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EXHIBIT 10.46
AGREEMENT OF PURCHASE AND SALE OF ASSETS
INTRODUCTION AND RECITALS
This Agreement of Purchase and Sale of Assets (the "Agreement") is
made and entered into this 24th day of November, 1997, by and between Robert
Crone-South Texas Health Care, Inc., a Texas corporation ("Seller") and Summit
Care Texas, LP, a Texas limited partnership or its affiliated nominee, ("Buyer"
or "Summit Care").
RECITALS
WHEREAS, Seller is:
(i) The lessee of a certain One Hundred and Ninety Four (194)-bed
nursing facility, commonly known as Briarcliff Nursing and
Rehabilitation Center, located at 3201 North Ware Road,
McAllen, Texas 78501, more particularly described on Exhibit
1.01(a)(i) hereto and hereby incorporated herein by reference
(the "Facility"), pursuant to a lease, dated July 1, 1993, by
and between Seller, as "Lessee" and Lloyd Hobbs, as "Lessor,"
as amended by that certain First Amendment to Lease, dated
April 9, 1996, (collectively the "Lease"), between Seller and
Hobbs & Curry Family Limited Partnership, a Texas partnership
and successor-in-interest to Lloyd Hobbs, as "Lessor," copies
of which are also attached as part Exhibit 1.01(a)(i) hereto
and hereby incorporated herein by reference (hereinafter, the
term "Owner" shall be used to refer to both Lloyd Hobbs and to
Hobbs & Curry Family Limited Partnership during their
respective ownership of the Facility); and
(ii) A party to that certain "Option Agreement," dated August 2,
1992, as amended by that certain Amendment to Option
Agreement, dated April 9, 1996 (collectively the "Option
Agreement"), copies of which are attached as Exhibit
1.01(a)(ii) hereto and hereby incorporated herein by
reference, whereby Owner has granted Seller an option to
purchase fee title to the Facility, exercisable on the terms
therein set forth; and
(iii) The fee owner of a certain parcel of vacant land comprising
approximately 1.8 acres, situated adjacent to the Facility
(the "Adjacent Land"), more particularly described on Exhibit
1.01(a)(iii) hereto and hereby incorporated herein by
reference, subject to that certain deed of trust dated October
26, 1995 ("Trust Deed"), to Allen Shields, as "Trustee," a
copy of which is also attached as part of Schedule 1.01(a)
(iii) hereto and hereby incorporated by reference; and
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(iv) The owner or lessee of all supplies, machinery, equipment,
fixtures, inventory and all other items of personal property
utilized in the operation of all of the foregoing, as
hereinafter defined; and
WHEREAS, the Seller desires to sell and assign Buyer desires to
purchase and assume the Seller's interest in the Facility, and the Assets of
Seller, as more fully defined herein, on the terms and conditions set forth in
this Agreement;
NOW, THEREFORE, in consideration of the mutual promises of the parties
and for other good and valuable consideration, the parties agree as follows:
ARTICLE I
PURCHASE AND SALE OF ASSETS
1.01 Description of Assets. Subject to the terms and conditions of
this Agreement, as of the Closing Date, as defined in Article IX herein, Seller
shall convey, assign and transfer to Buyer and Buyer shall accept good and
indefeasible title to the following assets as the same may exist on the Closing
Date (collectively referred to as the "Assets").
(a) All of Seller's right, title and interest in and to
the Facility, including without limitation, the real property, structures,
fixtures, paving, surfacing and improvements therein (collectively referred to
as the "Premises"), which real property is more particularly described on
Exhibit 1.01(a)(i) attached hereto, and which shall be conveyed to Buyer
pursuant to an assignment of Seller's interest in the Lease and Option
Agreement, with the written consent of the Owner thereto;
(b) All personal property, except supplies, as defined
below, such as furniture, fixtures, vehicles, and equipment located in and upon
the Premises as of the Closing or used in the operation of the Premises as a
nursing facility (the "Personal Property"), more particularly described on
Exhibit 1.01(b) attached hereto;
(c) Seller's interest in any and all leases, contracts,
service contracts and other agreements used in the operation of the Facility
which Buyer has expressly agreed to assume in addition to the Lease and Option
Agreement, copies of which are attached hereto as set forth in Exhibit 1.01(c)
("the Contracts");
(d) Seller's interest in any and all patient records and
agreements, personnel records, provider agreements, records of inspection of the
Facility by local, state and federal agencies, records of construction,
architectural plans of the improvements on the Premises, including as built
plans and surveys, construction
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contracts and specifications, as such presently exist in and upon the Premises;
(e) All of Seller's right, title and interest in and to
the use of the name "Briarcliff Nursing and Rehabilitation Center";
(f) All of Seller's right, title and interest in and to
any and all drugs, medicines, foods, linens or other supplies used in connection
with the operation of the Facility, but in any event not less than the normal
and usual operating compliment of supplies necessary to last ten (10) days in
the ordinary course of Seller's business operations at the Facility (the
"Supplies"); and
(g) All of Seller's right, title and interest in and to
any and all licenses, permits and authorizations obtained in connection with the
operation of the Facility which are transferable, copies of which are attached
hereto as Exhibit 1.01(g).
1.02 Liabilities and Assets Excluded. The following tangible and
intangible assets and liabilities of Seller are being retained by Seller and are
expressly excluded from the Assets being Purchased by or transferred to Buyer:
(a) Seller's cash on hand, or in bank accounts and
investments;
(b) Seller's accounts receivable as of the Closing Date;
(c) All of Seller's leases, contracts, service contracts
or other commitments, if any, not expressly assumed by Buyer as provided on
Exhibit 1.01(c) hereto;
(d) Any and all property of patients held by Seller as
security for or in lieu of payment for Seller's accounts receivable;
(e) Any and all debts, obligations or liabilities of
Seller relating to the Assets, unless expressly assumed herein by Buyer on
Exhibit 1.01(c) attached hereto;
(f) Any and all liabilities of Seller for injuries,
damages, acts or omissions relating to the Facility or the Assets prior to the
Closing Date;
(g) Any and all claims of or obligations to the United
States under the Medicare Program, or to the State of Texas under the Medicaid
Program, or other third-party payors, arising out of the operations of the
Assets prior to the Closing Date;
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(h) Any and all federal and state tax liabilities
including for sales tax payable with respect to periods prior to the Closing and
sales, use or excise tax payable with respect to the within transaction and the
assets transferred hereunder;
(i) Seller's proprietary computer software, and those
proprietary forms and manuals owned by or developed for Seller for use at the
Facility; and
(k) All other items of personal property set forth on
Exhibit 1.02 hereto (collectively, the "Excluded Assets").
ARTICLE II
PURCHASE PRICE
The purchase price (the "Purchase Price") which Buyer agrees to pay and
Seller agrees to accept for the Assets is Three Million Nine Hundred Thousand
Dollars ($3,900,000.00), to be paid to Seller in accordance with the provisions
of this Article II.
2.01 Earnest Money Deposit. Seller acknowledges that Buyer has
deposited the sum of One Hundred Thousand Dollars ($100,000.00) as an earnest
money deposit ("Deposit") with Wanda Keller, Senior Vice President and Escrow
Officer, First American Title Company, Houston, Texas ("Escrow Holder"), to be
held in an interest-bearing escrow account pending the Closing and subject to
the terms and conditions of this Agreement, to be applied to the payment of the
Purchase Price at Closing. The Deposit and all interest accrued thereon shall be
refundable in full to Buyer upon written request of Buyer for any reason
delivered on or before September 16, 1997, and thereafter shall be refundable to
Buyer should the contemplated transaction fail to close on or before October 31,
1997, for any reason other than the default of Buyer hereunder, and as provided
by Section 7.18 of this Agreement.
2.02 Cash. Buyer shall pay in immediately available funds to Seller
the cash portion of the Purchase Price by wire deposit to Seller at Closing,
less the Deposit and all accrued interest thereon and less the Adjustment
Retention Fund (as provided in Section 2.04 below).
2.03 Adjustments. The Purchase Price shall be adjusted upward
within forty-five (45) days of the Closing as of the Effective Date to the
extent, if any, that Buyer derives a benefit from any prepaid items of Seller,
including, but not limited to taxes, expenses and insurance and to the extent
Buyer succeeds to Seller's position with respect to Seller's deposits for
utilities, such as telephone, water, gas, electricity or sewer. The Purchase
Price shall be adjusted downward within forty five (45) days of Closing as of
the Effective Date to the extent that Seller has not fully paid and discharged
all payables, charges, expenses, costs,
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taxes or assessments accruing on or before the Effective Date, including
employee vacation pay or for other employee benefit programs of Seller. All
adjustments at or after Closing shall be in cash.
2.04 Adjustment Retention Fund. Escrow Holder shall retain, from
the cash portion of the Purchase Price payable to Seller at Closing, the sum of
Twenty Thousand Dollars ($20,000.00) as a retention fund (the "Adjustment
Retention Fund") from which Escrow Holder shall, upon instructions from Buyer
and Seller, deduct adjustments to the Purchase Price, if any, to be made
following the Closing. The Adjustment Retention Fund, less any such adjustments,
shall be delivered to Seller and all adjustments shall be delivered to Buyer no
later than forty-five (45) days following the Closing Date.
2.05 Prorations, Credits, Costs. The following items shall be
apportioned and prorated as of the Closing Date:
(a) Property Taxes. General county, city and school taxes
on a fiscal year basis for the Premises and for the personal property (including
taxes impounded with Mortgage lenders).
(b) Insurance. There shall be no proration of Seller's
prepaid insurance premiums as Buyer shall provide its own insurance coverage.
Seller shall be entitled to receive any refunds of any such prepaid insurance
premiums.
(c) Rents, Utilities and Deposits. All rents, utilities
shall be paid to the Closing Date by Seller. Seller shall be entitled to a
refund for any utility deposits.
(d) Employee Sick, Holiday, Vacation Pay, Etc. Seller
shall credit to Buyer against the Purchase Price a sum equal to the equivalent
of employee wages for all employee vacation pay or other employee benefits
earned or accrued prior to the Closing Date. Such credit shall reduce the cash
payment required of Buyer at Closing as provided in Section 2.02 above.
(e) Closing Costs. Buyer shall pay for the cost of
recordation of the Assignment of Lease and the Assignment of Option Agreement.
Buyer and Seller shall each pay fifty percent (50%) of the statutory cost of a
leasehold title insurance policy with the survey exception removed. Buyer and
Seller shall each pay fifty percent (50%) for the cost of the survey and Seller
shall pay any transfer tax applicable to recordation of the Assignment of Lease
or the Assignment of Option Agreement, any recordation fees for other
instruments required to clear title hereunder, and any sales or use taxes, if
applicable, to this transaction. Personal and real property taxes will be
prorated as of the Closing Date.
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(f) Employer's Taxes. Seller shall be responsible for
all business, occupation, withholding, FICA, unemployment and similar taxes of
any kind, including both the employer's and employee's portion of any such tax,
relating to any period prior to the Closing Date, including taxes on employee
sick, holiday and vacation pay.
(g) Prepaid Services. Any advance payments made by
residents of the Facility for services to be rendered after the Closing Date
shall be paid to Buyer at Closing.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer as of the Execution Date
and the Closing Date (the truth and accuracy of which shall constitute a
condition precedent to Buyer's obligations hereunder) as follows:
3.01 Organization. Seller is a duly organized and validly existing
Texas subchapter S corporation, and is in good standing in the State of Texas.
Seller has full power and authority to own and lease its properties and to carry
on its business as presently conducted. Robert Crone and Kelly Baily are the
sole shareholders of Seller.
3.02 Authority. The execution, delivery and performance of this
Agreement has been duly authorized by the Seller in accordance with its articles
of incorporation and bylaws and no further action by Seller will be required to
make this Agreement valid and binding upon Seller in accordance with its terms.
Except as provided on Exhibit 3.02 attached hereto, the execution, delivery and
performance of this Agreement will not cause any default in or breach of any
provisions of any applicable law, rules or regulations, or any indenture,
mortgage, loan agreement, contract, lease or other instrument to which Seller is
a party or by which it or any of its property or assets are bound.
3.03 Financial Statements. Exhibit 3.03 attached hereto sets forth
the unaudited balance sheets and operating statements of Seller for the eight
(8) months ended August 31, 1997 and shall be updated at Closing to include the
nine (9) ending on September 30, 1997, and unaudited financial statements
compiled and reviewed by Jody Turner, Seller's accountant, for the same period
(collectively, the "Financial Statements"). The Financial Statements attached
hereto as Exhibit 3.03 have been prepared in accordance with generally accepted
accounting principles consistently followed and fairly present the operating
position of the Facility as of the respective dates and the results of
operations for the respective periods indicated. Seller agrees to cooperate with
Buyer and use its best efforts in furnishing any
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financial information of Seller required by Buyer for filing with the Securities
and Exchange Commission after Closing.
