EXHIBIT 10.1
LEASE TERMINATION AND
OPERATIONS TRANSFER AGREEMENT
THIS LEASE TERMINATION AND OPERATIONS TRANSFER AGREEMENT (the
"Agreement") is made and entered into as of the 31st day of March, 2002 by and
between (i) DIVERSICARE ASSISTED LIVING SERVICES NC, LLC, a Tennessee limited
liability company ("Lessee") and ADVOCAT INC., a Delaware corporation
("Advocat"), and (ii) XXXXXX MANAGEMENT GROUP FIRST PARTNERSHIP, a North
Carolina general partnership ("PMG I"), XXXXXX MANAGEMENT GROUP FIFTH
PARTNERSHIP, a North Carolina general partnership ("PMG V"), XXXXXX, XXXXXX AND
XXXX, a North Carolina general partnership ("PPH"), XXX X. XXXXXX, individually
("Xxx Xxxxxx"), A. XXXXX XXXXXX and wife XXXX XXX XXXXXX (the "Pierces") and A.
XXXXX XXXXXX, individually ("Xxxxx Xxxxxx") (PMG I, PMG V, PPH, Xxx Xxxxxx, the
Pierces and Xxxxx Xxxxxx being hereinafter referred to collectively as the
"Lessors" and individually as a "Lessor").
RECITALS
A. Pursuant to the thirteen (13) Lease Agreements (With Option
to Purchase) identified on Exhibit A attached hereto by and between Lessee and,
as applicable, PMG I, PMG V, PPH and the Pierces (each a "Lease" and
collectively, the "Leases"), and the Sublease Agreement identified on Exhibit A
attached hereto by and between Lessee and Xxx Xxxxxx (the "Sublease"), Lessee
is currently the lessee of the twelve (12) adult care home facilities (with
apartment units, as and where so stated), the manager's home and the office
building identified on Exhibit A attached hereto, all located in the State of
North Carolina as more particularly set forth in Exhibit A attached hereto.
B. Pursuant to the two (2) Assignment and Assumption of Leases
identified on Exhibit A attached hereto between Lessee and PMG I (the
"Assignments"), the rights and obligations of PMG I, as lessee, under the two
(2) Lease Agreements with Xxxxx Xxxxxx identified on Exhibit A attached hereto
(the "Assigned Leases") were assigned to and assumed by Lessee, so that Lessee
is currently the lessee of the adult care home facility and the manager's home
identified on Exhibit A attached hereto and located in Rocky Mount, North
Carolina. The adult care home facilities (with apartment units, as and where so
stated), manager's homes and the office building identified on Exhibit A
attached hereto that are leased by Lessee pursuant to the Leases, the Sublease
and the Assigned Leases are hereinafter referred to individually as a
"Facility" and collectively as the "Facilities".
C. Advocat has guaranteed the payment and performance by Lessee
of its obligations under each of the Leases, the Sublease and the Assigned
Leases pursuant to and in accordance with the terms and provisions of the five
(5) Guaranty of Lease Agreements and the Guaranty of Sublease Agreement
identified on Exhibit B attached hereto (each a "Guaranty" and collectively the
"Guarantys").
D. The Leases, the Sublease and the Assignments were made,
executed and delivered in connection with the acquisition by Lessee, as Buyer,
of certain assets of the Lessors and certain affiliates and related parties, as
Sellers and Owners, pursuant to an Asset Purchase Agreement dated July 23,
1997, as amended by Amendment No. 1 to Asset Purchase Agreement dated September
30, 1997 (the "Asset Purchase Agreement"). Lessors and Lessee now wish to
terminate each of the Leases with possession and operation of all of the Leased
Property (as described and defined in each of the Leases) and the Subleased
Property (as defined and described in the Sublease) being returned to the
applicable Lessor. Lessee and PMG I further wish to terminate the Assignments,
with possession and operation of the premises and property that are the subject
of the Assigned Leases being returned to PMG I. In connection with such
termination, Lessee is willing to transfer to each Lessor certain assets
related to each Facility and each Lessor is willing to assume certain
obligations with respect to each Facility, subject to the terms and conditions
set forth in this Agreement. In addition, the parties hereto desire to make
certain releases and other agreements relating to the Facilities, certain other
adult care home facilities, and certain affiliates of the parties hereto, all
as more particularly set forth herein.
E. In order to facilitate an orderly transfer of the operations
of each Facility from Lessee to each Lessor, Lessee and Lessors desire to
document certain terms and conditions relevant to the termination of the
Leases, the Sublease, the Assignments and the transfer of operational control
and responsibility for each Facility.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants and agreements of the parties set forth herein, the parties
hereto agree as follows:
AGREEMENT
1. Termination and Assignment; Surrender of Leased Property;
Releases of Guarantys.
1.1 Termination Date. If all of the conditions to the
completion of the transactions contemplated herein are satisfied, the closing
of the transactions contemplated herein (the "Termination Date") shall occur
and be effective as of 12:01 a.m. on May 1, 2002, or such other date as the
parties shall mutually agree.
1.2 Termination of Leases and Sublease. Effective as of
the Termination Date each of the Leases and the Sublease shall and will be
cancelled and terminated, and all of their respective terms and conditions
(including without limitation the option to purchase the Leased Property
provided to Lessee under the Leases) shall and will be deemed to be of no
further force and effect, with the same effect as if the Termination Date was
the expiration date of each Lease and the Sublease. Each Lessor and Lessee
hereby declares that, effective as of the Termination Date, except as otherwise
expressly provided in Section 9.3, all obligations and duties of the Lessee
pursuant to the Leases and the Sublease are hereby terminated. On the
Termination Date, Lessee and each Lessor shall execute and deliver a Notice of
Termination of Lease for each Lease, in the form attached hereto as Exhibit C,
evidencing the termination of each Lease and sufficient for recording in the
real estate records of the counties in which each Facility is located.
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1.3 Termination of Assignments. Effective as of the
Termination Date, each of the Assignments shall and will be cancelled and
terminated, and all of the terms and conditions thereof shall and will be
deemed to be of no further force and effect. PMG hereby declares that,
effective as of the Termination Date, all obligations and duties of Lessee
under and pursuant to each of the Assignments are hereby terminated. On the
Termination Date, Lessee will assign to PMG I, and PMG I will assume, all of
the rights and obligations of the Lessee under each of the Assigned Leases
pursuant to an Assignment and Assumption of Leases in the form attached hereto
as Collective Exhibit D to be executed by Lessee and PMG I. On or before the
Termination Date, PMG I shall obtain the acknowledgment and consent, in
writing, of the Lessor under the Assigned Leases, and that of any other
necessary party, to the assignment of the Assigned Leases back to PMG I and the
release of Lessee from its duties and obligations as lessee under each of the
Assigned Leases.
1.4 Delivery of Leased Property; Transfer of Lessee's
Personal Property. On the Termination Date, Lessee will vacate and surrender to
each Lessor, as applicable, and will deliver possession and control to each
Lessor, as applicable of the following: (i) all of the Leased Property that is
the subject of each Lease, (ii) all of the Subleased Property that is the
subject of the Sublease, and (iii) the premises and other property that is the
subject of the Assigned Leases. On the Termination Date, Lessee will also
transfer, assign and deliver to the applicable Lessor for each Facility all of
Lessee's right, title and interest in and to, and the possession and control
of, all equipment, motor vehicles, machinery, furniture, fixtures, trade
fixtures, inventory of goods and supplies and all other tangible and intangible
personal property owned or leased by Lessee and located at or used in
connection with and necessary for the operation of each Facility ("Lessee's
Personal Property"), including (x) the right to the use of the name under which
each Facility is doing business or has done business during Lessee's use and
occupancy, and (y) the operations, policies and procedures manual of each
Facility as in place at the time the Facility was leased to Lessee; but
excluding (i) any leased property that is the subject of a Declined Contract
(as defined in Paragraph 8), (ii) Lessee's wide area network and associated
software provided on the Diversicare wide area network, (iii) Lessee's
continuous quality improvement program, manuals and materials, management
information systems, policy, procedure and educational manuals and materials,
and similar proprietary property of Lessee, and (iv) any rights in or to the
use of the name "Advocat" or "Diversicare", or any derivative thereof, and
subject to the rights of any lessors of any of Lessee's Personal Property. The
computers and component parts at the Kernersville office building belonging to
the Lessors that were removed and stored in the warehouse of Lessors when
Lessee moved its headquarters from that Facility will be reinstalled by Lessee
in the Kernersville office building prior to, and will be operable on, the
Termination Date. On the Termination Date, Lessee will make, execute and
deliver a Xxxx of Sale and Assignment in the form attached hereto as Exhibit E
sufficient to transfer Lessee's interest in Lessee's Personal Property to the
applicable Lessor. The presence of the Lessee's Personal Property at each
Facility on the Termination Date shall constitute delivery thereof. Any items
of Lessee's Personal Property containing the name or logo of "Diversicare" or
"Advocat", or any derivative thereof, at any Facility as of the Termination
Date shall be replaced and either destroyed by Lessors or returned to Lessee.
As of the Termination Date, Lessors will discontinue the use of any stationary
or other supplies at any Facility which contain reference to such names.
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1.5 Termination and Release of Advocat Guarantys.
Effective as of the Termination Date, each of the Lessors shall and does hereby
irrevocably and unconditionally release and forever discharge Advocat, its
successors and assigns, of and from any and all claims, demands, actions,
causes of action, rights, remedies or suits which each and everyone of the
Lessors ever had, now has or might have against Advocat, its successor and
assigns, arising out of, related to or connected with each and every one of the
Guarantys. Each Lessor hereby declares that, effective as of the Termination
Date, each and every one of the Guarantys shall be and hereby is cancelled and
terminated and that Advocat shall and does not have any obligations or
liabilities whatsoever under any one or all of the Guarantys to any of the
Lessors named therein or any other party. On the Termination Date, Lessors
shall deliver to Advocat the executed original of each Guaranty, clearly marked
to indicate its termination and the release and discharge of Advocat from any
liability or obligation with respect thereto.
