Exhibit 10.4
UMBRELLA AGREEMENT
UMBRELLA AGREEMENT (this "Agreement") made this 25th day of September,
2002, by and between certain affiliates of Greenbriar Corporation, ▇▇▇▇▇ ▇.
▇▇▇▇▇▇, and Greenbriar Corporation, each having an address at Centura Tower I,
Suite 650, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇; Attn ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
(hereinafter referred collectively to as "Greenbriar"), and ▇▇▇ ▇. ▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Sunwest Management, Inc.
("SMI"), an Oregon corporation, certain affiliates of SMI, and any entity and/or
affiliate of SMI, all with an address at ▇▇▇▇ - ▇▇▇▇ ▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇; attn ▇▇▇ ▇. ▇▇▇▇▇▇ (hereinafter referred to collectively as "the "Harder
Group"). Greenbriar is also referred to as "Seller" and The Harder Group is also
referred to as "Purchaser".
WITNESSETH THAT THE HARDER GROUP AND GREENBRIAR HAVE AGREED AS FOLLOWS:
1. Greenbriar Corporation, and some of its affiliates, agree to sell to the
Harder Group, for $10 and other valuable consideration, including the
closing of all the transactions discussed in this agreement, the following:
(a) The Willows at Sherman, Sherman, Texas, as per separate contract, with
a purchase price of Six Million One Hundred Fifty Thousand
($6,150,000) Dollars, including purchase money financing of Two
Million Fifty Thousand ($2,050,000) Dollars, The parties plan to sign
an Agreement for Purchase and Sale (the "▇▇▇▇▇▇▇ Contract"), between
The Willows at Sherman, Inc., a Texas corporation, having an address
for notices under this Agreement at c/o Greenbriar Corporation,
Centura Tower I, Suite 650, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇;
Attn ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (hereinafter referred to as "Sherman"), and
Willows at Sherman Assisted Living & Memory Care, LP, a Texas limited
partnership ("Willows), with an address for notices under this
Agreement at c/o Sunwest Management, Inc., ▇▇▇▇ - ▇▇▇▇ ▇▇▇▇▇▇ ▇▇,
▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇;
(b) (i) The Corinthians Retirement Project (as therein defined), as per
separate contract, with a purchase price of Eleven Million Three
Hundred Fifty Thousand ($11,350,000) Dollars, including purchase money
financing of Three Million Five Hundred Ten Thousand ($3,510,000)
Dollars. The parties plan to sign an Agreement for Purchase and Sale
(the "Corinthians Retirement Contract"), between Corinthians Real
Estate Investors, L.P., a Texas limited partnership, having an address
for notices under this Agreement at c/o Greenbriar Corporation,
Centura Tower I, Suite 650, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇;
Attn ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (hereinafter referred to as "CREI"), and
Corinthians I Retirement Community, LP, a Texas limited partnership
("Corinthians Retirement"), with an address for notices under this
Agreement at c/o Sunwest Management, Inc., ▇▇▇▇ - ▇▇▇▇ ▇▇▇▇▇▇ ▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, and. (ii) The Corinthians Assisted
Living Project (as therein defined), as per separate contract, with a
purchase price of Five Million Seven Hundred Thousand ($5,700,000)
Dollars, including purchase money financing of One Million Seven
Hundred Forty Thousand ($1,740,000) Dollars. The parties plan to sign
an Agreement for Purchase and Sale (the "Corinthians Assisted
Contract"), between Corinthians Real Estate Investors, L.P., a Texas
limited partnership, having an address for notices under this
Agreement at c/o Greenbriar Corporation, Centura Tower I, Suite 650,
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇; Attn ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
(hereinafter referred to as "CREI"), and Corinthians Assisted Living &
Memory Care, LP, a Texas limited partnership ("Corinthians Assisted
Living"), with an address for notices under this Agreement at c/o
Sunwest Management, Inc., ▇▇▇▇ - ▇▇▇▇ ▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇,
(c) The Harlingen property in Cameron County, Texas, as per separate
contract, with a purchase price of Three Million Three Hundred Sixty
Thousand ($3,360,000) Dollars, including purchase money financing not
to exceed the excess, if any, of the Purchase Price over any debt to
be assumed or given by Purchaser to Vestin Mortgage Company. The
parties plan to sign an Agreement for Purchase and Sale (the
"Harlingen Contract"), between The Willows at Sherman, Inc., a Texas
corporation, having an address for notices under this Agreement at c/o
Greenbriar Corporation, Centura Tower I, Suite 650, ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇; Attn ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (hereinafter
referred to as "Harlingen"), and Camelot I Retirement Community, LP
("Camelot"), a Texas limited partnership, with an address for notices
under this Agreement at c/o Sunwest Management, Inc., ▇▇▇▇ - ▇▇▇▇
▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇; and
(d) 100% of the common stock of the following management companies (the
"Management Companies"):
o SLM-Crown Pointe, Inc.