3.04 Tax Returns. Within the times and in the manner prescribed by
law, Seller has filed all federal, state and local tax returns required by law
and has paid all taxes, assessments, and penalties due and payable. The
provisions for taxes reflected in Seller's Financial Statements, are adequate
for any and all county, school and local property taxes for the period ending on
the date of the most recent balance sheet and for all prior periods, whether or
not disputed. There are no present disputes as to taxes of any nature payable by
Seller.
3.05 Absence of Changes. Except as provided on Exhibit 3.05, since
the date of the latest Financial Statements of Seller, there has not been any
material change in the financial condition or operations of Seller, except
changes in the ordinary course of business.
3.06 Liabilities. Exhibit 3.06 to this Agreement contains a true
and complete schedule of all known liabilities and obligations of Seller except
those incurred in the ordinary course of business. Seller acknowledges that
Buyer shall not be obligated for any liabilities or obligations of Seller of any
kind or nature in connection with this Agreement, whether absolute, accrued,
contingent, known, unknown or otherwise, except for liabilities of Seller which
Buyer has expressly agreed to assume as provided on Exhibit 1.01(c) and Seller
hereby indemnifies and holds Buyer harmless from any such liabilities not so
assumed.
3.07 Title to Property. Seller is the lessee of the Property
subject only to the Permitted Exceptions provided for in paragraph 5.01, Seller
will deliver to Buyer at Closing good and marketable leasehold title to the
Property. Seller is in possession of all Property leased from others.
3.08 Condition of Property. To the best of Seller's knowledge and
except as provided on Exhibit 3.08 attached hereto, as of the Closing Date, the
Premises and personal property of Seller being conveyed or assigned herein will
be in good operating condition and repair, subject only to ordinary wear and
tear. Seller shall disclose to Buyer on Exhibit 3.08 any known material defect
or deficiency with regard to the structure, soil, fixtures or equipment of the
Premises which would materially impair the use or value of the Premises, and any
known material defect or deficiency with regard to the plumbing, electrical,
mechanical or other system of the Premises which would materially impair the use
or value of the Premises.
3.09 Real Property Description and Zoning. Exhibit 1.01(a) to this
Agreement is a legal description of the Premises leased by Seller and included
in this transaction. To the best of Seller's
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knowledge, the zoning of each parcel of property described on, Exhibit 1.01(a)
permits the existing improvements as constituted and the continuation of the
business presently being conducted on each such parcel.
3.10 Encroachments. To the best of Seller's knowledge, there are no
encroachments onto the Property except as may be revealed by the Survey, and all
improvements constituting part of such real properties located thereon are
entirely located on the real properties being conveyed or transferred to Buyer
pursuant to this Agreement without encroachment on any other property
whatsoever, and none of such improvements encroach upon any known easement or
right of way affecting such real property. As a condition to Closing, Buyer and
Seller shall each pay fifty percent (50%) of the cost of a real property survey
of the Property, by a registered land surveyor in the State of Texas, in a form
reasonably satisfactory to Buyer, certifying such facts which shall be attached
hereto as Exhibit 3.10.
3.11 Personal Property Description. Exhibit 1.01(b) to this
Agreement is a schedule of machinery, equipment, furniture, supplies, vehicles,
tools, and other tangible personal property owned by, in the possession of, or
used by Seller in connection with the business now being conducted at the
Facility (except fixtures and inventories of Supplies and items excluded
pursuant to this Agreement). Except as provided on Exhibit 3.11 or on the list
of Contracts attached as Exhibit 1.01(c), no personal property used by Seller
in connection with the Facility or the business conducted thereon is held under
a security agreement, conditional sales contract, lease, or other title
retention or security arrangement or is located other than in the possession of
Seller at the Facility. Exhibit 1.02 lists personal property on the premises of
the Facility which is excluded from sale and which may be removed from the
Facility by Seller at any time prior to or after the Closing Date, except that
all such items shall be removed within five (5) business days of request by
Buyer after the Closing Date.
3.12 Contracts, Leases, Commitments. Except as provided on Exhibit
1.01 (c) as of the date of Closing, there will be no contracts, agreements, or
commitments of any kind relating to the business at the Facility which will
affect Buyer on the Premises subsequent to the Closing Date, other than those
that can be terminated on thirty (30) days, notice, without penalty or further
payment. Seller is not a party to, nor is the Premises bound by any agreement
that is materially adverse to the business as presently conducted at the
Facility or those that have been excluded from sale by mutual written agreement
of the parties and for which Seller shall remain liable.
3.13 Defaults. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will not result in any of
the following: (1) any violation or breach of
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any term or provision of this Agreement; (2) a default or an event that with
notice or lapse of time or both, would result in a default, breach, adverse
modification or violation of any lease, license, franchise, promissory note,
conditional sales contract, commitment, indenture, deed of trust, or any other
agreement, instrument or arrangement to which Seller is a party or by which
Seller or the Premises is or may be bound; (3) an event that would permit any
party to terminate any agreement or to accelerate the maturity of any
indebtedness or other obligation of Seller or the Facility, or; (4) the creation
or imposition of any lien, charge or encumbrance on any of the Property.
3.14 Adverse Claims, Litigation and Proceedings. Except as shown on
Exhibit 3.14, Seller knows of no material claims by creditors or other parties
against Seller, actual or contingent, direct or indirect, liquidated or
unliquidated, or otherwise affecting Seller, at law or in equity, or before or
by any governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, or before any arbitrator of any kind,
which involve the possibility of any judgment or liability not fully covered by
casualty or liability insurance or for which provision for payment has not been
made or which would impose any liability on Buyer or the Facility. Seller is not
in default with respect to any judgment, order, writ, injunction, decree, award,
rule or regulation of any court, arbitration or governmental department,
commission, board, bureau, agency or instrumentality. Seller is not aware of any
pending or potential condemnation action with respect to the property to be
transferred hereby. Seller acknowledges that Buyer shall not be obligated for
any liabilities or obligations of Seller of any kind or nature in connection
with this Agreement, whether absolute, accrued, contingent, known, unknown or
otherwise, except for liabilities of Seller which Buyer has expressly agreed to
assume as provided herein and Seller hereby indemnifies and holds Buyer harmless
from any such liabilities not so assumed.
3.15 Labor Relations, Employment Policies and Benefits. Seller is
not a party to nor is it bound by any employment contracts, collective
bargaining agreements, pension, bonus, profit sharing, stock option or other
agreements or arrangements for the benefit of or relating to its employees.
Seller agrees to save, indemnify and hold Buyer harmless of and from any and all
liability, responsibility, loss, cost or expense of any nature whatsoever,
arising out of or relating to any of Seller's employment policies for all
periods prior to the Closing Date. Seller acknowledges that, except to the
extent required by law, or to the extent disclosed by Seller and assumed by
Buyer, Buyer is not assuming any of Seller's obligations to its employees.
Attached as a part of Exhibit 3.15 hereto are copies of Seller's vacation and
holiday policies and all other employment policies and practices not set out in
those policies, to which Seller is a party or by which Seller may be bound, and
Seller is not in default under
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any of them. There have been no claims of default, and, to the best knowledge of
Seller, there are no facts or conditions which, by their existence or on notice,
will result in a default under these policies. Except as set forth in Exhibit
3.15 hereto, there has been no union election or material organizational
activity affecting the employees of Seller. Except as described in Exhibit 3.15,
there is not, to Seller's knowledge, any pending or threatened labor dispute or
work stoppage affecting Seller's business. Exhibit 3.15 attached hereto sets
forth a list of all employees of Seller at the Facility and a schedule of their
rates of pay, length of employment, and earned (and accrued, if any) vacation
and sick leave benefits, as of the Closing Date. Such earned and accrued
vacation and sick leave benefits shall be calculated for each employee on a true
accrual basis (to include both earned and unearned benefits).
3.16 Compliance with Laws, Regulations and Licensure.
(a) Seller has complied with and is not in violation of
applicable federal, state or local statutes, laws or regulations (including,
without limitation, any applicable building, zoning, or other law, ordinance or
regulation affecting the Premises) in the operation of the Facility as now
conducted. To Seller's knowledge, except as set forth in the most recent survey
and certification inspection reports and plan of correction on the Facility,
dated which are attached hereto as Exhibit 3.16, there have been no notices of
violation of any applicable law, order, ordinance, rule, regulation or
requirement, or of any covenant, condition or restriction affecting or relating
to the use of occupancy of the Premises issued by any governmental agency having
jurisdiction over the Premises or by any other person entitled to enforce the
same. To the best of Seller's knowledge, Seller shall have fully complied at its
sole expense prior to Closing with the requirements of any outstanding plan of
correction formulated in response to any inspection survey, with the exception
of those items listed on the latest survey and plan of correction, attached as
Exhibit 3.16 hereto, which Buyer agrees to review and, unless Buyer notifies
Seller to the contrary on or before September 16, 1997, which Buyer agrees to
correct at Buyer's expense.
(b) Seller has obtained and is not currently in violation
under all permits, licenses, provider agreements and other authorizations
required by Seller for the operation of the Facility as now conducted, all of
which are in full force and effect. There is no suit, action, administrative, or
other proceeding, or governmental investigation pending or threatened to
withdraw or revoke such permits, licenses, provider agreements or other
authorizations.
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(c) The Facility is currently licensed as follows: 194
beds, of which 120 are licensed Medicaid, 36 are licensed Medicare/Medicaid, and
38 are Private.
3.17 Cost Reports. Seller shall deliver to Buyer prior to Closing
copies of Seller's last three (3) fiscal year cost reports, as filed with and
audited by desk audit by the appropriate Medicare and Medicaid agencies. To the
extent either or both of the Medicare or Medicaid reimbursement Programs have
not audited the last three (3) fiscal year cost reports filed with the
respective agency, Seller shall, in addition, deliver to Buyer a copy of the
most recently audited cost report for each reimbursement program, such copy to
include a copy of the audit report and all adjustments made pursuant to or
subsequent to the said audit. Seller shall prepare and file with the appropriate
Medicare and Medicaid agencies its final cost reports in respect to its
operation of the Facility as soon as practicable after the Closing Date. In the
event the federal or state agencies making payments to Seller for services
performed prior to the Closing Date make any claim for reimbursement of
overpayment occurring for any such period, then Seller agrees to save, indemnify
and hold Buyer harmless from and against any and all loss, damage, injury or
expense incurred by Buyer because of any such claim, or in the event that a
claim is made against Buyer in respect to the right to reimbursement for periods
prior to the Closing Date. It is specifically contemplated by the parties that
indemnification shall include, without limitation, any liability under Section
1128A of the Social Security Act, as amended. If, following the transfer of
licensure, Buyer receives payment from any federal or state agency which
represents reimbursement in respect to underpayments made to Seller for services
rendered prior to the Closing Date, then Buyer shall promptly remit such
payments to Seller.
3.18 Insurance. Exhibit 3.18 contains a description of all
insurance policies held by Seller concerning the Premises and the business as
now conducted. All the insurance policies are in the respective principal
amounts as set forth on Exhibit 3.18 and Seller has maintained continuously,
without gaps in coverage for the five (5) years preceding the Closing Date
insurance as described Exhibit 3.18. Seller shall obtain, if necessary, tail
coverage for any gap in coverage for occurrences up to the Closing Date.
3.19 Patient Trust Accounts. Exhibit 3.19 contains a true, correct,
and complete accounting, properly reconciled as of the Closing Date, of all
patient trust funds held by Seller in respect to the Facility.
3.20 Average Patient Census. Attached hereto as Exhibit 3.20 are
true and correct summaries of the current patient census ("Census") of the
Facility showing the sources of payments (i.e.
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Medicare, Medicaid, private or other) for each of the last two (2) years of
Seller.
3.21 Full Disclosure. Seller has disclosed all facts, information,
events and transactions relating to the Facility and the assets transferred
herein, to the best of its knowledge and ability. Seller has made no
representation which it knows to be false or inaccurate or which it knows
contains or will contain any untrue statement of a material fact or omit any
material fact necessary to make the statements contained herein misleading.
Seller shall make such additions, corrections and supplements to the Exhibits as
are necessary up to the Closing Date to make disclosures complete in all
respects.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller as of the Execution Date
and the Closing Date (the truth and accuracy of which shall constitute a
condition precedent to Seller's obligations hereunder) as follows:
4.01 Organization. Buyer is a limited partnership duly organized,
validly existing and in good standing under the laws of the State of Texas,
having full power and authority to enter into this Agreement and to perform its
obligations hereunder. Buyer is in good standing or authorized to do business in
the State of Texas.
4.02 Authority. The execution, performance and delivery of this
Agreement by Buyer has been duly authorized by Buyer and no further action of
Buyer will be required in order to make this Agreement valid and binding upon
Buyer in accordance with its terms and conditions. This Agreement will not
violate or breach Buyer's constituting instruments, any contract to which Buyer
is a party or by which Buyer may be bound, or any judgment, ruling or court
order purporting to bind Buyer.
