment of the Purchase Price
at Closing. The Deposit and all interest accrued thereon shall be refundable in
full to Buyer upon written request of Buyer for any reason delivered on or
before September 16, 1997, and thereafter shall be refundable to Buyer should
the contemplated transaction fail to close on or before October 31, 1997, for
any reason other than the default of Buyer hereunder, and as provided by Section
7.18 of this Agreement.
2.02 Cash. Buyer shall pay in immediately available funds to Seller the
----
cash portion of the Purchase Price by wire deposit to Seller at Closing, less
the Deposit and all accrued interest thereon and less the Adjustment Retention
Fund (as provided in Section 2.04 below).
2.03 Adjustments. The Purchase Price shall be adjusted upward within
-----------
forty-five (45) days of the Closing as of the Effective Date to the extent, if
any, that Buyer derives a benefit from any prepaid items of Seller, including,
but not limited to taxes, expenses and insurance and to the extent Buyer
succeeds to Seller's position with respect to Seller's deposits for utilities,
such as telephone, water, gas, electricity or sewer. The Purchase Price shall be
adjusted downward within forty five (45) days of Closing as of the Effective
Date to the extent that Seller has not fully paid and discharged all payables,
charges, expenses, costs,
4
taxes or assessments accruing on or before the Effective Date, including
employee vacation pay or for other employee benefit programs of Seller. All
adjustments at or after Closing shall be in cash.
2.04 Adjustment Retention Fund. Escrow Holder shall retain, from the cash
-------------------------
portion of the Purchase Price payable to Seller at Closing, the sum of Twenty
Thousand Dollars ($20,000.00) as a retention fund (the "Adjustment Retention
Fund") from which Escrow Holder shall, upon instructions from Buyer and Seller,
deduct adjustments to the Purchase Price, if any, to be made following the
Closing. The Adjustment Retention Fund, less any such adjustments, shall be
delivered to Seller and all adjustments shall be delivered to Buyer no later
than forty-five (45) days following the Closing Date.
2.05 Prorations, Credits, Costs. The following items shall be apportioned
--------------------------
and prorated as of the Closing Date:
(a) Property Taxes. General county, city and school taxes on a
--------------
fiscal year basis for the Premises and for the personal property (including
taxes impounded with Mortgage lenders).
(b) Insurance. There shall be no proration of Seller's prepaid
---------
insurance premiums as Buyer shall provide its own insurance coverage. Seller
shall be entitled to receive any refunds of any such prepaid insurance premiums.
(c) Rents, Utilities and Deposits. All rents, utilities shall be
-----------------------------
paid to the Closing Date by Seller. Seller shall be entitled to a refund for any
utility deposits.
(d) Employee Sick, Holiday, Vacation Pay, Etc. Seller shall credit
-----------------------------------------
to Buyer against the Purchase Price a sum equal to the equivalent of employee
wages for all employee vacation pay or other employee benefits earned or accrued
prior to the Closing Date. Such credit shall reduce the cash payment required of
Buyer at Closing as provided in Section 2.02 above.
(e) Closing Costs. Buyer shall pay for the cost of recordation of
-------------
the Assignment of Lease and the Assignment of Option Agreement. Buyer and Seller
shall each pay fifty percent (50%) of the statutory cost of a leasehold title
insurance policy with the survey exception removed. Buyer and Seller shall each
pay fifty percent (50%) for the cost of the survey and Seller shall pay any
transfer tax applicable to recordation of the Assignment of Lease or the
Assignment of Option Agreement, any recordation fees for other instruments
required to clear title hereunder, and any sales or use taxes, if applicable, to
this transaction. Personal and real property taxes will be prorated as of the
Closing Date.
5
(f) Employer's Taxes. Seller shall be responsible for all business,
----------------
occupation, withholding, FICA, unemployment and similar taxes of any kind,
including both the employer's and employee's portion of any such tax, relating
to any period prior to the Closing Date, including taxes on employee sick,
holiday and vacation pay.
(g) Prepaid Services. Any advance payments made by residents of the
----------------
Facility for services to be rendered after the Closing Date shall be paid to
Buyer at Closing.
ARTICLE III
-----------
REPRESENTATIONS AND WARRANTIES OF SELLER
----------------------------------------
Seller hereby represents and warrants to Buyer as of the Execution Date and
the Closing Date (the truth and accuracy of which shall constitute a condition
precedent to Buyer's obligations hereunder) as follows:
3.01 Organization. Seller is a duly organized and validly existing Texas
------------
subchapter S corporation, and is in good standing in the State of Texas. Seller
has full power and authority to own and lease its properties and to carry on its
business as presently conducted. Xxxxxx Xxxxx and Xxxxx Xxxxx are the sole
shareholders of Seller.
3.02 Authority. The execution, delivery and performance of this Agreement
---------
has been duly authorized by the Seller in accordance with its articles of
incorporation and bylaws and no further action by Seller will be required to
make this Agreement valid and binding upon Seller in accordance with its terms.
Except as provided on Exhibit 3.02 attached hereto, the execution, delivery and
performance of this Agreement will not cause any default in or breach of any
provisions of any applicable law, rules or regulations, or any indenture,
mortgage, loan agreement, contract, lease or other instrument to which Seller is
a party or by which it or any of its property or assets are bound.
3.03 Financial Statements. Exhibit 3.03 attached hereto sets forth the
--------------------
unaudited balance sheets and operating statements of Seller for the eight (8)
months ended August 31, 1997 and shall be updated at Closing to include the nine
(9) ending on September 30, 1997, and unaudited financial statements compiled
and reviewed by Xxxx Xxxxxx, Seller's accountant, for the same period
(collectively, the "Financial Statements"). The Financial Statements attached
hereto as Exhibit 3.03 have been prepared in accordance with generally accepted
accounting principles consistently followed and fairly present the operating
position of the Facility as of the respective dates and the results of
operations for the respective periods indicated. Seller agrees to cooperate with
Buyer and use its best efforts in furnishing any
6
financial information of Seller required by Buyer for filing with the Securities
and Exchange Commission after Closing.
3.04 Tax Returns. Within the times and in the manner prescribed by law,
-----------
Seller has filed all federal, state and local tax returns required by law and
has paid all taxes, assessments, and penalties due and payable. The provisions
for taxes reflected in Seller's Financial Statements, are adequate for any and
all county, school and local property taxes for the period ending on the date of
the most recent balance sheet and for all prior periods, whether or not
disputed. There are no present disputes as to taxes of any nature payable by
Seller.
3.05 Absence of Changes. Except as provided on Exhibit 3.05, since the
------------------
date of the latest Financial Statements of Seller, there has not been any
material change in the financial condition or operations of Seller, except
changes in the ordinary course of business.
3.06 Liabilities. Exhibit 3.06 to this Agreement contains a true and
-----------
complete schedule of all known liabilities and obligations of Seller except
those incurred in the ordinary course of business. Seller acknowledges that
Buyer shall not be obligated for any liabilities or obligations of Seller of any
kind or nature in connection with this Agreement, whether absolute, accrued,
contingent, known, unknown or otherwise, except for liabilities of Seller which
Buyer has expressly agreed to assume as provided on Exhibit 1.01(c) and Seller
hereby indemnifies and holds Buyer harmless from any such liabilities not so
assumed.
3.07 Title to Property. Seller is the lessee of the Property subject only
-----------------
to the Permitted Exceptions provided for in paragraph 5.01, Seller will deliver
to Buyer at Closing good and marketable leasehold title to the Property. Seller
is in possession of all Property leased from others.
3.08 Condition of Property. To the best of Seller's knowledge and except
---------------------
as provided on Exhibit 3.08 attached hereto, as of the Closing Date, the
Premises and personal property of Seller being conveyed or assigned herein will
be in good operating condition and repair, subject only to ordinary wear and
tear. Seller shall disclose to Buyer on Exhibit 3.08 any known material defect
or deficiency with regard to the structure, soil, fixtures or equipment of the
Premises which would materially impair the use or value of the Premises, and any
known material defect or deficiency with regard to the plumbing, electrical,
mechanical or other system of the Premises which would materially impair the use
or value of the Premises.
3.09 Real Property Description and Zoning. Exhibit 1.01(a) to this
------------------------------------
Agreement is a legal description of the Premises leased by Seller and included
in this transaction. To the best of Seller's
7
knowledge, the zoning of each parcel of property described on, Exhibit 1.01(a)
permits the existing improvements as constituted and the continuation of the
business presently being conducted on each such parcel.
3.10 Encroachments. To the best of Seller's knowledge, there are no
-------------
encroachments onto the Property except as may be revealed by the Survey, and all
improvements constituting part of such real properties located thereon are
entirely located on the real properties being conveyed or transferred to Buyer
pursuant to this Agreement without encroachment on any other property
whatsoever, and none of such improvements encroach upon any known easement or
right of way affecting such real property. As a condition to Closing, Buyer and
Seller shall each pay fifty percent (50%) of the cost of a real property survey
of the Property, by a registered land surveyor in the State of Texas, in a form
reasonably satisfactory to Buyer, certifying such facts which shall be attached
hereto as Exhibit 3.10.
3.11 Personal Property Description. Exhibit 1.01(b) to this Agreement is
-----------------------------
a schedule of machinery, equipment, furniture, supplies, vehicles, tools, and
other tangible personal property owned by, in the possession of, or used by
Seller in connection with the business now being conducted at the Facility
(except fixtures and inventories of Supplies and items excluded pursuant to this
Agreement). Except as provided on Exhibit 3.11 or on the list of Contracts
attached as Exhibit 1.01(c), no personal property used by Seller in connection
with the Facility or the business conducted thereon is held under a security
agreement, conditional sales contract, lease, or other title retention or
security arrangement or is located other than in the possession of Seller at the
Facility. Exhibit 1.02 lists personal property on the premises of the Facility
which is excluded from sale and which may be removed from the Facility by Seller
at any time prior to or after the Closing Date, except that all such items shall
be removed within five (5) business days of request by Buyer after the Closing
Date.
3.12 Contracts, Leases, Commitments. Except as provided on Exhibit
------------------------------
1.01(c) as of the date of Closing, there will be no contracts, agreements, or
commitments of any kind relating to the business at the Facility which will
affect Buyer on the Premises subsequent to the Closing Date, other than those
that can be terminated on thirty (30) days, notice, without penalty or further
payment. Seller is not a party to, nor is the Premises bound by any agreement
that is materially adverse to the business as presently conducted at the
Facility or those that have been excluded from sale by mutual written agreement
of the parties and for which Seller shall remain liable.
3.13 Defaults. The execution and delivery of this Agreement and the
--------
consummation of the transactions contemplated hereby will not result in any of
the following: (1) any violation or breach of
8
any term or provision of this Agreement; (2) a default or an event that with
notice or lapse of time or both, would result in a default, breach, adverse
modification or violation of any lease, license, franchise, promissory note,
conditional sales contract, commitment, indenture, deed of trust, or any other
agreement, instrument or arrangement to which Seller is a party or by which
Seller or the Premises is or may be bound; (3) an event that would permit any
party to terminate any agreement or to accelerate the maturity of any
indebtedness or other obligation of Seller or the Facility, or; (4) the creation
or imposition of any lien, charge or encumbrance on any of the Property.
3.14 Adverse Claims, Litigation and Proceedings. Except as shown on
------------------------------------------
Exhibit 3.14, Seller knows of no material claims by creditors or other parties
against Seller, actual or contingent, direct or indirect, liquidated or
unliquidated, or otherwise affecting Seller, at law or in equity, or before or
by any governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, or before any arbitrator of any kind,
which involve the possibility of any judgment or liability not fully covered by
casualty or liability insurance or for which provision for payment has not been
made or which would impose any liability on Buyer or the Facility. Seller is not
in default with respect to any judgment, order, writ, injunction, decree, award,
rule or regulation of any court, arbitration or governmental department,
commission, board, bureau, agency or instrumentality. Seller is not aware of any
pending or potential condemnation action with respect to the property to be
transferred hereby. Seller acknowledges that Buyer shall not be obligated for
any liabilities or obligations of Seller of any kind or nature in connection
with this Agreement, whether absolute, accrued, contingent, known, unknown or
otherwise, except for liabilities of Seller which Buyer has expressly agreed to
assume as provided herein and Seller hereby indemnifies and holds Buyer harmless
from any such liabilities not so assumed.
