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Exhibit 99.22
MASTER SETTLEMENT AGREEMENT
dated as of August 1, 2001
among
GREENBRIAR CORPORATION,
THE ASSIGNORS NAMED HEREIN,
and
LSOF POOLED EQUITY, L.P.,
Page 33 of 123
ARTICLE I DEFINITIONS..................................................2
ARTICLE II TRANSFER OF CONSIDERATION....................................9
2.1 Consideration................................................9
2.2 Transfer of Assets..........................................10
2.3 Assumption of Liabilities...................................10
2.4 Closing.....................................................11
2.5 Prorations..................................................12
2.6 Allocation of Consideration.................................12
2.7 Damages.....................................................12
2.8 Intentionally Deleted.......................................12
2.9 Filings.....................................................12
2.10 Pre-Closing Escrow..........................................13
ARTICLE III REPRESENTATIONS AND WARRANTIES..............................13
3.1 Representations and Warranties of the Assignors.............13
(a) Organization.......................................13
(b) Authorization and Effect of Agreement..............14
(c) Conflicts..........................................14
(d) Consents...........................................14
(e) Stockholder Matters................................14
(f) Absence of Certain Changes and Events..............14
(g) Subsidiaries.......................................15
(h) Litigation; Decrees................................15
(i) Deposits...........................................16
(j) Real Property......................................16
(k) Physical Assets and Properties.....................17
(l) Intangible Assets and Properties...................17
(m) Contracts..........................................18
(n) Contract Defaults..................................18
(o) Compliance With Laws...............................19
(p) Environmental Matters..............................19
(q) Insurance..........................................19
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(r) Employee Matters...................................20
(s) Labor Matters......................................20
(t) Solvency...........................................21
(u) Warranty and Product Liability Claims..............21
(v) Licenses, Permits, Etc.............................21
(w) Employees and Consultants..........................21
(x) Disclosure.........................................21
(y) Taxes and Fees.....................................22
(z) Finders............................................22
(aa) Books of Account...................................22
(bb) Sufficiency of Assets..............................22
(cc) Cash Position......................................22
(dd) Bankruptcy.........................................22
3.2 Representations and Warranties of Assignee..................23
(a) Corporate Organization.............................23
(b) Authorization and Effect of Agreement..............23
(c) Conflicts..........................................23
(d) Consents...........................................23
(e) Finders............................................23
ARTICLE IV AGREEMENTS..................................................24
4.1 Conduct of Business.........................................24
4.2 Inspection..................................................24
4.3 Litigation Standstill.......................................25
4.4 Employees...................................................25
(a) Assignor Obligations...............................25
(b) Employment by Assignor.............................25
4.5 Agreement to Forward Orders, Inquiries and Leads............26
4.6 Third Party Solicitations...................................26
4.7 Employee Solicitation.......................................26
4.8 Non-Competition.............................................26
4.9 Confidentiality.............................................27
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4.10 Cooperation.................................................27
ARTICLE V CONDITIONS TO CLOSING.......................................28
5.1 Conditions to Obligations of Assignee and Assignor..........28
5.2 Conditions to Obligations of Assignee.......................28
5.3 Conditions to the Obligations of Assignor...................31
ARTICLE VI TERMINATION.................................................31
6.1 Termination.................................................31
6.2 Post-Termination Activity...................................33
6.3 Effect of Termination.......................................33
ARTICLE VII SURVIVAL AND INDEMNIFICATION................................33
7.1 Survival of Representations, Warranties and Covenants.......33
7.2 Indemnification by Assignor.................................34
7.3 Indemnification by Lone Star Parties........................35
7.4 Defense of Claims...........................................35
ARTICLE VIII TRANSITION SERVICES.........................................37
8.1 Use of Name.................................................37
8.2 Permits.....................................................37
8.3 Payment Received............................................37
8.4 Copies of Records...........................................37
ARTICLE IX MISCELLANEOUS...............................................38
9.1 Notices.....................................................38
9.2 Transfer Taxes..............................................39
9.3 Non-Assignable Contracts....................................39
9.4 Entire Agreement............................................39
9.5 Non-Waiver..................................................40
9.6 Curative Actions; Severability..............................40
9.7 Governing Law...............................................40
9.8 WAIVER OF JURY TRAIL........................................40
9.9 Construction................................................41
9.10 Counterparts................................................41
9.11 Successors and Assigns......................................41
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9.12 Cumulative Rights...........................................41
9.13 Costs; Expenses.............................................41
9.14 No Third Party Beneficiaries................................41
9.15 Press Releases/Filings......................................41
9.16 Time of the Essence.........................................42
9.17 Acknowledgments.............................................42
9.18 Assignment of Stock.........................................42
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LIST OF SCHEDULES
Schedule 1.1 Permitted Liens
------------
Schedule 2.2 Excluded Assets
------------
Schedule 2.3 Certain Assumed Liabilities of Assignor
------------
Schedule 2.6 Allocation of Consideration
------------
Schedule 3.1(a) Jurisdictions of Qualification
---------------
Schedule 3.1(d) Consents
---------------
Schedule 3.1(f) Absence of Certain Changes and Events
---------------
Schedule 3.1(h)(1) Litigation
------------------
Schedule 3.1(h)(2) Litigation affecting the Assigned Assets or Businesses
------------------
Schedule 3.1(i) Deposits
---------------
Schedule 3.1(j) Real Property/Facility Leases
---------------
Schedule 3.1(k) Leased Tangible Property
---------------
Schedule 3.1(l) Intangible Properties
---------------
Schedule 3.1(m) Contracts
---------------
Schedule 3.1(n) Contract Defaults
---------------
Schedule 3.1(p) Environmental Matters
---------------
Schedule 3.1(q) Insurance Policies
---------------
Schedule 3.1(r) Employee Benefit Plans
---------------
Schedule 3.1(s) Labor Matters
---------------
Schedule 3.1(u) Warrant and Product Liability Claims
---------------
Schedule 3.1(v) Licenses and Permits
---------------
Schedule 3.1(w) Employment, Consulting, Service and Commission Agreements
---------------
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LIST OF EXHIBITS
Exhibit A - Mutual Release
Exhibit B - ▇▇▇▇ of Sale
Exhibit C - Assumption Agreement
Exhibit D - Consent Agreement
Exhibit E - Pre-Closing Escrow Agreement
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MASTER SETTLEMENT AGREEMENT
This Master Settlement Agreement (this "Agreement") is made as of
August 1, 2001, by and among LSOF Pooled Equity, L.P., a Delaware limited
partnership ("Lone Star"), Greenbriar Corporation, a Nevada corporation (the
"Company"), Berne Village, Inc., a North Carolina corporation ("Berne Village"),
▇▇▇▇ ▇▇▇▇ Plantation, Inc., a North Carolina corporation ("RTP"), Windsor House
West, Incorporated, a South Carolina corporation ("Windsor"), The
Denison-Greenbriar, Inc., a Texas corporation ("DG"), The Terrace Retirement,
Inc., an Oregon corporation ("TRI"), Rose Garden Estates, Inc., a Nevada
corporation ("RGE"), Wedgwood Partners Ltd. Limited Partnership, a Nevada
limited partnership ("WPL"), Wedgwood Retirement Inns, Inc., a Washington
corporation ("Wedgwood"), and Transferco, Inc., a Nevada corporation
("Transferco," and together with Berne Village, RTP, Windsor, DG, TRI, WPL,
Wedgwood and RGE, each an "Assignor," and collectively the "Assignors").
RECITALS
--------
WHEREAS, in January 1998, Lone Star's ultimate predecessor in interest,
Lone Star Opportunity Fund, L.P., purchased shares of the Company's Series F
Senior Convertible Preferred Stock and shares of the Company's Series G Senior
Convertible Preferred Stock (collectively, the "Preferred Stock") for
$22,000,000, which Preferred Stock was convertible into shares of the Company's
common stock;
WHEREAS, on October 30, 2000, Lone Star delivered its notice of
conversion evidencing its desire to convert the Preferred Stock into shares of
the Company's common stock;
WHEREAS, a dispute arose between the Company and Lone Star as to the
conversion price of the Preferred Stock and the number of shares of the
Company's common stock into which the Preferred Stock would be convertible;
WHEREAS, all matters relating to the conversion of the Preferred Stock
are currently being litigated pursuant to the lawsuit styled: LSOF Pooled
Equity, L.P. v. Greenbriar Corporation, Cause No. 00-08824, in the 162nd
Judicial District Court (the "District Court") of Dallas County, Texas (the
"Lawsuit") asserting claims against the Company and seeking legal and equitable
relief;
WHEREAS, on April 5, 2001, the District Court granted partial summary
judgment in favor of Lone Star;
WHEREAS, a trial will be scheduled for the near future;
WHEREAS, solely to avoid the prospect of prolonged, costly litigation,
Greenbriar and Lone Star desire to compromise and settle all claims between
them, including, but not limited to, all existing claims asserted or existing
claims that could have been asserted by any party;
WHEREAS, each Assignor is a direct or indirect wholly-owned subsidiary
of the Company;
WHEREAS, in connection with this Agreement and in consideration for the
releases contained herein, (i) the Assignors are transferring to Assignee all of
their respective right, title and interest, in and to the Assigned Assets, (ii)
the Company will pay to Lone Star $4,000,000 in immediately available funds, and
Page 40 of 123
(iii) for the same consideration, the Company is redeeming all of Lone Star's
Preferred Stock, any and all of the Company's common stock into which Lone
Star's Preferred Stock was purportedly converted, together with all of Lone
Star's right, title and interest to any and all claims and rights with respect
to its interest as a stockholder, equity interest holder or otherwise; and
WHEREAS, this Agreement and the consideration transferred pursuant
hereto is to compromise and settle all disputed claims and to buy peace, and no
payment, release or other consideration given constitutes an admission of
liability by any party hereto, all such liability being expressly denied.
NOW, THEREFORE, in consideration of the foregoing premises, the mutual
agreements contained in this Agreement and other consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties to this Agreement
hereby agree as follows:
AGREEMENT
---------
ARTICLE I
DEFINITIONS
-----------
"Affiliate" shall mean, with respect to any Person, (a) each Person
that, directly or indirectly, owns or controls, whether beneficially, or as a
trustee, guardian or other fiduciary, five percent (5%) or more of the Capital
Stock having ordinary voting power in the election of directors of such Person,
(b) each Person that controls, is controlled by or is under common control with
such Person and (c) in the case of individuals, the immediate family members,
spouses and lineal descendants of individuals who are Affiliates of the Person.
For the purposes of this definition, "control" of a Person shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of its management or policies, whether through the ownership of voting
securities, by contract, by virtue of being an executive officer or a director
or otherwise.
"Agreement" means this Master Settlement Agreement, as amended,
supplemented or otherwise modified from time to time.
"Assigned Assets" shall have the meaning assigned in Section 2.2.
"Assignee" shall mean Lone Star or its designated assignees in
accordance with Section 9.11.
"Assignee Party" shall have the meaning assigned in Section 7.2.
"Assignor" or "Assignors" shall have the meaning assigned in the
Preamble.
"Assignor Party" shall have the meaning assigned in Section 7.3.
"Assumed Liabilities" shall have the meaning assigned in Section 2.3.
"Assumption Agreement" means that certain Assumption Agreement to be
executed by the Assignee and each of the Assignors substantially in the form of
Exhibit C hereto.
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"Berne Village" shall have the meaning assigned in the Preamble.
"▇▇▇▇ of Sale" means that certain ▇▇▇▇ of Sale to be executed by each
of the Assignors substantially in the form of Exhibit B hereto.
"Business" shall mean with respect to (i) Berne Village, the operation
and ownership of the assisted living facility and community known as Berne
Village located in New Bern, North Carolina; (ii) RTP, the operation and
ownership of the assisted living facility and community known as ▇▇▇▇ ▇▇▇▇
Plantation located in King, North Carolina; (iii) Windsor (or its assignee), the
operation and ownership of the assisted living facility and community known as
Windsor House West located in Spartanburg, South Carolina; (iv) DG, the
operation and ownership of the assisted living facility and community known as
Greenbriar at Denison located in Denison, Texas; (v) TRI, the operation and
ownership of the assisted living facility and community known as The Terrace
located in Portland, Oregon; (vi) RGE, the operation and ownership of the
assisted living facility and community known as Rose Garden Estates located in
Ritzville, Washington; (vii) Transferco, the operation and ownership of the
assisted living facilities and communities known as Villa de Sol and
Meadowbrook, each located in Roswell, New Mexico; (viii) WPL, the operation and
ownership of the assisted living facilities and communities known as Camelot
Assisted Living located in Harlingen, Texas and La Villa located in Roswell, New
Mexico; and (ix) Wedgwood, the operation and ownership of the assisted living
facility and community known as Summer Hill located in Oak Harbor, Washington.