4.03 Third Party Consults. Except for licensure and other normal
approvals for a transaction of this type, this purchase and sale is not subject
to approval or consent of any governmental or regulatory authority and no such
consent or approval is required as a condition to the validity or enforceability
of the obligations of Buyer hereunder.
4.04 Litigation. Buyer is not aware of any litigation pending,
threatened or anticipated involving Buyer which would or might materially,
adversely, directly or indirectly affect the enforceability of this Agreement or
the ability of Buyer to perform its obligations hereunder.
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ARTICLE V
CONDUCT OF SELLER PRIOR TO CLOSING
Seller hereby covenants and agrees as follows (the fulfillment of which
constitutes a condition precedent to Buyer's performance hereunder):
5.01 Title Insurance Commitment. Not later than thirty (30) days
prior to Closing, Buyer shall obtain a title insurance commitment with respect
to the Premises (Texas Department of Insurance promulgated form) attached hereto
as Exhibit 5.01, issued by such title insurer as is agreed upon by the parties.
Buyer shall have twenty (20) days from the date of receipt of title commitment
to examine the condition of Seller's title. If Buyer determines title to be
defective, Buyer shall notify Seller, in writing, within said twenty (20) day
period of its objections to title. Seller shall have fifteen (15) days from
receipt of such notice to remove the defects of title at Seller's expense. If
Seller is unable to remove them within the aforesaid period, Buyer shall have
the option of (a) accepting title in its defective condition or, (b) terminating
this Agreement, whereupon Buyer and Seller shall be released of all further
obligations hereunder and the Deposit, with all accrued interest, shall be
returned to Buyer. Seller shall use its best efforts to correct any defects of
title within the applicable time period, including applying Purchase Price
proceeds reasonably required to remove the disapproved items and, if necessary,
by filing law suits. Any exceptions to or conditions upon or defects of title as
reflected in said Title insurance commitment which (a) are not specifically and
timely objected to by Buyer; or (b) which after objection are waived by Buyer,
shall be deemed to be Permitted Exceptions and Buyer agrees to accept title at
Closing with all Permitted Exceptions.
5.02 Survey: Environmental Report Study. Not later than twenty (20)
days prior to Closing, Buyer shall receive a survey of the Premises identified
on Exhibit 1.01 certified by a registered surveyor, sufficient to remove the
survey exception from the aforementioned title insurance policy. The survey
shall indicate all setbacks, structures, easements, encroachments, routes of
access and dimensions. If the survey indicates an encroachment or violates the
terms of this Agreement, the encroachment or violation shall be resolved or
accepted in the manner specified in paragraph 5.01 above for removing defects of
title. Concurrently with obtaining the survey, Buyer shall obtain at Buyer's
expense, a Phase I Environmental Study ("Environmental Study") with respect to
the Premises. If the Environmental Study indicates a problem it shall be
resolved or accepted in the manner set forth in Paragraph 5.01 above.
5.03 UCC Clearance. Within fifteen (15) days after the date hereof,
Seller shall deliver to Buyer an appropriate certificate from the Uniform
Commercial Code filing officer of the State of
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Texas with respect to the Personal Property to be transferred herein, showing
all existing creditors of Seller having a security interest in any of such
Personal Property.
5.04 Conduct of Business. Prior to the Closing Date, Seller shall
carry on its business substantially in the manner as previously carried out at
the Facility in its ordinary course, including doing the following:
(a) Seller shall, to the best of its ability, maintain
the goodwill of suppliers, distributors, residents, employees, and others having
a business relationship with Seller;
(b) Seller shall, to the best of its ability, perform all
maintenance and repairs necessary to keep the Facility in good operating
condition and repair, including maintaining supplies and inventory at levels
consistent with Seller's operations in the ordinary course of business;
(c) Except with the prior approval of Buyer, Seller shall
not enter into or terminate any agreements, leases, or commitments, except in
the ordinary course of business;
(d) Seller shall maintain an average occupancy rate and
patient mix at the Facility consistent with the representations made by Seller
in Section 3.20 above;
(e) Except in the ordinary course of business, Seller
shall not increase the rate of compensation payable to become payable to
Seller's employees;
(f) Seller shall not execute any union agreement with any
collective bargaining unit or union representatives without Buyer's prior
consent;
(g) Seller shall maintain all permits, licenses and other
authorizations required for the lawful operation of the Facility;
(h) Seller shall not sell or remove any of the Property
on the Premises without Buyer's prior approval except in the ordinary course of
business or those items listed on Exhibit 1.02;
(i) Seller shall not implement any new employment
agreements, bonus plans, employee benefit plans, etc. without Buyer's prior
written approval; and
(j) Seller shall not change its personnel policies
without Buyer's prior written approval.
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5.05 Feasibility Inspection of Premises. The exhibits were not
available for the Buyer's review and approval prior to execution of this
Agreement. Therefore, Buyer and Seller agree that the following dates shall
govern with respect to the Buyer's review and approval of exhibits and Facility.
On or before September 1, 1997 shall be the date for all of Seller's preliminary
exhibits. Buyer shall have until September 16, 1997, at 5:00 p.m., Central
Standard Time, (the "Feasibility Period") to review, approve and inspect the
Facility, Assets, exhibits and all of the books and records maintained at the
Facility relevant to the operation of the Facility. Buyer shall maintain strict
confidentiality of all information obtained during its inspection. Buyer shall
have the right to terminate this Agreement if it is not satisfied with any
material aspect of the condition of the Assets, including but not limited to,
the Property, Premises, Personal Property and operations of the Facility at the
end of the Feasibility Period. Buyer's failure to terminate this Agreement on or
before the expiration of the Feasibility Period shall be deemed as Buyer's
agreement to proceed to Closing. Exhibits that state information as of the
Closing Date will be amended three (3) days before the Closing Date and
substituted on the Closing Date.
5.06 Insurance. Seller shall maintain until Closing all existing
insurance policies covering the Facility and the Premises, including those
policies listed on Exhibit 3.18 attached hereto.
5.07 Accounts Payable. Seller shall pay all accounts payable at the
Facility for goods received prior to the Closing Date, the liability for which
has been incurred by Seller.
ARTICLE VI
BUYER'S CONDUCT PRIOR TO CLOSING
6.01 Licensure. Buyer shall use its best efforts and due diligence
to obtain a license from the Department of Human Services of the State of Texas
authorizing Buyer to operate the Facility as presently represented to be
licensed and to obtain Medicare and Medicaid certification and provider
agreements thereunder.
ARTICLE VII
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER
The obligations of Buyer under this Agreement are subject to the
satisfaction, at or before Closing, of all of the conditions set forth in this
Article VII. Buyer may waive any or all of these conditions in whole or in part
without prior notice; provided that no such waiver shall constitute a waiver by
Buyer of any of its other rights or remedies at law or in equity if Seller shall
be in default of any of its representations, warranties or covenants under this
Agreement.
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7.01 Certificate Regarding the Accuracy of Representations. Except
as provided otherwise on an exhibit attached hereto, all representations of
Seller in this Agreement or in any written statement delivered to Buyer under
this Agreement shall be true at Closing as though made again at that time. A
certificate of Seller dated the Closing Date executed by an officer of Seller
shall be provided to Buyer at Closing to certify the same.
7.02 Good Standing Certificate. Seller shall deliver to Buyer a
certificate of good standing issued by the Secretary of State of Texas.
7.03 UCC Clearance. Seller shall deliver an appropriate certificate
from the Uniform Commercial Code filing officer of the State of Texas with
respect to the Personal Property to be transferred herein, showing all existing
creditors of Seller having a security interest in any of such Personal Property.
All such security interests shall be released prior to Closing or through escrow
at Closing.
7.04 Opinion of Seller's Counsel. Seller shall deliver a favorable
opinion of counsel to Seller, dated the Closing Date, in form and substance
satisfactory to Buyer, stating that (i) the instruments of conveyance,
assignment and transfer of the Property delivered by Seller to Buyer hereunder
have been duly authorized, executed and delivered, and are legal, valid and
effective for the purpose of conveying to Buyer Seller's, good and marketable
title to the Property; (ii) except as may be specified by such counsel, counsel
does not know of any litigation, proceeding or governmental investigation
pending or threatened against or relating to the Facility, Seller or the
Property, nor of any basis for any such litigation, proceeding or governmental
investigations; (iii) all proceedings required by law or by this Agreement to be
taken by Seller in connection with the transactions contemplated hereunder have
been duly and validly taken; (iv) Seller has complete and unrestricted corporate
power to convey, assign and deliver to Buyer all of the Property, and the
conveyance and transfer of the Property has been duly authorized by Seller's
Board of Directors and are not Contrary to Seller's articles of incorporation or
bylaws; (v) such Counsel has no knowledge of any defects in the title to any of
the Property, or of any claims asserted by others of rights or interests in such
Property, and there are no restrictions upon the vesting of title to the
Property in Buyer; (vi) no consent or approval of any third party not obtained
and in effect on the Closing Date is required to vest good and indefeasible
title to the Property in Buyer or to consummate the transactions contemplated
hereunder; (vii) such counsel has no knowledge or belief that would lead such
counsel to doubt the veracity of any of the covenants, representations or
warranties of Seller in this Agreement; and (viii) as to such other matters as
Buyer may reasonably request. In rendering the opinion, such counsel may rely as
to factual matters on certificates of Seller's
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officers and upon such other evidence as such counsel may deem necessary or
appropriate.
7.05 Consents. All third parties whose consents or authorizations
are required in order to convey and transfer to Buyer unencumbered, good and
marketable title to the Property shall have given such consents or
authorizations in writing.
7.06 Seller's Compliance. Seller shall have performed satisfied and
complied with all covenants, agreements and conditions required by this
Agreement to be performed or complied with by Seller.
7.07 Actions, Suits, Proceedings. No action, suit or proceeding
before any court or any governmental body or authority, pertaining to the
transaction contemplated by this Agreement or to its consummation, shall have
been instituted on or before the Closing Date.
7.08 Title Insurance. At the Closing, there shall be delivered to
Buyer, as the insured, a standard Texas Department of Insurance promulgated form
extended coverage policy of title insurance, with endorsements sufficient to
remove the survey exception and other standard exceptions, in the amount of the
Purchase Price, issued by a qualified title insurance company, as provided in
Section 5.01 above, insuring Buyer as the fee owner of the Premises, showing as
exceptions only the permitted exceptions.
7.09 Survey; Environmental Study. Buyer and Seller shall each pay
fifty percent (50%) of the cost of a boundary line survey of the Premises
acceptable to Buyer and sufficient to remove the survey exception from the
aforementioned policy of title insurance showing the location of all structures,
improvements, rights of way, easements, setbacks, encroachments, access,
dimensions, and other matters affecting the Premises; prepared by a registered
land surveyor and a, at Buyer's expense, a Phase I Environmental Study, both of
which shall comply with the requirements of Section 5.02 hereof.
7.10 Licenses, Permits. Seller and Buyer agree that Buyer shall
have obtained in its name all permits, licenses and other governmental approvals
required for the operation of the Facility before the Effective Date, including,
but not limited to, the following: written approval or a waiver of the need for
such approval pursuant to Certificate of Need or Capital Expenditure Review
(Section 1122 of the Social Security Act, as amended), or any federal or state
Successor legislation, and a license issued by the State Department of Health to
operate the Facility with the same licensed bed capacity of the Facility as set
forth herein.
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7.11 Provider Agreements, Approvals, Certification. Buyer shall be
satisfied that, if applied for, signed provider agreements, new provider
numbers, and all appropriate Medicaid and Medicare approvals and certification,
if any, shall be obtainable.
7.12 Correction, Improvements. All corrections or improvements
required to be made to the improvements, to the Property by any federal, state
or local governmental agency or by any third party payor to effect transfer of
licensure, the Premises and all provider agreements to Buyer at Closing shall be
made or performed in accordance with Section 3.16 hereof prior to Closing. If
such corrections or improvements are due to deficiencies cited prior to the
Closing Date, they shall be made at Seller's expense. If Seller elects not to
make the required corrections or improvements, Buyer may terminate this
Agreement and receive a refund of Deposit, or accept the Facility without such
corrections or improvements and proceed to Closing. If such corrections or
improvements are due to deficiencies cited after the Closing Date, they shall be
made at the expense of Buyer.
7.13 List of Seller's Creditors. The Seller shall furnish to the
Buyer, in accordance with the requirements of the Uniform Commercial Code, a
list of Seller's existing creditors, signed and sworn to by an officer of the
Seller containing the names and business addresses of all existing creditors of
the Seller, with the amounts due to each creditor, and also the names of all
persons who are known to the Seller to assert claims against it even though such
claims are disputed. The Seller understands that, in accordance with the
provisions of the Uniform Commercial Code, the Buyer intends to deliver or send
appropriate notice to all the persons shown on the list of creditors furnished
by the Seller and to other persons, if any, who are known to the Buyer to hold
or assert claims against the Seller. The Seller will cooperate with the Buyer in
all matters relating to such notice and will furnish any additional information
that may be required by the Buyer to satisfy the statutory provisions in this
regard.