1.6 Termination and Release of Xxxxxx Non-Compete
Agreements. Effective as of the Termination Date, Xxx Xxxxxx, Xxxxx Xxxxxx, the
Pierces, PMG I, PMG V, PPH and each of the other persons or entities identified
as Sellers and Owners under the Asset Purchase Agreement shall be and hereby
are released and discharged from the covenants and agreements not to compete
against Advocat or Lessee contained and set forth in (i) Article XIV of the
Asset Purchase Agreement, (ii) Paragraph 7 of the Employment Agreement by and
between Lessee and Xxx Xxxxxx dated as of October 1, 1997 and (iii) Paragraph 7
of the Consulting Agreement by and between Lessee and Xxxxx Xxxxxx dated as of
October 1, 1997 (collectively, the "NonCompete Restrictions"). Advocat and
Lessee hereby declare that, effective as of the Termination Date, each of the
NonCompete Restrictions, including the NonCompete Period and the NonCompete
Area described therein, shall be and hereby are cancelled and terminated and
will be deemed to be of no further force and effect, with the same effect as if
the Termination Date was the expiration date of each of the NonCompete
Restrictions. As a condition to and in consideration of such release of the
NonCompete Restrictions and the transactions contemplated hereby, Xxx Xxxxxx
and Xxxxx Xxxxxx hereby covenant and agree with Advocat and Lessee that,
effective as of the Termination Date, during the NonCompete Period (as defined
herein) and within the NonCompete Area (as defined herein), neither Xxx Xxxxxx
nor Xxxxx Xxxxxx, nor any partnership, corporation, limited liability company
or other entity of which they may be or become a shareholder, partner or member
(including, without limitation any of the Lessors) shall directly or
indirectly: (1) except for the Facilities acquired pursuant to this Agreement
and except for any adult care homes which they may acquire by purchase or lease
that are already in operation as of the date of this Agreement, acquire, lease,
manage, consult for, serve as agent or subcontractor for, finance, invest in,
own any part of, or exercise management control over any health care operation
or business which provides any services competitive with the services provided
by the Business (as defined herein); or (2) interfere with or attempt to
interfere with any past or present relationship, contractual or legal, between
Advocat, Lessee or any affiliate of Advocat or Lessee, on the one hand, and any
customer, resident, physician, physician group, or healthcare provider with
whom Advocat, Lessee or any affiliate of Advocat or Lessee contracts with in
connection with the operation of the Business in the NonCompete Area, on the
other hand. The "Business" shall mean the business of an adult care home (as
that term is defined in current Chapter 131D of the NCGS General Statutes). The
"NonCompete Period" shall commence on the Termination Date and terminate on the
fifth (5th) anniversary thereof. The "NonCompete Area"
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shall mean the area within North Carolina or Virginia and within a fifteen (15)
mile radius of each location, whether owned or leased, from which the Business
is operated or conducted on the Termination Date by Advocat, Lessee or the
subsidiaries of Lessee known as Diversicare Assisted Living Services, Inc.,
Diversicare Assisted Living Services NC I, LLC and Diversicare Assisted Living
Services NC II, LLC. Provided that nothing contained in this Section 1.6 shall
prohibit Xxx Xxxxxx, Xxxxx Xxxxxx or any of their affiliates from owning, as a
passive investor, not more than five percent (5%) of the outstanding securities
of any class of any publicly-traded securities of any publicly held company
listed on a well-recognized national securities exchange or on an interdealer
quotation system of the National Association of Securities Dealers, Inc.
As a condition to and in consideration of the transactions
contemplated hereby, Advocat and Lessee hereby covenant and agree with Lessors
that, effective as of the Termination Date, during the NonCompete Period,
neither Advocat nor Lessee, nor any affiliates (as defined in the Securities
Act of 1933, as amended) of Advocat or Lessee shall directly or indirectly,
except for any adult care homes which they or their affiliates currently own or
operate or which they or their affiliates may acquire by purchase or lease that
are already in operation as of the date of this Agreement, acquire, lease,
manage, consult for, serve as agent or subcontractor for, finance, invest in,
own any part of, or exercise management control over any health care operation
or business which provides any services competitive with the services provided
by the Business which are located within the states of North Carolina or
Virginia and within 15 miles of any of the Facilities which are subject to any
of the Leases. Provided that nothing contained in this Section 1.6 shall
prohibit Advocat or Lessee or any of their affiliates from owning, as a passive
investor, not more than five percent (5%) of the outstanding securities of any
class of any publicly traded securities of any publicly held company listed on
a well-recognized national securities exchange or an interdealer quotation
system of the National Association of Securities Dealers, Inc.
In the event of a breach of the covenants set forth herein, the
parties hereto recognize that monetary damages shall be inadequate to
compensate the protected party intended to have the benefit of the covenants
set forth herein (the "Protected Party"), and the Protected Party shall be
entitled, without the posting of a bond, to an injunction restraining such
breach, with the costs (including attorney's fees) of securing such injunction
to be jointly and severally borne by the party committing such breach. Nothing
contained herein shall be construed as prohibiting any Protected Party from
pursuing any other remedy available to it for such breach or threatened breach.
All parties hereto hereby acknowledge the necessity of protection
against the competition of described herein and that the nature and scope of
such protection has been carefully considered by the parties. The NonCompete
Period and the NonCompete Area are expressly represented and agreed to be fair,
reasonable and necessary. The consideration provided for in this Agreement is
deemed to be sufficient and adequate to compensate the parties hereto for
agreeing to the restrictions contained in this Section 1.6. If, however, any
court determines that any of the forgoing restrictions are not reasonable, such
restrictions shall be modified, rewritten or interpreted to include as much of
their nature and scope as will render them enforceable.
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1.7 Other Agreements.
1.7.1 Effective as of the Termination Date, the
Lessors, Xxx Xxxxxx and his spouse, and each of the other persons or entities
identified as Sellers or Owners in the Asset Purchase Agreement, shall not be
required to return to Lessee the monies deposited by Lessee with said parties,
or any of them, as the last month's Rent under the Leases and the sublease, as
reflected on the closing statement prepared and delivered in connection with
the Closing of the Asset Purchase Agreement. All of said sums so deposited by
Lessee shall belong to and shall be and remain the property of the Lessors, Xxx
Xxxxxx and spouse, or such other Sellers or Owners, as applicable.
1.7.2 Effective as of the Termination Date, Xxxxx
Xxxxxx shall be and is hereby declared to be released and discharged from any
liability that Xxxxx Xxxxxx now has or may to Lessee or its subsidiary,
Diversicare Assisted Living Services NC II, LLC with respect to the Waste Water
Treatment Facility situated at the adult care home facility known as Senter's
Rest Home, Hector's Creek, Harnett County, North Carolina, which facility was
acquired by Lessee pursuant to the Asset Purchase Agreement and is now owned by
said subsidiary.
1.7.3 On or before the Termination Date, Xxxxx
Xxxxxx will cause the townhome used as the manager's residence for the adult
care facility known as Heritage Care of Seven Lakes, West End, Xxxxx County,
North Carolina to be conveyed to Diversicare Assisted Living Services NC I,
LLC, or its designee, in accordance with the terms and provisions of the Asset
Purchase Agreement.
1.8 Carolina Rest Home. The parties hereby acknowledge
that the Lease Agreement (With Option to Purchase) dated as of September 30,
1997 by and between PMG I, as Lessor, and Lessee for the adult care home
facility known as Carolina Rest Home in Roanoke Rapids, North Carolina has
already been terminated due to casualty damage that occurred on November 8,
2000, that the Leased Property described therein has been vacated and
surrendered by Lessee to PMG I, and that PMG I and Lessee have no current or
further obligations or duties thereunder. From and after the Effective Date,
Lessee will continue to cooperate with and assist PMG I in the collection of
the insurance proceeds payable in respect of such casualty loss by Lessee's
insuror in accordance with the terms and conditions of the Lease for the
Carolina Rest Home facility.
1.9 New River Country Center. Anything herein to the
contrary notwithstanding, Lessors and Lessee agree that promptly following the
execution of this Agreement, Lessee shall, at Lessee's cost and expense,
proceed to close and cease the operations of the New River Country Center
Facility located in Sparta, North Carolina (the "Sparta Facility"). Lessee will
diligently, and at Lessee's cost and expense, complete the closure of the
Sparta Facility in accordance with all applicable laws, ordinances and
regulations pertaining to the closure of an adult care home facility, including
the giving of all applicable notices to the residents of the Sparta Facility
and any governmental agencies having jurisdiction over the Sparta Facility. PMG
I will cooperate in good faith with Lessee and take any and all actions as may
be required of PMG I, as the Lessor and owner of the Sparta Facility, to
complete the closure of the Sparta Facility by Lessee in the manner provided
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herein. Without limiting the generality of the foregoing, PMG I and Lessee will
cooperate with each other as necessary or appropriate to provide for the
orderly transfer of the residents of the Facility to other adult care home
facilities, wherever located, including, if so requested by PMG I and agreed to
by a resident, transfer to any of the other Facilities that are the subject of
this Agreement or any other adult care home facilities which are owned,
operated and/or managed by any of the Lessors. In consideration of Assignee
bearing the cost and expense of closing the Sparta Facility, PMG I agrees that
amount of the current monthly installment of rent due under the Lease for the
Sparta Facility for the month of April, 2002 shall be reduced by one half (1/2)
and that such reduced payment shall be the final payment of rent due from
Lessee under the Lease for the Sparta Facility. Thereafter, no further payments
of rent or any additional charges shall be due and payable by Lessee in respect
of the Sparta Facility regardless of the fact that Lessee may continue to
occupy the Sparta Facility from and after May 1, 2002 in order to complete the
closure of the Sparta Facility as provided herein.
2. As Is/Where Is.
All of the Leased Property, the Subleased Property, the premises and
property that are the subject of the Assignment Leases, and Lessee's Personal
Property (collectively, the "Real and Personal Property") will be transferred
and delivered to Lessor by Lessee on the Termination Date, and will be accepted
by Lessor, "as is," "where is," with no warranty of habitability, use or
fitness for habitation with respect to any real estate and improvements and
with no warranties, including the warranty of merchantability or fitness for a
particular purpose, with respect to all of the other property, and all of which
warranties (both express and implied) Lessee hereby disclaims. Lessors have, or
will have on or before the Termination Date, examined and inspected the Real
and Personal Property and knows and is satisfied with, or will know and be
satisfied with its condition and Lessors are not now relying, and will not
later rely, upon any representations or warranties made (or asserted to have
been made) by Lessee, Advocat or anyone claiming to act by, through or under or
on their behalf concerning the Real and Personal Property. Prior to the
Termination Date, Lessors shall have the right, upon reasonable advance notice
and during normal business hours, to enter the Facilities for the purpose of
inspecting the Real and Personal Property and determining Lessee's compliance
with the terms of this Agreement, subject to any security, health, safety or
privacy requirements or rights of the residents and employees of each Facility.
Lessee shall have the right to have a representative present at all times
during any such inspection by Lessors.
3. Transfer of Resident Trust Funds.
3.1 On or before the Termination Date, Lessee shall
deliver to Lessor a true, correct and complete accounting (properly audited and
reconciled) of all security deposits, resident accounts and resident trust
funds (collectively, the "Resident Trust Funds") and an inventory of all other
residents' property, if any, held by Lessee on the Termination Date for
residents at the Facilities. On the Termination Date, Lessee shall transfer the
Resident Trust Funds and any other residents' property at the Facilities to
Lessor and Lessor hereby agrees that it will accept such Resident Trust Funds
and any other residents' property in trust for the residents, in accordance
with applicable statutory and regulatory requirements.