3.15 Labor Relations, Employment Policies and Benefits. Seller is not a
-------------------------------------------------
party to nor is it bound by any employment contracts, collective bargaining
agreements, pension, bonus, profit sharing, stock option or other agreements or
arrangements for the benefit of or relating to its employees. Seller agrees to
save, indemnify and hold Buyer harmless of and from any and all liability,
responsibility, loss, cost or expense of any nature whatsoever, arising out of
or relating to any of Seller's employment policies for all periods prior to the
Closing Date. Seller acknowledges that, except to the extent required by law, or
to the extent disclosed by Seller and assumed by Buyer, Buyer is not assuming
any of Seller's obligations to its employees. Attached as a part of Exhibit 3.15
hereto are copies of Seller's vacation and holiday policies and all other
employment policies and practices not set out in those policies, to which Seller
is a party or by which Seller may be bound, and Seller is not in default under
9
any of them. There have been no claims of default, and, to the best knowledge of
Seller, there are no facts or conditions which, by their existence or on notice,
will result in a default under these policies. Except as set forth in Exhibit
3.15 hereto, there has been no union election or material organizational
activity affecting the employees of Seller. Except as described in Exhibit 3.15,
there is not, to Seller's knowledge, any pending or threatened labor dispute or
work stoppage affecting Seller's business. Exhibit 3.15 attached hereto sets
forth a list of all employees of Seller at the Facility and a schedule of their
rates of pay, length of employment, and earned (and accrued, if any) vacation
and sick leave benefits, as of the Closing Date. Such earned and accrued
vacation and sick leave benefits shall be calculated for each employee on a true
accrual basis (to include both earned and unearned benefits).
3.16 Compliance with Laws, Regulations and Licensure.
-----------------------------------------------
(a) Seller has complied with and is not in violation of applicable
federal, state or local statutes, laws or regulations (including, without
limitation, any applicable building, zoning, or other law, ordinance or
regulation affecting the Premises) in the operation of the Facility as now
conducted. To Seller's knowledge, except as set forth in the most recent survey
and certification inspection reports and plan of correction on the Facility,
which are attached hereto as Exhibit 3.16, there have been no notices of
violation of any applicable law, order, ordinance, rule, regulation or
requirement, or of any covenant, condition or restriction affecting or relating
to the use of occupancy of the Premises issued by any governmental agency having
jurisdiction over the Premises or by any other person entitled to enforce the
same. To the best of Seller's knowledge, Seller shall have fully complied at its
sole expense prior to Closing with the requirements of any outstanding plan of
correction formulated in response to any inspection survey, with the exception
of those items listed on the latest survey and plan of correction, attached as
Exhibit 3.16 hereto, which Buyer agrees to review and, unless Buyer notifies
Seller to the contrary on or before September 16, 1997, which Buyer agrees to
correct at Buyer's expense.
(b) Seller has obtained and is not currently in violation under all
permits, licenses, provider agreements and other authorizations required by
Seller for the operation of the Facility as now conducted, all of which are in
full force and effect. There is no suit, action, administrative, or other
proceeding, or governmental investigation pending or threatened to withdraw or
revoke such permits, licenses, provider agreements or other authorizations.
10
(c) The Facility is currently licensed as follows: 194 beds, of
which 120 are licensed Medicaid, 36 are licensed Medicare/Medicaid, and 38 are
Private.
3.17 Cost Reports. Seller shall deliver to Buyer prior to Closing copies
------------
of Seller's last three (3) fiscal year cost reports, as filed with and audited
by desk audit by the appropriate Medicare and Medicaid agencies. To the extent
either or both of the Medicare or Medicaid reimbursement Programs have not
audited the last three (3) fiscal year cost reports filed with the respective
agency, Seller shall, in addition, deliver to Buyer a copy of the most recently
audited cost report for each reimbursement program, such copy to include a copy
of the audit report and all adjustments made pursuant to or subsequent to the
said audit. Seller shall prepare and file with the appropriate Medicare and
Medicaid agencies its final cost reports in respect to its operation of the
Facility as soon as practicable after the Closing Date. In the event the federal
or state agencies making payments to Seller for services performed prior to the
Closing Date make any claim for reimbursement of overpayment occurring for any
such period, then Seller agrees to save, indemnify and hold Buyer harmless from
and against any and all loss, damage, injury or expense incurred by Buyer
because of any such claim, or in the event that a claim is made against Buyer in
respect to the right to reimbursement for periods prior to the Closing Date. It
is specifically contemplated by the parties that indemnification shall include,
without limitation, any liability under Section 1128A of the Social Security
Act, as amended. If, following the transfer of licensure, Buyer receives payment
from any federal or state agency which represents reimbursement in respect to
underpayments made to Seller for services rendered prior to the Closing Date,
then Buyer shall promptly remit such payments to Seller.
3.18 Insurance. Exhibit 3.18 contains a description of all insurance
---------
policies held by Seller concerning the Premises and the business as now
conducted. All the insurance policies are in the respective principal amounts as
set forth on Exhibit 3.18 and Seller has maintained continuously, without gaps
in coverage for the five (5) years preceding the Closing Date insurance as
described Exhibit 3.18. Seller shall obtain, if necessary, tail coverage for any
gap in coverage for occurrences up to the Closing Date.
3.19 Patient Trust Accounts. Exhibit 3.19 contains a true, correct, and
----------------------
complete accounting, properly reconciled as of the Closing Date, of all patient
trust funds held by Seller in respect to the Facility.
3.20 Average Patient Census. Attached hereto as Exhibit 3.20 are true and
----------------------
correct summaries of the current patient census ("Census") of the Facility
showing the sources of payments (i.e.
11
Medicare, Medicaid, private or other) for each of the last two (2) years of
Seller.
3.21 Full Disclosure. Seller has disclosed all facts, information, events
---------------
and transactions relating to the Facility and the assets transferred herein, to
the best of its knowledge and ability. Seller has made no representation which
it knows to be false or inaccurate or which it knows contains or will contain
any untrue statement of a material fact or omit any material fact necessary to
make the statements contained herein misleading. Seller shall make such
additions, corrections and supplements to the Exhibits as are necessary up to
the Closing Date to make disclosures complete in all respects.
ARTICLE IV
----------
REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
Buyer hereby represents and warrants to Seller as of the Execution Date and
the Closing Date (the truth and accuracy of which shall constitute a condition
precedent to Seller's obligations hereunder) as follows:
4.01 Organization. Buyer is a limited partnership duly organized, validly
------------
existing and in good standing under the laws of the State of Texas, having full
power and authority to enter into this Agreement and to perform its obligations
hereunder. Buyer is in good standing or authorized to do business in the State
of Texas.
4.02 Authority. The execution, performance and delivery of this Agreement
---------
by Buyer has been duly authorized by Buyer and no further action of Buyer will
be required in order to make this Agreement valid and binding upon Buyer in
accordance with its terms and conditions. This Agreement will not violate or
breach Buyer's constituting instruments, any contract to which Buyer is a party
or by which Buyer may be bound, or any judgment, ruling or court order
purporting to bind Buyer.
4.03 Third Party Consults. Except for licensure and other normal
--------------------
approvals for a transaction of this type, this purchase and sale is not subject
to approval or consent of any governmental or regulatory authority and no such
consent or approval is required as a condition to the validity or enforceability
of the obligations of Buyer hereunder.
4.04 Litigation. Buyer is not aware of any litigation pending, threatened
----------
or anticipated involving Buyer which would or might materially, adversely,
directly or indirectly affect the enforceability of this Agreement or the
ability of Buyer to perform its obligations hereunder.
12
ARTICLE V
---------
CONDUCT OF SELLER PRIOR TO CLOSING
----------------------------------
Seller hereby covenants and agrees as follows (the fulfillment of which
constitutes a condition precedent to Buyer's performance hereunder):
5.01 Title Insurance Commitment. Not later than thirty (30) days prior to
--------------------------
Closing, Buyer shall obtain a title insurance commitment with respect to the
Premises (Texas Department of Insurance promulgated form) attached hereto as
Exhibit 5.01, issued by such title insurer as is agreed upon by the parties.
Buyer shall have twenty (20) days from the date of receipt of title commitment
to examine the condition of Seller's title. If Buyer determines title to be
defective, Buyer shall notify Seller, in writing, within said twenty (20) day
period of its objections to title. Seller shall have fifteen (15) days from
receipt of such notice to remove the defects of title at Seller's expense. If
Seller is unable to remove them within the aforesaid period, Buyer shall have
the option of (a) accepting title in its defective condition or, (b) terminating
this Agreement, whereupon Buyer and Seller shall be released of all further
obligations hereunder and the Deposit, with all accrued interest, shall be
returned to Buyer. Seller shall use its best efforts to correct any defects of
title within the applicable time period, including applying Purchase Price
proceeds reasonably required to remove the disapproved items and, if necessary,
by filing law suits. Any exceptions to or conditions upon or defects of title as
reflected in said Title insurance commitment which (a) are not specifically and
timely objected to by Buyer; or (b) which after objection are waived by Buyer,
shall be deemed to be Permitted Exceptions and Buyer agrees to accept title at
Closing with all Permitted Exceptions.
5.02 Survey; Environmental Report Study. Not later than twenty (20) days
----------------------------------
prior to Closing, Buyer shall receive a survey of the Premises identified on
Exhibit 1.01 certified by a registered surveyor, sufficient to remove the survey
exception from the aforementioned title insurance policy. The survey shall
indicate all setbacks, structures, easements, encroachments, routes of access
and dimensions. If the survey indicates an encroachment or violates the terms of
this Agreement, the encroachment or violation shall be resolved or accepted in
the manner specified in paragraph 5.01 above for removing defects of title.
Concurrently with obtaining the survey, Buyer shall obtain at Buyer's expense, a
Phase I Environmental Study ("Environmental Study") with respect to the
Premises. If the Environmental Study indicates a problem it shall be resolved or
accepted in the manner set forth in Paragraph 5.01 above.
5.03 UCC Clearance. Within fifteen (15) days after the date hereof,
-------------
Seller shall deliver to Buyer an appropriate certificate from the Uniform
Commercial Code filing officer of the State of
13
Texas with respect to the Personal Property to be transferred herein, showing
all existing creditors of Seller having a security interest in any of such
Personal Property.
5.04 Conduct of Business. Prior to the Closing Date, Seller shall carry
-------------------
on its business substantially in the manner as previously carried out at the
Facility in its ordinary course, including doing the following:
(a) Seller shall, to the best of its ability, maintain the goodwill
of suppliers, distributors, residents, employees, and others having a business
relationship with Seller;
(b) Seller shall, to the best of its ability, perform all
maintenance and repairs necessary to keep the Facility in good operating
condition and repair, including maintaining supplies and inventory at levels
consistent with Seller's operations in the ordinary course of business;
(c) Except with the prior approval of Buyer, Seller shall not enter
into or terminate any agreements, leases, or commitments, except in the ordinary
course of business;
(d) Seller shall maintain an average occupancy rate and patient mix
at the Facility consistent with the representations made by Seller in Section
3.20 above;
(e) Except in the ordinary course of business, Seller shall not
increase the rate of compensation payable to become payable to Seller's
employees;
(f) Seller shall not execute any union agreement with any collective
bargaining unit or union representatives without Buyer's prior consent;
(g) Seller shall maintain all permits, licenses and other
authorizations required for the lawful operation of the Facility;
(h) Seller shall not sell or remove any of the Property on the
Premises without Buyer's prior approval except in the ordinary course of
business or those items listed on Exhibit 1.02;
(i) Seller shall not implement any new employment agreements, bonus
plans, employee benefit plans, etc. without Buyer's prior written approval; and
(j) Seller shall not change its personnel policies without Buyer's
prior written approval.