7.14 Tax and Assessment Clearance Certificate. Seller shall provide
to Buyer a certificate from the applicable taxing and assessing authorities as
Buyer may reasonably request as evidence that all property tax liabilities and
assessments of Seller accruing for all tax years prior to the current tax year,
have been fully satisfied or provision for such satisfaction has been made.
7.15 Exterminator's Report. Seller shall have delivered to Buyer an
exterminator's certification attached hereto as Exhibit 7.15, to the effect that
there is no evidence of infestation or infection of structurally damaging pests
or organisms nor damage to the Facility caused by same. If such exists, repair
and treatment shall be done prior to the Closing Date at the sole expense of
Seller.
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7.16 Seller's Noncompete Agreement. Robert Crone and any members of
his immediate family who are presently involved in the operation of the
Facility, shall have executed and delivered their Non-Competition Agreements,
the form of which is attached as Exhibit 9.01(c) whereby they agree that they
will not directly or indirectly compete with Buyer in the County of Hidalgo,
Texas for a term of seven (7) ears following the Closing Date.
7.17 Extraordinary Events. There shall not have been (i) any
suspension of trading in or limitation on prices for securities generally on any
national securities exchange, or (ii) the declaration or a bank moratorium or
any suspension of payment of banks, or (iii) the commencement of armed
hostilities or other national or international calamity directly involving the
United States which directly and materially affects the business or Property of
the Seller.
7.18 Concurrent Sale of Adjacent Land To Buyer. Prior to the
Closing, Buyer and Seller shall have entered into a binding and definitive
mutual written agreement whereby Seller agrees to sell its fee interest in the
Adjacent Land to Buyer and Buyer agrees to purchase Seller's interest in the
Adjacent Land. Buyer shall further have satisfied itself that the Adjacent Land
may be purchased by Buyer on such terms and conditions as therein contained.
Buyer's purchase of the Adjacent Land shall take place concurrently with the
Closing. Notwithstanding anything to the contrary contained in this Agreement,
if this condition is not satisfied at Closing, at Closing Buyer may, at its sole
discretion and upon written notice to Seller and Escrow Holder, elect not to
purchase the Facility and Buyer shall thereupon be entitled to receive a return
of its Deposit, plus all accrued interest thereon.
ARTICLE VIII
CONDITIONS PRECEDENT TO SELLER'S PERFORMANCE
The obligations of Seller under this Agreement are subject to the
satisfaction, at or before the Closing, of all the conditions set out below in
this Article VIII. Seller may waive any or all of these conditions in whole or
in part without prior notice, provided, however, that no such waiver of a
condition shall constitute a waiver by Seller of any of its other rights or
remedies, at law or in equity, if Buyer shall be in default of any its
representations, warranties or covenants under this Agreement.
8.01 Accuracy of Representations and Warranties. Except as
otherwise permitted by this Agreement, all representations and warranties by
Buyer in this Agreement or in any written statement delivered by Buyer under
this Agreement shall be true on and as of the Closing as though made at that
time.
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8.02 Good Standing Certificate. Buyer shall deliver a good standing
certificate issued by the Secretary of State of the State of Texas and of each
other state in which Buyer transacts business.
8.03 Opinion of Buyer's Counsel. Buyer shall deliver an opinion of
counsel to Buyer, dated the Closing Date, and in form and substance satisfactory
to Seller, stating that (i) Buyer is a corporation duly incorporated in the
state of its incorporation or a partnership validly existing and authorized to
do business in the State of Texas, (ii) that Buyer has complete and unrestricted
power to transact the purchase of the Property hereunder and that the purchase
of said Property has been duly authorized by Buyer's Board of Directors and is
not contrary to Buyer's articles of incorporation, bylaws or partnership
agreement, if applicable; (iii) such counsel has no knowledge or belief that
would lead such counsel to doubt the veracity of any of the covenants,
warranties or representations of Buyer in this Agreement; and (iv) as to such
other matters as Seller may reasonably request. In rendering the opinion, such
counsel may rely as to factual matters on certificates of Buyer's officers and
upon such other evidence as such counsel may deem necessary or appropriate.
8.04 Buyer's Compliance. Buyer shall have performed, satisfied and
complied with all covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by Buyer.
8.05 Actions, Suits, Proceedings. No action, suit or proceeding
before any court or governmental body or authority, pertaining to the
transaction contemplated by this Agreement or to its consummation shall have
been instituted on or before the Closing Date.
ARTICLE IX
CLOSING
The Closing of this Agreement shall take place at the offices of
Hidalgo County Abstract and Title, at 4900 N. Tenth Street, Suite E-2, McAllen,
Texas, 78504 at 10:00 a.m. local time, on or before Monday, November 24, 1997,
to be effective as of 12:00 a.m., local time, December 1, 1997 (the "Closing
Date" or "Closing"). The parties hereto may by mutual consent expressed in
writing fix another time to be the Closing Date or another location for the
Closing. In the event the conditions precedent to the closing of this
transaction listed in Articles VII and VIII hereof have not occurred in time to
allow the Closing to take place on the Closing Date, the transaction shall close
as soon thereafter as possible and such Closing shall be effective as of that
date and time. The Parties hereto agree to use their best efforts to ensure that
the transaction closes on the Closing Date as specified herein or as soon
thereafter as possible. If the Closing has not occurred on or
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prior to December 1, 1997, either party may, by written notice to the other,
terminate this transaction without liability to the other providing the party
giving notice is not then in default.
9.01 Se11er's Obligations at Closing. At the Closing, in addition
to having satisfied the conditions precedent provided in Article VII, Seller
shall deliver or cause to be delivered to Buyer:
(a) For all real property and interests in real property,
an Assignment of Lease, sufficient to convey to Buyer all of Seller's right to
any options to purchase the Facility, as contained in the Lease, with the
written consent of the Owner, properly executed and acknowledged, conforming to
and conveying the agreed state of the title, in recordable form as shall be
reasonably acceptable to Buyer;
(b) For all Personal Property, a general warranty bill of
sale with full covenants of warranty, in the form set forth on Exhibit 9.01(b)
hereto, properly executed and acknowledged, conforming to the terms of this
Agreement; for all supplies, a general warranty bill of sale in the form set
forth on Exhibit 9.01(b) hereto, properly executed and acknowledged, and
conforming to the terms of this Agreement (the "Bills of Sale") ;
(c) A Non-Competition Agreement, the form of which is
attached as Exhibit 9.01(c), executed by Seller;
(d) For all leases, maintenance contracts, service
contracts and other agreements which are transferable, an assignment of Seller's
interest (the "Assignment", in the form set forth on Exhibit 9.01(d) hereto,
properly executed and acknowledged, and conforming to the terms of this
Agreement;
(e) A Schedule of Seller's Accounts Receivable as of the
Closing Date;
(f) A list of all present employees, their rates of pay,
length of employment, and vacation, holiday and sick leave accruals as of the
Effective Date;
(g) All other Exhibits to this Agreement which are
required to be updated by Seller to the Closing Date; and
(h) Seller, at any time before or after the Closing Date,
will execute, acknowledge, and deliver any further assignments, conveyances, and
other assurances, documents, and instruments of transfer, reasonably requested
by Buyer, and will take any other action consistent with the terms of this
Agreement that may reasonably be requested by Buyer for the purpose of
assigning, transferring, granting, conveying, and confirming to Buyer, or
reducing to possession, any or all of the Property to be
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conveyed or transferred by this Agreement. If requested by Buyer, Seller further
agrees to prosecute or otherwise enforce in their name for the benefit of Buyer
any claims, rights or benefits that are transferred to Buyer by this Agreement
and that require, in Buyer's opinion, prosecution or enforcement of claims,
rights or benefits, and such prosecution or enforcement under this paragraph
shall be solely at Buyer's expense, unless the prosecution or enforcement is
made necessary by a breach of this Agreement by Seller. On the Closing Date,
Seller shall put Buyer into full possession and enjoyment of the Property.
9.02 Buyer's Obligations at Closing. At the Closing, in addition to
having satisfied the conditions precedent provided in Article VIII, Buyer shall
deliver or cause to be delivered to Sellers:
(a) The Purchase Price specified in Article II hereof and
all costs and expenses payable by or under the terms of this Agreement (see (b)
and (e) attached);
(b) All documents, required of Buyer by the Title Company
for issuance of the Owner's title policy to be issued at the Closing; and
(c) The certificates and opinion of Counsel set forth in
Article VIII hereof.
ARTICLE X
POST-CLOSING OBLIGATIONS OF PARTIES
10.01 Post-Closing Obligations of Seller. Subsequent to the Closing
Date, in addition to that provided above, Seller covenants and agrees as
follows:
(a) Accounts Payable. Seller is responsible for payment
of all accounts payable that have accrued from or in connection with the
operation of the Facility for any period prior to the Closing Date. Seller,
therefore, agrees to save, indemnify and hold Buyer harmless from any and all
loss, damage, injury or expense incurred by Buyer as a result of Seller's
non-payment of such accounts payable.
(b) Survival of Representations. All statements contained
in any certificate or other instrument delivered by or on behalf of Seller
pursuant hereto, or in connection with the transactions contemplated hereby,
shall be deemed representations of Seller. All representations of Seller shall
survive for one (1) year following the Closing.
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(c) Records. Seller agrees to make available to Buyer all
current patient accounts and current patient financial records which may
reasonably be required by Buyer.
10.02 Post-Closing Obligations of Buyer. Subsequent to the Closing
Date, in addition to that provided above, Buyer covenants and agrees as follows:
(a) Assumption of Leases, Contracts and Commitments.
Buyer agrees to assume and be bound by all of the terms and provisions of the
Contracts referred to in Exhibit 1.01(c) hereof. Buyer shall indemnify and hold
Seller harmless from any matter or loss, damage, injury or expense related to
the performance of, services rendered, or goods sold under or pursuant to such
Contracts after the Closing Date;
(b) Accounts Receivable. Buyer agrees that the Accounts
Receivable of Seller as of the Closing Date are not being transferred or sold
hereunder (the "Accounts Receivable") . At Closing, Seller will deliver a
Schedule of the Accounts Receivable, acknowledged by Buyer, which will list said
Accounts Receivable by Patient. Those receipts from patients designated on such
schedule of Accounts Receivable will be paid by Buyer to Seller up to the total
account for each such patient so listed that are attributable to the period of
Seller's operation of the Facility prior to the Closing Date. Buyer acknowledges
that whereas room and board charges are billed in advance, miscellaneous
services are billed in arrears. Buyer, therefore, agrees to cooperate with
Seller in billing and collecting miscellaneous services provided by Seller prior
to the Closing Date. Buyer and Seller agree that, for patients continuing as
patients in the Facility after the Closing Date, payments made shall be first
applied to past due charges unless otherwise agreed for specified accounts or
indicated on the payment itself. It is understood that Buyer is agreeing merely
to receive payments on Seller's Accounts Receivable and not to actively collect
same. As to Seller's Accounts Receivable that have not been collected at the end
of the ninety (90) day collection period, Seller thereafter shall collect such
Accounts Receivable for its own account and Buyer shall have no further
responsibility therefor, except that Buyer agrees to promptly forward any
payments received by Buyer on Seller's account, to Seller;
(c) Patient Trust Accounts. Buyer acknowledges that
Seller will transfer all of its patient trust accounts to Buyer as of the
Closing Date, which patient trust accounts are attached as Exhibit 3.19 hereto.
With respect to such patient trust accounts, Buyer agrees to assume custody of
such accounts and deal with them in a fiduciary capacity required by law;
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(d) Maintenance of Patient Records. Buyer understands
that all the Seller's current patient records are being transferred hereunder to
Buyer, as required by law, and with respect to all current patient records,
Buyer agrees to diligently maintain such records as prescribed by law and to
allow Seller or its agents or representatives to reasonably examine such records
relating to the period of Seller's operation of the Facility from time to time
and to make copies thereof at Seller's expense; and
(e) Survival of Representations. All statements
contained in any certificate or other instrument delivered by or on behalf of
Buyer pursuant hereto, or in connection with the transaction contemplated
hereby, shall be deemed representations of Buyer. All representations,
warranties and covenants made by Buyer shall survive the Closing.
ARTICLE. XI
INDEMNIFICATION
11.01 Indemnity by Seller. Seller hereby agrees to indemnify,
defend and hold Buyer harmless from and against any and all claims, demands,
obligations, losses, liabilities, damages, recoveries and deficiencies,
including interest, penalties and reasonable attorneys' fees, costs and
expenses, which Buyer may suffer as a result of the untruth of any of the
representations made herein, or any default by Seller in the performance of any
of its commitments, covenants or conditions under this Agreement, or for any
liabilities which may arise from operation or ownership of the Property by
Seller prior to the Effective Date. For the purposes hereof, any representation
shall be deemed to be inaccurate if it omits to state any fact which is
necessary in order to make the statements contained therein not false or
misleading. The rights of Buyer under this Section 11.01 are without prejudice
to any other remedies not inconsistent herewith which Buyer may have against
Seller.