"Capital Stock" shall mean all shares, options, warrants, general or
limited partnership or membership interests or other equivalents (regardless of
how designated) of or in a corporation, partnership, limited liability company
or other Person, whether voting or nonvoting, including common stock, preferred
stock or any other "equity security" (as such term is defined in Rule 3a11-1 of
the General Rules and Regulations promulgated by the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as amended).
"Claims" means all claims and causes of actions that either were or
could have been asserted in the Lawsuit as more specifically set forth in the
Mutual Release.
"Closing" has the meaning set forth in Section 2.4.
"Closing Date" has the meaning set forth in Section 2.4.
"Code" has the meaning assigned in Section 2.3(b).
"Company" shall have the meaning assigned in the Preamble.
"Consent Agreement" shall mean that certain Consent Agreement of even
date herewith executed by certain stockholders of the Company, including each of
the directors of the Company and Intervenors attached hereto as Exhibit D.
"Crowne Point Escrow" shall have the meaning set forth in Section
2.10(b).
"Crowne Point Proceeds" shall have the meaning set forth in Section
2.10(b).
"DG" shall have the meaning assigned in the Preamble.
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"Direct Claim" shall have the meaning set forth in Section 7.4(d).
"District Court" shall have the meaning assigned in the Recitals.
"Employee" shall have the meaning assigned in Section 3.1(r).
"Employee Benefit Plans" shall have the meaning assigned in Section
3.1(r).
"Environmental Laws" shall have the meaning assigned in Section 3.1(p).
"ERISA" shall have the meaning set forth in Section 4.4.
"ERISA Affiliate" shall have the meaning set forth in Section 3.1(r).
"Escrow Amounts" shall have the meaning set forth in Section 2.10(b).
"Excluded Assets" shall have the meaning assigned in Section 2.2.
"Facility" shall mean any assisted living facility or community that is
an Assigned Asset.
"Facility Leases" shall have the meaning assigned in Section 3.1(j)(v).
"Former Employee" shall have the meaning assigned in Section 3.1(r).
"GAAP" generally accepted accounting principles in the United States of
America.
"Greenbriar Parties" shall mean the Company and each Assignor.
"Harlingen" shall have the meaning assigned in the Preamble.
"Indebtedness" means with respect to any Person, without duplication,
any liability of such Person (i) for borrowed money, (ii) evidenced by bonds,
debentures, notes or other similar instruments, (iii) constituting capitalized
lease obligations, (iv) incurred or assumed as the deferred purchase price of
property, or pursuant to conditional sale obligations and title retention
agreements, (v) for the reimbursement of any obligor on any letter of credit,
bankers' acceptance or similar credit transaction, (vi) for Indebtedness of
others guaranteed by such Person, (vii) for interest swap obligations, commodity
agreements and currency agreements and (viii) for Indebtedness of any other
Person of the type referred to in clauses (i) through (vii) which are secured by
any Lien on any property or asset of such first referred to Person, the amount
of such Indebtedness being deemed to be the lesser of the value of such property
or asset or the amount of the Indebtedness so secured.
"Indemnifiable Losses" means any and all damages, losses, liabilities,
obligations, costs, and expenses, and any and all claims, demands, or suits (by
any person), including the costs and expenses of any and all actions, suits,
proceedings, demands, assessments, judgments, settlements, and compromises
relating thereto and including reasonable attorneys' fees and expenses in
connection therewith.
"Indemnifying Party" means any person required to provide
indemnification under this Agreement.
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"Indemnitee" means any person entitled to indemnification under this
Agreement.
"Indemnity Payment" means any amount of Indemnifiable Losses required
to be paid pursuant to this Agreement.
"Intervenors" American Realty Trust, Inc., Basic Capital Management,
Inc., One Realco Corporation (in its own capacity and as successor in interest
to Nanook Partners, L.P.), Tacco Financial Corporation, International Health
Products, Inc.
"Law" shall mean any law (including common law), constitution, statute,
regulation, rule, ordinance, order, injunction, writ, decree or award of any
governmental authority of competent jurisdiction or of any arbitrator (including
ERISA, the Code, the Uniform Commercial Code, any applicable tax law, product
safety law, occupational safety or health law, Environmental Law and/or
securities laws).
"Lawsuit" shall have the meaning assigned in the Recitals. "Leased
Tangible Property" shall have the meaning assigned in Section 3.1(k).
"Licensed Intangible Properties" shall have the meaning assigned in
Section 3.1(l).
"Lien" shall mean any mortgage, pledge, hypothecation, lien (statutory
or other), judgment lien, security interest, security agreement, charge or other
encumbrance, or other security arrangement of any nature whatsoever, including
any installment contract, conditional sale or other title retention arrangement,
any sale of accounts receivable or chattel paper, any assignment, deposit
arrangement or lease (including capital leases) intended as, or having the
effect of, security and the filing of any financing statement under the UCC or
comparable law of any jurisdiction.
"Lone Star" shall have the meaning assigned in the Preamble.
"Lone Star Parties" shall mean Lone Star and Assignee.
"Mutual Release" shall mean the Mutual Release substantially in the
form of Exhibit A and all related exhibits thereto, including the Agreed Motion
to Dismiss and the Agreed Order Granting Motion to Dismiss.
"Organizational Documents" shall mean with respect to a corporation,
the certificate or articles of incorporation and by-laws of such corporation;
with respect to a partnership, the certificate of partnership (or limited
partnership, as applicable) and partnership agreement, together with the
analogous documents for any corporate or partnership general partner; with
respect to a limited liability company, the certificate of formation or articles
of organization and operating agreement; and, in any case, any other document
governing the formation and conduct of business by such Person.
"Owned Tangible Property" shall have the meaning assigned in Section
3.1(k).
"Owned Intangible Property" shall have the meaning assigned in Section
3.1(l).
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"Permitted Liens" means those liens set forth on Schedule 1.1, liens
for ad valorem taxes and assessments not yet due and payable, mechanics liens
incurred in the ordinary course of the Business consistent with past practice,
and other minor encumbrances which do not and will not adversely affect the
transferability, use or value of the Real Property as it is currently being used
in connection with such Assignor's Business.
"Person" shall mean an individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization or government or department or other agency or
political subdivision thereof.
"Pre-Closing Escrow Agent" shall have the meaning assigned in Section
2.10(a).
"Pre-Closing Escrow Agreement" shall have the meaning assigned in
Section 2.10(a).
"Pre-Closing Escrow Amount" shall have the meaning assigned in Section
2.10(a).
"Preferred Stock" has the meaning assigned in the Recitals.
"Real Property" shall have the meaning assigned in Section 3.1(j)(i).
"RGE" shall have the meaning assigned in the Preamble.
"RTP" shall have the meaning assigned in the Preamble.
"Solvent" shall mean, with respect to any Person on a particular date,
that on such date (a) the fair value of the property of such Person is greater
than the total amount of liabilities, including contingent liabilities, of such
Person; (b) the present fair salable value of the assets of such Person is not
less than the amount that will be required to pay the probable liability of such
Person on its debts as they become absolute and matured; (c) such Person does
not intend to, and does not believe that it will, incur debts or liabilities
beyond such Person's ability to pay as such debts and liabilities mature; and
(d) such Person is not engaged in a business or transaction, and is not about to
engage in a business or transaction, for which such Person's property would
constitute an unreasonably small amount of capital. The amount of contingent
liabilities (such as litigation, guarantees and pension plan liabilities) at any
time shall be computed as the amount which, in light of all the facts and
circumstances existing at the time, represents the amount which can reasonably
be expected to become an actual or matured liability.
"Stock Certificates" shall mean any and all stock certificates
evidencing the Company's common stock into which Lone Star's Preferred Stock was
purportedly converted.
"Subject Employee" shall have the meaning assigned in Section 3.1(w).
"Subsidiary" shall mean with respect to any Person, (a) any corporation
(i) of which an aggregate of more than fifty percent (50%) of the outstanding
Capital Stock having ordinary voting power to elect a majority of the Board of
Directors of such corporation (irrespective of whether, at the time, Capital
Stock of any other class or classes of such corporation shall have or might have
voting power by reason of the happening of any contingency) is at the time,
directly or indirectly, owned legally or beneficially by such Person and/or one
or more Subsidiaries of such Person or (ii) with respect to which any such
Person has the right to vote or designate the vote of fifty percent (50%) or
more of such Capital Stock, whether by proxy, agreement, operation of law or
Page 45 of 123
otherwise and (b) any partnership or limited liability company (i) in which such
Person and/or one or more Subsidiaries of such Person shall have an interest
(whether in the form of voting or participation in profits or capital
contribution) of more than fifty percent (50%) or (ii) of which any such Person
is a general partner or manager or may exercise the powers of a general partner
or manager.
"Taxes" means all taxes, assessments, fees, levies, imposts, duties,
penalties, deductions, liabilities, withholdings or other charges of any nature
whatsoever, including interest and penalties, imposed by any governmental
authority.
"Terminating Assignee's Breach" shall have the meaning assigned in
Section 6.1(c).
"Terminating Assignor's Breach" shall have the meaning assigned in
Section 6.1(b).
"Third Party Claim" means any claim, action, or proceeding made or
brought by any Person who is not a party to this Agreement or an Affiliate of a
party to this Agreement.
"Transaction Documents" shall mean this Agreement, the Mutual Release,
the ▇▇▇▇ of Sale, the Assumption Agreement, the Consent Agreement, and all other
agreements, instruments, documents and certificates now or hereafter delivered
to Lone Star or its Affiliates by the Company or its Affiliates pursuant to or
in connection with any of the foregoing.
"Transferco" shall have the meaning assigned in the Preamble.
"TRI" shall have the meaning assigned in the Preamble.
"Wedgwood" shall have the meaning assigned in the Preamble.
"Windsor" shall have the meaning assigned in the Preamble.
"WTP" shall have the meaning assigned in the Preamble.
ARTICLE II
TRANSFER OF CONSIDERATION
2.1 Consideration.
-------------
(a) Subject to the terms hereof, (i) the Company agrees to (A)
on the Closing Date, pay to Lone Star, a cash payment of Four Million
Dollars ($4,000,000) in immediately available funds; and (B) cause each
of the Assignors to assign, convey and transfer to Assignee on the
Closing Date, the Assigned Assets as set forth below in Section 2.2;
and (ii) the Company and the Intervenors shall fully and finally
release all claims the Company or any of its Subsidiaries, stockholders
(including, without limitation, the Intervenors), directors, officers,
employees, representatives, agents or any of their Affiliates may have
against the Lone Star Parties or any of their Affiliates pursuant to
the terms and conditions of the Mutual Release.
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(b) Subject to the terms hereof, Lone Star agrees to accept
(i) the cash payment referenced in clause (i)(A) above, and (ii) the
transfer of the Assigned Assets in consideration of the following:
(i) the redemption by the Company of (A) all of Lone
Star's right, title and interest in and to Lone Star's Capital
Stock in the Company, including (1) Lone Star's Preferred
Stock and all attendant rights, including conversion rights
and default dividend claims, (2) Lone Star's 1,054,202 shares
of the Company's common stock, and (3) all other equity
interests in the Company that may be held by Lone Star; and
(B) all reimbursable expenses (other than the expenses related
to the transactions contemplated by the Transaction Documents)
due Lone Star by the Company and such reimbursable expenses
shall be compromised, waived and discharged;
(ii) the assumption by Lone Star of the Assumed
Liabilities as set forth in Section 2.3 below; and
(iii) the full and final release of all Claims that
Lone Star or any of its Subsidiaries, stockholders, directors,
officers, employees, representatives, agents or any of their
Affiliates (including, but not limited to Lone Star
Opportunity Fund, L.P. and LSOF Greenbriar L.L.C.) may have
against the Company, or any of its Subsidiaries, stockholders,
directors, officers, employees, representatives, agents or
their Affiliates pursuant to the terms and conditions of the
Mutual Release.
(c) All parties to this Agreement agree for federal income tax
purposes to treat all consideration payable to Lone Star (except for
reimbursable expenses referenced in Section 2.1(b)(i)(B), if any) as a
payment to Lone Star in redemption of its Capital Stock of the Company.
Subject to the terms and conditions of this Agreement, it is
the express intent of the Company and Lone Star to fully and finally
resolve all disputes between them, including without limitation the
Lawsuit, in a manner that settles and discharges all past and present
differences of any kind or character and, to the greatest extent
allowed by law.