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3.2 Lessee will indemnify, defend and hold Lessor
harmless from all liabilities, claims and demands, including reasonable
attorneys' fees, in the event the amount of the Resident Trust Funds, or other
residents' property, if any, transferred to Lessor do not represent the full
amount of the Resident Trust Funds or other property shown to have been
delivered to Lessee as custodian for the residents at the Facility or for
claims which arise from actions or omissions of Lessee with respect to the
Resident Trust Funds or other property prior to the Termination Date. Lessors
will indemnify, defend and hold Lessee harmless from all liabilities, claims
and demands, including reasonable attorneys' fees, in the event a claim is made
against Lessee by a resident for his/her Resident Trust Funds or property where
such funds or property were properly calculated and transferred to Lessors
pursuant to the terms hereof.
4. Employees.
4.1 Employment of Existing Employees. On the Termination
Date, Lessor shall, subject to the provisions of Section 4.2 below, have the
right and option of offering to employ any or all of Lessee's employees that
work at the Facilities. Lessee shall terminate the employment of any employees
at the Facilities that Lessor does not elect to employ. In order to determine
compliance with Section 4.2, below, Lessor shall advise Lessee in writing on or
before ten (10) days prior to the Termination Date of those employees of Lessee
that Lessor has elected not to employ. Lessee shall remain liable for all
Employee Liabilities (as herein defined) relating to all employees of Lessee at
the Facilities that accrue up to the Termination Date. Lessor shall assume and
be responsible for all Employee Liabilities with respect to all employees of
Lessee at the Facilities hired by Lessor that accrue on or after the
Termination Date. Without limiting the generality of the foregoing, Lessee
shall remain liable from and after the Termination Date for all obligations of
Lessee, if any, to provide continuation of health insurance coverage in
accordance with COBRA to those employees of Lessee not hired by Lessor and
eligible to utilize COBRA as a result of the termination of their employment by
Lessee as herein provided. As used herein, "Employee Liabilities" means wages,
salaries, earned and accrued vacation, holiday and sick pay, all accrued paid
days off and sick days, and earned or accrued bonuses, if any, due to employees
at the Facilities and health insurance, payroll and payroll taxes, unemployment
and FICA expenses.
4.2 WARN Act. Anything in this Agreement to the contrary
notwithstanding, Lessors shall employ such number of Lessee's employees at the
Facilities and shall retain for a period of ninety (90) days following the
Closing Date such number of Lessee's employees at the Facility as shall be
necessary to avoid any potential liability by Lessee for a violation of the
Workers Adjustment Retraining and Notification Act (the "WARN Act") (or any
similar law of the State of North Carolina) attendant to Lessee's failure to
notify such employees of a "mass layoff" or "plant closing" as defined in the
WARN Act (or any similar law of the State of North Carolina). For purposes of
determining compliance by Lessors with the foregoing provisions, employees at
each Facility terminated by Lessee during the period of ninety (90) days
immediately prior to the Termination Date for other than cause, retirement or
voluntary departure, all of whom are listed in Exhibit F, shall be taken into
consideration. Lessors shall indemnify Lessee from and against any liability
for any WARN Act violations resulting from the aggregation of the terminations
of employment by Lessee during the ninety (90) days immediately preceding the
Termination Date
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listed on Exhibit F with the terminations of employment of Lessee's employees
at the Facilities on or after the Termination Date in violation of this Section
4.2. Nothing herein contained shall be deemed either to affect or to limit in
any way the management prerogatives of Lessors with respect to employees, or to
create or to grant to such employees any third party beneficiary rights or
claims or causes of action of any kind or nature. In the event at the time of
the execution of this Agreement, Exhibit F is not attached hereto, Lessee and
Lessors agree that the provisions of this Section 4.2 shall nonetheless be
effective and binding upon Lessee and Lessors provided that Exhibit F is
delivered by Lessee to Lessors and is attached hereto on or before the
Termination Date.
5. Accounts Receivable.
5.1 Lessee shall retain its right, title and interest in
and to all unpaid accounts receivable with respect to each Facility which
relate to the period prior to the Termination Date. On or before the
Termination Date, Lessee shall provide each Lessor with a schedule setting
forth by resident its outstanding accounts receivable as of the Termination
Date.
5.2 Payments received by any Lessor after the
Termination Date from third party payors and private pay residents which relate
to periods prior to the Termination Date, Lessor shall collect as Lessee's
agent for the limited purpose of such collection. Lessor shall remit to Lessee
the gross proceeds of such collection within thirty (30) days following the end
of each month thereafter for a maximum of six (6) months. Lessee shall be
responsible for collecting all receivables thereafter. Lessee and Lessor each
agree to provide the other party with any information in its possession
reasonably requested by such party with respect accounts receivable and amounts
received.
5.3 Lessee shall timely file or cause to be filed all
cost reports required to be filed with respect to the purchase of services by
Medicaid prior to the Termination Date and pay all amounts required thereunder
for any periods prior to the Termination Date. Lessee shall be entitled to
receive any refund or other benefit which may result from the filing of said
reports. Lessee shall remain liable for the refund of any overpayments made to
Lessee prior to the Termination Date for which payment is due to Medicaid or
any other third party payor after the Termination Date arising from services
provided by Lessee at a Facility prior to the Termination Date. After the
Termination Date, Lessors shall assist Lessee in any way reasonably necessary
to complete such cost reports in a timely manner.
5.4 Each party hereto covenants and agrees to remit or
forward, with reasonable promptness, to the other (i) any payments received,
which payments are on or in respect of accounts or notes receivable owned by
(or are otherwise payable to) the other or (ii) any notifications, mailings or
other written communications (including such communications from Medicaid or
other government payor) received by such party which pertain to the other party
or such other party's operation of any Facility. It is understood and agreed
that, in connection with their operation of the Facilities from and after the
Termination Date, Lessors will apply for and obtain their own provider account
numbers for each Facility prior to the Termination Date and shall not be
entitled to use
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Lessee's provider account number(s) for the Facilities, which shall remain the
sole and exclusive property of Lessee.
6. Prorations; Liabilities.
6.1. Revenues and expenses pertaining to Assumed
Contracts (as defined in Section 8), and real and personal property taxes
attributable to each Facility shall be prorated between Lessee and Lessors as
of the Termination Date. In general, such prorations shall be made so as to
reimburse Lessee for prepaid expense items and to charge Lessee for prepaid
revenue items that are attributable to the period after the Termination Date
and to charge Lessee for expenses payable after the Termination Date that are
attributable to the period prior to the Termination Date.
6.2. There shall be no proration of utility charges or
any other payables or expenses attributable to each Facility as of the
Termination Date, it being the intent of the parties that the Lessee shall pay
the bills therefore for the period prior to the Termination Date and Lessors
shall pay the bills therefore for the period on and after the Termination Date.
Utilities for each Facility will be cut off in Lessee's name on the last day
prior to the Termination Date and Lessee shall be entitled to the return of any
deposit in respect thereof. Lessors shall be responsible for obtaining utility
services in their own names for their respective Facilities, ensuring that the
same are available on the Termination Date, and making any deposits necessary
therefore prior to the Termination Date. Lessee will notify its suppliers,
other than the Assumed Contracts, that the cut off date for their provision of
supplies or services to the Facilities will be the last day prior to the
Termination Date.
6.3. All prorations required hereunder shall be made on
the basis of actual days elapsed in the relevant accounting or revenue period
and shall be based on the most recent information available to Lessee. All
amounts owing from one party hereto to the other party hereto that require
adjustment after the Termination Date shall be settled within thirty (30) days
after the Termination Date, or, in the event the information necessary for such
adjustment is not available within said 30-day period, then as soon thereafter
as practicable.
6.4. Notwithstanding the fact that the Termination Date
is the first day of a calendar month, there shall be no proration of and Lessee
shall not be required to pay all or any portion of the monthly installment of
rent which, by the terms of each Lease, is due on the first day of each
calendar month. Likewise, PMGI and Xxx Xxxxxx will be responsible for the
monthly installment of rent, if any, due and payable on and as of the
Termination Date under the Assigned Leases and the Sublease.
7. Access to Records.
7.1 On the Termination Date, Lessee shall deliver to
each Lessor all of the books and records for each Lessor's respective Facility,
including, but not limited to, resident medical and financial records and
employee records for those employees of Lessee at the Facility hired by Lessor
in accordance with Section 4.1 hereof. The turnover of records and information
with respect to residents of each Facility which are in the possession of
Lessee shall be subject to applicable legal
10
requirements and rights governing the confidentiality of resident records, but
Lessee shall cooperate with Lessor in facilitating requests to residents of the
Facility to consent to the transfer to Lessor of such records and information.
7.2 After the Termination Date, each Lessor shall allow
Lessee and its agents and representatives to have reasonable access to (upon
reasonable prior notice and during normal business hours), and to make copies
of, the books and records (including, subject to obtaining, residents' or
resident's authorized representative consent, medical records for
pre-Termination Date residents) and supporting material of each Facility
relating to the period prior to the Termination Date, to the extent reasonably
necessary to enable Lessee (i) to investigate and defend malpractice, employee
or other claims, (ii) to prepare work papers for financial reports, tax returns
and cost reports, (iii) to answer any questions raised relating to patient
billing with respect to the pre-Termination Date period, (iv) to investigate
any claims for overpayment made to Lessee, and (v) to verify accounts
receivable collections due Lessee. Lessee shall be entitled to remove the
originals of any records delivered to Lessor for purposes of litigation
involving a resident or employee to whom such record relates, but only if an
officer of or counsel for Lessee certifies that such original must be produced
in order to comply with applicable law or the order of a court of competent
jurisdiction in connection with such litigation, and if such is consistent with
applicable law governing resident records. Any record so removed shall promptly
be returned to Lessor following its use. For a period of six (6) months after
the Termination Date, Lessors shall allow Lessee and its agents and
representatives shall have access to (upon reasonable prior notice and during
normal business hours but not more than one (1) time in each calendar month)
the cash receipts journals of each Facility and other records relating to cash
receipts or other forms of payment received or collected in respect of each
Facility from and after the Termination Date for the purpose of verifying the
allocation of cash receipts or other forms of payment in accordance with
Section 5 hereof. Following its receipt of the final remittance of receivables
from Lessors at the end of the six (6) month period as provided for in Section
5.2, above, Lessee shall have the one-time right, if it so elects, to have
access to such cash receipts journals and other records of each Facility for
the purpose of performing an audit, at Lessee's sole cost and expense, in order
to verify Lessor's compliance with Section 5; provided that Lessee gives
Lessors written notice of its election to perform such audit within fifteen
(15) days after its receipt of such final remittance and thereafter promptly
commences and diligently prosecutes such audit to completion. Lessors shall
reasonably cooperate with Lessee in the performance of such audit.