14
5.05 Feasibility Inspection of Premises. The exhibits were not available
----------------------------------
for the Buyer's review and approval prior to execution of this Agreement.
Therefore, Buyer and Seller agree that the following dates shall govern with
respect to the Buyer's review and approval of exhibits and Facility. On or
before September 1, 1997 shall be the date for all of Seller's preliminary
exhibits. Buyer shall have until September 16, 1997, at 5:00 p.m., Central
Standard Time, (the "Feasibility Period") to review, approve and inspect the
Facility, Assets, exhibits and all of the books and records maintained at the
Facility relevant to the operation of the Facility. Buyer shall maintain strict
confidentiality of all information obtained during its inspection. Buyer shall
have the right to terminate this Agreement if it is not satisfied with any
material aspect of the condition of the Assets, including but not limited to,
the Property, Premises, Personal Property and operations of the Facility at the
end of the Feasibility Period. Buyer's failure to terminate this Agreement on or
before the expiration of the Feasibility Period shall be deemed as Buyer's
agreement to proceed to Closing. Exhibits that state information as of the
Closing Date will be amended three (3) days before the Closing Date and
substituted on the Closing Date.
5.06 Insurance. Seller shall maintain until Closing all existing
---------
insurance policies covering the Facility and the Premises, including those
policies listed on Exhibit 3.18 attached hereto.
5.07 Accounts Payable. Seller shall pay all accounts payable at the
----------------
Facility for goods received prior to the Closing Date, the liability for which
has been incurred by Seller.
ARTICLE VI
----------
BUYER'S CONDUCT PRIOR TO CLOSING
--------------------------------
6.01 Licensure. Buyer shall use its best efforts and due diligence to
---------
obtain a license from the Department of Human Services of the State of Texas
authorizing Buyer to operate the Facility as presently represented to be
licensed and to obtain Medicare and Medicaid certification and provider
agreements thereunder.
ARTICLE VII
-----------
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER
------------------------------------------------
The obligations of Buyer under this Agreement are subject to the
satisfaction, at or before Closing, of all of the conditions set forth in this
Article VII. Buyer may waive any or all of these conditions in whole or in part
without prior notice; provided that no such waiver shall constitute a waiver by
Buyer of any of its other rights or remedies at law or in equity if Seller shall
be in default of any of its representations, warranties or covenants under this
Agreement.
15
7.01 Certificate Regarding the Accuracy of Representations. Except as
-----------------------------------------------------
provided otherwise on an exhibit attached hereto, all representations of Seller
in this Agreement or in any written statement delivered to Buyer under this
Agreement shall be true at Closing as though made again at that time. A
certificate of Seller dated the Closing Date executed by an officer of Seller
shall be provided to Buyer at Closing to certify the same.
7.02 Good Standing Certificate. Seller shall deliver to Buyer a
-------------------------
certificate of good standing issued by the Secretary of State of Texas.
7.03 UCC Clearance. Seller shall deliver an appropriate certificate from
-------------
the Uniform Commercial Code filing officer of the State of Texas with respect to
the Personal Property to be transferred herein, showing all existing creditors
of Seller having a security interest in any of such Personal Property. All such
security interests shall be released prior to Closing or through escrow at
Closing.
7.04 Opinion of Seller's Counsel. Seller shall deliver a favorable
---------------------------
opinion of counsel to Seller, dated the Closing Date, in form and substance
satisfactory to Buyer, stating that (i) the instruments of conveyance,
assignment and transfer of the Property delivered by Seller to Buyer hereunder
have been duly authorized, executed and delivered, and are legal, valid and
effective for the purpose of conveying to Buyer Seller's, good and marketable
title to the Property; (ii) except as may be specified by such counsel, counsel
does not know of any litigation, proceeding or governmental investigation
pending or threatened against or relating to the Facility, Seller or the
Property, nor of any basis for any such litigation, proceeding or governmental
investigations; (iii) all proceedings required by law or by this Agreement to be
taken by Seller in connection with the transactions contemplated hereunder have
been duly and validly taken; (iv) Seller has complete and unrestricted corporate
power to convey, assign and deliver to Buyer all of the Property, and the
conveyance and transfer of the Property has been duly authorized by Seller's
Board of Directors and are not Contrary to Seller's articles of incorporation or
bylaws; (v) such Counsel has no knowledge of any defects in the title to any of
the Property, or of any claims asserted by others of rights or interests in such
Property, and there are no restrictions upon the vesting of title to the
Property in Buyer; (vi) no consent or approval of any third party not obtained
and in effect on the Closing Date is required to vest good and indefeasible
title to the Property in Buyer or to consummate the transactions contemplated
hereunder; (vii) such counsel has no knowledge or belief that would lead such
counsel to doubt the veracity of any of the covenants, representations or
warranties of Seller in this Agreement; and (viii) as to such other matters as
Buyer may reasonably request. In rendering the opinion, such counsel may rely as
to factual matters on certificates of Seller's
16
officers and upon such other evidence as such counsel may deem necessary or
appropriate.
7.05 Consents. All third parties whose consents or authorizations are
--------
required in order to convey and transfer to Buyer unencumbered, good and
marketable title to the Property shall have given such consents or
authorizations in writing.
7.06 Seller's Compliance. Seller shall have performed satisfied and
-------------------
complied with all covenants, agreements and conditions required by this
Agreement to be performed or complied with by Seller.
7.07 Actions, Suits, Proceedings. No action, suit or proceeding before
---------------------------
any court or any governmental body or authority, pertaining to the transaction
contemplated by this Agreement or to its consummation, shall have been
instituted on or before the Closing Date.
7.08 Title Insurance. At the Closing, there shall be delivered to Buyer,
---------------
as the insured, a standard Texas Department of Insurance promulgated form
extended coverage policy of title insurance, with endorsements sufficient to
remove the survey exception and other standard exceptions, in the amount of the
Purchase Price, issued by a qualified title insurance company, as provided in
Section 5.01 above, insuring Buyer as the fee owner of the Premises, showing as
exceptions only the permitted exceptions.
7.09 Survey; Environmental Study. Buyer and Seller shall each pay fifty
---------------------------
percent (50%) of the cost of a boundary line survey of the Premises acceptable
to Buyer and sufficient to remove the survey exception from the aforementioned
policy of title insurance showing the location of all structures, improvements,
rights of way, easements, setbacks, encroachments, access, dimensions, and other
matters affecting the Premises; prepared by a registered land surveyor and a, at
Buyer's expense, a Phase I Environmental Study, both of which shall comply with
the requirements of Section 5.02 hereof.
7.10 Licenses, Permits. Seller and Buyer agree that Buyer shall have
-----------------
obtained in its name all permits, licenses and other governmental approvals
required for the operation of the Facility before the Effective Date, including,
but not limited to, the following: written approval or a waiver of the need for
such approval pursuant to Certificate of Need or Capital Expenditure Review
(Section 1122 of the Social Security Act, as amended), or any federal or state
Successor legislation, and a license issued by the State Department of Health to
operate the Facility with the same licensed bed capacity of the Facility as set
forth herein.
17
7.11 Provider Agreements, Approvals, Certification. Buyer shall be
---------------------------------------------
satisfied that, if applied for, signed provider agreements, new provider
numbers, and all appropriate Medicaid and Medicare approvals and certification,
if any, shall be obtainable.
7.12 Correction, Improvements. All corrections or improvements required
------------------------
to be made to the improvements, to the Property by any federal, state or local
governmental agency or by any third party payor to effect transfer of licensure,
the Premises and all provider agreements to Buyer at Closing shall be made or
performed in accordance with Section 3.16 hereof prior to Closing. If such
corrections or improvements are due to deficiencies cited prior to the Closing
Date, they shall be made at Seller's expense. If Seller elects not to make the
required corrections or improvements, Buyer may terminate this Agreement and
receive a refund of Deposit, or accept the Facility without such corrections or
improvements and proceed to Closing. If such corrections or improvements are due
to deficiencies cited after the Closing Date, they shall be made at the expense
of Buyer.
7.13 List of Seller's Creditors. The Seller shall furnish to the Buyer,
--------------------------
in accordance with the requirements of the Uniform Commercial Code, a list of
Seller's existing creditors, signed and sworn to by an officer of the Seller
containing the names and business addresses of all existing creditors of the
Seller, with the amounts due to each creditor, and also the names of all persons
who are known to the Seller to assert claims against it even though such claims
are disputed. The Seller understands that, in accordance with the provisions of
the Uniform Commercial Code, the Buyer intends to deliver or send appropriate
notice to all the persons shown on the list of creditors furnished by the Seller
and to other persons, if any, who are known to the Buyer to hold or assert
claims against the Seller. The Seller will cooperate with the Buyer in all
matters relating to such notice and will furnish any additional information that
may be required by the Buyer to satisfy the statutory provisions in this regard.
7.14 Tax and Assessment Clearance Certificate. Seller shall provide to
----------------------------------------
Buyer a certificate from the applicable taxing and assessing authorities as
Buyer may reasonably request as evidence that all property tax liabilities and
assessments of Seller accruing for all tax years prior to the current tax year,
have been fully satisfied or provision for such satisfaction has been made.
7.15 Exterminator's Report. Seller shall have delivered to Buyer an
---------------------
exterminator's certification attached hereto as Exhibit 7.15, to the effect that
there is no evidence of infestation or infection of structurally damaging pests
or organisms nor damage to the Facility caused by same. If such exists, repair
and treatment shall be done prior to the Closing Date at the sole expense of
Seller.
18
7.16 Seller's Noncompete Agreement. Xxxxxx Xxxxx and any members of his
-----------------------------
immediate family who are presently involved in the operation of the Facility,
shall have executed and delivered their Non-Competition Agreements, the form of
which is attached as Exhibit 9.01(c) whereby they agree that they will not
directly or indirectly compete with Buyer in the County of Xxxxxxx, Texas for a
term of seven (7) years following the Closing Date.
7.17 Extraordinary Events. There shall not have been (i) any suspension
--------------------
of trading in or limitation on prices for securities generally on any national
securities exchange, or (ii) the declaration or a bank moratorium or any
suspension of payment of banks, or (iii) the commencement of armed hostilities
or other national or international calamity directly involving the United States
which directly and materially affects the business or Property of the Seller.
7.18 Concurrent Sale of Adjacent Land To Buyer. Prior to the Closing,
-----------------------------------------
Buyer and Seller shall have entered into a binding and definitive mutual written
agreement whereby Seller agrees to sell its fee interest in the Adjacent Land to
Buyer and Buyer agrees to purchase Seller's interest in the Adjacent Land. Buyer
shall further have satisfied itself that the Adjacent Land may be purchased by
Buyer on such terms and conditions as therein contained. Buyer's purchase of the
Adjacent Land shall take place concurrently with the Closing. Notwithstanding
anything to the contrary contained in this Agreement, if this condition is not
satisfied at Closing, at Closing Buyer may, at its sole discretion and upon
written notice to Seller and Escrow Holder, elect not to purchase the Facility
and Buyer shall thereupon be entitled to receive a return of its Deposit, plus
all accrued interest thereon.
ARTICLE VIII
------------
CONDITIONS PRECEDENT TO SELLER'S PERFORMANCE
--------------------------------------------
The obligations of Seller under this Agreement are subject to the
satisfaction, at or before the Closing, of all the conditions set out below in
this Article VIII. Seller may waive any or all of these conditions in whole or
in part without prior notice, provided, however, that no such waiver of a
condition shall constitute a waiver by Seller of any of its other rights or
remedies, at law or in equity, if Buyer shall be in default of any its
representations, warranties or covenants under this Agreement.
8.01 Accuracy of Representations and Warranties. Except as otherwise
------------------------------------------
permitted by this Agreement, all representations and warranties by Buyer in this
Agreement or in any written statement delivered by Buyer under this Agreement
shall be true on and as of the Closing as though made at that time.
19
8.02 Good Standing Certificate. Buyer shall deliver a good standing
-------------------------
certificate issued by the Secretary of State of the State of Texas and of each
other state in which Buyer transacts business.