o SLM-Oak Park, Inc.
o SLM-Wedgwood Terrace, Inc.
The date on which the sale and transfer of the said common stock shall occur is
called the "Stock Closing Date"). The sale and transfer of the said common stock
shall not occur until the necessary regulatory approvals (the "Approvals"), if
any, have been obtained by the parties hereto and until the Approvals have been
obtained the Harder Group shall act as consultants to such Management Companies.
Each of the above listed Management Companies is the manager under one
management contract and has no other assets or liabilities. Greenbriar
Corporation will indemnify the Harder Group against any claim that is asserted
against these Management Companies, or any person who is included in the
hereinabove defined term the "Harder Group", for actions or events that occurred
prior to the Stock Closing Date, including allegations, if any, asserted by the
owner of any of the properties covered by the applicable management contracts:
(i) of mismanagement, and/or (ii) that Greenbriar did not have the right to
transfer the stock as herein contemplated. Similarly, the Harder Group will
indemnify Greenbriar against any claim that is asserted against any person who
is included in the defined term "Greenbriar" or against these Management
Companies, for actions or events that occurred from and after the Stock Closing
Date, including allegations, if any, of mismanagement asserted by the owner of
any of the properties covered by the applicable management contracts.
(e) Greenbriar's affiliate will also lease and thereafter sell to The
Harder Group the two assisted living facilities in Muskogee, Oklahoma,
as per separate lease and purchase contract.
(f) Greenbriar agrees to lend to each of the purchasers of the properties
listed in this Paragraph 1 (a), (b) and (c) the closing costs required
to be paid by each such purchaser to Vestin Mortgage at the time of
the Closing of the purchase money financing required to close each
such acquisition; specifically, Greenbriar will lend to each such
buyer the "points" charged by Vestin at closing, the legal fees
charged by Vestin's attorney at closing, the title insurance, if any,
required by such lender for each such property (Vestin may waive title
insurance in certain instances, or may just require an updated
endorsement, in which event no loan for that particular expense will
be necessary), and mortgage recording costs and any advance interest
payment which Vestin may require, and Greenbriar will also lend to
each such Buyer any cash outlay required to be paid by such Buyer to
Greenbriar as a result of prorations under the respective sales
contracts referred to above; provided, however, that if under one such
contract Greenbriar is owed net cash for prorations and under another
such contract Greenbriar must pay that Buyer net cash for prorations,
the total net cash amounts under all the said contracts for prorations
will be netted out and the result, if it is a net credit in
Greenbriar's favor, will be added to the loan herein described. Such
loan will be evidenced by a Note, in the same form, and upon the same
terms, and signed and guaranteed (using Vestin's form of guaranty) by
the same persons, and bearing the same "points" (which points shall be
added to the principal amount of the Note to Greenbriar and shall be
due at maturity) and terms of payment, and interest rate, as the loan
made by Vestin.