7.3 Lessors agree to maintain such books, records and
other material comprising records of the operations of the Facilities prior to
the Termination Date that have been received by Lessors from Lessee or
otherwise, including, but not limited to, resident records and records of
resident funds, to the extent required by law, but in no event less than three
(3) years, and shall allow Lessee a reasonable opportunity not to exceed thirty
(30) days to remove such documents, at Lessee's expense, at such time after
such record retention period as may be required by law if Lessors shall decide
to destroy or dispose of such documents. Lessors shall provide Lessee not less
than forty-five (45) days, nor more than ninety (90) days, prior written notice
of such destruction or disposal. If Lessee desires to obtain any such
documents, it may do so by notifying the applicable Lessor in writing at any
time prior to the scheduled date of destruction or disposal, in which event
such Lessor
11
shall not destroy such documents and the parties shall promptly arrange for the
delivery of such documents to Lessee, at Lessee's expense.
8. Assumed/Declined Contracts. Effective as of the Termination
Date, Lessee shall transfer and assign to the applicable Lessor all of Lessee's
interest in, and the applicable Lessor shall assume the obligations of Lessee
under and agree to perform and be bound by all of the terms and conditions of,
the following (collectively, the "Assumed Contracts"): (i) all admission policy
agreements, patient's rights agreements and/or any other patient or resident
tenancy or occupancy agreements (collectively the "Occupancy Agreements") with
existing residents of each Facility (provided, however, that nothing herein
shall prevent Lessor from asking existing residents or requiring newly admitted
residents to sign new Occupancy Agreements with the Lessor) and (ii) all of the
operating contracts and agreements with third parties for the sale, lease or
provision of goods, services or equipment in connection with the operation of
each Facility (collectively, the "Service Contracts") other than the Declined
Contracts, if any (as hereinafter defined). Such assignment and assumption
shall be made pursuant to an Assignment and Assumption Agreement in the form
attached hereto as Exhibit G, to be executed on the Termination Date by Lessee
and each applicable Lessor. Lessee will cooperate with Lessor in obtaining any
required consent, waiver or approval in connection with the assignment to and
assumption by Lessor of Lessee's interests and obligations under the Assumed
Contracts, but Lessee shall have no liability to Lessor for any damages
incurred by Lessor as a result of its failure or inability to obtain any
consent or waiver necessary to assume any Assumed Contract. Nothing herein
shall be construed as imposing any liability on Lessor with respect to any
obligations under (a) the Assumed Contracts which relate to the period prior to
the Termination Date even if the same are not payable until after the
Termination Date, it being specifically understood and agreed that Lessor's
liability shall be limited to its acts and omissions thereunder from and after
the Termination Date or (b) the contracts and agreements specifically listed
and described in Exhibit H hereto which Lessor has advised Lessee in writing
prior to the Termination Date it is not prepared to assume as of the
Termination Date (the "Declined Contracts"). Lessee will provide Lessors with
copies of all Service Contracts for Lessor's inspection and approval prior to
the Termination Date. In the event that at the time of the execution of this
Agreement Exhibit H is not attached hereto, Lessee and Lessor agree that the
provisions of this Section 8 shall be effective and binding upon Lessee and
Lessor provided that Exhibit H is delivered and accepted by Lessor and Lessee
and attached hereto on or before the Termination Date.
9. Mutual Releases.
9.1 Release by Advocat and Lessee. Effective as of the
Termination Date, each of Advocat and Lessee shall and do hereby release and
forever discharge each Lessor, their employees, agents and representatives from
any and all liabilities or obligations, of whatever kind or nature, known or
unknown, that any of the Lessors, their agents, employees or representatives,
has, had or may have to Advocat or Lessee arising out of or based upon the
Leases, the Sublease, or the Assignments, or the use and occupancy of the
Facilities by Advocat, Lessee, or their agents, employees and representatives,
except with respect to (i) any breach of this Agreement by Lessors or (ii) any
future performance of Lessors required by this Agreement or (iii) any claims or
cross-claims made in the litigation brought by X.X. and Xxxxxxx Lemoynes
relating to employment at the
12
Jacksonville Facility currently pending in the local courts of Onslow County,
North Carolina (the "Pending Litigation") or (iv) any claim for indemnification
pursuant to Section 9.3, below.
9.2 Release by Lessors. Effective as of the Termination
Date, each Lessor shall and does hereby release and forever discharge each of
Advocat and Lessee, their employees, agents and representatives, from any and
all liabilities or obligations, of whatever kind or nature, known or unknown,
that any of Advocat, Lessee, or their agents, employees and representatives,
has, had or may have to any one or all of the Lessors arising out of or based
upon the Leases, the Sublease, or the Assignments, or the use and occupancy of
the Facilities by Advocat, Lessee, or their agents, employees and
representatives, except with respect to (i) any breach of this Agreement by
Advocat or Lessee or (ii) any future performance of Advocat or Lessee required
by this Agreement or (iii) any claims or cross-claims in the Pending Litigation
or (iv) any claim for indemnification pursuant to Section 9.3, below.
9.3 Claims by a Straddle Patient or Third Parties. Any
claim by a resident relating to professional negligence or similar matters
involving a resident of a Facility served prior to the Termination Date and/or
subsequent to the Termination Date or any claims made by or for any third
parties for personal injury or death occurring at a Facility will be the
responsibility of either Lessors or Lessee in accordance with the following
guidelines: (i) if it is a claim in which clearly the incident giving rise to
liability arose during Lessee's use and occupancy of the Facility but prior to
the Termination Date, Lessee shall respond to, and will hold harmless and
indemnify the applicable Lessor from and against, the claim and defense
expenses; (ii) if it is a claim in which clearly the incident giving rise to
liability arose subsequent to the Termination Date, the applicable Lessor shall
respond to, and will hold harmless and indemnify Lessee from and against, the
claim and defense expenses; and (iii) in the event that the incident giving
rise to liability as to time is not clear, Lessee and the applicable Lessor
will jointly defend the claim and each will fully cooperate with the other in
such defense. Once the claim is settled, closed or otherwise disposed of, if
the applicable Lessor and Lessee cannot agree to the allocation of both
indemnity and expenses, then the matter shall be submitted to binding
arbitration in accordance with the rules and procedures of the American
Arbitration Association.
10. Representations, Warranties and Covenants.
10.1 Each Lessor hereby represents and warrants that it
has all necessary power and authority to enter into this Agreement and to
execute all documents and instruments referred to herein or contemplated hereby
and all necessary action has been taken to authorize the individual executing
this Agreement to do so, and this Agreement has been duly and validly executed
and delivered by Lessor and is enforceable against Lessor in accordance with
its terms, except as such enforceability may be limited by applicable
bankruptcy laws and general principles of equity.
10.2 Advocat and Lessee each hereby represents and
warrants that it has all necessary power and authority to enter into this
Agreement and to execute all documents and instruments referred to herein or
contemplated hereby and to consummate the transaction provided for herein, and
all necessary action has been taken to authorize the individual executing this
13
Agreement to do so, and this Agreement has been duly and validly executed and
delivered by each of them and is enforceable against each of them in accordance
with its terms, except as such enforceability may be limited by applicable
bankruptcy laws and general principles of equity.
10.3 Lessors covenant and agree that, as of the
Termination Date, (i) Lessors will have all licenses, permits and approvals
required of each Lessor by the State of North Carolina to operate each adult
care home Facility as a fully licensed, adult care home facility, except to the
extent that there has been a waiver of such compliance from the applicable
governmental authorities having jurisdiction thereof and (ii) each adult care
home Facility will be duly certified to participate, and does participate, in
the Medicaid programs in the State of North Carolina under valid Medicaid
contracts.
10.4 Lessee covenants and agrees that between the date
hereof and the Termination Date: (i) Lessee will provide all necessary
information requested by Lessors for the preparation and filing of any and all
necessary applications or notifications to any federal or state governmental
authority having jurisdiction over a change in the operational control of the
Facilities, and any other information reasonably required to effect an orderly
transfer of the Facilities, (ii) except in the case of the Sparta Facility,
Lessee shall use its reasonable best efforts to keep the business and
organization of the Facilities intact and to preserve for Lessors the goodwill
of the suppliers, distributors, residents and others having business relations
with Lessee with respect to the Facilities; and (iii) except in the case of an
emergency or if required by law, or as provided for herein in the case of the
Sparta Facility Lessee shall not move or solicit the move of any residents
presently situated at any of the Facilities.
10.5 Lessee represents and warrants that, except as
otherwise provided in this Agreement, between the date hereof and the
Termination Date (i) Lessee will continue to carry on its business and
activities relating to the Facilities in the substantially same manner as it
did prior to the date hereof, (ii) Lessee will continue to perform its
obligations as Lessee under the Leases, (iii) Lessee will not enter into any
new contract or other agreement that will be an obligation affecting any
Facility subsequent to the Termination Date without the prior written consent
of the applicable Lessor, which consent shall not be unreasonably withheld,
(iv) Lessee will not dispose of any equipment, machinery, furnishings, fixtures
or inventory, except in the ordinary course of business.
10.6 Lessee represents and warrants that, to the best of
Lessee's knowledge, Lessee has permitted no liens or encumbrances (except for
the current year's taxes to be prorated as of the Termination Date) to be
placed upon any of the Leased Property and that if any such lien or encumbrance
is placed or permitted to be placed on any of the Leased Property between the
date hereof and the Termination Date, Lessee will cause the same to be removed
prior to the Termination Date. For purposes of this Section 10.6, the term
"Lessee's Knowledge" shall be deemed to mean and be limited to the personal
knowledge of the following officers or representatives of Lessee: Xxx Raupauch,
Xxxxx Xxxxxxx, Xxxxxxx Xxxxx, Xx. Xxxxxxx Xxxxxxx, and Will Council, but shall
in no event be deemed to include the personal knowledge of Xxx X. Xxxxxx, who
was formerly employed by Lessee.