2.2 Transfer of Assets. Subject to the provisions of this Agreement,
the Company agrees to cause each of the Assignors, and each Assignor hereby
agrees, to assign to Assignee and Assignee hereby agrees to accept from each
Assignor, all of such Assignor's assets and properties of every kind and nature,
real, personal or mixed, tangible or intangible, wherever situated, including
all land, buildings, improvements, fixtures, machinery, tooling, furniture,
vehicles, equipment, tools, inventory, supplies, indemnification rights,
technology, know-how, patents, trademarks, tradenames, proprietary information,
trade secrets, computer programs, copyrights, customer lists, resident lists,
resident deposits refundable to residents held by the Company or any of its
Page 47 of 123
Subsidiaries related to the Businesses, demographic information, customer data,
goodwill and other intangible property rights of any kind whatsoever, licensing
agreements and other contractual rights, and all of such Assignor's books and
records relating to the operations of such Assignor's Business, as each of the
foregoing exists as of the Closing Date (such assets being sold by the Assignors
are collectively referred to herein as the "Assigned Assets"); excluding,
however, cash, cash equivalents, marketable securities, accounts receivable,
notes receivable, loan receivables, deferred income taxes and prepaid income
taxes, income tax refunds, accrued interest receivables, utility deposits,
insurance policies and claims thereunder (other than the proceeds of any claims
which relate to the Assigned Assets), and the other assets listed on Schedule
2.2 (collectively, the "Excluded Assets"). The Assigned Assets shall be sold and
transferred to Assignee "as is" free and clear of all Liens, other than
Permitted Liens.
2.3 Assumption of Liabilities. Subject to the provisions of this
Agreement, the Assignee, in consideration of the other agreements related
thereto or entered into in connection therewith, shall assume the payment,
performance and discharge of the Assumed Liabilities. For purposes hereof,
"Assumed Liabilities" means only (i) the specific liabilities of each Assignor
under the contracts, purchase commitments, sales orders and arrangements listed
on Schedule 2.3 to the extent such obligations accrue following the Closing
Date, (ii) the Indebtedness specifically set forth on Schedule 2.3, and (iii)
all liabilities, obligations, costs and expenses incurred in the ordinary course
of business consistent with past practices prior to the Closing Date for goods
or services to be used by any of the Businesses after the Closing Date in an
aggregate amount not to exceed $250,000. Assignee does not and shall not agree
to pay, assume, perform, or discharge any of such Assignor's debts, obligations,
or liabilities (whether known or unknown, direct or indirect, absolute or
contingent, matured or unmatured, or otherwise), whether the same currently
exist or come to exist in the future, except the Assumed Liabilities. For the
avoidance of doubt, "Assumed Liabilities" shall not include any of the
following:
(a) any of the Assignor's liabilities for which assumption by
Assignee would be prohibited under the terms of such contracts,
commitments, orders or arrangements;
(b) any of the Assignor's liabilities or obligations with
respect to the employment or termination of employment of any employee
of any Assignor, payment of salary or severance or provision of
benefits, including but not limited to the benefits payable under any
Employee Benefit Plan with respect to the employment by any Assignor of
any employee or independent contractor of any Assignor or of any former
employee of any Assignor, and any liabilities or obligations of any
Assignor arising out of or resulting from any Employee Benefit Plan or
any other employee benefit agreement, arrangement, understanding,
program or practice, including any liabilities or obligations arising
under Section 4980B of the Internal Revenue Code of 1986, as amended
(the "Code");
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(c) except as specifically set forth on Schedule 2.3, any of
such Assignor's liabilities for Indebtedness;
(d) any of the Assignor's liabilities or obligations for Taxes
other than those Taxes that shall be prorated as set forth in Section
2.5 and the special assessment described on Schedule 2.3 with respect
to the Facility known as "The Terrace";
(e) any of the Assignor's liabilities or obligations under
contracts relating to any Assignor's equity or any Assignor's
equityholders;
(f) any of the Assignor's liabilities or obligations with
respect to any litigation or other claims arising in connection with
the pre-Closing operations of the Assigned Assets or such Assignor's
Business;
(g) any of the Assignor's liabilities or obligations arising
out of Environmental Laws arising in connection with the pre-Closing
operations of the Assigned Assets or the Business (including, without
limitation, any off-site disposal activities) or the Real Property or
any other real property (including previously-owned real property)
owned, leased or operated by any Assignor or any predecessor of any
Assignor or any prior owner of all or part of their respective business
or assets (including, but not limited to, any liability under
Environmental Laws as a result of hazardous materials present at, on or
under any such real property as of or prior to the Closing).
2.4 Closing. The consummation of the transactions contemplated herein
(the "Closing") shall take place at 10:00 a.m., local time, on the earlier to
occur of (i) three (3) business days after all of the conditions to Closing set
forth in Article V have been satisfied or waived, and (ii) August 31, 2001 at
the offices of Weil, Gotshal & ▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, or at such other time or place as the Lone Star and the
Company may agree in writing (the day on which the Closing takes place being
referred to herein as the "Closing Date"). At the Closing, the Company shall
deliver or cause to be delivered to the Lone Star Parties (i) $4,000,000 payable
in immediately available funds to an account designated by Lone Star, (ii) the
Assigned Assets, and (iii) the other documents required to be delivered by the
Greenbriar Parties pursuant to Article V hereof, including without limitation
the Mutual Release. At the Closing, Lone Star shall deliver to the Company the
Mutual Release, the Assumption Agreement and the Stock Certificates.
2.5 Prorations. Utility charges, ad valorem taxes and property taxes
and personal property taxes on the Assigned Assets and rents and other charges
payable with respect to leases and other contracts assumed by Assignee will be
prorated between the respective Assignor, on the one hand, and Assignee, on the
other hand, as of 12:01 a.m. on the Closing Date. To the extent practicable, all
such prorations and payments will be made on the Closing Date, with the balance
to be made as soon as practicable following the Closing Date in one or more
payments.
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2.6 Allocation of Consideration. For federal income and other
applicable tax purposes, the consideration shall be allocated among the Assigned
Assets as set forth in Schedule 2.6, such allocation to be made as provided in
Section 1060 of the Code. Assignors and Assignee shall each file Form 8594
(Asset Acquisition Statement Under Section 1060) on a timely basis reporting the
allocation of the consideration consistent with the allocation in Schedule 2.6.
Schedule 2.6 also reflects the aggregate fair market values for the Assigned
Assets, as such terms are defined in regulations promulgated pursuant to Section
1060 of the Code. Assignors and Assignee shall file on a timely basis any
amendments required to such Form 8594 as a result of a subsequent adjustment of
the consideration. Assignors and Assignee shall not take any position on their
respective federal income or other applicable tax returns that is inconsistent
with the allocation of the consideration as agreed to in Schedule 2.6 or as
adjusted as a result of a subsequent increase or decrease in the consideration.
The Assignors and Assignee shall each indemnify, defend and hold harmless the
other from and against any and all claims, losses, liabilities, damages, cost
and expenses that may be incurred as a result of the failure to file Form 8594,
the failure to file such Form 8594 on a timely basis or the failure to file its
tax returns in the manner required by this Section 2.6.
2.7 Damages. The consideration exchanged by the parties pursuant to
this Agreement, and the allocation of consideration described herein, reflects a
mutual compromise and may not be indicative of the damages or losses that will
result from the breach of this Agreement or any of the Transaction Documents.
2.8 Intentionally Deleted.
2.9 Filings. Immediately after the execution and delivery of this
Agreement, the Company shall file a Current Report on 8-K with the Securities
and Exchange Commission and Lone Star shall file an amendment to its Schedule
13D with the Securities and Exchange Commission relating to the transactions
contemplated herein, the contents of which shall be subject to the reasonable
approval of both Company and Lone Star, but shall comply in all respect with all
applicable law, rules, and regulations, including, without limitation, all
regulations of the Securities and Exchange Commission.
2.10 Pre-Closing Escrow.
(a) Upon the execution hereof, the Company shall pay Two
Million Dollars ($2,000,000) (the "Pre-Closing Escrow Amount") to
American Escrow (the "Pre-Closing Escrow Agent"), and the Pre-Closing
Escrow Agent shall hold the Pre-Closing Escrow Amount under the terms
of an escrow agreement in the form of Exhibit E hereto (the
"Pre-Closing Escrow Agreement").
(b) Upon the consummation of the sale of the assisted living
facility and community known as Crowne Point, the Company shall pay an
additional Two Million Dollars ($2,000,000) (the "Crowne Point
Proceeds") to the Pre-Closing Escrow Agent, and the Pre-Closing Escrow
Agent shall hold the Crowne Point Proceeds in a separate escrow account
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(the "Crowne Point Escrow") pursuant to an escrow agreement between the
Company and the Pre-Closing Escrow Agent. Such escrow agreement shall
provide that the Pre-Closing Escrow Agent shall provide Lone Star with
evidence satisfactory to Lone Star that the Crowne Point Proceeds have
been deposited into the Crowne Point Escrow and will immediately notify
Lone Star of any distributions from the Crown Point Escrow Account.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Assignors. Each of the
Greenbriar Parties represents and warrants, for and on behalf of itself and with
respect to each Assignor and the Assigned Assets purported to be owned by each
such Assignor, to the Lone Star Parties as follows:
(a) Organization. Each of the Greenbriar Parties is a
corporation duly organized, validly existing and in good standing under
the laws of the jurisdiction of its formation and has the requisite
power and authority to own, lease or otherwise hold the assets owned,
leased or otherwise held by it and to carry on its business as
presently conducted by it. Each of the Greenbriar Parties is in good
standing and duly qualified to conduct business as a foreign entity in
every jurisdiction in which its ownership or lease of property or
conduct of the business makes such qualification necessary. All of the
jurisdictions in which the Greenbriar Parties are in good standing and
duly qualified to conduct business as a foreign entity are listed on
Schedule 3.1(a).
(b) Authorization and Effect of Agreement. Each of the
Greenbriar Parties has the requisite corporate power and authority to
execute, deliver and perform its obligations under each of the
Transaction Documents executed or to be executed by such Greenbriar
Party. The execution, delivery and performance by each Greenbriar Party
of each of the Transaction Documents executed or to be executed by such
Greenbriar Party has been duly authorized by all requisite corporate
action as applicable. This Agreement has been duly executed and
delivered by each of the Greenbriar Parties. This Agreement
constitutes, and each of the other Transaction Documents to be executed
by a party hereto will constitute, the valid and binding obligation of
such Greenbriar Party, enforceable against such Greenbriar Party in
accordance with its terms, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally and
subject, as to enforceability, to general principles of equity,
including principles of commercial reasonableness, good faith and fair
dealing (regardless of whether enforcement is sought in a proceeding at
law or in equity).
Page 51 of 123
(c) Conflicts. Neither the execution, delivery, nor
performance of any Transaction Document executed or to be executed by
any Greenbriar Party will (i) violate any material Law applicable to
such Greenbriar Party, (ii) violate, conflict with, permit the
cancellation or acceleration of, or give rise to a loss of any benefit
under, any material agreement or commitment to which such Greenbriar
Party is a party or by which any of its properties are bound, or (iii)
violate or conflict with any provision of such Greenbriar Party's
Organizational Documents. Neither the Company nor any the Assignors
have entered into, or is aware of, any agreement pursuant to which any
person or entity has obtained the right to acquire any assets of the
Company any of its Subsidiaries.
(d) Consents. Except as set forth on Schedule 3.1(d), no
material actions, consents, or approvals of, or filings with, any
governmental authorities or any third parties are required in
connection with the execution, delivery or performance by any of the
Greenbriar Parties of the Transaction Documents.
(e) Stockholder Matters. The Consent Agreement has been signed
by those officers, directors and holders of the Company's Capital Stock
(including the Intervenors) signatory thereto, and no action has been
taken by an such party to amend, modify of rescind the Consent
Agreement.
(f) Absence of Certain Changes and Events. Except as
contemplated or expressly permitted by this Agreement and except as set
forth on Schedule 3.1(f) or disclosed in any filing with the Securities
Exchange and Commission prior to the date hereof, since March 31, 2001,
there has not been (i) any material damage, destruction or loss of any
kind with respect to any of the Assigned Assets, nor has there been any
event or circumstance which has had or reasonably could be expected to
have a material adverse effect on the financial condition or business
operations of such Assignor; (ii) any declaration, setting aside or
payment of any dividend or other distribution (whether in cash, stock
or property) with respect to any of the Assignors' outstanding capital
stock; (iii) any cancellation or compromise of any debt or claim, or
waiver or release of any right, except in the ordinary course of
business consistent with past practices; (iv) any sale, assignment,
lease or disposition of assets of any of the Assignors (or a commitment
to do any of the foregoing), except in the case of obsolete equipment
or in connection with the acquisition of replacement property that has
substantially the same value and utility; (v) any Lien created or
assumed upon the Assigned Assets (other than Permitted Liens); (vi) any
capital expenditures, or commitments to make such capital expenditures,
in excess of $100,000 (in the aggregate); (vii) the execution of any
agreement with any director, officer, employee or independent
contractor of any of the Assignors providing for his/her employment, or
any increase in compensation or severance or termination of benefits
payable or to become payable by an Assignor to such director, officer,
employee, or independent contractor, or any increase in benefits under
any collective bargaining agreement or other Employee Benefit Plan of
any of the Assignors, except in the ordinary course of business
Page 52 of 123
consistent with past practices; (viii) any distributions to its
stockholders in respect of its Capital Stock or loans to any Person; or
(ix) any transaction with any Affiliate required to be disclosed under
Item 404 of Regulation S-K promulgated under the Securities Act of
1933, as amended. Since March 31. 2001 such Assignor has not conducted
the Business other than in the ordinary course, consistent with such
Assignor's past practice. Since March 31, 2001, there has not been any
material adverse change in the Business or the financial condition or
results of operations of the Business. Since December 31, 2000, there
has not been any change by any of the Company or any of its
Subsidiaries in their financial or tax accounting principles or
methods, except insofar as required by GAAP, applicable law or
circumstances which did not exist as of the date of the December 31,
2000 audited financial statements.