8.03 Opinion of Buyer's Counsel. Buyer shall deliver an opinion of
--------------------------
counsel to Buyer, dated the Closing Date, and in form and substance satisfactory
to Seller, stating that (i) Buyer is a corporation duly incorporated in the
state of its incorporation or a partnership validly existing and authorized to
do business in the State of Texas, (ii) that Buyer has complete and unrestricted
power to transact the purchase of the Property hereunder and that the purchase
of said Property has been duly authorized by Buyer's Board of Directors and is
not contrary to Buyer's articles of incorporation, bylaws or partnership
agreement, if applicable; (iii) such counsel has no knowledge or belief that
would lead such counsel to doubt the veracity of any of the covenants,
warranties or representations of Buyer in this Agreement; and (iv) as to such
other matters as Seller may reasonably request. In rendering the opinion, such
counsel may rely as to factual matters on certificates of Buyer's officers and
upon such other evidence as such counsel may deem necessary or appropriate.
8.04 Buyer's Compliance. Buyer shall have performed, satisfied and
------------------
complied with all covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by Buyer.
8.05 Actions, Suits, Proceedings. No action, suit or proceeding before
---------------------------
any court or governmental body or authority, pertaining to the transaction
contemplated by this Agreement or to its consummation shall have been instituted
on or before the Closing Date.
ARTICLE IX
----------
CLOSING
-------
The Closing of this Agreement shall take place at the offices of Xxxxxxx
County Abstract and Title, at 0000 X. Xxxxx Xxxxxx, Xxxxx X-0, XxXxxxx, Xxxxx,
00000 at 10:00 a.m. local time, on or before Monday, November 24, 1997, to be
effective as of 12:00 a.m., local time, December 1, 1997 (the "Closing Date" or
"Closing"). The parties hereto may by mutual consent expressed in writing fix
another time to be the Closing Date or another location for the Closing. In the
event the conditions precedent to the closing of this transaction listed in
Articles VII and VIII hereof have not occurred in time to allow the Closing to
take place on the Closing Date, the transaction shall close as soon thereafter
as possible and such Closing shall be effective as of that date and time. The
Parties hereto agree to use their best efforts to ensure that the transaction
closes on the Closing Date as specified herein or as soon thereafter as
possible. If the Closing has not occurred on or
20
prior to December 1, 1997, either party may, by written notice to the other,
terminate this transaction without liability to the other providing the party
giving notice is not then in default.
9.01 Seller's Obligations at Closing. At the Closing, in addition to
-------------------------------
having satisfied the conditions precedent provided in Article VII, Seller shall
deliver or cause to be delivered to Buyer:
(a) For all real property and interests in real property, an
Assignment of Lease, sufficient to convey to Buyer all of Seller's right to any
options to purchase the Facility, as contained in the Lease, with the written
consent of the Owner, properly executed and acknowledged, conforming to and
conveying the agreed state of the title, in recordable form as shall be
reasonably acceptable to Buyer;
(b) For all Personal Property, a general warranty xxxx of sale with
full covenants of warranty, in the form set forth on Exhibit 9.01(b) hereto,
properly executed and acknowledged, conforming to the terms of this Agreement;
for all supplies, a general warranty xxxx of sale in the form set forth on
Exhibit 9.01(b) hereto, properly executed and acknowledged, and conforming to
the terms of this Agreement (the "Bills of Sale") ;
(c) A Non-Competition Agreement, the form of which is attached as
Exhibit 9.01(c), executed by Seller;
(d) For all leases, maintenance contracts, service contracts and
other agreements which are transferable, an assignment of Seller's interest (the
"Assignment", in the form set forth on Exhibit 9.01(d) hereto, properly executed
and acknowledged, and conforming to the terms of this Agreement;
(e) A Schedule of Seller's Accounts Receivable as of the Closing
Date;
(f) A list of all present employees, their rates of pay, length of
employment, and vacation, holiday and sick leave accruals as of the Effective
Date;
(g) All other Exhibits to this Agreement which are required to be
updated by Seller to the Closing Date; and
(h) Seller, at any time before or after the Closing Date, will
execute, acknowledge, and deliver any further assignments, conveyances, and
other assurances, documents, and instruments of transfer, reasonably requested
by Buyer, and will take any other action consistent with the terms of this
Agreement that may reasonably be requested by Buyer for the purpose of
assigning, transferring, granting, conveying, and confirming to Buyer, or
reducing to possession, any or all of the Property to be
21
conveyed or transferred by this Agreement. If requested by Buyer, Seller further
agrees to prosecute or otherwise enforce in their name for the benefit of Buyer
any claims, rights or benefits that are transferred to Buyer by this Agreement
and that require, in Buyer's opinion, prosecution or enforcement of claims,
rights or benefits, and such prosecution or enforcement under this paragraph
shall be solely at Buyer's expense, unless the prosecution or enforcement is
made necessary by a breach of this Agreement by Seller. On the Closing Date,
Seller shall put Buyer into full possession and enjoyment of the Property.
9.02 Buyer's Obligations at Closing. At the Closing, in addition to
------------------------------
having satisfied the conditions precedent provided in Article VIII, Buyer shall
deliver or cause to be delivered to Sellers:
(a) The Purchase Price specified in Article II hereof and all costs
and expenses payable by or under the terms of this Agreement (see (b) and (e)
attached);
(b) All documents, required of Buyer by the Title Company for
issuance of the Owner's title policy to be issued at the Closing; and
(c) The certificates and opinion of Counsel set forth in Article
VIII hereof.
ARTICLE X
---------
POST-CLOSING OBLIGATIONS OF PARTIES
-----------------------------------
10.01 Post-Closing Obligations of Seller. Subsequent to the Closing Date,
----------------------------------
in addition to that provided above, Seller covenants and agrees as follows:
(a) Accounts Payable. Seller is responsible for payment of all
----------------
accounts payable that have accrued from or in connection with the operation of
the Facility for any period prior to the Closing Date. Seller, therefore, agrees
to save, indemnify and hold Buyer harmless from any and all loss, damage, injury
or expense incurred by Buyer as a result of Seller's non-payment of such
accounts payable.
(b) Survival of Representations. All statements contained in any
---------------------------
certificate or other instrument delivered by or on behalf of Seller pursuant
hereto, or in connection with the transactions contemplated hereby, shall be
deemed representations of Seller. All representations of Seller shall survive
for one (1) year following the Closing.
22
(c) Records. Seller agrees to make available to Buyer all current
-------
patient accounts and current patient financial records which may reasonably be
required by Buyer.
10.02 Post-Closing Obligations of Buyer. Subsequent to the Closing Date,
---------------------------------
in addition to that provided above, Buyer covenants and agrees as follows:
(a) Assumption of Leases, Contracts and Commitments. Buyer agrees to
-----------------------------------------------
assume and be bound by all of the terms and provisions of the Contracts referred
to in Exhibit 1.01(c) hereof. Buyer shall indemnify and hold Seller harmless
from any matter or loss, damage, injury or expense related to the performance
of, services rendered, or goods sold under or pursuant to such Contracts after
the Closing Date;
(b) Accounts Receivable. Buyer agrees that the Accounts Receivable
-------------------
of Seller as of the Closing Date are not being transferred or sold hereunder
(the "Accounts Receivable"). At Closing, Seller will deliver a Schedule of the
Accounts Receivable, acknowledged by Buyer, which will list said Accounts
Receivable by Patient. Those receipts from patients designated on such schedule
of Accounts Receivable will be paid by Buyer to Seller up to the total account
for each such patient so listed that are attributable to the period of Seller's
operation of the Facility prior to the Closing Date. Buyer acknowledges that
whereas room and board charges are billed in advance, miscellaneous services are
billed in arrears. Buyer, therefore, agrees to cooperate with Seller in billing
and collecting miscellaneous services provided by Seller prior to the Closing
Date. Buyer and Seller agree that, for patients continuing as patients in the
Facility after the Closing Date, payments made shall be first applied to past
due charges unless otherwise agreed for specified accounts or indicated on the
payment itself. It is understood that Buyer is agreeing merely to receive
payments on Seller's Accounts Receivable and not to actively collect same. As to
Seller's Accounts Receivable that have not been collected at the end of the
ninety (90) day collection period, Seller thereafter shall collect such Accounts
Receivable for its own account and Buyer shall have no further responsibility
therefor, except that Buyer agrees to promptly forward any payments received by
Buyer on Seller's account, to Seller;
(c) Patient Trust Accounts. Buyer acknowledges that Seller will
----------------------
transfer all of its patient trust accounts to Buyer as of the Closing Date,
which patient trust accounts are attached as Exhibit 3.19 hereto. With respect
to such patient trust accounts, Buyer agrees to assume custody of such accounts
and deal with them in a fiduciary capacity required by law;
23
(d) Maintenance of Patient Records. Buyer understands that all the
------------------------------
Seller's current patient records are being transferred hereunder to Buyer, as
required by law, and with respect to all current patient records, Buyer agrees
to diligently maintain such records as prescribed by law and to allow Seller or
its agents or representatives to reasonably examine such records relating to the
period of Seller's operation of the Facility from time to time and to make
copies thereof at Seller's expense; and
(e) Survival of Representations. All statements contained in any
---------------------------
certificate or other instrument delivered by or on behalf of Buyer pursuant
hereto, or in connection with the transaction contemplated hereby, shall be
deemed representations of Buyer. All representations, warranties and covenants
made by Buyer shall survive the Closing.
ARTICLE XI
----------
INDEMNIFICATION
---------------
11.01 Indemnity by Seller. Seller hereby agrees to indemnify, defend and
-------------------
hold Buyer harmless from and against any and all claims, demands, obligations,
losses, liabilities, damages, recoveries and deficiencies, including interest,
penalties and reasonable attorneys' fees, costs and expenses, which Buyer may
suffer as a result of the untruth of any of the representations made herein, or
any default by Seller in the performance of any of its commitments, covenants or
conditions under this Agreement, or for any liabilities which may arise from
operation or ownership of the Property by Seller prior to the Effective Date.
For the purposes hereof, any representation shall be deemed to be inaccurate if
it omits to state any fact which is necessary in order to make the statements
contained therein not false or misleading. The rights of Buyer under this
Section 11.01 are without prejudice to any other remedies not inconsistent
herewith which Buyer may have against Seller.
Seller hereby indemnifies and agrees to defend and hold Buyer harmless from
any and all claims, demands, obligations, losses, liabilities, damages,
recoveries and deficiencies except as stated in Section 3.16(a) (including
interest, penalties, reasonable attorneys' fees, costs and expenses) which Buyer
may suffer as a result of Seller's failure to file cost reimbursement reports
with all written proposed audit adjustments to such cost reports for the period
of its operation of the Facility, or its failure to correct any deficiencies
with respect to such reports, or its failure to accurately compute and xxxx
charges for reimbursement which results in liability for any overcharge, or as a
result of any liability arising pursuant to Section 1128A of the Social Security
Act for the period of its operation of the Facility. This indemnification shall
survive for a term of one (1) year from the Closing date.
24
11.02 Indemnity by Buyer. Buyer hereby agrees to indemnify, defend and
------------------
hold Seller harmless from and against any and all claims, demands, obligations,
losses, liabilities including interest, penalties and reasonable attorneys'
fees, costs and expenses, which Seller may suffer as a result of the untruth of
any of the representations or warranties of Buyer herein or given pursuant
hereto, or any default by Buyer in the performance of any of its commitments,
covenants or conditions under this Agreement, or for any liabilities which may
arise from operation or ownership of the Property by Buyer from and after the
Closing Date. For the purposes hereof, any representation shall be deemed to be
inaccurate if it omits to state any fact which is necessary in order to make the
statements contained therein not false or misleading. The rights of Seller under
this Section 11.02 are without prejudice to any other remedies not inconsistent
herewith which Seller may have against Buyer.
11.03 Contested Claims. Upon receiving notice of a claim for
----------------
indemnification, the receiving party shall be entitled to defend, compromise, or
otherwise contest such claim at its own cost and expenses. In the event the
notifying party determines that it may, in light of such claim, be subject to
any loss, damage or expense, the notifying party shall have the right, but not
the obligation, to participate at its own expense in the defense, compromise or
contest of such claim; provided, however, the receiving party shall be entitled
to control such defense unless the notifying party assumes all liability
thereof.