14
11. Conditions to Close. The obligations of Lessors and of
Advocat and Lessee to consummate the transactions contemplated by this
Agreement are subject to the satisfaction of the following conditions on or
prior to the Termination Date or the dates designated elsewhere in this
Agreement for the satisfaction of such conditions:
(a) All of the representations and warranties of the parties
contained herein shall be true and correct in all material respects as of the
date of this Agreement and as of the Termination Date;
(b) As of the Termination Date, each party shall have performed
its obligations hereunder and all documents to be made executed and/or
delivered on the Termination Date shall have been tendered;
(c) There shall exist no actions, suits, arbitrations, claims,
attachments, proceedings, assignments for the benefit of creditors, insolvency,
bankruptcy, reorganization or other proceedings, pending or threatened against
any party hereto that would materially and adversely affect the ability of any
party hereto to perform its obligations under this Agreement;
(d) There shall exist no pending or threatened action, suit or
proceeding with respect to any party hereto before or by any court or
administrative agency (i) which seeks to restrain, suspend or prohibit resident
admission(s) to a Facility, (ii) which seeks to impose a provisional license or
the failure to comply with which could result in the imposition of a
provisional license as to any Facility or (iii) which seeks to restrain or
prohibit, or to obtain damages or a discovery order with respect to, this
Agreement or the consummation of the transactions contemplated hereby;
(e) Lessors, Advocat and Lessee shall have obtained all consents,
releases and approvals from all third parties from whom such consents, releases
or approvals are necessary to consummate the transactions contemplated hereby,
including without limitation, the case of Advocat and Lessee, the consent of
AmSouth Bank, and in the case of the Lessors, the holders of mortgages on the
Facilities;
(f) Each Lessor shall have obtained all of the licenses, permits,
approvals and certifications described in Section 10.3, above, necessary for
its continued operation as an adult care home of each adult care home Facility
to be vacated and surrendered to it by Lessee pursuant to this Agreement; and
12. Termination. Notwithstanding anything in this Agreement to
the contrary, this Agreement and the obligations of the parties hereunder may
be terminated on or prior to the Termination Date as follows:
(a) By Advocat and Lessee (i) in the event the transactions
contemplated by this Agreement have been prohibited or enjoined by reason of
any final judgment, decree or order entered or issued by a court of competent
jurisdiction in litigation or proceedings involving either Lessors or Lessee;
or (ii) in the event Lessors breach or violate any material provision of this
Agreement or fail
15
to perform any material covenant or agreement to be performed by Lessors under
the terms of this Agreement, and Advocat or Lessee has provided written notice
thereof to Lessors giving reasonable specificity and Lessors have not cured
same within a reasonable period of time and such breach is not waived by
Advocat and Lessee in writing.
(b) By Lessors (i) in the event the transactions contemplated by
this Agreement have been prohibited or enjoined by reason of any final
judgment, decree or order entered or issued by a court of competent
jurisdiction in litigation or proceedings involving either Lessors or Advocat
or Lessee; or (ii) in the event Advocat or Lessee breaches or violates any
material provision of this Agreement or fails to perform any material covenant
or agreement to be performed by Advocat or Lessee under the terms of this
Agreement and Lessors have provided written notice thereof to Advocat and
Lessee giving reasonable specificity and Advocat or Lessee has not cured same
within a reasonable period of time and such breach is not waived by Lessors in
writing.
(c) By Lessors or by Advocat or Lessee if the Termination Date
hereunder shall not have taken place by May 1, 2002, or by such later date as
shall be agreed upon by an appropriate amendment to this Agreement if the
parties agree in writing to an extension, provided that a party shall not have
the right to terminate under this Section 11 if the conditions precedent to
such party's obligation to close have been fully satisfied and such party has
failed or refused to close within a reasonable time after being requested in
writing to close by the other party.
13. Further Assurances. Each of the parties hereto agrees to
execute and deliver any and all further agreements, documents or instruments
necessary to effectuate this Agreement and the transactions referred to herein
or contemplated hereby or reasonably requested by the other party to perfect or
evidence their rights hereunder. Lessors and Lessees both agree to use their
best efforts to obtain the written consent and agreement of the lessors of the
adult care facilities known as Oakcrest Manor, Chesapeake, Virginia and Vintage
Inn, Williamston, North Carolina to the assignment of the current leases for
those facilities with Diversicare Assisted Living Services, Inc. and the
transfer of the operation of the facilities to Xxx X. Xxxxxx, or its assignee,
in accordance with that certain Lease Termination and Operations Transfer
Agreement by and between PMG I and Diversicare Assisted Living Services, Inc.
of even date herewith. It is the intent of the parties hereto that the
operation of such facilities will be transferred simultaneously with the
Termination Date, or as soon thereafter as possible.
14. Notices. All notices to be given by any party to this
Agreement to the other party hereto shall be in writing, and shall be (a) given
in person, (b) deposited in the United States mail, certified or registered,
postage prepaid, return receipt requested or (c)sent by national overnight
courier service, each addressed as follows:
(a) If to Lessors: 0000 Xxxxxxxx Xxxxxx Xxxx
X.X. Xxx 0000
Xxxxxxxxxxxx, X.X. 00000
Attn: Xxxxx Xxxxxx
16
(b) If to Lessee or Advocat: 000 Xxxxxxx Xxxxxxx Xxxx
Xxxxx 000
Xxxxxxxx, XX 00000
Attn: Xxxxxxx Xxxxx
Any such notice personally delivered shall be deemed delivered when actually
received, any such notice deposited in the United States mail, registered or
certified, return receipt requested, with all postage prepaid, shall be deemed
to have been given on the earlier of the date received or the date when
delivery is first refused, and any notice deposited with an overnight courier
service for deliver shall be deemed delivered on the business day following
such deposit. Any party to whom notices are to be sent pursuant to this
Agreement may from time to time change its address for further communications
thereunder by giving notice in the manner prescribed herein to all other
parties hereto.
15. Payment of Expenses. Each party hereto shall bear its own
legal, accounting and other expenses incurred in connection with the
preparation and negotiation of this Agreement and the consummation of the
transaction contemplated hereby, whether or not the transaction is consummated.
16. Entire Agreement; Amendment; Waiver. This Agreement, together
with the other agreements referred to herein, constitutes the entire
understanding among the parties with respect to the subject matter hereof,
superseding all negotiations, prior discussions and preliminary agreements.
This Agreement may not be modified or amended except in writing signed by the
parties hereto. No waiver of any term, provision or condition of this Agreement
in any one or more instances, shall be deemed to be or be construed as a
further or continuing waiver of any such term, provision or condition of this
Agreement. No failure to act shall be construed as a waiver of any term,
provision, condition or rights granted hereunder.
17. Binding Effect. This Agreement shall be binding upon and
shall inure to the benefit of the respective legal representatives, heirs,
successors and assigns of the parties hereto.
18. No Joint Venture; Third Party Beneficiaries. Nothing
contained herein shall be construed as forming a joint venture or partnership
among Lessors and Advocat or Lessee with respect to the subject matter hereof.
The parties hereto do not intend that any third party shall have any rights
under this Agreement.
19. Captions. The section headings contained herein are for
convenience only and shall not be considered or referred to in resolving
questions of interpretation.
20. Counterparts. This Agreement may be executed and delivered
via facsimile and in one or more counterparts and all such counterparts taken
together shall constitute a single original Agreement.
21. Governing Law. This Agreement shall be governed and construed
in accordance with the laws of the State of North Carolina.
[THE REST OF THIS PAGE INTENTIONALLY LEFT BLANK]
17
IN WITNESS WHEREOF, the parties hereby execute this Agreement as of
the day and year first set forth above.
DIVERSICARE ASSISTED LIVING SERVICES NC, LLC
By: /s/ Xxxxxxx Xxxxx
-------------------------------------------------
Name: Xxxxxxx Xxxxx
Title: President
ADVOCAT, INC.
By: /s/ Xxxxxxx Xxxxx
-------------------------------------------------
Name: Xxxxxxx Xxxxx
Title: President
XXXXXX MANAGEMENT GROUP FIRST PARTNERSHIP
By: /s/ A. S. Xxxxxx
-------------------------------------------------
Name: A. S. Xxxxxx
Title: Owner
XXXXXX MANAGEMENT GROUP FIFTH PARTNERSHIP
By: /s/ A. S. Xxxxxx
-------------------------------------------------
Name: A. S. Xxxxxx
Title: Owner
XXXXXX, XXXXXX AND XXXX
By: /s/ A. S. Xxxxxx
-------------------------------------------------
Name: A. S. Xxxxxx
Title: Managing Member
/s/ Xxx X. Xxxxxx
----------------------------------------------------
XXX X. XXXXXX
/s/ A. Xxxxx Xxxxxx
----------------------------------------------------
A. XXXXX XXXXXX
/s/ Xxxx Xxx Xxxxxx
----------------------------------------------------
XXXX XXX XXXXXX
18
EXHIBIT A
XXXXXX LEASES
I. LEASED FACILITIES
1. CHRISTIAN CARE OF NEW BERN
104 Xxxxx Boulevard
X.X. Xxx 00000
Xxx Xxxx, Xxxxxx Xxxxxx, XX 00000
Lease Agreement (With Option to Purchase) dated as of September 30,
1997 by and between Xxxxxx Management Group First Partnership, as
Lessor, and Diversicare Assisted Living Services NC, LLC, as Lessee,
for the adult care home facility and apartment units known as
Christian Care of New Bern
2. CREEKSIDE MANOR
0000 Xxxxxxxxxx Xxxx
Xxxxxxxxxxxx, Xxxxxxx Xxxxxx, XX 00000
Lease Agreement (With Option to Purchase) dated as of September 30,
1997 by and between Xxxxxx Management Group First Partnership, as
Lessor, and Diversicare Assisted Living Services NC, LLC, as Lessee,
for the adult care home facility known as Xxxxxxxxx Xxxxx
0. XXXXXXX XXXXXXX
0000 Xxxxxx Xx.
X.X. Xxx 000
Xxxxxxx, Xxxxxxx Xxxxxx, XX 00000
Lease Agreement (With Option to Purchase) dated as of September 30,
1997 by and between Xxxxxx Management Group First Partnership, as
Lessor, and Diversicare Assisted Living Services NC, LLC, as Lessee,
for the adult care home facility known as Catawba Village (formerly
known as Heritage Care of Conover)
4. HERITAGE CARE OF XXXXXXXXX CITY
Xxxxxxxxx Drive
X.X. Xxx 0000
Xxxxxxxxx Xxxx, Xxxxxxxxxx Xxxxxx, XX 00000
Lease Agreement (With Option to Purchase) dated as of September 30,
1997 by and between Xxxxxx Management Group First Partnership, as
Lessor, and Diversicare Assisted Living Services NC, LLC, as Lessee,
for the adult care home facility and apartment units known as Heritage
Care of Xxxxxxxxx City
5. HERITAGE CARE OF ELKIN
000 Xxxxxxx Xxxxx Xxxx
P.O. Box 828
Elkin, Xxxxx Xxxxxx, XX 00000
Lease Agreement (With Option to Purchase) dated as of September 30,
1997 by and between Xxxxxx Management Group First Partnership, as
Lessor, and Diversicare Assisted Living Services NC, LLC, as Lessee,
for the adult care home facility known as Heritage Care of Elkin
6. LIGHT HOUSE VILLAGE
000 Xxxxxxx Xxxxx
X.X. Xxx 000000
Xxxxxxxxxxxx, Xxxxxx Xxxxxx, XX 00000
Lease Agreement (With Option to Purchase) dated as of September 30,
1997 by and between Xxxxxx Management Group First Partnership, as
Lessor, and Diversicare Assisted Living Services NC, LLC, as Lessee,
for the adult care home facility known as Light House Village
(formerly known as Jacksonville Christian Care)
7. MAGNOLIA VILLAGE
0000 Xxx Xxxxxx
X.X. Xxx 0000
Xxx Xxxx, Xxxxxx Xxxxxx, XX 00000
Lease Agreement (With Option to Purchase) dated as of September 30,
1997 by and between Xxxxxx Management Group First Partnership, as
Lessor, and Diversicare Assisted Living Services NC, LLC, as Lessee,
for the adult care home facility known as Magnolia Village (formerly
known as New Bern Rest Home)
8. NEW RIVER COUNTRY CENTER
000 Xxxx Xxxx Xxxx
X.X. Xxx 000
Xxxxxx, Xxxxxxxxx Xxxxxx, XX 00000
Lease Agreement (With Option to Purchase) dated as of September 30,
1997 by and between Xxxxxx Management Group First Partnership, as
Lessor, and Diversicare Assisted Living Services NC, LLC, as Lessee,
for the adult care home facility known as New River Country Center
(formerly known as New River Country Care)