(g) Greenbriar Corporation also agrees to sell its 49% partnership
interest in Villa del Rey Roswell, LP and to transfer to the Harder
Group the option to purchase the 51% interest in Villa del Rey
Roswell, LP that Greenbriar's affiliate does not presently own. A copy
of that option is attached as Exhibit A. As consideration for this
transaction, Greenbriar Corporation will receive a note in the same
form as is discussed in the attached Corinthians Contract, from the
Harder Group for $823,728 and Greenbriar Corporation will also receive
the partnership interests discussed in Section "3" below and the
benefits of the other transactions described herein. The note will
bear interest at the prime rate, as published from time to time in the
Wall Street Journal, and will accrue monthly, with each monthly
payment being added to the principal debt on the first of each month,
and with the entire indebtedness being due and payable in full on the
maturity date. The principal and interest and all other amounts owing
under the Note will be due on March 16, 2004. The note will be
executed by ▇▇▇ ▇▇▇▇▇▇ and wife and ▇▇▇▇▇▇ ▇▇▇▇▇▇ and wife and Sunwest
Management, Inc. (herein collectively called the "Harder Group")
2. In addition to the above, so long as there is no monetary default (that has
not been cured within the Notice and Grace periods provided in the
applicable documents) by the Harder Group under any of its obligation to
any member of the Greenbriar Group (i.e. any entity or person affiliated
with Greenbriar Corporation and/or any affiliate of Greenbriar
Corporation), Greenbriar Corporation agrees to pay the Harder Group
$660,000, payable at the rate of $55,000 per month beginning one month
after the closing of all the transactions contemplated by this Agreement
(other than those discussed in Section "3"), and ending 12 months
thereafter. This payment is for due diligence and expenses for the
acquisition of properties for the partnerships in which the Greenbriar
Corporation will have a 50% partnership interest as contemplated by Section
"3" below.
3. (A) The Harder Group is currently negotiating to purchase the properties
listed hereafter in this paragraph. In consideration for Greenbriar's
agreements herein, and for other valuable considerations, the Harder Group
will assign and convey to Greenbriar Corporation, in the form of limited
partnership interests, One Half (1/2) of all the ownership interests in the
fee title, cash flow and profit and losses, in the following properties:
[Confidential information has been deleted and filed separately with the
Commission.]
(B) If, for any reason, the Harder Group is unable to purchase all or any of the
properties listed above, then the Harder Group will use its best efforts to
assign and convey to the Greenbriar Group a 50% total ownership interest, as
stated above to be in the form of a limited partnership interest, in properties
of similar value and with similar equity, it being the intention of the parties
that the Greenbriar Group will receive a 50% interest total ownership interest,
in the form of a limited partnership interest, in 12 properties of similar value
and with similar equity.
(C) If the Harder Group deems it necessary to assign a percentage of the total
ownership in any particular property hereafter acquired to another person or
entity, then: (i) the Greenbriar Group shall receive no less than 50% of the
total ownership interests in such property that are acquired by the Harder
Group, and (ii) to the extent that, as a result of the preceding clause "(i)",
Greenbriar receives less than a 50% ownership interest in any property, that is
intended by the parties to be part of the properties in which Greenbriar is
given an interest in fulfillment of the obligations discussed in this P. 3, then
the number of properties in which Greenbriar shall be given an ownership
interest as contemplated by this P. 3 shall be increased proportionately, to
compensate Greenbriar for the lower percentage ownership interest given to
Greenbriar in this property, so that Greenbriar will receive, as required by
this P. 3, the percentage equivalent of 50% of the total ownership interests in
12 properties. For example, in fulfillment of this P. 3, the following
combination, which is merely an example, and not an exhaustive list, shall be
deemed acceptable in fulfillment of this P. 3: (a) a 25% total ownership
interest (so long as it 1/2 of the Harder Group's total interest) in 8
properties, plus (b) a 10% total ownership interest (so long as it 1/2 of the
Harder Group's total interest) in 10 properties, plus (c) a 50% total ownership
interest (so long as it 1/2 of the Harder Group's total interest) in 6
properties.
(D) In the event of a dispute as to value or equity, the opinions of 3 third
party appraisers, each of whom has never had dealings with any of the parties
hereto, will be decisive. Time is of the essence and the Harder Group will use
its best efforts to acquire these acquisitions or similar acquisitions no later
than September 30, 2004.
(E) Anytime during a 24 month period after the Greenbriar Group receives its 50%
limited partnership interest, the Harder Group may buy that interest for
$750,000 per property or a total of $9,000,000, it being intended that
Greenbriar will receive $9,000,000 of total equity (as appraised by the lending
institutions) from the transactions contemplated by this paragraph "3".
(F) All partnership agreements contemplated in this Section "3" will be similar
in all respects to the Greatwood Partnership Agreement, attached as Exhibit B,
except for the names of the partners and their respective ownership interests.