(g) Subsidiaries. The Company has previously provided to Lone
Star copies of all Organizational Documents of the Company and each
Assignor, and such copies are true and correct in all respects.
(h) Litigation; Decrees. Except as disclosed on Schedule
3.1(h)(1) and the Lawsuit, there are no lawsuits, claims or
administrative or other proceedings or investigations pending or, to
the knowledge of the Company or any of its Subsidiaries, threatened by,
against or affecting (i) any of the Company or its Subsidiaries,
including without limitation, the Assignors, relating to the
Businesses, where the uninsured amount exceeds $200,000, individually
or in the aggregate, or (ii) this Agreement, the other Transaction
Documents or the transactions contemplated hereby or thereby. Except as
disclosed on Schedule 3.1(h)(1), neither the Company nor any of its
Subsidiaries, including the Assignors, is a party to or subject to the
provisions of any judgment, order, writ, injunction, decree or award of
any court, arbitrator or governmental or regulatory official, body or
authority relating to the Businesses, this Agreement, the other
Transaction Documents or the transactions contemplated hereby or
thereby. Except as disclosed on Schedule 3.1(h)(2), none of the
litigation described on Schedule 3.1(h)(1), affects or could affect the
Assigned Assets or such Assignor's Business.
(i) Deposits. Schedule 3.1(i) sets forth a true and complete
list all resident deposits being held by the Company or any of its
Subsidiaries and all cash of the Company or any of its Subsidiaries
which are related to the Assignors' Businesses.
(j) Real Property.
(i) Schedule 3.1(j) sets forth a true and complete
list of all real property owned by each Assignor (the "Real
Property"). Such Assignor has, and Assignee will be
transferred, good and indefeasible title to the Real Property,
free and clear of any Liens (other than Permitted Liens). Such
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Assignor does not lease, as lessee, any real property. Such
Assignor has provided to Assignee correct and complete copies
of all title insurance policies issued to such Assignor or in
such Assignor's possession relating to the Real Property.
(ii) The Real Property of such Assignor constitutes
all real property used in connection with such Assignor's
Business. Neither the Company nor such Assignor has knowledge
that the Real Property, any improvements thereon, or the use
by such Assignor thereof, fails to conform to (i) all
applicable Laws, including but not limited to zoning
requirements and the Americans With Disabilities Act, and (ii)
all restrictive covenants, if any. There are no eminent domain
proceedings pending, or to such Assignor's knowledge,
threatened against the Real Property. The Real Property has
adequate ingress or egress to public streets and highways.
(iii) The Real Property is connected to and is served
by water, solid waste and sewage disposal, drainage,
telephone, gas, electricity and other utility equipment
facilities and services necessary and sufficient for the
operation or use of the Real Property. To such Assignor's
knowledge, such facilities and services are adequate for the
present use and operation of the Real Property on a fully
occupied basis, and are installed and connected pursuant to
valid permits and are in material compliance with all
governmental regulations. To such Assignor's knowledge, no
fact or condition exists which would result in the termination
or impairment in the furnishing of utility services to the
Real Property. With respect to the prior three sentences, such
Assignor has not received any written notice to the contrary.
(iv) Other than as set forth on Schedule 3.1(j), the
Real Property has not been damaged by fire or other casualty
except for such damage which has been fully repaired and
restored prior to the date of this Agreement.
(v) Schedule 3.1(j) sets forth a true and complete
list of all real property leased by such Assignor, as lessor,
and a true and correct copy of the rent roll relating to each
of the Assignor's Facilities (the "Facility Leases").
(vi) There has not been (i) any threatened
cancellation of any Facility Leases not in the ordinary course
of such Assignor's Business, (ii) any outstanding disputes, of
a material nature, under any Facility Leases or (iii) to such
Assignor's knowledge, any bases for any claim of breach or
default thereunder. Such Assignor has no reason to believe
that any of the Facility Leases that are renewable will not be
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renewed by the other party on reasonable terms other than in
the ordinary course of such Assignor's Business.
(k) Physical Assets and Properties. Each Assignor
owns or leases all physical assets and personal properties
necessary in the operation of their respective Businesses. To
the extent such Assignor owns such physical assets and
personal property, each Assignor has, and Assignee will be
transferred and have, good title to all tangible assets and
properties, whether personal or mixed, purported to be owned
by such Assignor and included in the Assigned Assets (the
"Owned Tangible Property"), free and clear of all Liens, other
than Permitted Liens. Schedule 3.1(m) sets forth a true and
complete list of each lease or other agreement under which
such Assignor leases, licenses, holds, or operates any item of
physical property, other than the Owned Tangible Property,
that is included in the Assigned Assets (such leased tangible
property being referred to herein as the "Leased Tangible
Property"). Such Assignor has valid and enforceable leasehold
interests in the Leased Tangible Property, free and clear of
all Liens, other than Permitted Liens. All Owned Tangible
Property and Leased Tangible Property is located on the Real
Property.
(l) Intangible Assets and Properties. Set forth on
Schedule 3.1(l) is a true and complete listing of all
intangible assets and properties, including, without
limitation, all patents, copyrights, trademarks and service
marks, owned by such Assignor as of the date hereof (the
"Owned Intangible Properties"). Set forth on Schedule 3.1(l)
is a true and complete listing of all intangible assets and
properties, including, without limitation, all patents,
copyrights, trademarks and service marks, which such Assignor
licenses from third parties (the "Licensed Intangible
Properties"). The Owned Intangible Properties and the Licensed
Intangible Properties constitute all intangible assets and
properties used in connection with the operation of such
Assignor's Business. Such Assignor has, and Assignee will be
transferred and will have, good and marketable title to the
Owned Intangible Properties, free and clear of all Liens. Such
Assignor has, and except as set forth on Schedule 3.1(i) and
as provided in Section 8.1, Assignee will be transferred and
will have, the valid and enforceable right to use the Licensed
Intangible Properties in the manner the Licensed Intangible
Properties are used in connection with such Assignor's
Business as currently conducted, without the requirement for
any payment therefor and free and clear of all Liens. The
operations of such Assignor's Business do not, in any material
respect, infringe on the intellectual property rights of any
other person or entity other than the litigation with respect
to the name "Greenbriar" disclosed on Page D-7 of Schedule
3.1(h).
(m) Contracts. Each Assignor has provided to Lone
Star or has given Lone Star access to accurate and complete
copies of all of the following agreements or documents to
which such Assignor is subject and each of which is listed on
Schedule 3.1(m): (i) any lease (whether of real or personal
property); (ii) any agreement for the purchase of materials,
supplies, goods, services, equipment, or other assets (A)
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providing for annual payments by such Assignor of $10,000 or
more, (B) providing for aggregate payments by such Assignor of
$25,000 or more, or (C) not terminable on thirty (30) days or
less notice without penalty; (iii) any partnership, joint
venture, or other similar agreement or arrangement; (iv) any
instruments or documents evidencing the issuance of any equity
securities, warrants, rights or options to purchase equity
securities of such Assignor; (v) any management agreements;
(vi) any instruments or documents evidencing or relating to
Indebtedness, or guarantees of Indebtedness by such Assignor,
and any security interest granted by such Assignor with
respect thereto; (vii) any option, license, franchise, or
similar agreement; (viii) any agency, dealer, sales
representative, marketing, or other similar agreement; (ix)
any agreement that limits the freedom of any Assignor to
compete in any line of business or with any Person or in any
area that would limit the freedom of Assignee or any Affiliate
of Assignee after the Closing Date; (x) any agreement with a
holder of any Assignor's capital stock; (xi) any agreement
with any director or officer of any Greenbriar Party; or (xii)
any other agreement, commitment, arrangement, or plan not made
in the ordinary course of business. All such agreements,
arrangements, commitments, guarantees and other instruments
are legal, valid and binding obligations of such Assignor, and
to such Assignor's knowledge, of the other parties thereto,
enforceable in accordance with their terms; all payments
required to be made thereunder have been made by the parties
required to do so, except to the extent that any payments are
being contested in good faith and are listed as such on
Schedule 3.1(m); and no defenses, offsets or counterclaims
thereto have been asserted in writing, or, to such Assignor's
knowledge, may be made by any party thereto other than such
Assignor, nor has such Assignor waived any substantial rights
thereunder.
(n) Contract Defaults. Except as disclosed on
Schedule 3.1(n), such Assignor has not received written notice
of any default, and such Assignor is not in default, under any
material agreement, arrangement, commitment, guarantee or
other instrument relating to, binding, or affecting such
Assignor, such Assignor's Business or any of the Assigned
Assets, and there has not occurred any event which, with the
lapse of time or giving of notice, or both, would constitute a
default under any such material agreement. Except as set forth
on Schedule 3.1(n), there has not been (i) any threatened
cancellation of any contract set forth on Schedule 3.1(m),
(ii) any outstanding dispute under such contracts listed on
Schedule 3.1(m) or (iii) to the knowledge of such Assignor,
any bases for any claim of breach or default thereunder. The
execution, delivery and performance of this Agreement will not
entitle any other party to a contract specified on Schedule
3.1(m) to cancel, suspend or terminate such contract or cause
a diminution of such Assignor's rights thereunder. Except as
set forth on Schedule 3.1(m), in the case of any such
contracts (specified on Schedule 3.1(m)) which such Assignor
was not an original party, such entities rights thereunder
have been duly assigned to such Assignor by written
instrument, and where required, such assignment has been
consented to in writing by the other party or parties thereto,
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and such Assignor has furnished Assignee with true and
complete copies of all such assignments and consents. Such
Assignor has no reason to believe that any of the contracts
specified on Schedule 3.1(m) that are renewable will not be
renewed by the other party on reasonable terms.
(o) Compliance With Laws. Such Assignor is not in
material violation of, nor has such Assignor (or any
predecessor of such Assignor), received any written notice of
any alleged material violation of, any Law in (i) the conduct
of its Business, or (ii) its execution, delivery or
performance of the Transaction Documents. Such Assignor is not
in default of or in violation in any material respect of any
judgment, order, injunction or decree of any court,
administrative agency or other governmental authority.
(p) Environmental Matters. Except as set forth in
Schedule 3.1(p), (i) to the knowledge of such Assignor, the
Real Property is and has been in compliance in all material
respects with all applicable federal, state, or local
statutes, codes, rules, regulations, licenses or permits
relating to the environment, natural resources or public or
employee health or safety ("Environmental Laws") and Assignor
is not aware of any facts, circumstances or conditions
relating to the Real Property or the facilities or operations
thereon that could reasonably be expected to result in the
owner or operator of the Real Property incurring any material
liability or loss under any Environmental Law; and (ii)
Assignor has provided Assignee with copies of all
environmental health and safety reports relating to the Real
Property that are in Assignor's possession, custody or
control. There are no, and to the knowledge of the Assignor,
there never have been any underground storage tanks on the
Real Property.
(q) Insurance. The assets, properties and operations
of such Assignor are insured under various policies of general
liability and other forms of insurance listed on Schedule
3.1(q), which policies are, in full force and effect on the
date hereof, valid and enforceable in accordance with their
terms.
(r) Employee Matters.
(i) Schedule 3.1(r) sets forth each
"employee benefit plan," as defined in Section 3(3)
of the ERISA, and all other employee compensation and
benefit arrangements or payroll practices, including,
without limitation, all severance pay, sick leave,
vacation pay, salary continuation for disability,
consulting or other compensation agreements,
retirement, deferred compensation, bonus, long-term
incentive, stock option, stock purchase,
hospitalization, medical insurance, life insurance,
and scholarship plans or programs maintained by such
Assignor or any trade or business (whether or not
incorporated) which is under common control, or which
is treated as a single employer, with such Assignor
under Section 414(b), (c), (m) or (o) of the Code
("ERISA Affiliate") or to which such Assignor, any of
its Subsidiaries, or an ERISA Affiliate has
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contributed or is obligated to contribute (all such
plans or arrangements being hereinafter referred to
as the "Employee Benefit Plans") on account of any
person presently employed by such Assignor (an
"Employee") or formerly so employed by such Assignor
(a "Former Employee"), or under which any Employee or
Former Employee participates or has accrued any
rights. The terms Employee and Former Employee will
include, where applicable, the beneficiaries and
dependents of an Employee or Former Employee. Except
as disclosed on Schedule 3.1(r), no such Assignor or
any ERISA Affiliate has ever contributed to any plan
subject to Section 413 of the Code or to any multiple
employer welfare arrangement, as defined in Section
3(40) of ERISA. Such Assignor has no commitment or
obligation to establish or adopt any new or
additional Employee Benefit Plans or to materially
increase the benefits under any existing Employee
Benefit Plan.