9. PINEWOOD MANOR
Xxxxxx Station Road
Route 1, Box 19K
Ahoskie, Xxxxxxxx Xxxxxx, XX 00000
Lease Agreement (With Option to Purchase) dated as of September 30,
1997 by and between Xxxxxx Management Group First Partnership, as
Lessor, and Diversicare Assisted Living Services NC, LLC, as Lessee,
for the adult care home facility known as Pinewood Manor
2
10. EDENTON PRIME TIME
000 Xxxx Xxxxxx
X.X. Xxx 000
Xxxxxxx, Xxxxxx Xxxxxx, XX 00000
Lease Agreement (With Option to Purchase) dated as of September 30,
1997 by and between Xxxxxx, Xxxxxx and Xxxx, as Lessor, and
Diversicare Assisted Living Services NC, LLC, as Lessee, for the adult
care home facility and apartment units known as Edenton Prime Time
11. FREMONT REST CENTER
000 Xxxxx Xx.
X.X. Xxx 000
Xxxxxxx, Xxxxx Xxxxxx, XX 00000
Lease Agreement (With Option to Purchase) dated as of September 30,
1997 by and between Xxxxxx Management Group Fifth Partnership, as
Lessor, and Diversicare Assisted Living Services NC, LLC, as Lessee,
for the adult care home facility known as Fremont Rest Center
12. CHRISTIAN CARE - HENDERSON
1000 Health Care Xxxxxx Xxxx
X.X. Xxx 0000
Xxxxxxxxx, Xxxxx Xxxxxx, XX 00000
Sublease Agreement dated as of September 30, 1997 between Xxx X.
Xxxxxx, as Sublessee and Diversicare Assisted Living Services NC, LLC,
as Sublessee, for the adult care home facility known as Christian Care
Henderson (formerly known as Christian Care - Henderson - Pinecrest)
II. MANAGER'S HOME
1. PINEWOOD MANOR
Xxxxxx Station Road, Route 1, Box 19K
Ahoskie, Xxxxxxxx Xxxxxx, XX 00000
Lease Agreement (With Option to Purchase) dated as of September 30,
1997 by and between Xxxxxx Management Group First Partnership, as
Lessor, and Diversicare Assisted Living Services NC, LLC, as Lessee,
for manager's home at the Pinewood Manor adult care home facility
2. HERITAGE CARE OF ELKIN
000 Xxxxxxx Xxxxx Xxxx
X.X. Xxx 000
Xxxxx, Xxxxx Xxxxxx, XX 00000
[IS THERE A SEPARATE LEASE ON THIS MANAGERS HOME?]
3
III. OFFICE BUILDING
1. OFFICE BUILDING
Goodwill Church Road
Kernersville, Forsyth County, NC
Lease Agreement (With Option to Purchase) dated as of September 30,
1997 between A. Xxxxx Xxxxxx and Xxxx Xxx Xxxxxx, as Lessor, and
Diversicare Assisted Living Services NC, LLC, as Lessee, for land and
office building
IV. ASSIGNED/ASSUMED LEASES
1. HERITAGE RETIREMENT - ROCKY MOUNT
0000 Xxxxx Xxxx
Xxxxx Xxxxx, Xxxxxxxxx Xxxxxx, XX 00000
Lease Agreement dated as of July 14, 1997 by and between Xxxxx Xxxxxx,
as Lessor, and Xxxxxx Management Group First Partnership, as Lessee,
assigned and assumed by Assignment and Assumption of Lease Agreement
dated as of October 1, 1997 by and between Xxxxxx Management Group
First Partnership, as Assignor and Diversicare Assisted Living
Services NC, LLC, as Assignee, for the adult care home facility known
as Heritage Retirement - Rocky Mount (formerly known as Heritage Care
of Rocky Mount)
2. HERITAGE RETIREMENT - ROCKY MOUNT
000-000 Xxxxx Xxxxx
Xxxxx Xxxxx, Xxxxxxxxx Xxxxxx, XX 00000
Lease Agreement dated October 1, 1992 by and between X.X. Xxxxxx and
Xxxxx Xxxxxx, as Lessor, and A. Xxxxx Xxxxxx and Xxxx Xxx Xxxxxx, as
Lessee, assigned and assumed by Assignment and Assumption of Lease
dated as of October 1, 1997 between A. Xxxxx Xxxxxx and Xxxx Xxx
Xxxxxx, as Assignor, and Diversicare Assisted Living Services NC, LLC,
as Assignee, for manager's home at the Heritage Retirement - Rocky
Mount adult care home facility
4
EXHIBIT B
ADVOCAT GUARANTYS
1. Guaranty of Lease Agreements executed September 30, 1997, to
be effective as of October 1, 1997, by Advocat, Inc., as Guarantor, in favor of
Xxxxxx Management Group First Partnership, a North Carolina general
partnership. (10 adult care home facilities and the Pinewood Manor manager's
home)
2. Guaranty of Lease Agreement executed September 30, 1997, to
be effective as of October 1, 1997, by Advocat Inc., a Delaware corporation, as
Guarantor, in favor of Xxxxxx Management Group Fifth Partnership. (Fremont Rest
Center adult care home facility)
3. Guaranty of Lease Agreement executed September 30, 1997, to
be effective as of October 1, 1997, by Advocat Inc., a Delaware corporation, as
Guarantor, in favor of Xxxxxx, Xxxxxx and Hall, a North Carolina general
partnership. (Edenton Prime Time adult care home facility)
4. Guaranty of Lease Agreement executed September 30, 1997, to
be effective October 1, 1997, by Advocat Inc., a Delaware corporation, as
Guarantor, in favor of Xxxxxx Management Group First Partnership, a North
Carolina general partnership. (Heritage - Retirement - Rocky Mount adult care
home facility)
5. Guaranty of Lease Agreement executed September 30, 1997, to
be effective October 1, 1997, by Advocat Inc., a Delaware corporation, as
Guarantor, in favor of A. Xxxxx Xxxxxx and Xxxx Xxx Xxxxxx. (Kernersville
office building)
6. Guaranty of Sublease Agreement executed September 30, 1997,
to be effective October 1, 1997, by Advocat Inc., a Delaware corporation, as
Guarantor, in favor of Xxx X. Xxxxxx. (Christian Care - Henderson adult care
home facility)
EXHIBIT C
STATE OF ____________________
COUNTY OF __________________
NOTICE OF TERMINATION OF LEASE AGREEMENT
This NOTICE OF TERMINATION OF LEASE AGREEMENT ("Agreement") is made
and entered into as of this ___ day of _______________, 2002, to be effective
as of the effective date stated herein by and between
_____________________________________, ("Lessor") and DIVERSICARE ASSISTED
LIVING SERVICES NC, LLC, a Delaware limited liability Company ("Lessee").
WITNESSETH:
WHEREAS, Lessor and Lessee have previously entered into a Lease
Agreement (With Option to Purchase) [Sublease Agreement] (the "Lease") dated as
of September 30, 1997 providing for the lease by Lessee from Lessor of certain
real property, improvements, fixtures and equipment known as
_________________________________ and located in ___________________ North
Carolina (collectively, the "Leased Property"); and
WHEREAS, a memorandum of the Lease is of record in
____________________________ to which reference is here made; and
WHEREAS, Lessor and Lessee have elected to terminate the Lease and in
connection therewith, the parties have entered into that certain Lease
Termination and Operations Transfer Agreement dated March, 2002 (the
"Termination Agreement") relating to the termination of the Lease, the
surrender of possession and return to Lessor of the Leased Property, and the
transfer of certain personal property of the Lessee to Lessor necessary or
useful in the operation of the Leased Property; and
NOW THEREFORE, in consideration of the foregoing premises, and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, and further for the purpose of providing notice of the
termination of the Lease in accordance with the Termination Agreement, the
parties hereby state, acknowledge and confirm as follows:
1. Termination. The Lease shall be and is hereby canceled and
terminated in its entirety, and all of its terms and conditions shall and are
hereby deemed to be of no further force and effect, effective as of 12:01 a.m.
EST, May 1, 2002 (the "Effective Date"). As of the Effective Date, except as
otherwise specifically provided in the Termination Agreement, each of Lessor
and Lessee shall be released in full from each and all of its respective
covenants, agreements, duties, responsibilities, liabilities and obligations
(present and future) under the Lease and Lessor and Lessee each hereby
releases and forever discharges the other from any claims or demands that
either party now has or may have against the other with respect thereto.
2. Surrender of Leased Property. Lessee shall and does hereby
vacate and surrender possession of the Leased Property to Lessor as of the
Effective Date and the Lessor accepts the Leased Property from Lessee in "as
is" condition as of the Effective Date.
IN WITNESS WHEREOF, the parties hereto have caused this Termination of
Lease Agreement to be executed as of the effective date set forth herein.
LESSOR:
[-----------------------------]
By:
----------------------------------------
Its:
---------------------------------------
LESSEE:
DIVERSICARE ASSISTED LIVING SERVICES
NC, LLC
By:
----------------------------------------
Its:
---------------------------------------
[NOTARY ACKNOWLEDGEMENTS]
COLLECTIVE
EXHIBIT D
[HERITAGE ROCKY MOUNT
- FACILITY LEASE]
ASSIGNMENT AND ASSUMPTION OF LEASE
ASSIGNOR: DIVERSICARE ASSISTED LIVING SERVICES NC, LLC, a Tennessee
limited liability company
ASSIGNEE: XXXXXX MANAGEMENT GROUP FIRST PARTNERSHIP, a North Carolina
partnership
THIS ASSIGNMENT AND ASSUMPTION OF LEASE (the "Assignment") is made and
entered into as of March 1, 2002 by and between XXXXXX MANAGEMENT GROUP FIRST
PARTNERSHIP, a North Carolina general partnership("Assignee") and DIVERSICARE
ASSISTED LIVING SERVICES NC, LLC, a Tennessee limited liability company
("Assignor").