Seller hereby indemnities and agrees to defend and hold Buyer harmless
from any and all claims, demands, obligations, losses, liabilities, damages,
recoveries and deficiencies except as stated in Section 3.16(a) (including
interest, penalties, reasonable attorneys' fees, costs and expenses) which Buyer
may suffer as a result of Seller's failure to file cost reimbursement reports
with all written proposed audit adjustments to such cost reports for the period
of its operation of the Facility, or its failure to correct any deficiencies
with respect to such reports, or its failure to accurately compute and bill
charges for reimbursement which results in liability for any overcharge, or as a
result of any liability arising pursuant to Section 1128A of the Social Security
Act for the period of its operation of the Facility. This indemnification shall
survive for a term of one (1) year from the Closing date.
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11.02 Indemnity by Buyer. Buyer hereby agrees to indemnify,
defend and hold Seller harmless from and against any and all claims, demands,
obligations, losses, liabilities including interest, penalties and reasonable
attorneys' fees, costs and expenses, which Seller may suffer as a result of the
untruth of any of the representations or warranties of Buyer herein or given
pursuant hereto, or any default by Buyer in the performance of any of its
commitments, covenants or conditions under this Agreement, or for any
liabilities which may arise from operation or ownership of the Property by Buyer
from and after the Closing Date. For the purposes hereof, any representation
shall be deemed to be inaccurate if it omits to state any fact which is
necessary in order to make the statements contained therein not false or
misleading. The rights of Seller under this Section 11.02 are without prejudice
to any other remedies not inconsistent herewith which Seller may have against
Buyer.
11.03 Contested Claims. Upon receiving notice of a claim for
indemnification, the receiving party shall be entitled to defend, compromise, or
otherwise contest such claim at its own cost and expenses. In the event the
notifying party determines that it may, in light of such claim, be subject to
any loss, damage or expense, the notifying party shall have the right, but not
the obligation, to participate at its own expense in the defense, compromise or
contest of such claim; provided, however, the receiving party shall be entitled
to control such defense unless the notifying party assumes all liability
thereof.
ARTICLE XII
MISCELLANEOUS
12.01 Legal Expenses. If any legal action or other proceeding is
brought for the enforcement of this Agreement, or because of an alleged or
actual dispute, breach, default or misrepresentation in connection with any of
the provisions of this Agreement, the prevailing party shall be entitled to
recover reasonable attorneys, fees and other costs incurred in that action or
proceeding, in addition to any other relief to which it or they may be entitled.
12.02 Expenses. Each of the parties shall pay all costs and
expenses incurred or to be incurred by it in negotiating and preparing this
Agreement and in carrying out the transactions contemplated herein, except as
otherwise provided herein.
12.03 Assignment. Neither this Agreement nor the rights, duties
or obligations arising hereunder shall be assignable or delegable by either
party without the express prior written consent of the other, which consent will
not unreasonably be withheld; provided, however, that Buyer may assign this
Agreement or its rights, duties or obligations hereunder to a wholly-owned
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subsidiary of Buyer, or to a corporation which is a member of an affiliated
group of companies of which Buyer is the common parent corporation (within the
meaning of Section 1540 of the Internal Revenue Code, as amended) which group is
permitted to file a consolidated federal income tax return. Neither shall the
restriction on assignment or delegation apply to a merger or consolidation
involving Buyer and any other corporation. In the event of such a permitted
assignment, Buyer shall not be released from its obligations hereunder without
the express written consent of Seller, nor shall a notation be deemed to have
occurred without such written consent. All the terms and provisions of this
Agreement shall be binding upon and inure to the benefit of and be enforceable
by Buyer and Seller and their respective permitted successors and assigns.
Seller hereby further consents in advance to an assignment by Buyer to a real
estate investment trust.
12.04 Parties in Interest. Nothing in this Agreement, whether
express or implied, is intended to confer any rights or remedies under or by
reason of this Agreement on any persons other than Buyer and Seller and their
respective permitted successors and assigns, nor is anything in this Agreement
intended to relieve or discharge the obligations or liability of any third
persons to any party to this Agreement, nor shall any provisions give any third
persons any right of subrogation or action over or against any party of this
Agreement.
12.05 Notices. All notices, requests, demands, and other
communications hereunder shall be in writing, and shall be deemed to have been
duly given when personally delivered or, if mailed, seventy-two (72) hours after
mailing the said notice, registered or certified mail, postage prepaid, return
receipt requested, and properly addressed as follows:
To Buyer (if by mail): Summit Care Corporation
2600 W. Magnolia Blvd.
Burbank, California 95107-2100
Attn: President or
Chairman of the Board
With Copies to: Frank S. Osen, Esq.
9454 Wilshire Boulevard
Suite 800
Beverly Hills, CA 90210
To Seller: Robert Crone -
South Texas Health Care, Inc.
3201 North Ware Road
McAllen, Texas 78501
Attn: Robert Crone, President
26
27
With Copies to: Larry W. Langley, Esq.
Akin, Gump, Strauss,
Hauer, Feld, LLP
816 Congress Avenue
Austin, Texas 78701
or at such other address as either party may by like notice designate to the
other in writing.
12.06 Applicable Law. This Agreement shall be construed and
enforced in accordance with the laws of the State of Texas.
12.07 Counterparts. This Agreement may be executed simultaneously
in one or more Counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
12.08 Effect of Captions. The captions of section and subsections
of this Agreement have been inserted solely for convenience and reference, and
shall not control or effect the meaning or construction of any of the provisions
of this Agreement.
12.09 Entire Agreement; Modification; Waiver. This Agreement and
the exhibits hereto, constitute the entire Agreement between Seller, on the one
hand, and Buyer, on the other, pertaining to the subject matter contained in it
and supersedes all prior agreements, representations and all understandings of
the parties. No supplement, modification or amendment of this Agreement shall be
binding unless expressed as such and executed in writing by Buyer and Seller. No
waiver of any of the provisions of this Agreement shall be deemed to be or shall
constitute a waiver of any other provisions hereof, whether or not similar, nor
shall any such waiver constitute a continuing waiver. No waiver shall be binding
unless expressed as such in a document executed by the party making the waiver.
12.10 Publicity. Seller agrees to consult with Buyer concerning
any notice to employees, patients, families, referral sources or government
agencies concerning the transactions contemplated by this Agreement. All other
notices to third parties and all other publicity concerning the transactions
contemplated by this Agreement shall be jointly planned, mutually coordinated
and released by and between Buyer and Seller. Buyer shall make no public
disclosure without Seller's consent which may not be unnecessarily withheld or
delayed. None of the parties shall act unilaterally in this regard without the
prior written approval of the other; however, the approval shall not be
unreasonably withheld.
27
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12.11 Risk of Loss. Seller shall bear the risk of loss or damage
to the Premises from fire or other casualty until the Closing Date. In the event
of any material damage to or destruction of the Premises by fire or other
casualty, whether or not insured, or the taking of all or any material part of
the Premises by power of eminent domain or deed in lieu thereof, prior to the
Closing Date, Buyer may, at its option and, as its sole and exclusive remedy,
either (a) terminate this Agreement and all rights and obligations hereunder, in
which event all funds and documents deposited by Buyer into the Escrow shall be
returned promptly to Buyer and all documents and other items deposited by Seller
into the Escrow shall be returned promptly to Seller, or (b) elect to proceed
with the purchase of the Premises, in which event Seller shall deliver
possession of the Premises to Buyer at the close of the Escrow together with (i)
all insurance proceeds received by Seller in connection with such damage or
destruction and (ii) an assignment of all rights and claims of Seller under any
applicable insurance policies. Should Buyer elect to proceed with the purchase
of the Premises as provided in the foregoing subclause (b), Seller agrees to
fully cooperate with and assist Buyer in adjusting any loss and perfecting and
pursuing any claim under any applicable insurance policy. For purposes of this
Agreement, the phrase "material" damage to or destruction of the Premises shall
mean any damage to or destruction of any part of the Premises, the effect of
which would materially impair the current use and operation of the Premises.
12.13 Broker and Professional Fees. Tesch & Associates ("Tesch")
are the only brokers in this transaction. Buyer agrees to pay any brokerage
commission claimed to be due from Tesch with respect to this transaction. Tesch
is acting as agent for the Buyer and does not represent the interests of any
other party hereto.
12.14 Waiver of Deceptive Trade Practices - Consumer Protection
Act. Buyer represents, covenants and agrees that Buyer is not in a significantly
disparate bargaining position. Further, Buyer represents, warrants and agrees
that Buyer is represented by legal counsel in seeking or acquiring goods or
services, other than the purchase or lease of a family residence occupied or to
be occupied as Buyer's residence, by a purchase or a lease for a consideration
paid or to be paid that exceeds $500,000.00. Finally, Buyer represents,
warrants, and agrees that it waives all of the provisions of the Deceptive Trade
Practices Consumer
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29
Protection Act, other than Section 17.555, by this express provision in this
written contract signed by both Buyer and Buyer's legal counsel.
[SIG]
-------------------------------
Buyer
[SIG]
-------------------------------
Buyer's Legal Counsel
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
In the Presence of SELLER
ROBERT CRONE-SOUTH TEXAS
HEALTH CARE, INC.,
a Texas Subchapter S corporation
BY: [SIG]
-------------------------------
President
BUYER
SUMMIT CARE TEXAS, L.P.,
a Texas limited partnership
By: Summit Care Texas Management, Inc.,
a Texas corporation and sole general
partner
By: [SIG]
-------------------------------
Sr. V.P. Finance
-------------------------------
[Title]
29
30
EXHIBIT LIST
Page.
1.01(a)(i) Facility Legal Description and Lease
1.01(a)(ii) Facility Option Agreement
1.01(a)(iii) Adjacent Land Legal Description and Trust Deed
1.01(b) Personal Property
1.01(c) Contracts
1.01(g) Transferable Licenses and Permits
1.02 Excluded Assets
3.02 Authority Exceptions
3.03 Financial Statements
3.05 Changes
3.06 Liabilities
3.08 Condition of Property
3.10 Survey
3.11 Personal Property Leases; Liens
3.14 Adverse Claims; Litigation
3.15 Labor; Vacation and Holiday Policies
3.15 Employee List
3.16 Current Inspection Reports
3.17 Cost Reports
3.18 Description of Insurance Policies
3.19 Schedule of Patient Trust Accounts
3.20 Current Patient Census
5.01 Title Commitment
7.01 Certificate of Seller
7.02 Seller's Good Standing Certificate
7.03 UCC Clearance
7.04 Opinion of Seller's Counsel
7.05 Consents of Third Parties(i)
7.14 Tax Clearance Certificate
7.15 Exterminator's Report
8.03 Opinion of Buyer's Counsel
9.01(a) Form of Assignment of Lease
9.01(b) Form of Bills of Sale
9.01(c) Form of Seller's Non-Compete Agreement
9.01(F) Seller's Accounts Receivable
30
31
EXHIBIT 3.08
CONDITION OF PROPERTY
THIS IS TO ACKNOWLEDGE THAT TO THE BEST OF MY KNOWLEDGE AS OF DECEMBER 1, 1997
THE BRIARCLIFF NRS. & REHAB CTR. PREMISES AND PERSONAL PROPERTY ARE IN GOOD
OPERATING CONDITION AND REPAIR, SUBJECT ONLY TO ORDINARY WEAR AND TEAR.
/s/ ROBERT J. CRONE
-------------------------------
ROBERT J. CRONE
11/24/97
-------------------------------
DATE
32
EXHIBIT 3.14
ADVERSE CLAIMS; LITIGATION
AS OF NOVEMBER 19, 1997 TO MY KNOWLEDGE BRIARCLIFF NURSING AND REHABILITATION
CENTER HAS NO MATERIAL CLAIMS FILED AGINST THEM.
/s/ ROBERT J. CRONE
-------------------------------
ROBERT J. CRONE
11/24/97
-------------------------------
DATE
33
CERTIFICATE OF OFFICER
OF
ROBERT CRONE-SOUTH TEXAS HEALTH CARE, INC.
A
TEXAS CORPORATION
I, Robert Crone, the duly elected and acting President of Robert
Crone-South Texas Health Care, Inc., a Texas Corporation (the "Buyer") , DO
HEREBY CERTIFY in connection with Article 7. 01 of that certain Agreement of
Purchase and Sale of Assets, (the "Agreement"), dated November 24, 1997, by and
between Summit Care Texas, LP, a Texas Limited Partnership as Seller, the terms
of which are hereby incorporated herein by reference, that the representations
of Buyer set forth in the Agreement are true and correct as of December 1, 1997:
IN WITNESS WHEREOF, I have hereunto set my hand and seal this
twenty-fourth (24th) day of November, 1997, effective as of the first (1st) day
of December, 1997,
/s/ ROBERT J. CRONE
-------------------------------
ROBERT J. CRONE
34
AMERICAN TITLE COMPANY
SF 355545-A
-------------------
CLOSER 157 W. KELLER
---------------
CONSENT TO ASSIGNMENT OF LEASEHOLD ESTATE OF
BRIARCLIFF NURSING & REHABILITATION CENTER, MCALLEN, TEXAS
On August 12, 1992, Robert Crone/South Texas Healthcare, Inc., entered
into a Lease Agreement as Lessee, with Lloyd Hobbs, as Lessor (Owner) of the
Briarcliff Nursing & Rehabilitation Center, in McAllen, Texas. Legal Description
attached as Exhibit "A".