ARTICLE XII
-----------
MISCELLANEOUS
-------------
12.01 Legal Expenses. If any legal action or other proceeding is brought
--------------
for the enforcement of this Agreement, or because of an alleged or actual
dispute, breach, default or misrepresentation in connection with any of the
provisions of this Agreement, the prevailing party shall be entitled to recover
reasonable attorneys, fees and other costs incurred in that action or
proceeding, in addition to any other relief to which it or they may be entitled.
12.02 Expenses. Each of the parties shall pay all costs and expenses
--------
incurred or to be incurred by it in negotiating and preparing this Agreement and
in carrying out the transactions contemplated herein, except as otherwise
provided herein.
12.03 Assignment. Neither this Agreement nor the rights, duties or
----------
obligations arising hereunder shall be assignable or delegable by either party
without the express prior written consent of the other, which consent will not
unreasonably be withheld; provided, however, that Buyer may assign this
Agreement or its rights, duties or obligations hereunder to a wholly-owned
25
subsidiary of Buyer, or to a corporation which is a member of an affiliated
group of companies of which Buyer is the common parent corporation (within the
meaning of Section 1540 of the Internal Revenue Code, as amended) which group is
permitted to file a consolidated federal income tax return. Neither shall the
restriction on assignment or delegation apply to a merger or consolidation
involving Buyer and any other corporation. In the event of such a permitted
assignment, Buyer shall not be released from its obligations hereunder without
the express written consent of Seller, nor shall a notation be deemed to have
occurred without such written consent. All the terms and provisions of this
Agreement shall be binding upon and inure to the benefit of and be enforceable
by Buyer and Seller and their respective permitted successors and assigns.
Seller hereby further consents in advance to an assignment by Buyer to a real
estate investment trust.
12.04 Parties in Interest. Nothing in this Agreement, whether express or
-------------------
implied, is intended to confer any rights or remedies under or by reason of this
Agreement on any persons other than Buyer and Seller and their respective
permitted successors and assigns, nor is anything in this Agreement intended to
relieve or discharge the obligations or liability of any third persons to any
party to this Agreement, nor shall any provisions give any third persons any
right of subrogation or action over or against any party of this Agreement.
12.05 Notices. All notices, requests, demands, and other communications
-------
hereunder shall be in writing, and shall be deemed to have been duly given when
personally delivered or, if mailed, seventy-two (72) hours after mailing the
said notice, registered or certified mail, postage prepaid, return receipt
requested, and properly addressed as follows:
To Buyer (if by mail): Summit Care Corporation
0000 X. Xxxxxxxx Xxxx.
Xxxxxxx, Xxxxxxxxxx 00000-0000
Attn: President or
Chairman of the Board
With Copies to: Xxxxx X. Xxxx, Esq.
0000 Xxxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
To Seller: Xxxxxx Xxxxx -
South Texas Health Care, Inc.
0000 Xxxxx Xxxx Xxxx
XxXxxxx, Xxxxx 00000
Attn: Xxxxxx Xxxxx, President
26
With Copies to: Xxxxx X. Xxxxxxx, Esq.
Akin, Gump, Strauss,
Hauer, Feld, LLP
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxx 00000
or at such other address as either party may by like notice designate to the
other in writing.
12.06 Applicable Law. This Agreement shall be construed and enforced in
--------------
accordance with the laws of the State of Texas.
12.07 Counterparts. This Agreement may be executed simultaneously in one
------------
or more Counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
12.08 Effect of Captions. The captions of section and subsections of this
------------------
Agreement have been inserted solely for convenience and reference, and shall not
control or effect the meaning or construction of any of the provisions of this
Agreement.
12.09 Entire Agreement; Modification; Waiver. This Agreement and the
--------------------------------------
exhibits hereto, constitute the entire Agreement between Seller, on the one
hand, and Buyer, on the other, pertaining to the subject matter contained in it
and supersedes all prior agreements, representations and all understandings of
the parties. No supplement, modification or amendment of this Agreement shall be
binding unless expressed as such and executed in writing by Buyer and Seller. No
waiver of any of the provisions of this Agreement shall be deemed to be or shall
constitute a waiver of any other provisions hereof, whether or not similar, nor
shall any such waiver constitute a continuing waiver. No waiver shall be binding
unless expressed as such in a document executed by the party making the waiver.
12.10 Publicity. Seller agrees to consult with Buyer concerning any notice
---------
to employees, patients, families, referral sources or government agencies
concerning the transactions contemplated by this Agreement. All other notices to
third parties and all other publicity concerning the transactions contemplated
by this Agreement shall be jointly planned, mutually coordinated and released by
and between Buyer and Seller. Buyer shall make no public disclosure without
Seller's consent which may not be unnecessarily withheld or delayed. None of the
parties shall act unilaterally in this regard without the prior written approval
of the other; however, the approval shall not be unreasonably withheld.
27
12.11 Risk of Loss. Seller shall bear the risk of loss or damage to the
------------
Premises from fire or other casualty until the Closing Date. In the event of any
material damage to or destruction of the Premises by fire or other casualty,
whether or not insured, or the taking of all or any material part of the
Premises by power of eminent domain or deed in lieu thereof, prior to the
Closing Date, Buyer may, at its option and, as its sole and exclusive remedy,
either (a) terminate this Agreement and all rights and obligations hereunder, in
which event all funds and documents deposited by Buyer into the Escrow shall be
returned promptly to Buyer and all documents and other items deposited by Seller
into the Escrow shall be returned promptly to Seller, or (b) elect to proceed
with the purchase of the Premises, in which event Seller shall deliver
possession of the Premises to Buyer at the close of the Escrow together with (i)
all insurance proceeds received by Seller in connection with such damage or
destruction and (ii) an assignment of all rights and claims of Seller under any
applicable insurance policies. Should Buyer elect to proceed with the purchase
of the Premises as provided in the foregoing subclause (b), Seller agrees to
fully cooperate with and assist Buyer in adjusting any loss and perfecting and
pursuing any claim under any applicable insurance policy. For purposes of this
Agreement, the phrase "material" damage to or destruction of the Premises shall
mean any damage to or destruction of any part of the Premises, the effect of
which would materially impair the current use and operation of the Premises.
12.13 Broker and Professional Fees. Xxxxx & Associates ("Xxxxx") are the
----------------------------
only brokers in this transaction. Buyer agrees to pay any brokerage commission
claimed to be due from Xxxxx with respect to this transaction. Xxxxx is acting
as agent for the Buyer and does not represent the interests of any other party
hereto.
12.14 Waiver of Deceptive Trade Practices - Consumer Protection Act. Buyer
-------------------------------------------------------------
represents, covenants and agrees that Buyer is not in a significantly disparate
bargaining position. Further, Buyer represents, warrants and agrees that Buyer
is represented by legal counsel in seeking or acquiring goods or services, other
than the purchase or lease of a family residence occupied or to be occupied as
Buyer's residence, by a purchase or a lease for a consideration paid or to be
paid that exceeds $500,000.00. Finally, Buyer represents, warrants, and agrees
that it waives all of the provisions of the Deceptive Trade Practices - Consumer
28
Protection Act, other than Section 17.555, by this express provision in this
written contract signed by both Buyer and Buyer's legal counsel.
/s/ Xxxxxx X. Xxxxxxxx
-------------------------
Buyer
/s/ Xxxxx X. Xxxx
-------------------------
Buyer's Legal Counsel
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
In the Presence of SELLER
XXXXXX XXXXX-SOUTH TEXAS
HEALTH CARE, INC.,
a Texas Subchapter S corporation
By: /s/ Xxxxxx X. Xxxxx
-------------------
President
BUYER
SUMMIT CARE TEXAS, L.P.,
a Texas limited partnership
By:Summit Care Texas Management,
Inc.,a Texas corporation
and sole general partner
By: /s/ Xxxxxx X. Xxxxxxxx
----------------------
Sr. V.P. Finance
----------------
[Title]
29
EXHIBIT LIST
Page
----
1.01(a)(i) Facility Legal Description and Lease
1.01(a)(ii) Facility Option Agreement
1.01(a)(iii) Adjacent Land Legal Description
and Trust Deed
1.01(b) Personal Property
1.01(c) Contracts
1.01(g) Transferable Licenses and Permits
1.02 Excluded Assets
3.02 Authority Exceptions
3.03 Financial Statements
3.05 Changes
3.06 Liabilities
3.08 Condition of Property
3.10 Survey
3.11 Personal Property Leases; Liens
3.14 Adverse Claims; Litigation
3.15 Labor; Vacation and Holiday Policies
3.15 Employee List
3.16 Current Inspection Reports
3.17 Cost Reports
3.18 Description of Insurance Policies
3.19 Schedule of Patient Trust Accounts
3.20 Current Patient Census
5.01 Title Commitment
7.01 Certificate of Seller
7.02 Seller's Good Standing Certificate
7.03 UCC Clearance
7.04 Opinion of Seller's Counsel
7.05 Consents of Third Parties(i)
7.14 Tax Clearance Certificate
7.15 Exterminator's Report
8.03 Opinion of Buyer's Counsel
9.01(a) Form of Assignment of Lease
9.01(b) Form of Bills of Sale
9.01(c) Form of Seller's Non-Compete Agreement
9.01(F) Seller's Accounts Receivable
30
AMERICAN TITLE COMPANY
SF 355545-A
--------
CLOSER 157 X. XXXXXX
--------------
CONSENT TO ASSIGNMENT OF LEASEHOLD ESTATE OF
BRIARCLIFF NURSING & REHABILITATION CENTER, MCALLEN, TEXAS
On August 12, 0000, Xxxxxx Xxxxx/Xxxxx Xxxxx Healthcare, Inc., entered into
a Lease Agreement as Lessee, with Xxxxx Xxxxx, as Lessor (Owner) of the
Briarcliff Nursing & Rehabilitation Center, in McAllen, Texas. Legal Description
attached as Exhibit "A".
On January 1, 1995, Xxxxx Xxxxx assigned all his right, title and interest
in the Lease Agreement to Xxxxx & Xxxxx Family Limited Partnership, and on April
19, 1997 this Lease was amended to add a seventy-four bed addition and increase
the monthly rental payment.
Now comes Summit Care Texas, L.P., whose address is 0000 Xxxx Xxxxxxxx
Xxxxxxxxx, Xxxxxxx, Xxxxxxxxxx 00000-0000 agreeing to assume and perform all of
the terms, covenants and conditions, as Lessee under this Lease and further
agreeing to keep the Certificate and License in full force and effect during the
term of the Lease. Summit Care specifically acknowledges the escalation
provision of Paragraph 2 of the Lease Agreement.
The Lease will be considered in default if the Lessee (Summit Care) shall
fail or neglect to pay the rentals when due, or to pay any other sums of money
which they are required by this Lease to pay, and such non-payment shall
continue on the tenth day after written notice of the same has been posted to
Lessees. In the event of default of this Lease, Lessee will forfeit and transfer
any rights, or ownership of contracts and ownership of the Certificate of Need
at this location, with the State of Texas or the United States Government, to
Lessor.
Summit Care Texas, L.P. ("Lessee") agrees to assume all other terms,
covenants and conditions of this Lease as originally written and amended.
Xxxxxx Xxxxx/South Texas Healthcare, Inc. agrees to remain liable to the
Lessor on this Lease if Summit Care should default.
Subject to the above terms and conditions, any other terms and conditions
of the Lease, Xxxxx & Xxxxx Family Limited Partnership hereby agrees to consent
to the Assignment of this Lease and Option on the Briarcliff Nursing &
Rehabilitation Center, McAllen, Texas to Summit Care Texas, L.P.
The next rental payment of $53,218.75 will be due December 1st, 1997 and
monthly thereafter.
The Option may be exercised on October 1, 2003, provided the lease payments
are current and the Lease is in full force and effect. The amended option price
will be Four Million Seven Hundred Thousand Dollars ($4,700,000.00).