4. INSPECTION PERIOD
--------------------
Purchaser has inspected and intends to continue its physical and other
inspection of the properties it intends to buy and/or lease, as herein
discussed, through and including each Closing Date ("Inspection Period"), which
inspection shall be at the sole cost and expense of Purchaser. Seller shall
assist with such inspections, but shall not be obligated to incur any cost or
expense or to furnish any information other than at the place where same is
maintained in connection therewith. All information received by Purchaser
relating to the Project, Seller or its affiliates shall be kept in strict
confidence and used solely for the purpose of determining the advisability of
proceeding with the transaction described in this Agreement. Purchaser may not
communicate with any employee at any of the Properties unless Purchaser obtains
Seller's general written consent to communicate with such employees at each such
property. Each sale and/or lease will be without any representations of any kind
or nature by the seller, the Purchaser representing that it is sophisticated in
real estate and that this purchase price and sales structure are in material
consideration of each sale being in its "as is, where is" condition, with no
representations from Seller.
5. OPTION TO CONSOLIDATE NOTES
------------------------------
Sherman/Corinthians Seller Financing.
A. The sellers under the Agreements for Purchase and Sale mentioned in
Paragraphs 1 "(a)" and 1 "(b)" of this Agreement will be providing purchase
money financing for a portion of the Purchase Price under each such Agreement.
This Section "5" does not cover or refer in any way to any promissory notes tha
may be signed by any party with regard to any transaction in which any of the
parties hereto, or their affiliates, may engage other than the notes hereinafter
specifically described. For example, this Section "5" does not cover the notes
which evidence the obligation of any purchaser to pay any seller for closing
costs that may be loaned by any seller to any buyer in any transaction related
to this Agreement or related to any party that is affiliated with a party to
this Agreement.
(i) With respect to the ▇▇▇▇▇▇▇ Contract, Sherman will be providing purchase
money financing of Two Million Fifty Thousand ($2,050,000) Dollars (the "Sherman
Financing") to Willows, which will be evidenced by a Note (the "Sherman Note")
in that principal amount and which will be guaranteed and secured as therein
provided.
(ii) With respect to the Corinthians Retirement Contract, CREI will be providing
purchase money financing of Three Million Five Hundred Ten Thousand ($3,510,000)
Dollars (the "Corinthians Retirement Financing") for the sale to Corinthians
Retirement and with respect to the Corinthians Assisted Contract, CREI will be
providing purchase money financing of One Million Seven Hundred Forty Hundred
Thousand ($1,740,000) Dollars (the "Corinthians Assisted Financing") for the
sale to Corinthians Assisted Living, which financings will each be evidenced by
a Note or Notes (the "Corinthians Notes") in those respective principal amounts
and which will be guaranteed and secured as therein provided.
B. Beginning on the 1st day following the date (the "Start Date") on which the
last of the Corinthians Retirement, Corinthians Assisted Living and The Willows
at Sherman transactions closes, Willows, Corinthians Retirement, and Corinthians
Assisted Living, as purchasers/payors, and Sherman and CREI, as sellers/payees,
will each have the option for a period of six (6) months from the Start Date to
convert the Corinthian Retirement's financing of $3,510,000, the Corinthians
Assisted Living financing of $1,740,000, and The Willows at Sherman financing of
$2,050,000, to one note (the "Converted Note") in a total principal amount equal
to the sum of $2,800,000 ($2,660,000 for Corinthians Retirement and $140,000 for
Corinthians Assisted Living), plus accrued and unpaid interest under the
original notes to the date of conversion, and which principal amount shall bear
interest at the rate of Twelve (12%) per cent per annum, and be payable
interest-only, in advance, on the first day of each and every month for a period
of 24 months, at which time the entire unpaid balance of principal, interest,
and all other amounts owing under the Converted Note shall be paid in full;
provided, that if Sellers shall be of the opinion that such Note may be deemed
unenforceable under Texas law, and the Purchasers shall fail to provide an
opinion of counsel reasonably acceptable to Sellers that the Converted Note is
not usurious, then the interest rate under the Converted Note shall be lowered
to the maximum rate allowed under Texas law and the principal amount of the
Converted Note shall be increased, and the payment schedule shall be adjusted,
so that the total amount of dollars shall be paid as and when such dollars would
have been paid had the Converted Note carried the principal amount and terms of
payment originally contemplated in this paragraph. The Converted Note shall be
made, jointly and severally, by all the parties to the Notes being converted and
shall be guaranteed and secured by the same parties, collateral and other terms
as were the notes so converted. To exercise such option, the parties exercising
the option shall provide the other party with one (1) days' prior written notice
that it is exercising the option. Upon the signing of the Converted Note and all
guarantees and security agreements and UCCs and the posting of all the same
collateral, by all the purchasers and guarantors and others, the original notes
shall be deemed modified, released, superseded and replaced.