On January 1, 1995, Lloyd Hobbs assigned all his right, title and
interest in the Lease Agreement to Hobbs & Curry Family Limited Partnership, and
on April 19, 1997 this Lease was amended to add a seventy-four bed addition and
increase the monthly rental payment.
Now comes Summit Care Texas, L.P., whose address is 2600 West Magnolia
Boulevard, Burbank, California 95107-2100 agreeing to assume and perform all of
the terms, covenants and conditions, as Lessee under this Lease and further
agreeing to keep the Certificate and License in full force and effect during the
term of the Lease. Summit Care specifically acknowledges the escalation
provision of Paragraph 2 of the Lease Agreement.
The Lease will be considered in default if the Lessee (Summit Care)
shall fail or neglect to pay the rentals when due, or to pay any other sums of
money which they are required by this Lease to pay, and such non-payment shall
continue on the tenth day after written notice of the same has been posted to
Lessees. In the event of default of this Lease, Lessee will forfeit and transfer
any rights, or ownership of contracts and ownership of the Certificate of Need
at this location, with the State of Texas or the United States Government, to
Lessor.
Summit Care Texas, L.P. ("Lessee") agrees to assume all other terms,
covenants and conditions of this Lease as originally written and amended.
Robert Crone/South Texas Healthcare, Inc. agrees to remain liable to the
Lessor on this Lease if Summit Care should default.
Subject to the above terms and conditions, any other terms and
conditions of the Lease, Hobbs & Curry Family Limited Partnership hereby agrees
to consent to the Assignment of this Lease and Option on the Briarcliff Nursing
& Rehabilitation Center, McAllen, Texas to Summit Care Texas, L.P.
The next rental payment of $53,218.75 will be due December 1st, 1997
and monthly thereafter.
The Option may be exercised on October 1, 2003, provided the lease
payments are current and the Lease is in full force and effect. The amended
option price will be Four Million Seven Hundred Thousand Dollars
($4,700,000.00).
35
WITNESS OUR HANDS this 20th day of November, 1997.
SUMMIT CARE, TEXAS, L.P.
By: /s/ DERWIN L. WILLIAMS
-------------------------------
NAME: Derwin L. Williams
-------------------------------
Title: Sr. V.P. Finance
-------------------------------
Date: 11/24/97
-------------------------------
ROBERT CRONE/SOUTH TEXAS
HEALTHCARE, INC.
By: /s/ ROBERT CRONE
-------------------------------
Robert Crone, President
-------------------------------
Date: 11/24/97
-------------------------------
HOBBS AND CURRY FAMILY LIMITED
PARTNERSHIP
By. /s/ C. DAVID CURRY
-------------------------------
Name: C. David Curry
-------------------------------
Title: General Partner
-------------------------------
Date: November 20, 1997
-------------------------------
2
36
EXHIBIT "A"
Lot One (1), PRIMO SUBDIVISION No. 2, an Addition to the City of McAllen,
Hidalgo County, Texas; according to map or plat thereof recorded in Volume 31,
Page 40B, Map Records, Hidalgo County, Texas.
37
ACKNOWLEDGEMENT
STATE OF ARKANSAS
COUNTY OF SEBASTIAN
On this the 20th day of November, 1997, before me, the undersigned
officer, personally appeared C. David Curry, known to me to be the person whose
name is subscribed to the within Consent To Assignment of Leasehold Estate of
Briarcliff Nursing & Rehabilitation Center, McAllen, Texas, and acknowledged
that he executed the same for the purposes therein contained.
In Witness Whereof I hereunto set my hand and official seal.
[SIG]
-------------------------------
Notary Public`
My Commission expires:
November 1, 2000
- -------------------------------
[SEAL]
38
THE STATE OF TEXAS )
COUNTY OF HIDALGO )
This instrument was acknowledged before me this 24th day of November,
1997, by DERWIN L. WILLIAMS, SR. V.P. FINANCE, of SUMMIT CARE TEXAS, L.P., a
Texas Limited Partnership.
WANDA KELLER
[SEAL] MY COMMISSON EXPIRES
August 19, 2000
/s/ WANDA KELLER
-------------------------------
NOTARY PUBLIC, STATE OF TEXAS
THE STATE OF TEXAS )
COUNTY OF HIDALGO )
This instrument was acknowledged before me on this 24th day of November,
1997, by ROBERT J. CRONE, PRESIDENT of ROBERT CRONE/SOUTH TEXAS HEALTHCARE, INC.
WANDA KELLER
[SEAL] MY COMMISSON EXPIRES
August 19, 2000
/s/ WANDA KELLER
-------------------------------
NOTARY PUBLIC, STATE OF TEXAS
AFTER RECORDING RETURN TO:
AMERICAN TITLE CO. OF HOUSTON
SPRING OFFICE - BRANCH
25317 I-45 NORTH
THE WOODLANDS, TEXAS 77380
39
FIRST AMENDMENT TO LEASE AGREEMENT
This Amendment to Lease Agreement entered into this 9th day of April,
1996, amending the Lease Agreement dated August 12, 1992, on Briarcliff Nursing
& Rehabilitation Center of McAllen, Texas between Lloyd G. Hobbs as Lessor and
ROBERT CRONE/SOUTH TEXAS HEALTHCARE, INC., as Lessee. Lloyd G. Hobbs assigned
his interest in this lease agreement to Hobbs & Curry Family Limited Partnership
on January 1, 1995.
Now, Lessor and Lessees have agreed to add seventy-four beds to the
Briarcliff Nursing & Rehabilitation Center, making a total of 194 beds. Lessor
and Lessee have also agreed to increase the monthly rent by Nineteen Thousand
Nine Hundred Sixty-Seven Dollars and Fifty-Eight Cents ($19,967.58) per month
beginning when construction of the addition is complete and is ready for
occupancy.
Lessor is presently paying $30,027.81 per month rental on the original
120 beds and the increase of $19,967.58 for the addition would make a total
monthly rental payment of $49,995.39, until such time as there is an increase
in the Medicaid rates. It is expressly understood by both parties that the
escalation clause in Paragraph 2 of the Lease Agreement will prevail and that
this escalation clause will pertain to the total of 194 beds, after completion
of the addition, and that any increase in Medicaid rates will increase the
monthly rental payments accordingly for the balance of the lease term.
All other terms of the Lease Agreement, dated August 12, 1992, will
remain the same as originally written.
Witness our hands this 9th day of April, 1996.
HOBBS & CURRY FAMILY LIMITED
PARTNERSHIP
/s/ LLOYD HOBBS
----------------------------------------
Lloyd Hobbs, General Partner
Lessor
ROBERT CRONE/SOUTH TEXAS
HEALTHCARE, INC.
/s/ ROBERT CRONE
----------------------------------------
Robert Crone, President, Lessee
40
LEASE AGREEMENT
THIS LEASE AGREEMENT entered into this 12th day of August, 1992, by and
between LLOYD HOBBS as LESSOR, and ROBERT CRONE/SOUTH TEXAS HEALTHCARE, INC.,
213 North 40th, McAllen, TX 78501, as LESSEE,
WITNESSETH:
THAT for and in consideration of the covenants herein contained and the
rent hereby reserved, the Lessor has hereby let and rented to Lessee and Lessee
has hired and taken from the Lessor, the following described property,
consisting of one, 120-bed nursing home, commonly known as Briarcliff Nursing &
Rehabilitation Center of McAllen, Texas, located on the premises in Hidalgo
County, Texas, more particularly described in Exhibit "A" attached hereto,
including all furniture, fixtures and equipment located therein, provided and
installed by Lessor, paid for by Lessor, more particularly described in Exhibit
"B" attached hereto, to have and to hold the same for the period of years and
upon the terms and conditions hereinafter stated:
1. The term of this Lease shall be for the period of Fifteen (15)
years, commencing July 1, 1993 and ending June 30, 2008.
2. The rental shall be Twenty-Eight Thousand Four Hundred Seventy-Six
Dollars ($28,476.00) per month, payable in advance on or before the first day
of each month, except the rent shall be reduced to Twenty-Three Thousand Four
Hundred Seventy-Six Dollars ($28,476.00) for the first three (3) months of the
Lease, then back to $28,476.00 per month for the balance of the term of the
Lease, plus escalation as provided below. If the Lease shall commence on a day
other than the first day of the month, the rent will be pro-rated for the first
month. The rental payment will be mailed to Lloyd Hobbs, P.O. Box 126, Fort
Smith, Arkansas 72902, or to such other address as may be directed in writing.
The escalation clause is based upon increases in the Medicaid rates of 13.7% of
the Texas 207 Tile rates, times 120 beds times 30.4 average days per month and
shall be adjusted on the first day of the month following the effective date of
each and every rate increase. As an example, the 207 Texas Tile rate is now
$56.62 per day, times 120 beds, equals $6,794.40, times 365 days, equals
$2,479,958.00. $28,478 per month rent times 12 equals $341,712 annual rent.
$341,712 divided by $2,479,956 equals 13.7% of any 207 Tile rate increase, times
50%.
3. Lessee agrees to pay all taxes, general or special, assessed
against the land, buildings and personal property, from the time the property
is deeded to Lessor forward. An escrow for taxes is required; therefore, an
escrow payment of $1,500.00
1
41
forward. An escrow for taxes is required; therefore, an escrow payment of
$1,500.00 per month will be deposited with the Lessor for payment of taxes. This
escrow payment will be adjusted annually, to cover the taxes as levied against
the real and personal property by all taxing authorities using the previous
year as a guide.
4. The Lessee shall be responsible for and pay for fire and extended
coverage on the building and contents in such amount as shall be reasonably
requested by Lessor, being at least replacement value. The Insurance policy
shall designate Lessor and Lessee as named insured and loss payee, as
their interests may appear. If Lessee fails or neglects to provide this
insurance as required, Lessor may obtain same and add the premium cost to the
next lease payment due.
5. In the event of partial destruction of the building and contents
(that is, destruction of less than half, in value of the building and contents)
by fire or other casualty, then the Lessee shall be entitled to the insurance
proceeds and shall be obligated to restore the premises, including furniture,
furnishings, fixtures and equipment, to at least as good condition as it was,
prior to the destruction. Any insurance proceeds, in the event of loss, will be
escrowed with Owner of the building. Owner will pay bills incurred, as
directed by Lessee, from insurance proceeds, to repair damages as presented by
repair contractors. If repairs cost more than insurance proceeds Lessee will
be obligated to pay the difference from Lessee's own funds. If destruction is
fifty percent (50%) or more, of value, Lessor shall be entitled to the
insurance proceeds and shall, at his option, restore the premises as above
provided or cancel the Lease. In the event of destruction of fifty percent
(50%) or more of value, Lessor shall advise Lessee, within thirty (30) days
following the destruction, of his election in this regard.
6. In the event of a taking of all or of part of the land and buildings
as a result of eminent domain, condemnation or other governmental taking,
the consideration paid therefore shall be paid to the Lessor, and from the
date of payment of such consideration, the rental amount shall abate and be
reduced in proportion to the relation of the amount of the consideration to
$2,400,000.00 in value.
7. Lessee shall, as long as this Lease remains in effect, procure and
keep in effect, general public liability insurance against claims for bodily
injury or death occurring upon, in or about the demised premises, and on, in or
about the adjoining streets and passageways, with limits of not less than
$3,000,000.00 any one person or incident. Lessee shall also provide for
malpractice insurance. Lessor shall be a
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42
named insured on all policies.
8. Lessee agrees that it will at all times, during the term of
this Lease or any extension thereof, indemnify, protect, defend and save
harmless, the Lessor, against any and all claims, costs, charges, liabilities,
or expenses arising from damage or injury, actual or claimed, of whatever kind
or character, to property or persons occurring in or about the demised
premises, streets, sidewalks, passageways, parking lots, and alleys adjacent
thereto, and agree to resist or defend such action or proceedings, and cause
the same to be defended at his expense.
9. The premises shall be used as a licensed nursing home and for
no other purpose without the written consent of Lessor, Lessee agrees to
maintain the entire premises, including buildings, drives, parking area,
furniture, fixtures, equipment, and decoration in good and tenable repair and
condition. Lessee shall, at its expense, repair or replace items as may be
necessary to comply with this covenant, and such that the premises shall at all
times qualify for and remain, licensed as, at least an ICF II or private pay
for a 120-bed nursing home under the laws and regulations of the United States
and the State of Texas. A reduction in, or loss of, this or equivalent license
rating, in the event license ratings are changed, will be considered a default
in this Lease.