WITNESS OUR HANDS this 20th day of November, 1997.
SUMMIT CARE, TEXAS, L.P.
By: /s/ XXXXXX X. XXXXXXXX
--------------------------
NAME: Xxxxxx X. Xxxxxxxx
Title: Sr. V.P. Finance
Date: 11/24/97
XXXXXX XXXXX/SOUTH TEXAS
HEALTHCARE, INC.
By: /s/ XXXXXX XXXXX
----------------
Xxxxxx Xxxxx, President
Date: 11/24/97
XXXXX AND XXXXX FAMILY LIMITED
PARTNERSHIP
By. /s/ C. XXXXX XXXXX
--------------
Name: C. Xxxxx Xxxxx
Title: General Partner
Date: November 20, 1997
2
EXHIBIT "A"
Lot One (1), PRIMO SUBDIVISION No. 2, an Addition to the City of McAllen,
Xxxxxxx County, Texas; according to map or plat thereof recorded in Volume 31,
Page 40B, Map Records, Xxxxxxx County, Texas.
ACKNOWLEDGEMENT
STATE OF ARKANSAS
COUNTY OF SEBASTIAN
On this the 20th day of November, 1997, before me, the undersigned officer,
personally appeared C. Xxxxx Xxxxx, known to me to be the person whose name is
subscribed to the within Consent To Assignment of Leasehold Estate of Briarcliff
Nursing & Rehabilitation Center, McAllen, Texas, and acknowledged that he
executed the same for the purposes therein contained.
In Witness Whereof I hereunto set my hand and official seal.
[SIG]
-----------------------
Notary Public
My Commission expires:
November 1, 2000
[SEAL]
THE STATE OF TEXAS )
COUNTY OF XXXXXXX )
This instrument was acknowledged before me this 24th day of November, 1997,
by XXXXXX X. XXXXXXXX, XX. V.P. FINANCE, of SUMMIT CARE TEXAS, L.P., a Texas
Limited Partnership.
XXXXX XXXXXX
[SEAL] MY COMMISSON EXPIRES
August 19, 2000
/s/ XXXXX XXXXXX
----------------
NOTARY PUBLIC, STATE OF TEXAS
THE STATE OF TEXAS )
COUNTY OF XXXXXXX )
This instrument was acknowledged before me on this 24th day of November,
1997, by XXXXXX X. XXXXX, PRESIDENT of XXXXXX XXXXX/SOUTH TEXAS HEALTHCARE, INC.
XXXXX XXXXXX
[SEAL] MY COMMISSON EXPIRES
August 19, 2000
/s/ XXXXX XXXXXX
----------------
NOTARY PUBLIC, STATE OF TEXAS
AFTER RECORDING RETURN TO:
AMERICAN TITLE CO. OF HOUSTON
SPRING OFFICE - BRANCH
00000 X-00 XXXXX
XXX XXXXXXXXX, XXXXX 00000
FIRST AMENDMENT TO LEASE AGREEMENT
This Amendment to Lease Agreement entered into this 9th day of April, 1996,
amending the Lease Agreement dated August 12, 1992, on Briarcliff Nursing &
Rehabilitation Center of McAllen, Texas between Xxxxx X. Xxxxx as Lessor and
XXXXXX XXXXX/SOUTH TEXAS HEALTHCARE, INC., as Lessee. Xxxxx X. Xxxxx assigned
his interest in this lease agreement to Xxxxx & Xxxxx Family Limited Partnership
on January 1, 1995.
Now, Lessor and Lessees have agreed to add seventy-four beds to the
Briarcliff Nursing & Rehabilitation Center, making a total of 194 beds. Lessor
and Lessee have also agreed to increase the monthly rent by Nineteen Thousand
Nine Hundred Sixty-Seven Dollars and Fifty-Eight Cents ($19,967.58) per month
beginning when construction of the addition is complete and is ready for
occupancy.
Lessor is presently paying $30,027.81 per month rental on the original 120
beds and the increase of $19,967.58 for the addition would make a total monthly
rental payment of $49,995.39, until such time as there is an increase in the
Medicaid rates. It is expressly understood by both parties that the escalation
clause in Paragraph 2 of the Lease Agreement will prevail and that this
escalation clause will pertain to the total of 194 beds, after completion of the
addition, and that any increase in Medicaid rates will increase the monthly
rental payments accordingly for the balance of the lease term.
All other terms of the Lease Agreement, dated August 12, 1992, will remain
the same as originally written.
Witness our hands this 9th day of April, 1996.
XXXXX & XXXXX FAMILY LIMITED
PARTNERSHIP
/s/ XXXXX XXXXX
---------------
Xxxxx Xxxxx, General Partner
Lessor
XXXXXX XXXXX/SOUTH TEXAS
HEALTHCARE, INC.
/s/ XXXXXX XXXXX
----------------
Xxxxxx Xxxxx, President, Lessee
LEASE AGREEMENT
THIS LEASE AGREEMENT entered into this 12th day of August, 1992, by and
between XXXXX XXXXX as LESSOR, and XXXXXX XXXXX/SOUTH TEXAS HEALTHCARE, INC.,
000 Xxxxx 00xx, XxXxxxx, XX 00000, as LESSEE,
WITNESSETH:
THAT for and in consideration of the covenants herein contained and the
rent hereby reserved, the Lessor has hereby let and rented to Lessee and Lessee
has hired and taken from the Lessor, the following described property,
consisting of one, 120-bed nursing home, commonly known as Briarcliff Nursing &
Rehabilitation Center of McAllen, Texas, located on the premises in Xxxxxxx
County, Texas, more particularly described in Exhibit "A" attached hereto,
including all furniture, fixtures and equipment located therein, provided and
installed by Lessor, paid for by Lessor, more particularly described in Exhibit
"B" attached hereto, to have and to hold the same for the period of years and
upon the terms and conditions hereinafter stated:
1. The term of this Lease shall be for the period of Fifteen (15) years,
commencing July 1, 1993 and ending June 30, 2008.
2. The rental shall be Twenty-Eight Thousand Four Hundred Seventy-Six
Dollars ($28,476.00) per month, payable in advance on or before the first day of
each month, except the rent shall be reduced to Twenty-Three Thousand Four
Hundred Seventy-Six Dollars ($28,476.00) for the first three (3) months of the
Lease, then back to $28,476.00 per month for the balance of the term of the
Lease, plus escalation as provided below. If the Lease shall commence on a day
other than the first day of the month, the rent will be pro-rated for the first
month. The rental payment will be mailed to Xxxxx Xxxxx, X.X. Xxx 000, Xxxx
Xxxxx, Xxxxxxxx 00000, or to such other address as may be directed in writing.
The escalation clause is based upon increases in the Medicaid rates of 13.7% of
the Texas 207 Tile rates, times 120 beds times 30.4 average days per month and
shall be adjusted on the first day of the month following the effective date of
each and every rate increase. As an example, the 207 Texas Tile rate is now
$56.62 per day, times 120 beds, equals $6,794.40, times 365 days, equals
$2,479,958.00. $28,478 per month rent times 12 equals $341,712 annual rent.
$341,712 divided by $2,479,956 equals 13.7% of any 207 Tile rate increase, times
50%.
3. Lessee agrees to pay all taxes, general or special, assessed against
the land, buildings and personal property, from the time the property is deeded
to Lessor forward. An escrow for taxes is required; therefore, an escrow payment
of $1,500.00
forward. An escrow for taxes is required; therefore, an escrow payment of
$1,500.00 per month will be deposited with the Lessor for payment of taxes. This
escrow payment will be adjusted annually, to cover the taxes as levied against
the real and personal property by all taxing authorities using the previous year
as a guide.
4. The Lessee shall be responsible for and pay for fire and extended
coverage on the building and contents in such amount as shall be reasonably
requested by Lessor, being at least replacement value. The Insurance policy
shall designate Lessor and Lessee as named insured and loss payee, as their
interests may appear. If Lessee fails or neglects to provide this insurance as
required, Lessor may obtain same and add the premium cost to the next lease
payment due.
5. In the event of partial destruction of the building and contents (that
is, destruction of less than half, in value of the building and contents) by
fire or other casualty, then the Lessee shall be entitled to the insurance
proceeds and shall be obligated to restore the premises, including furniture,
furnishings, fixtures and equipment, to at least as good condition as it was,
prior to the destruction. Any insurance proceeds, in the event of loss, will be
escrowed with Owner of the building. Owner will pay bills incurred, as directed
by Lessee, from insurance proceeds, to repair damages as presented by repair
contractors. If repairs cost more than insurance proceeds Lessee will be
obligated to pay the difference from Lessee's own funds. If destruction is fifty
percent (50%) or more, of value, Lessor shall be entitled to the insurance
proceeds and shall, at his option, restore the premises as above provided or
cancel the Lease. In the event of destruction of fifty percent (50%) or more of
value, Lessor shall advise Lessee, within thirty (30) days following the
destruction, of his election in this regard.
6. In the event of a taking of all or of part of the land and buildings
as a result of eminent domain, condemnation or other governmental taking, the
consideration paid therefore shall be paid to the Lessor, and from the date of
payment of such consideration, the rental amount shall xxxxx and be reduced in
proportion to the relation of the amount of the consideration to $2,400,000.00
in value.
7. Lessee shall, as long as this Lease remains in effect, procure and
keep in effect, general public liability insurance against claims for bodily
injury or death occurring upon, in or about the demised premises, and on, in or
about the adjoining streets and passageways, with limits of not less than
$3,000,000.00 any one person or incident. Lessee shall also provide for
malpractice insurance. Lessor shall be a
2
named insured on all policies.
8. Lessee agrees that it will at all times, during the term of this Lease
or any extension thereof, indemnify, protect, defend and save harmless, the
Lessor, against any and all claims, costs, charges, liabilities, or expenses
arising from damage or injury, actual or claimed, of whatever kind or character,
to property or persons occurring in or about the demised premises, streets,
sidewalks, passageways, parking lots, and alleys adjacent thereto, and agree to
resist or defend such action or proceedings, and cause the same to be defended
at his expense.
9. The premises shall be used as a licensed nursing home and for no other
purpose without the written consent of Lessor, Lessee agrees to maintain the
entire premises, including buildings, drives, parking area, furniture, fixtures,
equipment, and decoration in good and tenable repair and condition. Lessee
shall, at its expense, repair or replace items as may be necessary to comply
with this covenant, and such that the premises shall at all times qualify for
and remain, licensed as, at least an ICF II or private pay for a 120-bed nursing
home under the laws and regulations of the United States and the State of Texas.
A reduction in, or loss of, this or equivalent license rating, in the event
license ratings are changed, will be considered a default in this Lease.
10. Lessee, with the prior written consent of the Lessor, which consent
shall not be unreasonably withheld, shall have the right to make such additions,
alterations, changes and improvements on the demised premises as Lessee shall
deem necessary or desirable; provided that no such addition, alteration, change
or improvement shall be made which will weaken the structural strength of the
building, deminish its utility or value, and all additions, alterations, changes
and improvements shall be made in a workmanlike manner in full compliance with
all building laws and ordinances applicable thereto, and shall become part
thereto upon termination of this Lease. Lessee may erect and maintain such signs
upon the premises as they may desire, and as may be permitted by laws or
ordinances pertaining thereto, but at its sole expense and responsibility.
11. Lessee shall keep the demised premises in a clean, safe and sanitary
condition, and shall comply with all municipal, county, state and federal laws
and regulations governing the conduct of the activities conducted, suffered or
permitted by the Lessee on the demised premises and the Lessee shall obtain
appropriate permits from all such authorities required.
3
shall have the right to sub-lease any or all of the leased premises, with the
prior written consent of Lessor, first obtained, which consent will not be
unreasonably withheld, provided that the Lessee will remain liable for the
performance of the covenants and obligations of this Lease. If the property is
sub-leased, the Lessor will have the right to a reasonable adjustment in the
rent.