For good and valuable consideration, the receipt of which is hereby
acknowledged, and pursuant to that certain Lease Termination and Operations
Transfer Agreement dated as of March ____, 2002 by and among Assignor and
Assignee and certain affiliates described herein (the "Termination Agreement"),
Assignor and Assignee hereby agree as follows:
1. Assignment of Lease. Assignor hereby transfers, grants,
conveys, assigns and sets over to Assignee, its successors and assigns, all of
Assignor's right, title, and interest as Lessee in, to and under that certain
Lease Agreement dated July 14, 1997 by and between Xxxxx Xxxxxx (widow), of
Rocky Mount, North Carolina, as Lessor, and Lessee for certain real property
and all buildings, equipment and appurtenances located thereon situated on
Cokey Road in Rocky Mount, Edgecombe County, North Carolina and known as
Heritage Care of Rocky Mount (the "Lessee"), and any and all amendments,
modifications, restatements, renewals or replacements thereof or thereto,
together with any and all rights to extend or renew and all other options or
rights provided for therein, for the benefit and use of the Assignee as and
from the effective date hereof and during the term and interest of the Lessee
therein. Reference is here made to the Lease for a full statement of its terms
and conditions. Assignee was assigned all of the right, title and interest, and
assumed all of the obligations, of the Lessee under the Lease pursuant to an
Assignment and Assumption of Lease dated as of October 1, 1997 by and between
Assignor and Assignee (the "Assignment").
2. Assumption by Assignee. Assignee hereby assumes, and does
hereby covenant and agree with Assignor to fully and faithfully pay, perform,
keep, observe, meet and discharge, from and after the effective date hereof,
all of the duties, responsibilities, undertakings and obligations of the Lessee
that accrue under the Lease from and after the effective date hereof,
including, without limitation, the payment of rent, and Assignee agrees to be
bound from and after the effective date hereof by all of the terms, conditions,
covenants and agreements of the Lease. Assignee hereby
covenants and agrees that it will indemnify and hold and save harmless the
Assignor from and against all liabilities, obligations, claims, demands, costs
or expenses incurred or suffered by, or asserted against, Assignor as a result
of or on account of the failure of Assignee to observe and perform any of the
duties, responsibilities and obligations of the Lessee which shall accrue or
arise under the Lease on and after the effective date hereof.
3. Termination of Assignment. The Assignment is terminated as of
the effective date hereof and declared to be of no further force and effect,
and Lessee shall have no further duties or obligations under or in respect of
the Assignment.
4. No Change. It is understood and agreed by the parties hereto
that this Assignment does not extend the terms of the Lease or change the
consideration given therefor in any form. This instrument shall not have the
effect of in any way modifying, amending, supplementing or abridging the Lease
or any of its provisions as the same are now or may hereafter be in force and
effect.
5. Effective Date. This Assignment shall be effective as of
12:01 a.m., EST, on May 1, 2002.
6. Governing Law. This Assignment shall be interpreted,
construed and governed according to the laws of the State of North Carolina.
7. Binding Effect. This Assignment shall be binding upon and
shall inure to the benefit of the respective legal representatives, successors
and assigns of the Assignor, and Assignee.
[THE REST OF THIS PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have caused this Assignment to
be executed to be effective as of the effective date stated herein.
ASSIGNEE:
XXXXXX MANAGEMENT GROUP
FIRST PARTNERSHIP
By:
----------------------------------------
Its:
---------------------------------------
ASSIGNOR:
DIVERSICARE ASSISTED LIVING
SERVICES NC, LLC
By:
----------------------------------------
Its:
---------------------------------------
COLLECTIVE
EXHIBIT D
[HERITAGE ROCKY MOUNT
- MANAGER'S HOME]
ASSIGNMENT AND ASSUMPTION OF LEASE
ASSIGNOR: DIVERSICARE ASSISTED LIVING SERVICES NC, LLC, a Tennessee limited
liability company
ASSIGNEE: A. XXXXX XXXXXX and XXXX XXX XXXXXX, as Partners
THIS ASSIGNMENT AND ASSUMPTION OF LEASE (the "Assignment") is made and
entered into as of March 1, 2002 by and between A. XXXXX XXXXXX and XXXX XXX
XXXXXX, as Partners ("Assignee") and DIVERSICARE ASSISTED LIVING SERVICES NC,
LLC, a Tennessee limited liability company ("Assignor").
For good and valuable consideration, the receipt of which is hereby
acknowledged, and pursuant to that certain Lease Termination and Operations
Transfer Agreement dated as of March ___, 2002 as amended, by and among
Assignor and Assignee and certain affiliates described therein (the
"Termination Agreement"), Assignor and Assignee hereby agree as follows:
1. Assignment of Lease. Assignor hereby transfers, grants,
conveys, assigns and sets over to Assignee, its successors and assigns, all of
Assignor's right, title, and interest as Lessee in, to and under that certain
Lease Agreement dated October 1, 1992 by and between X. X. Xxxxxx and wife,
Xxxxx X. Xxxxxx, of Rocky Mount, North Carolina, as Lessor, and A. Xxxxx Xxxxxx
and Xxxxxx X. Xxxxxx, partners, as the original Lessee thereunder, Assignor
being the successor to the interest of the said A. Xxxxx Xxxxxx and Xxxxxx X.
Xxxxxx as Lessee thereunder, for a parcel of land together with the buildings
or other improvements situated thereon described as 132-136 Xxxxx Drive in
Rocky Mount, Edgecombe County, North Carolina (the "Lease"), and any and all
amendments, modifications, restatements, renewals or replacements thereof or
thereto, together with any and all rights to extend or renew and all other
options or rights provided for therein, for the benefit and use of the Assignee
as and from the effective date hereof and during the term and interest of the
Lessee therein. Reference is here made to the Lease for a full statement of its
terms and conditions. Assignor was assigned all of the right, title and
interest, and assumed all of the obligations, of the Lessee under the Lease
pursuant to an Assignment and Assumption of Lease dated as of October 1, 1997
by and between Assignor and Assignee (the "Assignment").
2. Assumption by Assignee. Assignee assumes, and does hereby
covenant and agree with Assignor to fully and faithfully pay, perform, keep,
observe, meet and discharge, from and after the effective date hereof, all of
the duties, responsibilities, undertakings and obligations of the Lessee that
accrue under the Lease from and after the effective date hereof, including,
without limitation,
the payment of rent, and Assignee agrees to be bound from and after the
effective date hereof by all of the terms, conditions, covenants and agreements
of the Lease. Assignee hereby covenants and agrees that it will indemnify and
hold and save harmless the Assignor from and against all liabilities,
obligations, claims, demands, costs or expenses (including reasonable attorneys
fees) incurred or suffered by, or asserted against, Assignor as a result of or
on account of the failure of Assignee to observe and perform any of the duties,
responsibilities and obligations of the Lessee which shall accrue or arise
under the Lease on and after the effective date hereof.
3. Termination of Assignment. The Assignment is terminated as of
the effective date hereof and declared to be of no further force and effect,
and Lessee shall have no further duties or obligations under or in respect of
the Assignment.
4. No Change. It is understood and agreed by the parties hereto
that this Assignment does not extend the terms of the Lease or change the
consideration given therefor in any form. This instrument shall not have the
effect of in any way modifying, amending, supplementing or abridging the Lease
or any of its provisions as the same are now or may hereafter be in force and
effect.
5. Effective Date. This Assignment shall be effective as of
12:01 a.m., EST, on May 1, 2002.
6. Governing Law. This Assignment shall be interpreted,
construed and governed according to the laws of the State of North Carolina.
7. Binding Effect. This Assignment shall be binding upon and
shall inure to the benefit of the respective legal representatives, successors
and assigns of the Assignor, and Assignee.
[THE REST OF THIS PAGE INTENTIONALLY LEFT BLANK]
2
IN WITNESS WHEREOF, the parties hereto have caused this Assignment to
be executed to be effective as of the effective date stated herein.
ASSIGNEE:
By:
----------------------------------------
A. Xxxxx Xxxxxx
By:
----------------------------------------
Xxxx Xxx Xxxxxx
ASSIGNOR:
DIVERSICARE ASSISTED LIVING
SERVICES NC, LLC
By:
----------------------------------------
Its:
---------------------------------------
3
EXHIBIT E
XXXX OF SALE AND ASSIGNMENT
ASSIGNOR: DIVERSICARE ASSISTED LIVING SERVICES NC, LLC, a Tennessee limited
liability company
ASSIGNEE:
---------------------------------------------------------------------
THIS XXXX OF SALE AND ASSIGNMENT ("Assignment") is made and entered
into effective as of the Effective Date set forth herein by and between
___________________________________________________________________ ("Assignee)
and Diversicare Assisted Living Services NC, LLC, a Tennessee limited liability
company ("Assignor").
WITNESSETH:
WHEREAS, Assignor and Assignee, and certain of their affiliates, have
entered into a certain Lease Termination and Operations Transfer Agreement
dated as of March __, 2002 (the "Termination Agreement") pursuant to which
Assignor has agreed to transfer and deliver to Assignee certain personal
property used by Assignor in the operation of certain adult care home
facilities and related properties (the "Facilities") described therein;
NOW THEREFORE, in consideration of the foregoing premises, and other
good and valuable consideration, the receipt and sufficient of which is hereby
acknowledged, and pursuant to the Termination Agreement, the parties hereto
agree as follows:
1. Sale and Assignment. Assignor hereby bargains, sells,
conveys, assigns, transfers, and delivers to Assignee, its successors and
assigns, forever, all right, title and interest of Assignor in and to the
following property owned, leased, used or held by Assignor and located at or
used in connection with, and necessary to the operation of, the Facilities
described on Exhibit A attached hereto (collectively the "Assets"):
(a) All furniture, furnishings, trade fixtures,
fittings, computers, appliances, apparatus, equipment, machinery, tools,
leasehold improvements and fixtures, and all other tangible personal property
of every kind and description, together with all accessions, additions,
attachments, accessories, appurtenances and replacements parts thereto and
thereof (collectively, "Personal Property");
(b) All assignable warranties, surety agreements or
guaranties (express or implied) issued in connection with or arising out of the
purchase, construction, repair or replacement of any of the foregoing Personal
Property, and all rights of Assignor which have accrued or may accrue
thereunder;
(c) All inventories of consumable and disposable goods
and supplies of every kind and description, including without limitation, raw
materials, work in progress, stock in trade, finished goods, supplies, paper,
food, cleaning materials, disposables, linens, office supplies, drugs and
medical supplies (collectively, "Inventory");
(d) All resident, medical, clinical, personnel files and
other records related to the Facilities (including both hard and microfiche
copies) and all books and records used in operating the Facilities;
(e) All motor vehicles including, but not limited to,
those vehicles listed on Exhibit A, attached hereto (collectively, the
"Vehicles");
(f) All contract and leasehold rights and interests
pursuant to contracts for purchase or lease of personal property, construction
contracts, contracts for purchase, sale or lease of equipment, goods or
services currently furnished or to be furnished in connection with the
Facilities and that are expressly assumed by Assignee pursuant to the
Termination Agreement;
(g) All trade names under or by which the Facilities may
be operated or known and all trademarks, trade names and goodwill related to
the Facilities or the operation of the business of the Facilities; and
(h) All books and records pertaining to the above
described Assets, including the policies procedures and operations manual
specific to each Facility as in place at the time such Facility was leased to
Lessee.