10. Lessee, with the prior written consent of the Lessor, which
consent shall not be unreasonably withheld, shall have the right to make such
additions, alterations, changes and improvements on the demised premises as
Lessee shall deem necessary or desirable; provided that no such addition,
alteration, change or improvement shall be made which will weaken the
structural strength of the building, deminish its utility or value, and all
additions, alterations, changes and improvements shall be made in a workmanlike
manner in full compliance with all building laws and ordinances applicable
thereto, and shall become part thereto upon termination of this Lease. Lessee
may erect and maintain such signs upon the premises as they may desire, and as
may be permitted by laws or ordinances pertaining thereto, but at its sole
expense and responsibility.
11. Lessee shall keep the demised premises in a clean, safe and
sanitary condition, and shall comply with all municipal, county, state and
federal laws and regulations governing the conduct of the activities conducted,
suffered or permitted by the Lessee on the demised premises and the Lessee
shall obtain appropriate permits from all such authorities required.
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43
shall have the right to sub-lease any or all of the leased premises, with the
prior written consent of Lessor, first obtained, which consent will not be
unreasonably withheld, provided that the Lessee will remain liable for the
performance of the covenants and obligations of this Lease. If the property is
sub-leased, the Lessor will have the right to a reasonable adjustment in the
rent.
13. Lessee agrees to permit Lessor, or his authorized representative to
enter the demised premises at all reasonable times during usual business hours
for the purpose of inspecting the same, provided that this shall not be
construed to obligate Lessor to notify Lessee of any defect observed therein.
14. Lessee shall not do or suffer anything to be done whereby the demised
premises, or any part thereof, may be encumbered by a mechanic's or similar
lien, and in the event such lien is filed against the demised premises, or any
part thereof, purporting to be for or on account of any labor done or material
or services furnished in connection with any work in or about the demised
premises, Lessee shall discharge the same of record within ten days after the
date of such claim, or if Lessee desires to contest the validity or amount of
such claim, they may do so provided that they first post security acceptable to
Lessor, fully indemnifying Lessor and the premises from any claim, charge, or
demand arising from such claim or expenses incurred in connection therewith.
15. The occurrence of any one or more of the following events shall
constitute an "event of default" in the performance of the covenants of the
Lessee:
a. The Lessee shall fail or neglect to pay the rentals when due, or
to pay any other sums of money which it is required by this Lease to pay, and
such non-payment shall continue on the tenth day after written notice of the
same has been posted to Lessee. In the event of default of this Lease, Lessee
will forfeit any rights, or ownership of contracts and ownership of Certificate
of Need at this location, with the State of Texas or the United States
Government, to Lessor, and will assign all its rights in the Medicaid or
Medicare Contract to Lessor without any cost to Lessor.
b. The Lessee shall fail, refuse or neglect to perform or observe
any other covenant required of it herein, and such non-performance or
non-observance shall continue on the thirtieth (30th) day (unless a later date
be slated in the notice) after written notice of the same has been posted to
the Lessee.
c. This Lease, or the premises itself, or any property of the Lessee
is levied upon the process of law, and such levy be not completely discharged
or secured to the
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44
upon by process of law, and such levy by not completely discharged, or secured
to the satisfaction of the Lessor, within fifteen (15) days after service of the
process.
d. Lessee becomes involved in financial difficulties as evidenced by
(1) an admission in writing of its inability to pay its debts generally as they
become due, (2)becoming petitioner in any voluntary debtor or bankruptcy
proceedings, whether asking arrangement, composition, reorganization,liquidation
or other relief, suspension or modification of their obligations, (3) becoming
a party respondent to any involuntary proceeding the purpose of which is to
subject the assets of the Lessees to the control of a court of creditor's
committee, (4) making an assignment of all or of a substantial part of their
property for the benefit of their creditors, or (5) seeking, consenting to, or
failing to avert the appointment of a receiver or a trustee for all or a
substantial part of its property, or of the demised premises, or of its interest
in this Lease.
16. If an event of default occurs, Lessor shall have the option to:
a. Terminate this Lease by service of written notice of termination,
and Lessees right to the possession of the premises shall cease upon the date
stated in such notice, without prejudice to Lessors' right to recover all sums
due as of the date possession is surrendered, plus any damage or loss suffered
on or prior to such date, including any expenses such as court costs, attorney's
fees and similar expenses incurred by Lessor in recovering possession, rent,
and/or damages due from Lessee; or
b. Re-enter and take possession of the premises without further
demand or notice, and expel Lessee, or those claiming under it, and remove the
effects of both, or either (forcibly if necessary) without being deemed guilty
of any manner of trespass and without prejudice to Lessor's further rights under
this Lease. In such event, the obligations of the Lessee under this Lease shall
continue, but Lessor may from time to time upon such terms and conditions, and
for such bona fide rental as it may be able reasonably to negotiate, sub-let the
premises for the account of Lessee, and all sums received by Lessor shall be
credited to the account of Lessee, and all sums received by Lessor shall be
credited to the account of Lessee, less all reasonable expenses actually
incurred by Lessor, including, but not limited to brokerage fees, advertising
expense, preparation including re-decoration, of the premises for sub-letting,
legal expenses, cost of performing such of Lessees obligations as Lessor finds
it necessary to perform at his expense and all other items necessary and
proper to procure suitable
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45
tenants for the premises. Lessee shall remain liable to Lessor for any
deficiency between the amounts properly credited to Lessee, and the amount due
Lessor under this Lease.
c. If Lessor, after taking possession of the premises pursuant to
subparagraph (b) above, is unable to make a bona fide sub-lease with a new
tenant for a term which equals or exceeds the balance of the period for which
Lessee is then obligated, Lessor shall have the right forthwith to demand and
recover from Lessee, the present value of the difference between the amount to
be received by Lessor under the new sub-lease, and the amount which would have
been payable by Lessee under this Lease for the remainder of the term hereof,
plus the expenses of Lessor as defined above.
d. Notwithstanding any election by Lessor to retake possession
pursuant to subparagraph (b) above, Lessor may at any time thereafter, upon
written notice to Lessee, terminate this Agreement in all respects, and in such
event, Lessee shall have no further liability, obligation or responsibility
after the date of such termination.
e. In order that Lessor may be indulgent when it deems the
circumstances warrant without prejudicing his right under this Lease, Lessee now
expressly agrees that no indulgence or extension, waiver or forgiveness,
variation by practice, nor any neglect or abstention by Lessor in strictly
enforcing the covenants of Lessee on any one or more occasions shall ever be
deemed a waiver of or estoppel against the right of Lessor to insist upon strict
compliance with each and every covenant herein, without any further or special
notice or warning, the existence of a covenant in this Lease and the provisions
of this paragraph being deemed adequate notice of the rights of the Lessor. No
property belonging to the Lessee shall ever be removed from the premises at any
time when there exists any default in the performance of any other covenant or
obligation assumed herein by Lessee.
17. Lessee agrees to execute any instrument reasonably required by Lessor
reflecting attornment to its prior interest which may be required by Lessor in
connection with mortgaging their interest in the demised premises, and/or
refunding or refinancing in the future of any mortgage which Lessor may place
upon the premises, subject to right of option of even date herewith.
18. Upon any termination of this Lease, whether by lapse of time,
cancellation pursuant to an election provided for therein, forfeiture, or
otherwise, Lessees shall surrender, immediately, possession of the demised
premises and all buildings and
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improvements then on the same, to Lessor in good and tenantable repair,
reasonable wear and damage from fire or other casualty or peril excepted. If
possession be not immediately surrendered, Lessor, with or without process of
Law may forthwith re-enter said premises and repossess the same, all persons
and property, without being deemed guilty of any unlawful act and without
prejudice to any other legal remedy available to Lessor.
19. Lessor has the right to assign all or any part of this Lease.
Lessor will notify Lessee in the event of an Assignment.
20. It is the intention of the parties that this is to be a net, net
net Lease.
21. Lessee agrees that if a default on this Lease occurs, resulting in
foreclosure or assignment, Lessees interest in the certificate of need will be
assigned to Lessor immediately and forthwith, at no cost to Lessor.
22. This Lease shall be construed and interpreted in accordance with
the laws of the State of Texas.
23. Any notice or demand required or permitted by law or by any of the
provisions of this Lease shall be in writing. All notices or demands by Lessor
to or upon Lessee shall be deemed to have been properly given when sent by
certified mail, addressed to Lessee, Robert Crone/South Texas Healthcare, Inc.,
213 North 40th, McAllen, TX 78501, or such other place as Lessee may from time
to time, designate in a written notice to Lessor; and to Lessor by Lessee,
addressed to Lloyd Hobbs, P.O. Box 126, Fort Smith, Arkansas 72902, or at such
other place as Lessor may from time to time, designate in a written notice to
Lessee.
24. This Lease and all provisions herein shall be binding upon and
inure to the benefit of the parties hereto, their heirs, legal representatives,
successors and assigns.
25. Time is of the essence in this Lease.
IN WITNESS WHEREOF the parties have caused this instrument to be
properly executed the day and year first above written.
/s/Lloyd Hobbs
---------------------------------------
Lloyd Hobbs Lessor
ROBERT CRONE/SOUTH TEXAS
HEALTHCARE, INC.
/s/Robert Crone
---------------------------------------
Robert Crone, PRESIDENT -- LESSEE
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Exhibit A
McAllen, Texas
The East 425.0 fee of the North 375.0 feet of the South 734.55 feet of
Lot 125, La Lomita Irrigation & Construction Company's Subdivision, of
Porciones 61, 62 and 63, Hidalgo County, Texas, as per map or plat thereof
recorded in Volume 24, Page 68, Deed Records, Hidalgo County, Texas, and
described as follows:
BEGINNING at a point on the East line of Lot 125, North 8 degrees 42 minutes 30
seconds East, 359.55 feet from the Southeast corner of Lot 125, for the
Southeast corner of the following described tract of land, said point being in
North Ware Road (F.M. #2220);
THENCE, with the East line of Lot 125, in Ware Road, North 8 degrees 42 minutes
30 seconds East, 375.0 feet to a point, for the Northeast corner hereof; said
point being on the projection of the South line of Gardenia Avenue;
THENCE, with he South line of Gardenia Avenue and its projection, North 81
degrees 17 minutes 30 seconds West, at 40.91 feet pass an iron pin on the West
line of North Road and at 425.0 feet an iron pin on the East line of North 38th
Street, for the Northwest corner hereof;
THENCE, with the East line of North 38th Street, and its Southerly projection,
South 8 degrees 42 minutes 30 seconds West, 375.00 feet to a point, for the
Southwest corner hereof;
THENCE, parallel to the South line of Lot 125, South 81 degrees 17 minutes 30
seconds East, at 384.09 feet pass an iron pin on the West line of North Ware
Road and at 425.0 feet the PLACE OF BEGINNING, containing 3.66 acres of land,
more or less, of which the East 10.91 feet, comprising 0.35 acre, lies in North
Ware Road (F.M. #2220).
EDWARDS ABSTRACT AND TITLE CO.
48
FIRST AMENDMENT TO OPTION
This Amendment to Option entered into this 9th day of April, 1996,
amending the Option Agreement dated August 12, 1992, on Briarcliff Nursing &
Rehabilitation Center of McAllen, Texas between LLOYD G. HOBBS, as Grantor, and
ROBERT CRONE/SOUTH TEXAS HEALTHCARE, INC., as Grantee. Lloyd G. Hobbs assigned
his Interest in this Option to Hobbs & Curry Family Limited Partnership on
January 1, 1995.
Now, Grantor and Grantee have agreed to add seventy-four beds to the
Briarcliff Nursing & Rehabilitation Center, making a total of 194 beds. Grantor
and Grantee have also agreed to increase the Option Price for this nursing home
as follows:
The Option is amended to state that the Option may be exercised by
Grantee at any time after eighty-four (84) monthly rental payments have been
paid which would include the increased rental payments for the new addition. For
example, if the first monthly rental payment to include the new addition is
made on October 1, 1996, then the option could be exercised on October 1, 2003,
providing all 84 payments had been paid. The option price will be $4,700,000.00
All other terms of the Option Agreement, dated August 12, 1992, will
remain the same as originally written.
Witness our hands this 9th day of April, 1996.
H0BBS & CURRY FAMILY LIMITED
PARTNERSHIP
/s/ Lloyd Hobbs
-------------------------------
Lloyd Hobbs, General Partner
Grantor
ROBERT CRONE/SOUTH TEXAS
HEALTHCARE, INC.
/s/ Robert Crone
-------------------------------
Robert Crone, President-Grantee
49
OPTION AGREEMENT
For and in consideration of the sum of ten dollars cash in hand paid,
receipt of which is hereby acknowledged and for other good and valuable
considerations, LLOYD HOBBS, hereinafter called "Grantor", does hereby give and
grant unto Robert Crone/South Texas Healthcare, Inc., 214 North 40th, McAllen,
TX 78501, together with all improvements now or hereafter constructed upon the
same, and including all personal property shown upon Exhibit "B" attached
hereto, and in addition, any renewals, substitutions, replacements or additions
thereto, which may be on the premises and belonging to Grantor at the time of
the exercise of this Option, To-Wit:
Legal description attached hereto as exhibit "A".