(ii) No Employee or Former Employee of such
Assignor will be entitled to any additional benefit
or any acceleration of the time of payment or vesting
of any benefit under any of the Employee Benefit
Plans set forth on Schedule 3.1(r) as a result of the
transactions contemplated by this Agreement or the
other Transaction Documents.
(s) Labor Matters. Except as listed and described on
Schedule 3.1(h), Schedule 3.1(r) and Schedule 3.1(s), with
respect to Employees and Former Employees, (i) such Assignor
has no written personnel policy applicable to such Employees,
(ii) such Assignor is and has been in compliance in all
material respects with all applicable Laws regarding
employment and employment practices, terms and conditions of
employment, wages and hours, occupational safety and health
and workers' compensation and is not engaged in any unfair
labor practices, (iii) such Assignor has no material
grievances pending or, to the knowledge of such Assignor,
threatened against it and (iv) such Assignor has no material
charges or complaints pending or, to such entity's knowledge,
threatened against it before the National Labor Relations
Board, the Equal Employment Opportunity Commission or any
other federal, state or local agency responsible for the
prevention of unlawful employment practices. There is no labor
strike, slowdown, work stoppage or lockout actually pending
or, to the knowledge of such Assignor, threatened against or
affecting such Assignor's Business. Such Assignor is not a
party to any collective bargaining agreement, no such
agreement determines the terms and conditions of any Employee
or Former Employee, and no collective bargaining agent has
been certified as a representative of any of the Employees or
Former Employees. To such Assignor's knowledge, no union
organizational campaign is currently pending with respect to
any of the Employees or Former Employees.
(t) Solvency. After giving effect to the transactions
contemplated by the Transaction Documents and the payment and
accrual of all transaction costs in connection with the
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foregoing, the Company and its Subsidiaries, taken as a whole,
are Solvent.
(u) Warranty and Product Liability Claims. Except as
set forth on Schedule 3.1(u), such Assignor has not made any
express warranties or guarantees with respect to any services
rendered in the operation of such Assignor's Business.
(v) Licenses, Permits, Etc. Schedule 3.1(v) sets
forth all governmental licenses, franchises, permits and other
authorizations held by such Assignor. Such government
licenses, franchises, permits and other authorizations
transferred to Assignee by such Assignor constitute all
government licenses, franchises, permits and other
authorizations necessary in the conduct of such Assignor's
Business.
(w) Employees and Consultants. Schedule 3.1(w) hereto
contains a complete list of the employees of each Assignor
(the "Subject Employees"), and the total current compensation
and benefits of each such employee. Such Assignor has
furnished the Assignee with true and complete copies of any
contracts with such Subject Employees, provided, however,
Assignee shall have no obligation to assume any such contract.
Schedule 3.1(w) also sets forth a true and complete list of
all consulting, service or commission agreements to which such
Assignor (or the Company (or any of its Subsidiaries) on
behalf of such Assignor) is a party or otherwise relating to
such Assignor's Business.
(x) Disclosure. No representation or warranty by the
Greenbriar Parties contained in this Agreement or in any
Transaction Document and no statement contained in any
document furnished or to be furnished by or on behalf of any
Greenbriar Party, or any Affiliate thereof to any Lone Star
Party or any of Lone Star Party's representatives in
connection with the transactions contemplated hereby, contains
or will contain any untrue statement of a material fact, or
omits or will omit to state any material fact necessary, in
light of the circumstances under which it was or will be made,
in order to make the statements herein or therein not
misleading.
(y) Taxes and Fees. Other than those Taxes that will
be prorated on the Closing Date as set forth in Section 2.5,
each Assignor has paid and discharged, or has caused to be
paid and discharged, all Taxes for which it is obligated and
will pay and discharge all such Taxes which will have become
due and payable prior to or as of the Closing Date. Each
Assignor has duly filed or will file, or has caused or will
cause to be duly filed, with the appropriate federal, state
and local governmental agencies all returns and reports
required to be filed by such Assignor as of the Closing Date
and with respect to any taxable period prior to or which
includes the Closing Date (each of which fairly present or
will present the information purported to be shown and reflect
or will reflect, all Tax liability of such entity for the
periods in question) and such Assignor has paid or will pay in
Page 59 of 123
full all Taxes in respect of the periods for which such
returns and reports were filed. All necessary payments
required to be withheld for the employees (including, without
limitation, for unemployment insurance) have been properly
withheld and paid.
(z) Finders. None of the Company, any of the
Assignors, or any Affiliate of such entity has made any
agreement with any Person or taken any action which would
cause any Person to become entitled to an agent's, broker's,
or finder's fee or commission in connection with the
transactions contemplated hereby.
(aa) Books of Account. None of the Assignors have
engaged in any transaction, maintained any bank account or
used any of the funds of such Assignor except for
transactions, bank accounts and funds which have been and are
reflected in the normally maintained books and records of the
Business.
(bb) Sufficiency of Assets. The Assigned Assets
constitute all properties and assets used by such Assignor in
the conduct of such Assignor's Business as currently
conducted.
(cc) Cash Position. The cash balances shown on the
Corporate Cash Report dated as of July 26, 2001 certified by
▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇▇ represents the approximate
total cash and cash equivalents for the Company and its
Subsidiaries. The uses of cash shown on the Corporate Cash
Requirements Report dated as of July 26, 2001 certified by
▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇▇ represents the approximate cash
uses for the Company and its Subsidiaries.
(dd) Bankruptcy. Neither the Company nor any of the
Assignors has (i) filed a petition seeking relief under Title
11 of the United States Code, as now constituted or hereafter
amended, or any other applicable federal, state or foreign
bankruptcy, debtor relief or other similar law, (ii) consented
to the institution of proceedings thereunder or to the filing
of any such petition or to the appointment of or taking
possession by a custodian, receiver, liquidator, assignee,
trustee or sequestrator (or similar official) of such
Greenbriar Party or of any substantial part of any such
Person's assets, (iii) made a general assignment for the
benefit of creditors, (iv) taken any corporate action to
authorize any of the foregoing or (v) admitted in writing its
inability to, or shall be generally unable to, pay its debts
as such debts become due.
3.2 Representations and Warranties of Assignee. Lone Star represents
and warrants to the Greenbriar Parties as follows:
(a) Corporate Organization. Lone Star is a limited partnership
duly formed, validly existing and in good standing under the laws of
the State of Delaware.
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(b) Authorization and Effect of Agreement. Lone Star has the
requisite limited partnership power and authority to execute, deliver
and perform its obligations under each of the Transaction Documents
executed or to be executed by Lone Star. The execution, delivery and
performance by Lone Star of each of the Transaction Documents executed
or to be executed by Lone Star has been duly authorized by all
requisite limited partnership action. This Agreement has been duly
executed and delivered by Lone Star. This Agreement constitutes, and
each of the other Transaction Documents to be executed by Lone Star
will constitute, the valid and binding obligation of Lone Star,
enforceable against Lone Star in accordance with its terms, subject to
applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors' rights
and remedies generally and subject, as to enforceability, to general
principles of equity, including principles of commercial
reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity).
(c) Conflicts. Neither the execution, delivery, nor
performance of any Transaction Document executed or to be executed by
Lone Star will (i) violate any material Law applicable to Lone Star,
(ii) violate, conflict with, permit the cancellation or acceleration
of, or give rise to a loss of any benefit under, any material agreement
or commitment to which Lone Star is a party or by which any of its
properties are bound, or (iii) violate or conflict with any provision
of Lone Star's Organizational Documents.
(d) Consents. No actions, consents, or approvals of, or
filings with, any governmental authorities or any third parties are
required in connection with the execution, delivery or performance by
Lone Star of the Transaction Documents executed or to be executed by
Lone Star.
(e) Finders. Neither Lone Star nor an Affiliate of Lone Star
has made any agreement with any person or taken any action which would
cause any person to become entitled to an agent's, broker's or finder's
fee or commission in connection with the transactions contemplated
hereby.
ARTICLE IV
AGREEMENTS
----------
4.1 Conduct of Business. From the date hereof through the Closing, the
Company and each of the Assignors will not to take any action inconsistent with
this Agreement. Without limiting the generality of the foregoing, unless
consented to by Assignee in writing, the Company and each of the Assignors, will
not, except as contemplated by this Agreement:
(a) with respect to the Company, change or amend its
Organizational Documents, except as otherwise required by law in a
manner that would adversely affect its ability to consummate the
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transaction contemplated hereby, and with respect to any Assignor,
change or amend its Organizational Documents, except as otherwise
required by law;
(b) enter into, extend, materially modify, terminate or renew
any contract of a type required to be listed on Schedule 3.1(m), except
in the ordinary course of business;
(c) sell, assign, transfer, convey, lease or otherwise dispose
of any material assets or properties used or useful in any of the
Businesses;
(d) except as otherwise required by law or consistent with
past practices, no Assignor shall take any action with respect to the
grant of any severance or termination pay which will become due and
payable from such Assignor on or after the Closing Date; make any
change in the management structure of such Assignor, including, without
limitation, the hiring of additional officers or the terminations of
existing officers, other than in the ordinary course of business;
(e) with respect to any Assignor, acquire by merger or
consolidation with, or merge or consolidate with, or purchase
substantially all of the assets of, or otherwise acquire any material
assets or business of any corporation, partnership, association or
other business organization or division thereof, except as contemplated
by Section 9.11; and
(f) with respect to any Assignor, incur any Indebtedness.
4.2 Inspection. From time to time prior to Closing, the Company and the
Assignors shall afford to Assignee and its accountants, counsel and other
representatives reasonable access, during normal business hours, to the
properties, books, contracts, commitments, tax returns, records and appropriate
officers and employees of the Company and its Subsidiaries, including the
Assignors, and shall furnish such representatives with all financial and
operating data and other information concerning the affairs of the Company and
its Subsidiaries as they may reasonably request.
4.3 Litigation Standstill. The parties hereto agree not to seek a
hearing date, or, if applicable, agree to postpone any hearing date, on any
motions or pleadings in connection with the Lawsuit, including, without
limitation, Lone Star's Motion for Summary Judgment, until the earlier to occur
of the termination of this Agreement pursuant to Article 9 or September 15,
2001. Lone Star's obligations under this Section 4.3 are subject to no further
motions or pleadings being made in connection with the Lawsuit by the parties
hereto or the subject matter of the Lawsuit by any parties hereto attempting to
intervene in the Lawsuit.
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4.4 Employees.
(a) Assignor Obligations. Each Assignor acknowledges that
notwithstanding any benefits which Assignee may offer or provide to any
Employee to whom Assignee has extended an offer of employment, such
Assignor has certain obligations with respect to such Assignor's
Employees under Section 4980B of the Code and Section 601 et seq. of
the Employment Retirement Income Security Act of 1974, as amended
("ERISA") and agree to comply with those obligations. Each Assignor
shall be responsible for and shall cause to be discharged and satisfied
in full all amounts owed to any Employee or Former Employee, including
wages, salaries, accrued vacation, any employment, incentive,
compensation or bonus agreements or other benefits or payments on
account of termination of employment by such Assignor, and shall
indemnify the Lone Star Parties and hold the Lone Star Parties harmless
from any losses thereunder. Each Assignor shall be responsible for
compliance with the COBRA notice and continuation coverage requirements
under Part 6 of Title I of the ERISA, with respect to all employees
(and their beneficiaries) experiencing a qualifying event (as defined
in Section 603 of ERISA) on account of the transactions contemplated by
this Agreement or occurring prior to the Closing.
(b) Employment by Assignor. Assignee may, but is not obligated
to, extend offers of employment effective as of the Closing Date to any
or none of the Subject Employees on terms and conditions to be
determined by Assignee in its sole discretion. Assignee will notify the
appropriate Assignor within ten (10) days prior to the anticipated
Closing Date of which Subject Employees, if any, the Assignee intends
to make offers of employment. Assignor will have no liability for any
claims made by any Subject Employee subsequently employed or continued
in employment by Assignee and for which the initial event giving rise
to such claim occurred after the Closing Date and not as a result of
the transactions contemplated hereby. To the extent that Assignee does
extend offers of employment to any of the Subject Employees, each
Assignor agrees to terminate or release any such Subject Employee from
such Subject Employee's employment with Assignor.
4.5 Agreement to Forward Orders, Inquiries and Leads. The Company and
each Assignor hereby agrees that for a period of three (3) months they will
forward promptly to the Assignee any and all inquiries and sales leads relating
to the Businesses and the Facilities transferred in connection therewith.