6. MISCELLANEOUS
----------------
6.1 This Agreement is binding upon and shall inure to the benefit of the
parties hereto, their respective heirs, successors, legal representatives and
permitted assigns.
6.2 Wherever under the terms and provisions of this Agreement the time for
performance falls upon a Saturday, Sunday or legal holiday, such time for
performance shall be extended to the second business day thereafter.
6.3 This Agreement may be executed in one or more counterparts, all of
which when taken together shall constitute one and the same agreement, and shall
become effective when one or more counterparts have been executed by each of the
parties hereto and delivered to each of the other parties hereto.
6.4 The captions at the beginning of the several paragraphs, Sections and
Articles are for convenience in locating the context, but are not part of the
context. Unless otherwise specifically set forth in this Agreement to the
contrary, all references to Exhibits contained in this Agreement refer to the
Exhibits which are attached to this Agreement, all of which Exhibits are
incorporated in, and made a part of, this Agreement by reference. Unless
otherwise specifically set forth in this Agreement to the contrary, all
references to Articles, Sections, paragraphs and clauses refer to portions of
this Agreement.
6.5 If any term or provision of this Agreement shall be held to be illegal,
invalid, unenforceable or inoperative as a matter of law, the remaining terms
and provisions of this Agreement shall not be affected thereby, but each such
remaining term and provision shall be valid and shall remain in full force and
effect.
6.6 This Agreement and the other writings referred to in, or delivered
pursuant to, this Agreement, embody the entire understanding and contract
between the parties hereto with respect to the Project and supersede any and all
prior agreements and understandings between the parties hereto, whether written
or oral, formal or informal, with respect to the subject matter of this
Agreement. This Agreement has been entered into after full investigation by each
party and its professional advisors, and neither party is relying upon any
statement, representation or warranty made by or on behalf of the other which is
not expressly set forth in this Agreement.
6.7 No extensions, changes, waivers, modifications or amendments to or of
this Agreement, of any kind whatsoever, shall be made or claimed by Seller or
Purchaser, and no notices of any extension, change, waiver, modification or
amendment made or claimed by Seller or Purchaser shall have any force or effect
whatsoever, unless the same is contained in a writing and is fully executed by
the party against whom such matter is asserted.
6.8 This Agreement shall be governed and interpreted in accordance with the
laws of the State of Nevada.
6.9 Each party hereto shall pay all charges specified to be paid by them
pursuant to the provisions of this Agreement and their own attorney's fees in
connection with the negotiation, drafting and closing of this Agreement.
6.10 Each party hereto warrants and represents that, subject to any
provisions hereof to the contrary, it has full power and authority to enter into
this Agreement and to perform all of its obligations under this Agreement. Each
member of the Purchaser and the Seller hereunder, respectively, is jointly and
severally liable with respect to all of, respectively, Purchaser's and Seller's
obligations and liabilities hereunder.
6.11 Purchaser and Seller agree that this Agreement has been entered into
solely for the benefit of Purchaser and Seller and no other person or entity, it
being the intention of Purchaser and Seller that no person or entity not a party
to this Agreement shall have any right or standing to (a) bring any action
against Purchaser or Seller based on this Agreement, or (b) assume that any
provision of this Agreement will be enforced or remain unmodified or unwaived,
or (c) assert that it or he is or should be or was intended to be a beneficiary
of any provision of this Agreement. IN WITNESS WHEREOF, the parties hereto have
caused this Agreement to be executed in their names by their respective duly
authorized representatives on the day and year first above written.
The Harder Group:
/s/ ▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Sunwest Management, Inc.
By: /s/ ▇▇▇ ▇▇▇▇▇▇
----------------------------------
▇▇▇ ▇▇▇▇▇▇, President
Greenbriar Corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------- ----------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President and CEO ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Individually