1. This Option may be exercised by Grantees at any time after one
hundred Twenty (120) payments have been paid, provided all lease payments are
current, conditioned upon the Grantees, their successors or assigns being in
possession of the home at the time of exercise and upon the express condition
and understanding that the Grantees herein have fully performed all of the terms
and conditions contained in that certain Lease Agreement dated the 12th day of
August, 1992, to be kept and performed by the Lessees therein and more
particularly are current in the payment of all sums due under the terms of said
Lease Agreement. If at any time, the above Lease shall be terminated, this
Option will immediately become null and void. This Option may be exercised by
means of Grantee giving written notice by certified mail, return receipt
requested, of such election to Lessor, Lloyd Hobbs, Box 126, Fort Smith, AR
72902 or at such other place as may be directed in writing, accompanied by
$10,000.00 earnest money deposit. The earnest money deposit will be applied on
the purchase price if purchase is concluded.
2. The price for the assets to be sold shall be Two Million Four Hundred
Thousand Dollars ($2,400,000.00). The purchase price is payable in cash unless a
financing arrangement is worked out at the time of purchase with Seller.
The purchase price herein stated shall include the personal property
consisting of furniture, furnishings, fixtures and equipment located on said
premises as of the date of beginning of this Lease, and such as may thereafter
be placed upon the
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premises by way of substitution for or addition to such furniture, furnishings,
fixtures and equipment, less any furniture and equipment removed for replacement
during the Lease term by Lessor or Lessee.
3. Upon receipt of notice of intent to exercise this Option, Grantor
shall promptly furnish to Grantees, a Warranty Dead, subject only to recorded
easements, rights-of-way, mineral interests and etc. Recorded easements and
restrictions shall not be deemed to impair title.
4. Closing shall be at a time and place mutually agreeable. In the
absence of agreement, Grantor may obligate Grantees to perform by giving written
notice that he is ready, willing and able to execute the Deed and Bill of Sale.
Grantees shall have ten (10) business days to execute the instruments required
to consummate this transaction, and to pay the purchase price. If purchase price
is not tendered or other arrangements made within the ten-day period, the option
will be null and void and the $10,000.00 earnest money deposit will be
considered liquidated damages and the Lease will continue in force, except no
option will be in force and effect. Grantees shall designate some place in Fort
Smith, Arkansas at which they will appear prepared to perform, and Grantor shall
have ten (10) business days after receipt of such demand in which to execute and
deliver the documents required by this Option. If Grantor fails, neglects or
refuses to perform, Grantees shall have the right to seek specific performance
of this Option.
5. This Option may not be assigned by Grantees without the written
consent of the Grantor, which consent will not be unreasonably withheld.
Notices required or permitted by this Option may be given to Grantor by
certified mail, return receipt requested, addressed to Lloyd Hobbs, P. O. Box
126, Fort Smith, Arkansas 72902 and to Grantees by certified mail, return
receipt requested, to Robert Crone/South Texas Healthcare, Inc., 213 North 40th,
McAllen, TX 78601. Either party may change the person to whom or the place to
which notice is to be given by written request.
This Agreement shall be binding upon the heirs, legal representatives,
successors and assigns of the parties hereto.
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Dated this 12th day of August, 1992.
/s/ Lloyd Hobbs
-------------------------------
Lloyd Hobbs, Grantor
ROBERT CRONE/SOUTH TEXAS
HEALTHCARE, INC.
/s/ Robert Crone
-------------------------------
Robert Crone, President-Grantee
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52
BILL OF SALE FOR SUPPLIES
Robert Crone-South Texas Health Care, Inc., a Texas corporation
("SELLER"), as owner of certain supplies used in the operation of the facility
more particularly described in Exhibit "A" hereto for Ten Dollars ($10.00) and
other good and valuable consideration, the receipt and adequacy of which is
hereby acknowledged, does hereby grant, sell and transfer unto Summit Care
Texas, LP, a Texas limited partnership or its affiliated nominee, ("BUYER" or
"SUMMIT"), the Personal property more particularly set forth and described on
Exhibit "B" attached hereto and incorporated herein by reference.
To have and to hold the same to BUYER and its successors and assigns for
their use forever.
SELLER hereby covenants and warrants to the BUYER that it is the lawful
owner of said goods; that said goods are free and clear from all encumbrances
except as set forth; and that SELLER has the right to sell the same.
IN WITNESS WHEREOF, SELLER has executed this Bill of Sale on November
24, 1997, to be effective as of the first (1st) day of December, 1997.
IN THE PRESENCE OF: SELLER:
ROBERT CRONE-SOUTH TEXAS
HEALTH CARE, INC.
[SIG] By: /s/ Robert Crone
- ------------------------------- -------------------------------
Robert Crone
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NON-COMPETE AGREEMENT
This Non-Compete Agreement (the "Agreement") is entered into this 24th
day of November, 1997 by and among Summit Care Texas, LP, a Texas limited
partnership ("Summit Care") and Robert Crone, an individual and resident of the
State of Texas (hereinafter referred to as "Seller")
RECITALS
A. Summit Care and Seller have entered into an Agreement of Purchase and
Sale of Assets (the "Purchase Agreement"), whereby Seller has agreed to sell to
Summit Care that certain One Hundred and Ninety Four (194)-bed nursing facility,
commonly known as Briarcliff Nursing and Rehabilitation Center, located at 3201
North Ware Road, in the City of McAllen, County of Hidalgo, State of Texas, more
particularly described on Exhibit A hereto and herein incorporated by reference
(the "Facility"). The terms and provisions of the Purchase Agreement are hereby
incorporated herein as if set forth in full. All capitalized, undefined terms
used herein shall have the meanings given to them in the Agreement.
B. Seller has knowledge and expertise in the ownership and operation of
nursing homes.
C. Summit Care intends to operate the Facility and real property held
and operated by Seller and sold to Summit Care as a nursing home.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and of the mutual
promises herein, the parties hereto agree as follows:
1. For good and valuable consideration, the receipt of which is hereby
acknowledged, Seller agrees for seven (7) calendar years following the Closing
Date of the Agreement not to compete with Summit Care within the County of
Hidalgo, State of Texas.
2. For purposes of this Agreement, Seller shall be deemed to be in
competition with Summit Care if Seller either separately or jointly, owns,
operates, or has a direct or indirect interest in the operation of a Nursing
Home (which, for purposes of this Agreement shall mean, a facility engaged in
the provision of long
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term care, an extended care facility, assisted living facility, retirement
center or any similar facility) or the provision of any service or ancillary
service that is provided in the operation of the Facility during the term of
this Agreement, in the County of Hidalgo; or if Seller engages in the operation
of a Nursing Home or the provision of long term care in Hidalgo County as an
affiliate, investor, officer, director, administrator, employee, consultant,
agent, or in any other material capacity.
3. Seller also covenants that he shall not during the term hereof,
solicit Summit Care's or its affiliates' patients or current employees for the
purpose of providing long term care, long term care, or any other medical
services, and will not hire any of said employees for the provision of services
associated with a Nursing Home, long term care, or any other medical services.
4. For purposes of this Agreement a "current employee" is defined to
mean any person who has been employed by Summit Care for at least four hundred
(400) hours during any continuous one hundred twenty (120) day period within the
past twelve (12) months preceding any particular date in question during the
term of this Agreement.
5. Seller acknowledges that the restrictions in this Agreement are
reasonable, as to substance, geographical area and duration, for the protection
of Summit Care. Nonetheless, if a court finds this covenant not to compete to be
too broad, said court shall have the ability to narrow the substance,
geographical area or duration to the extent necessary for the covenant to become
reasonable and enforceable. If Seller knowingly or intentionally violates this
section, Summit Care may exercise any or all remedies provided by law, including
but not limited to a temporary restraining order without notice and without
bond, temporary injunction without bond, and a permanent injunction without bond
in addition to other equitable or legal remedies, if any, Summit Care may have
against Seller or others acting in concert with Seller. In addition to and
without waiving other remedies available to Summit Care under law or pursuant to
this Section, Summit Care may require Seller to account and remit to Summit an
amount equal to one hundred and fifty percent (150%) of all gross fees earned by
Seller from such customers and patients as liquidated damages for such breach.
6. This Agreement shall not be changed or canceled without the express
written consent of Summit Care and shall be binding upon and shall inure to the
benefit of the heirs, successors and assigns of the parties.
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7. This Agreement shall last for a term of seven (7) calendar years from
the date hereof and shall be construed and interpreted in accordance with the
laws of the state of Texas.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
SUMMIT CARE TEXAS, LP
a Texas limited partnership
By:
--------------------------------
The Sr. V.P. Finance
---------------------------
of its General Partner
Summit Care Management, Inc.
a California Corporation
SELLER
/s/ Robert Crone
-------------------------------
Robert Crone
-------------------------------
[SIG]
-------------------------------
Family Member
-------------------------------
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BILL OF SALE FOR PERSONAL PROPERTY
Robert Crone-South Texas Health Care, Inc., a Texas corporation
("SELLER"), in consideration of Ten Dollars ($10. 00) and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, does hereby grant, bargain, sell, convey and transfer to Summit
Care Texas, LP, a Texas limited partnership or its affiliated nominee, ("BUYER"
or "SUMMIT CARE"), all right, title and interest, as of December 1, 1997, in and
to, all and singular, the following:
(1) all existing personal property such as furniture, fixtures, and
equipment (the "Personal Property") including, but not limited to the items
listed on Exhibit "A" attached hereto which are presently located on the real
property of and/or used in connection with the ownership, maintenance or
operation of the facility more particularly described in Exhibit "B" attached
hereto (the "Facility"), other than that Personal property specifically excluded
under the terms of the Agreement of Purchase and Sale of Assets dated November
24, 1997, by and between Buyer and Seller (the "Purchase Agreement"); and
(2) all licenses, occupancy agreements, certificates, permits,
accreditation, registrations and authorizations of all federal, state and local
governmental or regulatory authorities, or other agreements providing for the
use or occupancy of, the Facility and Personal Property (to the extent each may
be transferred).
(3) any and all plans, drawings, specifications, surveys, engineering
reports, and other technical descriptions owned or held by Seller which relate
in any way to the design, construction, ownership, use, maintenance, service, or
operation of the Facility or the Personal property to the extent any of the
above are transferable.
(4) all rights, title, and interest in and to the names and the
telephone numbers for the Facility set forth on Exhibit "A" hereto.
TO HAVE AND TO HOLD, all and singular, the Personal Property hereby
sold, assigned, transferred and conveyed to Buyer, its successors and assigns,
to and for its own use and benefit.
Seller hereby represents and warrants to Buyer that Seller is the owner
of said Personal Property, that Seller has full right,
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power and authority to sell said Personal Property and to make this Bill of
Sale, and that said Personal Property is not encumbered. Subject to the
foregoing limitations, representations and warranties, and to the
representations and warranties contained in the Purchase Agreement, the Personal
Property is hereby conveyed by Seller to Buyer. Seller does hereby bind itself,
its successors and assigns and the heirs, executors, administrators and assigns
of Seller, to forever WARRANT AND DEFEND the title to the said Personal property
unto the said Buyer and its successor and assigns; against every person
whosoever lawfully claiming, or declaiming the same, or any part thereof.
Signed this twenty-fourth (24th) day of November, 1997, to be effective
as of the first (1st) day of December, 1997.
IN THE PRESENCE OF: SELLER:
ROBERT CRONE-SOUTH TEXAS
HEALTH CARE, INC.
/s/ By: /s/ Robert Crone
- ------------------------------- -------------------------------
Robert Crone
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BILL OF SALE FOR SUPPLIES
Robert Crone-South Texas Health Care, Inc., a Texas corporation
("SELLER"), as owner of certain supplies used in the operation of the facility
more particularly described in Exhibit "A" hereto for Ten Dollars ($10.00) and
other good and valuable consideration, the receipt and adequacy of which is
hereby acknowledged, does hereby grant, sell and transfer unto Summit Care
Texas, LP, a Texas limited partnership or its affiliated nominee, ("BUYER" or
"SUMMIT") , the Personal property more particularly set forth and described on
Exhibit "B" attached hereto and incorporated herein by reference.
To have and to hold the same to BUYER and its successors and assigns for
their use forever.
SELLER hereby covenants and warrants to the BUYER that it is the lawful
owner of said goods; that said goods are free and clear from all encumbrances
except as set forth; and that SELLER has the right to sell the same.
IN WITNESS WHEREOF, SELLER has executed this Bill of Sale on November
24, 1997, to be effective as of the first (1st) day of December, 1997.
IN THE PRESENCE OF: SELLER:
ROBERT CRONE-SOUTH TEXAS
HEALTH CARE, INC.
/s/ By: /s/ Robert Crone
- ------------------------------- -------------------------------
Robert Crone
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