4.6 Third Party Solicitations. From the date hereof until Closing, the
Company, its Affiliates, officers, directors, employees or representatives will
not initiate any transaction which could adversely affect their obligations
under this Agreement, and the Company shall give Lone Star prompt written notice
if the Company or any of its Affiliates is approached by any Person or group of
Persons about any such transaction and a reasonable opportunity to participate
in discussions regarding the same; provided, however, nothing contained herein
shall prohibit the Company from entering into discussions or negotiations with
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any Person or group of Persons concerning any merger, sale of assets, sale of
shares of Capital Stock or similar transaction if such transaction could not
adversely affect the Greenbriar Parties' obligations under this Agreement.
4.7 Employee Solicitation.
(a) From the date hereof and for a period of one (1) year from
the Closing Date, without the prior written consent of Lone Star,
neither the Company nor any of its Subsidiaries shall, or shall
knowingly permit its Affiliates, officers, directors, representatives
and agents to, (i) prior to Closing, directly or indirectly offer,
participate or initiate negotiations with any Person employed at the
Facilities with respect to a transfer of such Person's employment to
another facility owned or operated by the Company, its Subsidiaries, or
their respective Affiliates, or (ii) directly or indirectly, hire,
offer, participate in, or initiate negotiations concerning, employment,
with any officer or employee of the Assignee or any Person that was
employed at any Facility within the year prior to Closing and was
subsequently employed by Assignee after Closing.
(b) From the date hereof and for a period of one (1) year from
the Closing Date, without the prior written consent of the Company,
Lone Star shall not, and shall not knowingly permit its Affiliates,
officers, directors, representatives and agents to, directly or
indirectly, hire, offer, participate in, or initiate negotiations
concerning employment with any officer or employee of the Company or
any Assignor (or their Affiliates) other than the Subject Employees or
as otherwise contemplated herein.
(c) Notwithstanding the foregoing, this Agreement shall not
prohibit any advertisement or general solicitation (or hiring as a
result thereof) that is not specifically targeted at such persons.
4.8 Non-Competition. For a period beginning on the Closing Date and
ending one (1) year after the date of Closing, neither the Company nor any of
its Subsidiaries or their respective Affiliates shall, without the prior written
consent of Lone Star, directly or indirectly, engage, participate, make any
financial investment in, manage or render advisory other services to or for any
Person engaged in the business of owning, operating or managing assisted living
facilities or communities located within a twenty-mile radius of any of the
Businesses, other than the assisted living facilities and communities known as
The Greenbriar at Sherman located in Sherman, Texas, Villa de Rey located in
Roswell, New Mexico and Camelot Retirement located in Harlingen, Texas. The
Company and each of the Assignors acknowledges, in its own behalf and on behalf
of their respective Subsidiaries, that the scope of prohibited activities, the
geographic boundaries and the duration of the obligations set forth herein are
(i) reasonable and no broader than necessary to protect the legitimate business
interest of the Lone Star Parties and (ii) do not and will not impose an
unreasonable burden upon such parties.
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4.9 Confidentiality. Except for any governmental filings required in
order to complete the transactions contemplated herein and as the Company and
the Lone Star Parities may otherwise agree or consent in writing, all
information received by the Lone Star Parties and the Greenbriar Parties and
their respective representatives in contemplation, or pursuant to the terms, of
this Agreement shall be kept in confidence by the receiving party and its
representatives; provided, however, that any party hereto may disclose such
information to its legal and financial advisors, lenders, financing sources and
their respective legal advisors and representatives so long as such Persons
agree to maintain the confidentiality of such information in accordance with
this Section 4.9. If the transactions contemplated hereby shall fail to be
consummated, all copies of documents or extracts thereof containing information
and data as to one of the other parties, including all information prepared by
the receiving party's representatives may be destroyed at the option of the
receiving party, with notice of such destruction (or return) to be confirmed in
writing to the disclosing party. Any information not so destroyed (or returned)
will remain subject to these confidentiality provisions (notwithstanding any
termination of this Agreement) until the second (2nd) anniversary of the date of
this Agreement. The foregoing confidentiality provisions shall not apply to such
portions of the information received which (i) are or become generally available
to the public through no action by the receiving party or by such party's
representatives, (ii) are or become available to the receiving party on a
non-confidential basis from a source, other than the disclosing party or its
representatives, not known by the receiving party to be prohibited from
disclosing such portions to it by a contractual legal or fiduciary obligation,
or (iii) are required by law to be disclosed. In addition, the foregoing
confidentiality provisions shall not apply to any disclosure by the Lone Star
Parties after the Closing of any information disclosed to them by the Greenbriar
Parties.
Cooperation. The Company and each of the Assignors agrees to use its
reasonable best efforts to cooperate with the Lone Star Parties in obtaining any
third-party consents necessary to effectuate the transactions contemplated
hereby.
ARTICLE V
CONDITIONS TO CLOSING
---------------------
5.1 Conditions to Obligations of Assignee and Assignor. The obligations
of the Lone Star Parties and the Greenbriar Parties to consummate, or cause to
be consummated, the transactions contemplated hereby are subject to the
condition that there not be in force any order or decree, statute, rule or
regulation nor shall there be on file any complaint by a governmental agency
seeking an order or decree, restraining, enjoining or prohibiting the
consummation of the transactions contemplated hereby, and neither the Lone Star
Parties nor the Greenbriar Parties shall have received notice from any
governmental authority that it has determined to institute any suit or
proceeding to restrain or enjoin the consummation of the transactions
contemplated hereby or to nullify or render ineffective this Agreement if
consummated, or to take any other action which would result in the prohibition
or a material change in the terms of the transactions contemplated hereby.
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5.2 Conditions to Obligations of Assignee. The obligations of the Lone
Star Parties to consummate, or cause to be consummated, the transactions
contemplated by this Agreement are subject to the satisfaction of the following
additional conditions, any one or more of which may be waived in writing by the
Lone Star Parties:
(a) Each of the representations and warranties of the
Greenbriar Parties contained in this Agreement all of the other
Transaction Documents shall be true and correct in all material
respects (other than the representation set forth in Section 3.1(cc),
which shall be true and correct in all respects), both on the date
hereof and as of the Closing, as if made anew at and as of that time,
and each of the covenants and agreements of the Greenbriar Parties to
be performed as of or prior to the Closing shall have been duly
performed and complied with in all material respects, except in each
case for changes after the date hereof which are contemplated or
expressly permitted by this Agreement.
(b) Each Greenbriar Party shall have delivered to the Lone
Star Parties a certificate signed by an officer of such Greenbriar
Party, dated as of the date of Closing, certifying that, to the best of
the knowledge and belief of such officer, the conditions specified in
Section 5.1, as they relate to such Greenbriar Party, and Section
5.2(a) have been fulfilled.
(c) Any consent required for the consummation of the
transactions contemplated shall have been obtained.
(d) The Lone Star Parties shall have received the following,
and in form and substance satisfactory to Lone Star Parties:
(i) a Warranty Deed executed by each of the Assignors
conveying all of the Real Property;
(ii) Title Insurance Policies covering all of the
Real Property;
(iii) Surveys, certified to Assignee and the
applicable title company, of the Real Property reasonably
acceptable to Lone Star and otherwise satisfactory for the
applicable title company to delete the survey exception from
the title insurance policy to be issued by such title company,
provided, Lone Star shall pay any costs charged by the title
company solely related to the deletion of the survey exception
from the title policy;
(iv) a ▇▇▇▇ of Sale duly executed by each of the
Assignors; and
(v) the Assumption Agreement duly executed by each of
the Assignors.
Page 66 of 123
(e) Lone Star Parties shall have received the following
opinions, all dated the Closing Date and all in form and substance
satisfactory to the Lone Star Parties:
(i) a written opinion of (A) Glast, ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇, in form and substance satisfactory to Lone Star, and
(B) with respect to matters of local law, local counsel to the
Company and its Subsidiaries (such counsel to be reasonably
satisfactory to Lone Star), each such opinion as to such
matters as shall be required by Lone Star or its counsel,
including the corporate good standing of the Greenbriar
Parties, the proper adoption of any corporate resolution
required hereby, the authority of the Person signing for the
Greenbriar Parties, the validity, binding nature and
enforceability of this Agreement and the other Transaction
Documents;
(ii) a written opinion of Nevada counsel to the
Company and its Subsidiaries (such counsel to be reasonably
satisfactory to Lone Star) (i) stating that this Agreement,
the other Transaction Documents, and the consummation of the
transactions contemplated hereby and thereby do not require
the approval of the holders of the Company's Capital Stock
under Nevada law or the Company's Organizational Documents,
and (ii) as to such other matters as shall be required by Lone
Star or its counsel; and
(iii) unless waived by Lone Star, the Company having
obtained a solvency opinion from Business Valuation Services,
Inc. or another valuation firm reasonably acceptable to Lone
Star, on which the Lone Star Parties may rely and which is
reasonably satisfactory to Lone Star, to the effect that after
giving effect to the transactions contemplated by the
Transaction Documents and the payment and accrual of all
transaction costs in connection with the foregoing, the
Company and its Subsidiaries, taken as a whole, are Solvent.
(f) The Lone Star Parties shall have received lien searches
from all jurisdictions reasonably determined by the Lone Star Parties
to be appropriate, as of one (1) day prior to the Closing Date, with
respect to the Company and each of its Assignors reflecting no Liens
(other than Permitted Liens) or evidence satisfactory to Assignee of
the payment or release of any and all Lien.
(g) Each Greenbriar Party shall have (A) delivered to Assignee
(x) copies certified by the appropriate governmental official of the
jurisdiction of its incorporation as of a date not more than five (5)
days prior to the Closing Date, of each Greenbriar Party's certificate
of incorporation and all amendments thereto and (y) copies, certified
by the Secretary or an Assistant Secretary of each Greenbriar Party, of
each Greenbriar Party's Bylaws; (B) deliver to Assignee a certificate
of good standing issued with respect to each Greenbriar Party by the
appropriate governmental official of the jurisdiction of its
incorporation as of a date not more than one (1) day prior to the
Closing Date; and (C) executed and delivered a secretary's certificate
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relating to incumbency, corporate proceedings and the certificate of
incorporation and bylaws.
(h) As of the Closing Date and prior to giving effect to the
transactions contemplated by the Transaction Documents, there shall not
have occurred any material adverse change in the business, results of
operations, financial condition of the Company or the Assignors between
the date hereof and the Closing Date.
(i) The Consent Agreement is in full force and effect and no
action has been taken to amend, modify or rescind such Agreement
without the consent of Lone Star.
(j) The Lone Star Parties shall have entered into employment
contracts with the executive director of each Facility on terms no less
favorable than such Persons' existing employment contracts.
(k) No Assignor shall have any Indebtedness outstanding
(including, without limitation, any trade payables for which such
Assignor has received an invoice prior to Closing, provided after
Closing such Assignor shall promptly pay any trade payables upon
receipt of the invoice thereof), other than the Assumed Liabilities,
and no Assignor shall have any creditors, other than those creditors
whose claims arise directly from the Assumed Liabilities, other than
creditors whose claims are the subject of a bona fide dispute.
(l) The bankruptcy case commenced by American Care
Communities, Inc. shall have been dismissed, or the Bankruptcy Court
with jurisdiction over such proceedings shall have issued an order
permitting the transfer of the assisted living facilities and
communities known as Berne Village and ▇▇▇▇ ▇▇▇▇ Plantation.
(m) All repairs necessitated by the existing damage to the
assisted living facility and community known as the Greenbriar at
▇▇▇▇▇▇▇▇ (including roof and siding repairs) shall have been completed
to the reasonable satisfaction of Lone Star; provided, however, if such
repairs have not been completed prior to the Closing, the repairs will
be completed by the Company and/or its contractors at the Company's
sole cost and expense within thirty (30) days of the Closing Date.
5.3 Conditions to the Obligations of Assignor. The obligation of the
Greenbriar Parties to consummate the transactions contemplated by this Agreement
is subject to the satisfaction of the following additional conditions, any one
or more of which may be waived in writing by the Greenbriar Parties:
(a) Each of the representations and warranties of Lone Star
contained in this Agreement shall be true and correct in all material
respects both on the date hereof and as of the Closing, as if made anew
at and as of that time, and each of the covenants and agreements of
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Lone Star to be performed as of or prior to the Closing shall have been
duly performed in all material respects, except in each case for
changes after the date hereof which are contemplated or expressly
permitted by this Agreement.
(b) Lone Star shall have delivered to the Assignors a
certificate signed by an officer of Lone Star, dated the Closing,
certifying that, to the best of the knowledge and belief of such
officer, the conditions specified in Section 5.1, as they relate to
Lone Star, and Section 5.3(a) have been fulfilled.
(c) Lone Star shall have delivered the Mutual Release and any
Stock Certificates.
(d) The Lone Star Parties shall have delivered the Assumption
Agreement.
ARTICLE VI
TERMINATION
-----------
6.1 Termination. This Agreement may be terminated and the transactions
contemplated hereby abandoned:
(a) By mutual written consent of the parties at any time prior
to the Closing.