2. Excluded Assets. The following items of property are
expressly excluded from the transfer of the Assets provided for herein and for
purposes of this Assignment are not, and shall not be deemed to be, a part of
the "Assets" described herein: (i) any leased property that is the subject of a
Declined Contract (as defined in Paragraph 8 of the Termination Agreement, (ii)
Assignor's wide area network and associated software provided on the
Diversicare wide area network, (iii) Assignor's continuous quality improvement
program, manuals and materials, management information systems, policy,
procedure and educational manuals and materials, and similar proprietary
property of Assignor, and (iv) any rights in or to the use of the name
"Advocat" or "Diversicare", or any derivative thereof. Anything to the contrary
herein notwithstanding, Lessor shall be entitled to receive all operations,
policies and procedures manual specific to individual Facilities as in place at
the time the Facility was leased to Lessee.
3. Rights Assigned. It is acknowledged that as to any Assets, or
any part thereof,
2
located at and used, held or maintained in connection with the operation of the
Facilities that are leased and not owned by Assignor, Assignor is not selling
or conveying such Assets but is only assigning its rights, if any, in and to
those Assets to Assignee and the term "Assets" includes, as to those items, the
leasehold interest only of Assignor, together with any options to purchase any
of said items and any additional or greater rights with respect to such items
which Assignor may have the right to hereafter acquire.
4. As Is/Where Is. The Assets hereby conveyed and assigned are
being transferred to and accepted by Assignee "as-is" "where-is", without any
warranty, express or implied, statutory or otherwise, and including without
limitation any warranty as to condition, merchantability or fitness for a
particular purpose, all of which warranties (both express and implied) Assignor
hereby disclaims.
5. Delivery of Documents; Further Assurances. Simultaneously
with the execution of this Assignment, Assignor has caused to be delivered to
Assignee all agreements, books, instruments, documents, records, invoices,
manuals, warranties and other materials, records and documents evidencing or
relating to the Assets transferred hereby. If additional records or documents
evidencing or relating to the Assets are subsequently found or received by
Assignor, Assignor will immediately forward them to Assignee. Assignor further
agrees to cooperate with Assignee and to execute and deliver, or cause to be
executed and delivered, any and all such further documents, instruments,
materials or records, including motor vehicle certificates of title, as may be
necessary or required or reasonably requested by Assignee in order to further
perfect Assignee's right, title and interest in and to the Assets and to
otherwise carry out the intent and purpose of this Assignment.
6. Attorney-In-Fact. To assure the full effectiveness of this
Assignment with respect to the Vehicles transferred hereby, Assignor hereby
constitutes and appoints Assignee its true and lawful attorney, with full power
of substitution, for Assignor and in its name and stead or otherwise, to demand
or receive from time to time any and all of the Vehicles, to give receipts and
releases for or in respect of the same or any part thereof, and from time to
time to institute and prosecute in the name of Assignor or otherwise any and
all proceedings at law, in equity or otherwise, which Assignee reasonably may
deem proper, in order to collect, assert or enforce any claim, right or title
of any kind of Assignee in or to the Vehicles and to defend or compromise any
or all actions, suits or proceedings with respect to any of the Vehicles and in
general, to do all acts and things in relation to the Vehicles as Assignee
reasonably may deem desirable; Assignor declaring that the appointment made and
the powers granted by this Assignment are coupled with an interest and are not
and shall not be revocable by Assignor.
7. Effective Date. This Assignment shall be effective as of
12:01 a.m., EST, on the lst day of May, 2002.
8. Binding Effect. This Assignment shall be binding upon and
shall inure to the benefit of the respective legal representatives, successors
and assigns of the Assignor and Assignee.
3
IN WITNESS WHEREOF, Assignor and Assignee have caused this Instrument
to be executed as of effective date stated herein.
ASSIGNOR:
DIVERSICARE ASSISTED LIVING
SERVICES NC, LLC
By:
----------------------------------------
Its:
---------------------------------------
ASSIGNEE:
[-------------------------------]
By:
----------------------------------------
Its:
---------------------------------------
4
EXHIBIT A
MOTOR VEHICLES
EXHIBIT F
TERMINATED EMPLOYEES
None
EXHIBIT G
ASSIGNMENT OF OCCUPANCY AGREEMENTS,
SECURITY AND OTHER DEPOSITS, SERVICE AGREEMENTS
AND ASSUMPTION AGREEMENT
THIS ASSIGNMENT OF OCCUPANCY AGREEMENTS, SECURITY AND OTHER DEPOSITS,
SERVICE AGREEMENTS AND ASSUMPTION AGREEMENT (the "Assignment") is made
effective as of the Effective Date set forth herein by and between
______________________________ ("Assignee") and DIVERSICARE ASSISTED LIVING
SERVICES NC, LLC, a Tennessee limited liability company ("Assignor").
WITNESSETH:
Assignor and Assignee, and certain of their affiliates, have entered
into a Lease Termination and Operations Transfer Agreement dated as of March
___, 2002 (the "Termination Agreement") pursuant to which Assignor will
surrender, transfer and deliver to Assignee possession and control of certain
real and personal property located in North Carolina for use and operation as
adult care home facilities.
NOW, THEREFORE, in consideration of the foregoing premises, and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, and pursuant to the Termination Agreement, the parties hereto
agree as follows:
1. Assignment. Assignor hereby assigns, transfers, sells,
conveys and delivers to Assignee, its successors and assigns, forever, all
right, title and interest of Assignor in and to the following assets (the
"Assets"):
(i) All admissions policy agreements, patient's rights
agreements and/or any other patient or resident tenancy or occupancy agreements
(collectively, "Occupancy Agreements") with residents or patients covering
rooms or units in the adult care home facilities described on Exhibit A
attached hereto, and any and all security or other deposits and/or trust
accounts related to the Occupancy Agreements (the "Accounts"); and
(ii) All operating contracts or agreements with third
parties for the sale, lease or provisions of goods, services or equipment in
connection with the use, enjoyment, occupancy or operation by Assignor of the
adult care home facilities described on Exhibit A attached hereto ("Service
Agreements").
2. Delivery and Receipt of Documents. Simultaneously with the
execution of this Assignment, Assignor have delivered or caused to be delivered
the originals or true, correct and complete copies of the Occupancy Agreements
and the Service Agreements, and any modifications, renewals or extensions
thereof, to the extent the same are available and in written form, together
with
appropriate documentation, evidencing the Accounts, the name of each resident
and the amount held on his or her behalf hereby transferred, and all other
agreements, instruments, ledgers, books of account or other records or
documents relating to the Assets hereby assigned and transferred. If additional
records or documents are found or received, Assignor will immediately forward
them to Assignee.
3. Assumption of Occupancy Agreements. Assignee hereby assumes
and agrees to perform all of the terms, covenants and conditions of the
Occupancy Agreements required to be performed on the part of Assignor which
shall arise or accrue on or after the effective date hereof, including, but not
limited to, the obligation to repay to residents, in accordance with the terms
of such Occupancy Agreements, all Accounts, trust account deposits and any
security deposits actually delivered by Assignor to and received by Assignee in
accordance with the Termination Agreement and required to be repaid by the
terms of such Occupancy Agreements. In connection herewith, Assignee agrees to
indemnify and save and hold harmless Assignor from any and all liabilities,
obligations, claims, costs, expenses (including, without limitation, reasonable
attorneys' fees) or causes of action existing in favor of or asserted by other
parties to the Occupancy Agreement, or hereafter incurred or suffered by
Assignor, arising out of or relating to Assignee's failure to perform any of
the obligations of Assignor under the Occupancy Agreements on and after the
effective date hereof or to repay any trust account or security deposits
actually received by Assignee where required to do so. Nothing herein shall be
construed so as to limit Assignee's rights under the Occupancy Agreements or at
law or in equity to terminate such Occupancy Agreements, and Assignee shall not
be liable to Assignors or any other party for such proper termination, nor
shall anything herein prevent Assignee from asking residents to sign new
Occupancy Agreements with Assignee.
4. Assumption of Service Agreements. Assignee hereby assumes and
agrees to perform all of the terms, covenants and conditions of the Service
Agreements required to be performed on the part of Assignor which shall arise
or accrue on and after the effective date hereof, and hereby agrees to
indemnify, save and hold harmless Assignor from any and all liabilities,
obligations, claims, costs, expenses (including, without limitation, reasonable
attorneys' fees) or causes of action existing in favor of or asserted by other
parties to the Service Agreements, or hereafter incurred or suffered by
Assignor, arising out of or relating to Assignee's failure to perform any of
the obligations of Assignor under the Service Agreements on and after the
effective date hereof. Nothing herein shall be construed so as to limit
Assignee's rights under the Service Agreements or at law or in equity to
terminate such Service Agreements after the effective date hereof, and Assignee
shall not be liable to Assignor or any other party for such proper termination.
5. Indemnification by Assignor. Assignor hereby agrees to
indemnify, save and hold harmless Assignee from and against all liabilities,
obligations, claims, costs, expenses (including, without limitation, reasonable
attorneys' fees) or causes of action existing in favor of or asserted by other
parties to the Occupancy Agreements or the Services Agreements, or hereafter
incurred or suffered by Assignee, arising out of or resulting from Assignor's
failure to perform any of the obligations of Assignor under the Occupancy
Agreements or the Service Agreements prior to the effective date hereof.
2
6. Binding Effect. This Assignment shall be binding upon and
shall inure to the benefit of the respective legal representatives, successors
and assigns of Assignors and Assignee.
7. Effective Date. This Assignment shall be effective as of
12:01 a.m., EST, May 1, 2002.
IN WITNESS WHEREOF, the parties hereto have executed this Assignment
to be effective as of the effective date stated herein.
ASSIGNOR:
DIVERSICARE ASSISTED LIVING SERVICES NC,
LLC
By:
----------------------------------------
Its:
---------------------------------------
ASSIGNEE:
[ ]
----------------------------------------
By:
----------------------------------------
Its:
---------------------------------------
3
EXHIBIT A
TO ASSIGNMENT OF OCCUPANCY AGREEMENTS, SECURITY AND OTHER
DEPOSITS, SERVICE AGREEMENTS AND ASSUMPTION AGREEMENT
Adult Care Home Facilities
EXHIBIT H
DECLINED CONTRACTS
Lessors have advised Lessee that Lessors do not intend to assume any of the
Service Contracts applicable to the Facilities, except for the following
contracts or agreements:
1. The offsite apartment lease for the administrator at the
Light House Village Facility.
2. The NTFC Capital Corporation telephone equipment lease for
the telephone system at the Heritage Care of Xxxxxxxxx City Facility.