13. Lessee agrees to permit Lessor, or his authorized representative to
enter the demised premises at all reasonable times during usual business hours
for the purpose of inspecting the same, provided that this shall not be
construed to obligate Lessor to notify Lessee of any defect observed therein.
14. Lessee shall not do or suffer anything to be done whereby the demised
premises, or any part thereof, may be encumbered by a mechanic's or similar
lien, and in the event such lien is filed against the demised premises, or any
part thereof, purporting to be for or on account of any labor done or material
or services furnished in connection with any work in or about the demised
premises, Lessee shall discharge the same of record within ten days after the
date of such claim, or if Lessee desires to contest the validity or amount of
such claim, they may do so provided that they first post security acceptable to
Lessor, fully indemnifying Lessor and the premises from any claim, charge, or
demand arising from such claim or expenses incurred in connection therewith.
15. The occurrence of any one or more of the following events shall
constitute an "event of default" in the performance of the covenants of the
Lessee:
a. The Lessee shall fail or neglect to pay the rentals when due, or
to pay any other sums of money which it is required by this Lease to pay, and
such non-payment shall continue on the tenth day after written notice of the
same has been posted to Lessee. In the event of default of this Lease, Lessee
will forfeit any rights, or ownership of contracts and ownership of Certificate
of Need at this location, with the State of Texas or the United States
Government, to Lessor, and will assign all its rights in the Medicaid or
Medicare Contract to Lessor without any cost to Lessor.
b. The Lessee shall fail, refuse or neglect to perform or observe any
other covenant required of it herein, and such non-performance or non-observance
shall continue on the thirtieth (30th) day (unless a later date be slated in the
notice) after written notice of the same has been posted to the Lessee.
c. This Lease, or the premises itself, or any property of the Lessee
is levied upon the process of law, and such levy be not completely discharged or
secured to the
4
upon by process of law, and such levy by not completely discharged, or secured
to the satisfaction of the Lessor, within fifteen (15) days after service of the
process.
d. Lessee becomes involved in financial difficulties as evidenced by
(1) an admission in writing of its inability to pay its debts generally as they
become due, (2)becoming petitioner in any voluntary debtor or bankruptcy
proceedings, whether asking arrangement, composition, reorganization,liquidation
or other relief, suspension or modification of their obligations, (3) becoming a
party respondent to any involuntary proceeding the purpose of which is to
subject the assets of the Lessees to the control of a court of creditor's
committee, (4) making an assignment of all or of a substantial part of their
property for the benefit of their creditors, or (5) seeking, consenting to, or
failing to avert the appointment of a receiver or a trustee for all or a
substantial part of its property, or of the demised premises, or of its interest
in this Lease.
16. If an event of default occurs, Lessor shall have the option to:
a. Terminate this Lease by service of written notice of termination,
and Lessees right to the possession of the premises shall cease upon the date
stated in such notice, without prejudice to Lessors' right to recover all sums
due as of the date possession is surrendered, plus any damage or loss suffered
on or prior to such date, including any expenses such as court costs, attorney's
fees and similar expenses incurred by Lessor in recovering possession, rent,
and/or damages due from Lessee; or
b. Re-enter and take possession of the premises without further
demand or notice, and expel Lessee, or those claiming under it, and remove the
effects of both, or either (forcibly if necessary) without being deemed guilty
of any manner of trespass and without prejudice to Lessor's further rights under
this Lease. In such event, the obligations of the Lessee under this Lease shall
continue, but Lessor may from time to time upon such terms and conditions, and
for such bona fide rental as it may be able reasonably to negotiate, sub-let the
premises for the account of Lessee, and all sums received by Lessor shall be
credited to the account of Lessee, and all sums received by Lessor shall be
credited to the account of Lessee, less all reasonable expenses actually
incurred by Lessor, including, but not limited to brokerage fees, advertising
expense, preparation including re-decoration, of the premises for sub-letting,
legal expenses, cost of performing such of Lessees obligations as Lessor finds
it necessary to perform at his expense and all other items necessary and proper
to procure suitable
5
tenants for the premises. Lessee shall remain liable to Lessor for any
deficiency between the amounts properly credited to Lessee, and the amount due
Lessor under this Lease.
c. If Lessor, after taking possession of the premises pursuant to
subparagraph (b) above, is unable to make a bona fide sub-lease with a new
tenant for a term which equals or exceeds the balance of the period for which
Lessee is then obligated, Lessor shall have the right forthwith to demand and
recover from Lessee, the present value of the difference between the amount to
be received by Lessor under the new sub-lease, and the amount which would have
been payable by Lessee under this Lease for the remainder of the term hereof,
plus the expenses of Lessor as defined above.
d. Notwithstanding any election by Lessor to retake possession
pursuant to subparagraph (b) above, Lessor may at any time thereafter, upon
written notice to Lessee, terminate this Agreement in all respects, and in such
event, Lessee shall have no further liability, obligation or responsibility
after the date of such termination.
e. In order that Lessor may be indulgent when it deems the
circumstances warrant without prejudicing his right under this Lease, Lessee now
expressly agrees that no indulgence or extension, waiver or forgiveness,
variation by practice, nor any neglect or abstention by Lessor in strictly
enforcing the covenants of Lessee on any one or more occasions shall ever be
deemed a waiver of or estoppel against the right of Lessor to insist upon strict
compliance with each and every covenant herein, without any further or special
notice or warning, the existence of a covenant in this Lease and the provisions
of this paragraph being deemed adequate notice of the rights of the Lessor. No
property belonging to the Lessee shall ever be removed from the premises at any
time when there exists any default in the performance of any other covenant or
obligation assumed herein by Lessee.
17. Lessee agrees to execute any instrument reasonably required by Lessor
reflecting attornment to its prior interest which may be required by Lessor in
connection with mortgaging their interest in the demised premises, and/or
refunding or refinancing in the future of any mortgage which Lessor may place
upon the premises, subject to right of option of even date herewith.
18. Upon any termination of this Lease, whether by lapse of time,
cancellation pursuant to an election provided for therein, forfeiture, or
otherwise, Lessees shall surrender, immediately, possession of the demised
premises and all buildings and
6
improvements then on the same, to Lessor in good and tenantable repair,
reasonable wear and damage from fire or other casualty or peril excepted. If
possession be not immediately surrendered, Lessor, with or without process of
Law may forthwith re-enter said premises and repossess the same, all persons and
property, without being deemed guilty of any unlawful act and without prejudice
to any other legal remedy available to Lessor.
19. Lessor has the right to assign all or any part of this Lease. Lessor
will notify Lessee in the event of an Assignment.
20. It is the intention of the parties that this is to be a net, net net
Lease.
21. Lessee agrees that if a default on this Lease occurs, resulting in
foreclosure or assignment, Lessees interest in the certificate of need will be
assigned to Lessor immediately and forthwith, at no cost to Lessor.
22. This Lease shall be construed and interpreted in accordance with the
laws of the State of Texas.
23. Any notice or demand required or permitted by law or by any of the
provisions of this Lease shall be in writing. All notices or demands by Lessor
to or upon Lessee shall be deemed to have been properly given when sent by
certified mail, addressed to Lessee, Xxxxxx Xxxxx/South Texas Healthcare, Inc.,
000 Xxxxx 00xx, XxXxxxx, XX 00000, or such other place as Lessee may from time
to time, designate in a written notice to Lessor; and to Lessor by Lessee,
addressed to Xxxxx Xxxxx, X.X. Xxx 000, Xxxx Xxxxx, Xxxxxxxx 00000, or at such
other place as Lessor may from time to time, designate in a written notice to
Lessee.
24. This Lease and all provisions herein shall be binding upon and inure to
the benefit of the parties hereto, their heirs, legal representatives,
successors and assigns.
25. Time is of the essence in this Lease.
IN WITNESS WHEREOF the parties have caused this instrument to be properly
executed the day and year first above written.
/s/ XXXXX XXXXX
---------------
Xxxxx Xxxxx, Lessor
XXXXXX XXXXX/SOUTH TEXAS
HEALTHCARE, INC.
/s/ XXXXXX XXXXX
----------------
Xxxxxx Xxxxx, President, Lessee
7
Exhibit A
McAllen, Texas
The East 425.0 fee of the North 375.0 feet of the South 734.55 feet of Lot
125, La Lomita Irrigation & Construction Company's Subdivision, of Porciones 61,
62 and 63, Xxxxxxx County, Texas, as per map or plat thereof recorded in Volume
24, Page 68, Deed Records, Xxxxxxx County, Texas, and described as follows:
BEGINNING at a point on the East line of Xxx 000, Xxxxx 0 degrees 42 minutes 30
seconds East, 359.55 feet from the Southeast corner of Lot 125, for the
Southeast corner of the following described tract of land, said point being in
North Xxxx Road (F.M. #2220);
THENCE, with the East line of Xxx 000, xx Xxxx Xxxx, Xxxxx 8 degrees 42 minutes
30 seconds East, 375.0 feet to a point, for the Northeast corner hereof; said
point being on the projection of the South line of Gardenia Avenue;
THENCE, with he South line of Gardenia Avenue and its projection, North 81
degrees 17 minutes 30 seconds West, at 40.91 feet pass an iron pin on the West
line of North Road and at 425.0 feet an iron pin on the East line of North 38th
Street, for the Northwest corner hereof;
THENCE, with the East line of North 38th Street, and its Southerly projection,
South 8 degrees 42 minutes 30 seconds West, 375.00 feet to a point, for the
Southwest corner hereof;
THENCE, parallel to the South line of Xxx 000, Xxxxx 00 degrees 17 minutes 30
seconds East, at 384.09 feet pass an iron pin on the West line of North Xxxx
Road and at 425.0 feet the PLACE OF BEGINNING, containing 3.66 acres of land,
more or less, of which the East 10.91 feet, comprising 0.35 acre, lies in North
Xxxx Road (F.M. #2220).
XXXXXXX ABSTRACT AND TITLE CO.
OPTION AGREEMENT
For and in consideration of the sum of ten dollars cash in hand paid,
receipt of which is hereby acknowledged and for other good and valuable
considerations, XXXXX XXXXX, hereinafter called "Grantor", does hereby give and
grant unto Xxxxxx Xxxxx/South Texas Healthcare, Inc., 000 Xxxxx 00xx, XxXxxxx,
XX 00000, together with all improvements now or hereafter constructed upon the
same, and including all personal property shown upon Exhibit "B" attached
hereto, and in addition, any renewals, substitutions, replacements or additions
thereto, which may be on the premises and belonging to Grantor at the time of
the exercise of this Option, To-Wit:
Legal description attached hereto as exhibit "A".
1. This Option may be exercised by Grantees at any time after one hundred
Twenty (120) payments have been paid, provided all lease payments are current,
conditioned upon the Grantees, their successors or assigns being in possession
of the home at the time of exercise and upon the express condition and
understanding that the Grantees herein have fully performed all of the terms and
conditions contained in that certain Lease Agreement dated the 12th day of
August, 1992, to be kept and performed by the Lessees therein and more
particularly are current in the payment of all sums due under the terms of said
Lease Agreement. If at any time, the above Lease shall be terminated, this
Option will immediately become null and void. This Option may be exercised by
means of Grantee giving written notice by certified mail, return receipt
requested, of such election to Lessor, Xxxxx Xxxxx, Xxx 000, Xxxx Xxxxx, XX
00000 or at such other place as may be directed in writing, accompanied by
$10,000.00 xxxxxxx money deposit. The xxxxxxx money deposit will be applied on
the purchase price if purchase is concluded.
2. The price for the assets to be sold shall be Two Million Four Hundred
Thousand Dollars ($2,400,000.00). The purchase price is payable in cash unless a
financing arrangement is worked out at the time of purchase with Seller.
The purchase price herein stated shall include the personal property
consisting of furniture, furnishings, fixtures and equipment located on said
premises as of the date of beginning of this Lease, and such as may thereafter
be placed upon the
1
FIRST AMENDMENT TO OPTION
This Amendment to Option entered into this 9th day of April, 1996, amending
the Option Agreement dated August 12, 1992, on Briarcliff Nursing &
Rehabilitation Center of McAllen, Texas between XXXXX X. XXXXX, as Grantor, and
XXXXXX XXXXX/SOUTH TEXAS HEALTHCARE, INC., as Grantee. Xxxxx X. Xxxxx assigned
his Interest in this Option to Xxxxx & Xxxxx Family Limited Partnership on
January 1, 1995.