(b) After August 15, 2001 and prior to the Closing, by written
notice to the Company from Assignee, if (i) there is any material
breach of any representation, warranty, covenant or agreement on the
part of any Greenbriar Party set forth in this Agreement, or (ii) if a
representation or warranty of the Greenbriar Parties shall be untrue in
any material respect, in either case, such that the condition specified
in Section 5.2(a) hereof would not be satisfied at the Closing (a
"Terminating Assignor's Breach") and, in each such case, such breach
has not been cured within seven (7) days after notice thereof by the
Assignee to the Company.
(c) After August 15, 2001 and prior to the Closing, by written
notice to Lone Star from the Company, if (i) there is any material
breach of any representation, warranty, covenant or agreement on the
part of Lone Star set forth in this Agreement, (ii) or if a
representation or warranty of Lone Star shall be untrue in any material
respect, in either case, such that the condition specified in Section
5.3 hereof would not be satisfied at the Closing (a "Terminating
Assignee's Breach") and, in each such case, such breach has not been
cured within seven (7) days after notice thereof by the Company to Lone
Star.
(d) By either the Company or Lone Star, after September 15,
2001, if the Closing has not occurred prior to such date, provided that
such terminating party is not in breach of any of its representations,
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warranties, covenants or agreements hereunder, and all of such
terminating party's conditions to Closing have been satisfied prior to
such date.
(e) By either the Company or Lone Star on or before August 8,
2001, if the sale of the assisted living facility and community known
as Crowne Point has not been consummated.
(f) By either the Company or Lone Star on or before August 14,
2001, because ▇▇▇▇▇▇ Financial has not consented to the transfer of the
assisted living facilities and communities known as Berne Village and
▇▇▇▇ ▇▇▇▇ Plantation on terms satisfactory to each of the Company and
Lone Star.
(g) By Lone Star, after August 14, 2001, because any of the
first mortgage holders have not consented to the transfer of the
assisted living facilities and communities known as Greenbriar at
▇▇▇▇▇▇▇, ▇▇▇▇ Garden Estates, Windsor House West, The Terrace, Villa
del Sol, La Villa, Summer Hill, Meadowbrook or Camelot Assisted Living.
(h) By Lone Star, if the Company shall fail to put or at any
time maintain $2,000,000 from the Crowne Point closing, i.e. the Crowne
Point Proceeds, in the Crowne Point Escrow Account in accordance with
Section 2.10(b).
(i) By Lone Star, if a case or proceeding commences against
any Greenbriar Party (i) seeking a decree or order in respect of any
Greenbriar Party under Title 11 of the United States Code, as now
constituted or hereafter amended or any other applicable federal, state
or foreign bankruptcy, debtor relief or other similar law, (ii) seeking
the appointment of a custodian, receiver, liquidator, assignee, trustee
or sequestrator (or similar official) for any Greenbriar Party or of
any substantial part of any such Person's assets or (iii) seeking the
winding-up or liquidation of the affairs of any Greenbriar Party.
(j) By Lone Star, if any Greenbriar Party, subsequent hereto
(i) files a petition seeking relief under Title 11 of the United States
Code, as now constituted or hereafter amended, or any other applicable
federal, state or foreign bankruptcy, debtor relief or other similar
law, (ii) consents to the institution of proceedings thereunder or to
the filing of any such petition or to the appointment of or taking
possession by a custodian, receiver, liquidator, assignee, trustee or
sequestrator (or similar official) of any Greenbriar Party or of any
substantial part of any such Person's assets, (iii) makes a general
assignment for the benefit of creditors, (iv) takes any corporate
action to authorize any of the foregoing or (v) admits in writing its
inability to, or shall be generally unable to, pay its debts as such
debts become due.
6.2 Post-Termination Activity. In the event of the termination of the
Agreement pursuant to Section 6.1(and including any notice of termination or
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acts in furtherance of a declared purpose to terminate regardless of whether
such termination is effective) or for any other reason, either party agrees that
it shall not, directly or indirectly:
(a) contact the escrow agent or any other person to stop,
inderdict or delay the immediate release and return of the Escrow
Amounts to the appropriate party;
(b) file or sponsor any garnishment, attachment or other legal
effort to obtain control over all or any portion of the escrowed fund
if it is not the party entitled to such Escrow Amounts
for a period which shall end seven (7) days after all of the Escrowed
Amounts shall have been returned to the appropriate party free and
clear of any claims by, through, or under the other party for the
possession or use of such funds.
6.3 Effect of Termination. In the event of termination of this
Agreement pursuant to Section 6.1, this Agreement shall forthwith become void
and have no effect, without any liability on the part of any party hereto or
their respective Affiliates, officers, directors or stockholders, other than
liability of the Greenbriar Parties or Lone Star as the case may be, for
breaches of this Agreement occurring prior to such termination. The provisions
of Sections 4.9, 9.7 and 9.8 hereof shall survive any termination of this
Agreement.
ARTICLE VII
SURVIVAL AND INDEMNIFICATION
----------------------------
7.1 Survival of Representations, Warranties and Covenants. The
representations, warranties, agreement and covenants contained in this Agreement
shall survive the execution of this Agreement and remain for two (2) years
following the Closing Date; provided, however, the representations and
warranties set forth in each of (i) Sections 3.1(b), 3.1(e), 3.1(j)(i), 3.1(k),
3.1(l) shall survive indefinitely and (ii) Sections 3.1(p), 3.1(r) and 3.1(y)
shall survive until the applicable statute of limitations has expired.
7.2 Indemnification by Assignor. The Company and each of the Assignors
shall, jointly and severally, indemnify and hold harmless each Assignee Party
(hereinafter defined) in respect of any and all Indemnifiable Losses resulting
from or relating to:
(a) any and all liabilities and obligations of the Greenbriar
Parties of any nature whatsoever, except for the Assumed Liabilities;
(b) any and all actions, suits, claims, or legal,
administrative, arbitration, governmental or other proceedings or
investigations against any Assignee Party that relate to the Greenbriar
Parties, the Businesses, the Assigned Assets or any affiliate of the
Greenbriar Parties in which the initial event giving rise thereto
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occurred prior to the Closing or which results from or arise out of any
action or inaction prior to the Closing of the Greenbriar Parties, or
any director, officer, employee, agent, representative or subcontractor
of any Greenbriar Party, including without limitation, the litigation
described on Schedule 3.1(h)(2);
(c) nonperformance or breach of any representation or warranty
on the part of any Greenbriar Party under this Agreement or any other
Transaction Document, or any misrepresentation in or omission from any
certificate furnished to the Lone Star Parties pursuant hereto;
(d) nonfulfillment of any covenant or agreement on the part of
any Greenbriar Party under this Agreement or any other Transaction
Document;
(e) any failure of the Company, any Assignor or Assignee to
comply with any bulk sales or transfer law (including the bulk sales
provisions of the Uniform Commercial Code in any jurisdiction) of any
jurisdiction applicable to the sale and transfer of the Assigned Assets
contemplated hereby;
(f) all sales or transfer taxes in respect of real or personal
property which may be due as a result of the sale taking place pursuant
to this Agreement;
(g) all actions, suits, proceedings, demands, assessments,
judgments, reasonable attorney's fees, court costs and expenses
incident to any of the foregoing; or
(h) any and all actions, suits, claims, or legal,
administrative, arbitration, governmental or other proceedings or
investigations against any Assignee Party that relate to this Agreement
or any of the other Transaction Documents or the transactions
contemplated hereby and thereby.
"Assignee Party" shall mean the Lone Star Parties, any Affiliate of the
Lone Star Parties, including, without limitation, the owners of Assignee or Lone
Star, and any officer, director, or employee of Assignee or the Lone Star
Parties or of any Affiliate thereof, including, without limitation, the owners
of the Lone Star Parties.
Indemnification by Lone Star Parties. The Lone Star Parties shall
indemnify and hold harmless each Assignor Party (hereinafter defined) in respect
of any and all Indemnifiable Losses resulting from or relating to:
(i) any and all Assumed Liabilities;
(j) nonperformance or breach of any representation or warranty
on the part of Lone Star under this Agreement or any other Transaction
Document, or any misrepresentation in or omission from any certificate
furnished to Assignor pursuant hereto;
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(k) nonfulfillment of any covenant or agreement on the part of
Lone Star under this Agreement or any other Transaction Document;
(l) any and all actions, suits, claims, or legal,
administrative, arbitration, governmental or other proceedings or
investigations against any Assignor Party that relate to the Lone Star
Parties, the Business, the Assigned Assets or any Affiliate of the Lone
Star Parties in which the initial event giving use rise thereto
occurred after the Closing or which results from or arise out of any
action or inaction after the Closing of the Lone Star Parties or any
director, officer, employee, agent, representative or subcontractor of
the Lone Star Parties; or
(m) all actions, suits, proceedings, demands, assessments,
judgments, reasonable attorney's fees, costs and expenses incident to
any of the foregoing.
"Assignor Party" shall mean the Company, the Assignors, any Affiliate
of Assignors, including, without limitation, the owners of Assignors, or any
officer, director, or employee of Assignors or of any Affiliate of Assignors,
including, without limitation, the owners of Assignors.
7.3 Defense of Claims.
(a) If any Indemnitee receives notice of assertion or
commencement of any Third Party Claim against such Indemnitee with
respect to which an Indemnifying Party is obligated to provide
indemnification under this Agreement, the Indemnitee will give such
Indemnifying Party reasonably prompt written notice thereof, but in any
event not later than fifteen (15) calendar days after receipt of such
notice of such Third Party Claim. Such notice will describe the Third
Party Claim in reasonable detail, will include copies of all material
written evidence thereof and will indicate the estimated amount, if
reasonably practicable, of the Indemnifiable Loss that has been or may
be sustained by the Indemnitee. The Indemnifying Party will have the
right to participate in, or, by giving written notice to the
Indemnitee, to assume, the defense of any Third Party Claim at such
Indemnifying Party's own expense and by such Indemnifying Party's own
counsel (reasonably satisfactory to the Indemnitee), and the Indemnitee
will cooperate in good faith in such defense.
(b) If, within ten (10) calendar days after giving notice of a
Third Party Claim to an Indemnifying Party pursuant to Section 7.4(a),
an Indemnitee receives written notice from the Indemnifying Party that
the Indemnifying Party has elected to assume the defense of such Third
Party Claim as provided in the last sentence of Section 7.4(a), the
Indemnifying Party will not be liable for any legal expenses
subsequently incurred by the Indemnitee in connection with the defense
thereof; provided, however, that if (i) the Indemnifying Party fails to
take reasonable steps necessary to defend diligently such Third Party
Claim within five (5) calendar days after receiving written notice from
the Indemnitee that the Indemnitee believes the Indemnifying Party has
failed to take such steps or if the Indemnifying Party has not
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undertaken fully to indemnify the Indemnitee in respect of all
Indemnifiable Losses relating to the matter, (ii) the Indemnitee
believes that a conflict of interest exists between the Indemnitee and
Indemnifying Party, (iii) the Indemnitee is requested to participate,
at the request of the Indemnifying Party, or (iv) the Indemnifying
Party's elects not to defend such claim, the Indemnitee will be free,
without prejudice to any the Indemnitee's rights hereunder, to assume
its own defense, and the Indemnifying Party will be liable for all
reasonable costs or expenses paid or incurred in connection therewith.
Without the prior written consent of the Indemnitee, the Indemnifying
Party will not enter into any settlement of any Third Party Claim which
would lead to liability or create any financial or other obligation on
the part of the Indemnitee for which the Indemnitee is not entitled to
indemnification hereunder.
(c) A failure to give timely notice or to include any
specified information in any notice as provided in Section 7.4(a) or
7.4(b) will not affect the rights or obligations of any party hereunder
except and only to the extent that, as a result of such failure, any
person which was entitled to receive such notice was deprived of its
right to recover any payment under its applicable insurance coverage or
was otherwise materially damaged as a result of such failure.
(d) The Indemnifying Party will have a period of ten (10)
calendar days within which to respond in writing to any claim by an
Indemnitee on account of an Indemnifiable Loss which does not result
from a Third Party Claim (a "Direct Claim"). If the Indemnifying Party
does not so respond within such ten (10) calendar day period, the
Indemnifying Party will be deemed to have rejected such claim, in which
event the Indemnitee will be free to pursue such remedies as may be
available to the Indemnitee.
ARTICLE VIII
TRANSITION SERVICES
-------------------
8.1 Use of Name. On and after the Closing Date, the Assignors agree to
sign or file such consents or other documents as Assignee shall reasonably
request in order to permit Assignee to use any Owned Intangible Property or
Licensed Intangible Property, including without limitation, the names "Berne
Village", "Rose Garden Estates", "▇▇▇▇ ▇▇▇▇ Plantation", "The Terrace", "Windsor
House West", "Villa del Sol", "Summer Hill", "La Villa", "Camelot Assisted
Living", and "Meadowbrook Place" and the Company and the Assignors shall
immediately cease using the same. The Assignee shall not use the name
"Greenbriar" or any of its related marks, and shall remove the name and ▇▇▇▇ of
"Greenbriar" from any of the Facilities' signage as soon as practicable after
Closing, but in no event later than 90 days after Closing.