Now, Grantor and Grantee have agreed to add seventy-four beds to the
Briarcliff Nursing & Rehabilitation Center, making a total of 194 beds. Grantor
and Grantee have also agreed to increase the Option Price for this nursing home
as follows:
The Option is amended to state that the Option may be exercised by Grantee
at any time after eighty-four (84) monthly rental payments have been paid which
would include the increased rental payments for the new addition. For example,
if the first monthly rental payment to include the new addition is made on
October 1, 1996, then the option could be exercised on October 1, 2003,
providing all 84 payments had been paid. The option price will be $4,700,000.00
All other terms of the Option Agreement, dated August 12, 1992, will remain
the same as originally written.
Witness our hands this 9th day of April, 1996.
XXXXX & XXXXX FAMILY LIMITED
PARTNERSHIP
/s/ XXXXX XXXXX
---------------
Xxxxx Xxxxx, General Partner
Grantor
XXXXXX XXXXX/SOUTH TEXAS
HEALTHCARE, INC.
/s/ XXXXXX XXXXX
----------------
Xxxxxx Xxxxx, President, Grantee
premises by way of substitution for or addition to such furniture, furnishings,
fixtures and equipment, less any furniture and equipment removed for replacement
during the Lease term by Lessor or Lessee.
3. Upon receipt of notice of intent to exercise this Option, Grantor
shall promptly furnish to Grantees, a Warranty Dead, subject only to recorded
easements, rights-of-way, mineral interests and etc. Recorded easements and
restrictions shall not be deemed to impair title.
4. Closing shall be at a time and place mutually agreeable. In the
absence of agreement, Grantor may obligate Grantees to perform by giving written
notice that he is ready, willing and able to execute the Deed and Xxxx of Sale.
Grantees shall have ten (10) business days to execute the instruments required
to consummate this transaction, and to pay the purchase price. If purchase price
is not tendered or other arrangements made within the ten-day period, the option
will be null and void and the $10,000.00 xxxxxxx money deposit will be
considered liquidated damages and the Lease will continue in force, except no
option will be in force and effect. Grantees shall designate some place in Fort
Xxxxx, Arkansas at which they will appear prepared to perform, and Grantor shall
have ten (10) business days after receipt of such demand in which to execute and
deliver the documents required by this Option. If Grantor fails, neglects or
refuses to perform, Grantees shall have the right to seek specific performance
of this Option.
5. This Option may not be assigned by Grantees without the written
consent of the Grantor, which consent will not be unreasonably withheld.
Notices required or permitted by this Option may be given to Grantor by
certified mail, return receipt requested, addressed to Xxxxx Xxxxx, P. O. Xxx
000, Xxxx Xxxxx, Xxxxxxxx 00000 and to Grantees by certified mail, return
receipt requested, to Xxxxxx Xxxxx/South Texas Healthcare, Inc., 000 Xxxxx 00xx,
XxXxxxx, XX 00000. Either party may change the person to whom or the place to
which notice is to be given by written request.
This Agreement shall be binding upon the heirs, legal representatives,
successors and assigns of the parties hereto.
2
Dated this 12th day of August, 1992.
/s/ Xxxxx Xxxxx
-------------------------------
Xxxxx Xxxxx, Grantor
XXXXXX XXXXX/SOUTH TEXAS
HEALTHCARE, INC.
/s/ Xxxxxx Xxxxx
-------------------------------
Xxxxxx Xxxxx, President-Grantee
3
NON-COMPETE AGREEMENT
This Non-Compete Agreement (the "Agreement") is entered into this 24th day
of November, 1997 by and among Summit Care Texas, LP, a Texas limited
partnership ("Summit Care") and Xxxxxx Xxxxx, an individual and resident of the
State of Texas (hereinafter referred to as "Seller")
RECITALS
A. Summit Care and Seller have entered into an Agreement of Purchase and
Sale of Assets (the "Purchase Agreement"), whereby Seller has agreed to sell to
Summit Care that certain One Hundred and Ninety Four (194)-bed nursing facility,
commonly known as Briarcliff Nursing and Rehabilitation Center, located at 0000
Xxxxx Xxxx Xxxx, in the City of McAllen, County of Xxxxxxx, State of Texas, more
particularly described on Exhibit A hereto and herein incorporated by reference
(the "Facility"). The terms and provisions of the Purchase Agreement are hereby
incorporated herein as if set forth in full. All capitalized, undefined terms
used herein shall have the meanings given to them in the Agreement.
B. Seller has knowledge and expertise in the ownership and operation of
nursing homes.
C. Summit Care intends to operate the Facility and real property held and
operated by Seller and sold to Summit Care as a nursing home.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and of the mutual
promises herein, the parties hereto agree as follows:
1. For good and valuable consideration, the receipt of which is hereby
acknowledged, Seller agrees for seven (7) calendar years following the Closing
Date of the Agreement not to compete with Summit Care within the County of
Xxxxxxx, State of Texas.
2. For purposes of this Agreement, Seller shall be deemed to be in
competition with Summit Care if Seller either separately or jointly, owns,
operates, or has a direct or indirect interest in the operation of a Nursing
Home (which, for purposes of this Agreement shall mean, a facility engaged in
the provision of long
-1-
term care, an extended care facility, assisted living facility, retirement
center or any similar facility) or the provision of any service or ancillary
service that is provided in the operation of the Facility during the term of
this Agreement, in the County of Xxxxxxx; or if Seller engages in the operation
of a Nursing Home or the provision of long term care in Xxxxxxx County as an
affiliate, investor, officer, director, administrator, employee, consultant,
agent, or in any other material capacity.
3. Seller also covenants that he shall not during the term hereof,
solicit Summit Care's or its affiliates' patients or current employees for the
purpose of providing long term care, long term care, or any other medical
services, and will not hire any of said employees for the provision of services
associated with a Nursing Home, long term care, or any other medical services.
4. For purposes of this Agreement a "current employee" is defined to
mean any person who has been employed by Summit Care for at least four hundred
(400) hours during any continuous one hundred twenty (120) day period within the
past twelve (12) months preceding any particular date in question during the
term of this Agreement.
5. Seller acknowledges that the restrictions in this Agreement are
reasonable, as to substance, geographical area and duration, for the protection
of Summit Care. Nonetheless, if a court finds this covenant not to compete to be
too broad, said court shall have the ability to narrow the substance,
geographical area or duration to the extent necessary for the covenant to become
reasonable and enforceable. If Seller knowingly or intentionally violates this
section, Summit Care may exercise any or all remedies provided by law, including
but not limited to a temporary restraining order without notice and without
bond, temporary injunction without bond, and a permanent injunction without bond
in addition to other equitable or legal remedies, if any, Summit Care may have
against Seller or others acting in concert with Seller. In addition to and
without waiving other remedies available to Summit Care under law or pursuant to
this Section, Summit Care may require Seller to account and remit to Summit an
amount equal to one hundred and fifty percent (150%) of all gross fees earned by
Seller from such customers and patients as liquidated damages for such breach.
6. This Agreement shall not be changed or canceled without the express
written consent of Summit Care and shall be binding upon and shall inure to the
benefit of the heirs, successors and assigns of the parties.
-2-
7. This Agreement shall last for a term of seven (7) calendar years from
the date hereof and shall be construed and interpreted in accordance with the
laws of the state of Texas.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
SUMMIT CARE TEXAS, LP
a Texas limited partnership
By: /s/ Xxxxxx X. Xxxxxxxx
----------------------
The Sr. V.P. Finance
----------------------
of its General Partner
Summit Care Management, Inc.
------------------------------
a California Corporation
SELLER
/s/ Xxxxxx Xxxxx
------------------------------
Xxxxxx Xxxxx
______________________________
[Signature]
------------------------------
Family Member
______________________________
-3-
XXXX OF SALE FOR PERSONAL PROPERTY
Xxxxxx Xxxxx-South Texas Health Care, Inc., a Texas corporation ("SELLER"),
in consideration of Ten Dollars ($10. 00) and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
does hereby grant, bargain, sell, convey and transfer to Summit Care Texas, LP,
a Texas limited partnership or its affiliated nominee, ("BUYER" or "SUMMIT
CARE"), all right, title and interest, as of December 1, 1997, in and to, all
and singular, the following:
(1) all existing personal property such as furniture, fixtures, and
equipment (the "Personal Property") including, but not limited to the items
listed on Exhibit "A" attached hereto which are presently located on the real
property of and/or used in connection with the ownership, maintenance or
operation of the facility more particularly described in Exhibit "B" attached
hereto (the "Facility"), other than that Personal property specifically excluded
under the terms of the Agreement of Purchase and Sale of Assets dated November
24, 1997, by and between Buyer and Seller (the "Purchase Agreement"); and
(2) all licenses, occupancy agreements, certificates, permits,
accreditation, registrations and authorizations of all federal, state and local
governmental or regulatory authorities, or other agreements providing for the
use or occupancy of, the Facility and Personal Property (to the extent each may
be transferred).
(3) any and all plans, drawings, specifications, surveys, engineering
reports, and other technical descriptions owned or held by Seller which relate
in any way to the design, construction, ownership, use, maintenance, service, or
operation of the Facility or the Personal property to the extent any of the
above are transferable.
(4) all rights, title, and interest in and to the names and the telephone
numbers for the Facility set forth on Exhibit "A" hereto.
TO HAVE AND TO HOLD, all and singular, the Personal Property hereby sold,
assigned, transferred and conveyed to Buyer, its successors and assigns, to and
for its own use and benefit.
Seller hereby represents and warrants to Buyer that Seller is the owner of
said Personal Property, that Seller has full right,
-1-
power and authority to sell said Personal Property and to make this Xxxx of
Sale, and that said Personal Property is not encumbered. Subject to the
foregoing limitations, representations and warranties, and to the
representations and warranties contained in the Purchase Agreement, the Personal
Property is hereby conveyed by Seller to Buyer. Seller does hereby bind itself,
its successors and assigns and the heirs, executors, administrators and assigns
of Seller, to forever WARRANT AND DEFEND the title to the said Personal property
unto the said Buyer and its successor and assigns; against every person
whosoever lawfully claiming, or declaiming the same, or any part thereof.
Signed this twenty-fourth (24th) day of November, 1997, to be effective as
of the first (1st) day of December, 1997.
IN THE PRESENCE OF:
XXXXXX XXXXX-SOUTH TEXAS
HEALTHCARE, INC.
________________________
/s/ XXXXXX XXXXX
----------------
Xxxxxx Xxxxx
-2-
XXXX OF SALE FOR SUPPLIES
Xxxxxx Xxxxx-South Texas Health Care, Inc., a Texas corporation ("SELLER"),
as owner of certain supplies used in the operation of the facility more
particularly described in Exhibit "A" hereto for Ten Dollars ($10.00) and other
good and valuable consideration, the receipt and adequacy of which is hereby
acknowledged, does hereby grant, sell and transfer unto Summit Care Texas, LP, a
Texas limited partnership or its affiliated nominee, ("BUYER" or "SUMMIT") , the
Personal property more particularly set forth and described on Exhibit "B"
attached hereto and incorporated herein by reference.
To have and to hold the same to BUYER and its successors and assigns for
their use forever.
SELLER hereby covenants and warrants to the BUYER that it is the lawful
owner of said goods; that said goods are free and clear from all encumbrances
except as set forth; and that SELLER has the right to sell the same.
IN WITNESS WHEREOF, SELLER has executed this Xxxx of Sale on November 24,
1997, to be effective as of the first (1st) day of December, 1997.
IN THE PRESENCE OF: SELLER:
XXXXXX XXXXX-SOUTH TEXAS
HEALTHCARE, INC.
_______________________
/s/ XXXXXX XXXXX
----------------
Xxxxxx Xxxxx
-1-