8.2 Permits. Form the date hereof and after the Closing Date, the
Assignors agree to join and fully cooperate with the Assignee in the filing of
any application with any necessary federal, state or local governmental
authorities, requesting such governmental authority's approval for the
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assignment or transfer to the Assignee (or any of its Affiliates) of any or all
permits issued to any Assignor (or its Subsidiaries) by such governmental
authority with respect to the Assignors' respective Businesses and the operation
thereof. Such cooperation shall include without limitation the furnishing of any
information that may be required in connection with such applications.
8.3 Payment Received. Each Assignor agrees that it will hold and will
promptly transfer and deliver to the appropriate party, from time to time as and
when received by them, any cash, checks with appropriate endorsements (using
their best efforts not to convert such checks into cash), or other property that
they may receive which properly belongs to another party, including any
insurance proceeds, and will account to the appropriate party for all such
receipts. Assignee shall have the right and authority to endorse the name of
each Assignor (which endorsement of the name of such Assignor shall include the
words "without recourse") on any check or any other evidences of indebtedness
received by Assignee on account of the Businesses and the Assigned Assets
transferred to Assignee hereunder.
8.4 Copies of Records.
(a) Each of the Assignors shall preserve all records possessed
by it (and not otherwise transferred to Assignee) relating to the
Assigned Assets, Assumed Liabilities or operations of the Business and
shall provide Assignee with access, upon prior reasonable written
request, during regular business hours, to such books of account and
records. Assignee and its representatives shall have the right to make
copies of such books and records. Such records may nevertheless be
destroyed by Assignors if Assignors send Assignee written notice of
their intent to destroy records, specifying with particularity the
contents of the records to be destroyed. Such records may then be
destroyed after the 90th day following delivery of such notice unless
Assignee objects to the destruction, in which case Assignors shall
either agree to retain such records or to deliver such records to
Assignee.
(b) Assignee shall preserve all records of Assignors which
were transferred to Assignee relating to the time periods prior to the
Closing, and shall provide to each Assignor with access to such records
(to the extent related to such Assignor), upon prior reasonable written
request, during regular business hours. Assignors and their
representatives shall have the right to make copies of such books and
records. Such records may nevertheless be destroyed by Assignee if
Assignee sends the applicable Assignor written notice of its intent to
destroy such records, specifying with particularity the contents of the
records to be destroyed. Such records may then be destroyed after the
90th day following delivery of such notice unless the applicable
Assignor objects to the destruction, in which case Assignee shall
either agree to retain such records or to deliver such records to such
Assignor.
Page 75 of 123
ARTICLE IX
MISCELLANEOUS
-------------
9.1 Notices. No notice or other communication shall be deemed given
unless sent in the manner, and to the persons, specified in this Section 9.1.
All notices and other communications hereunder shall be in writing and shall be
deemed given (a) upon receipt if delivered personally (unless subject to clause
(b)) or if mailed by registered or certified mail, (b) at noon on the date after
dispatch if sent by overnight courier or (c) upon the completion of transmission
(which is confirmed telephonically by the receiving party) if transmitted by
telecopy or other means of facsimile which provides immediate or near immediate
transmission to compatible equipment in the possession of the recipient, and in
any case to the parties at the following addresses or telecopy numbers (or at
such other address or telecopy number for a party as will be specified by like
notice):
if to any Greenbriar Party, to
Greenbriar Corporation
650 Centura Tower One
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which shall not constitute notice) to
▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Simon, Warner & ▇▇▇▇, L.L.P.
1700 City Center Tower II
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to Lone Star, to
LSOF Pooled Equity, L.P.
▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ 161
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Page 76 of 123
with a copy (which shall not constitute notice) to
Weil, Gotshal & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Each party named above may change its address and that of its representative for
notice by the giving of notice thereof in the manner hereinabove provided.
Transfer Taxes. Assignors shall bear responsibility, jointly and
severally, for, and timely pay, all applicable Taxes, if any, due as a result of
the transfer of the Assigned Assets in accordance herewith.
Non-Assignable Contracts. Nothing contained in this Agreement shall be
construed as an assignment or an attempted assignment of any contract which is
in law nonassignable without the consent of the other party or parties thereto,
unless such consent shall be given. To the extent that all consents for the
assignment of any contract shall not have been obtained by Assignors, the
applicable Assignor shall use commercially reasonable efforts to (i) provide to
Assignee the financial and business benefits of such nonassignable contract and
(ii) enforce, at the request of Assignee, for the account of Assignee, any
rights of Assignor arising from any such nonassignable contract (including the
right to elect to terminate in accordance with the terms thereof upon the
request of Assignee).
9.2 Entire Agreement. This Agreement, the Transaction Documents and the
other agreements contemplated hereby set forth the entire agreement of the
parties with respect to the matters set forth herein or therein. This Agreement
shall not be modified except by written instrument executed together or in
counterparts by all of the parties hereto. All exhibits and schedules referred
to herein are intended to be and hereby are specifically made a part of this
Agreement.
9.3 Non-Waiver. The failure of any party to insist upon strict
performance of any provision hereof shall not constitute a waiver of, or
estoppel against asserting, the right to require such performance in the future,
nor shall a waiver or estoppel with respect to a later breach of a similar
nature or otherwise.
9.4 Curative Actions; Severability.
(a) If any of the covenants, terms or conditions of this
Agreement are held illegal by any court or administrative body of
competent jurisdiction, and any director or stockholder action,
including, but not limited to, the execution of any documents or
instruments, will make such covenants, terms or conditions valid and
enforceable, each party hereby agrees that it shall take or cause to be
Page 77 of 123
taken such action as may reasonably be required to make any such
covenant, term or condition valid and enforceable.
(b) If any provision of this Agreement is held invalid, such
invalidity shall not affect the other provisions hereof which can be
given effect without the invalid provision, and to this end the
provisions of this Agreement are intended to be and shall be deemed
severable.
9.5 Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH
AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS WITHOUT REGARD TO THE PRINCIPLES
OF CONFLICTS OF LAWS. THE PARTIES HERETO HEREBY CONSENT TO THE JURISDICTION OF
ANY STATE OR FEDERAL COURT LOCATED WITHIN DALLAS COUNTY, TEXAS AND IRREVOCABLY
AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS
AGREEMENT SHALL BE LITIGATED IN SUCH COURTS. THE PARTIES ACCEPT FOR ITSELF AND
IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE
NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND WAIVE ANY DEFENSE OF FORUM
NON CONVENIENS, AND IRREVOCABLY AGREE TO BE BOUND BY ANY JUDGMENT RENDERED
THEREBY IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENTS.
9.6 WAIVER OF JURY TRAIL. EACH PARTY HERETO WAIVES ANY RIGHT TO TRAIL
BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (i) ARISING UNDER THIS
AGREEMENT OR ANY OF THE OTHER TRANSACTION DOCUMENTS OR (ii) IN ANY WAY CONNECTED
WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN RESPECT
OF THIS AGREEMENT OR ANY OF THE OTHER TRANSACTION DOCUMENTS OR THE TRANSACTIONS
RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE. EACH PARTY HEREBY
AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL
BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT SUCH PARTY MAY FILE AN
ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO
TRIAL BY JURY.
9.7 Construction. The headings in this Agreement are inserted for
convenience and identification only and are not intended to describe, interpret,
define or limit the scope, extent, or intent of this Agreement or any provision
hereof. Whenever the context requires, the gender of all words used in this
Agreement shall include the masculine, feminine, and neuter, and the number of
all words shall include the singular and the plural. No provision of this
Agreement will be interpreted in favor of, or against, any of the parties hereto
by reason of the extent to which any such party or its counsel participated in
Page 78 of 123
the drafting thereof or by reason of the extent to which any such provision is
inconsistent with any prior draft hereof or thereof.
9.8 Counterparts. This Agreement may be executed in any number of
counterparts with the same effect as if each of the parties had signed the same
document. All counterparts shall be construed together and shall constitute one
and the same instrument.
9.9 Successors and Assigns. Except as provided to the contrary in this
Agreement, this Agreement shall apply to, and shall be binding upon each of the
parties, their respective successors and permitted assigns. Neither this
Agreement nor any rights, interests or obligations hereunder may be assigned
without the prior written consent of Lone Star and the Company; provided,
however, that Lone Star may assign its rights and obligations hereunder to any
designee or designees subject to compliance by Lone Star of its obligations to
execute and deliver the Mutual Release; provided, further, that Windsor may
assign its rights and obligations hereunder to Windsor House Greenville LLC.
9.10 Cumulative Rights. The rights and remedies provided by this
Agreement are cumulative, and the use of any right or remedy by either party
shall not preclude or waive its right to use any or all other remedies.
9.11 Costs; Expenses. The Company will pay all of the costs and
expenses incurred by itself and the Lone Star Parties incidental to this
Agreement and the Transaction Documents and in preparing to consummate and
consummating the transactions provided for herein and therein; provided,
however, such costs and expenses shall be limited to $150,000.
9.12 No Third Party Beneficiaries. Nothing in this Agreement is
intended to confer upon any Person that is not a party hereto any rights or
remedies hereunder or otherwise.
9.13 Press Releases/Filings. The Greenbriar Parties, on the one hand,
and the Lone Star Parties, on the other hand, hereby acknowledge and agree that
the portion of any proposed press release or filing with the Securities and
Exchange Commission or any other governmental authority by such party pertaining
to the transactions contemplated hereby which references either such
transactions or other parties hereto by name shall be coordinated with, and
agreed upon, prior to the release or publication of such press release or filing
with the Securities and Exchange Commission by the Lone Star Parties, on the one
hand, and the Company, on the other hand. With respect to filing with the
Securities and Exchange Commission, the contents of such filing shall be subject
to the reasonable approval of both the Company and Lone Star, but shall comply
in all respects with all applicable law, rules, and regulations, including,
without limitation, all regulations of the Securities and Exchange Commission.
9.14 Time of the Essence. Time is of the essence to each and every
provision of this Agreement.
Page 79 of 123
9.15 Acknowledgments. The parties hereto hereby acknowledge that: (a)
each such party has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Transaction Documents; and (b) no joint
venture is created hereby or by the other Transaction Documents or otherwise
exists by virtue of the transactions contemplated hereby among the Greenbriar
Parties and the Lone Star Parties.
9.16 Assignment of Stock. The Greenbriar Parties hereby agree that
should Lone Star determine that it is advisable to accept an assignment of the
Capital Stock of any Assignor rather than the assignment of such Assignor's
assets, the Greenbriar Parties shall agree to enter into an amendment (and cause
the appropriate Subsidiary of Greenbriar to enter into an amendment) of this
Agreement to effectuate such change provided such transaction shall not affect
the economic terms as set forth herein.
[The Remainder of this Page Is Intentionally Left Blank]
Page 80 of 123
IN WITNESS WHEREOF, the parties have hereunto executed this Agreement
as of August 1, 2001.
THE COMPANY
-----------
GREENBRIAR CORPORATION
By:/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Executive Vice President and
Chief Financial Officer
Page 81 of 123
THE ASSIGNORS
-------------
WINDSOR HOUSE WEST, INCORPORATED
By:/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President, Chief Executive
Officer and Treasurer
Page 82 of 123
BERNE VILLAGE, INC.
By:/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President, Chief Executive
Officer and Treasurer
Page 83 of 123
▇▇▇▇ ▇▇▇▇ PLANTATION, INC.
By:/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President, Chief Executive
Officer and Treasurer
Page 84 of 123
THE ▇▇▇▇▇▇▇ - GREENBRIAR, INC.
By:/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President, Chief Executive
Officer and Treasurer
Page 85 of ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, INC.
By:/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President, Chief Executive
Officer and Treasurer
Page 86 of ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ RETIREMENT, INC.
By:/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President, Chief Executive
Officer and Treasurer
Page 87 of 123
TRANSFERCO, INC.
By:/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President, Chief Executive
Officer and Treasurer
Page 88 of 123
WEDGWOOD PARTNERS LTD., LIMITED PARTNERSHIP
By: GRB, LLC, a Nevada limited liability company, General
Partner
By: Greenbriar Acquisition Corporation, a Nevada
corporation, Manager
By:/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President, Chief Executive
Officer and Treasurer
Page 89 of 123
WEDGWOOD RETIREMENT INNS, INC.
By:/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President, Chief Executive
Officer and Treasurer
Page 90 of 123
LSOF POOLED EQUITY, L.P.
By: LSOF GenPar, Inc., its General Partner
By: /s/ ▇.▇. Dell
--------------------------------------------------
Name: ▇. ▇. Dell
------------------------------------------------
Title: Vice President
-----------------------------------------------