EXHIBIT 10.1
CONFIDENTIAL: THIS DOCUMENT IS PROVIDED FOR SETTLEMENT PURPOSES ONLY AND IS
SUBJECT TO THE PROTECTIONS OF FEDERAL RULE OF EVIDENCE 408 AND ALL SIMILAR
PROVISIONS AND SUPPORTING AUTHORITIES.
SETTLEMENT AGREEMENT
THIS SETTLEMENT AGREEMENT (this "Agreement") is made as of this 20th
day of March, 2000, by and among (a) SENIOR HOUSING PROPERTIES TRUST, a Maryland
real estate investment trust ("SNH") and its wholly-owned subsidiary, SPTMNR
PROPERTIES TRUST, a Maryland real estate investment trust ("SPTMNR"), (b) FIVE
STAR QUALITY CARE, INC., a Delaware corporation (the "New Manager"), (c)
SHOPCO-AZ, LLC, SHOPCO-CA, LLC, SHOPCO-COLORADO, LLC and SHOPCO-WI, LLC, each of
which is a Delaware limited liability company (collectively, the "New Operators"
and, together with SNH, SPTMNR and the New Manager, collectively, the "SNH
Entities"), and (d) MARINER POST-ACUTE NETWORK, INC., a Delaware corporation
(f/k/a Paragon Health Network, Inc.) ("Mariner"), GRANCARE, INC. (f/k/a New
GranCare, Inc.), a Delaware corporation ("GranCare"), AMS PROPERTIES, INC., a
Delaware corporation ("AMS Properties") and GCI HEALTH CARE CENTERS, INC., a
Delaware corporation ("GCIHCC" and, together with Mariner, GranCare and AMS
Properties, collectively, the "Mariner Entities").
WITNESSETH:
WHEREAS, SPTMNR is the owner of all of the real property, buildings,
plant and equipment and certain of the personal property used in connection with
the operation of various health care and health care related facilities (as
further defined and described herein, the "Facilities"); and
WHEREAS, pursuant to the Master Lease (this and other capitalized terms
used and not otherwise defined herein shall have the meanings given such terms
in Article 1 hereof), SPTMNR leases the Facilities to AMS Properties and GCIHCC;
and
WHEREAS, pursuant to the ▇▇▇▇▇▇▇▇▇▇▇ East Note, AMS Properties agreed
to pay to SPTMNR certain amounts as further described therein; and
WHEREAS, pursuant to the GranCare Guaranties, GranCare guaranteed the
payment and performance of each and every obligation and liability of AMS
Properties and GCIHCC (each of which is a wholly-owned subsidiary of GranCare)
to SPTMNR; and
WHEREAS, pursuant to the Mariner Guaranty, Mariner guaranteed the
payment and performance of each and every obligation and liability of GranCare
(a wholly-owned subsidiary of Mariner), AMS Properties and GCIHCC to SPTMNR; and
WHEREAS, pursuant to that certain Collateral Pledge Agreement dated as
of October 31, 1997, Mariner secured the Mariner Guaranty with $15,000,000.00 in
cash (the "Security Deposit"); and
WHEREAS, pursuant to that certain Amended and Restated HRP Shares
Pledge Agreement, dated as of June 30, 1992 by AMS Properties (the "Share Pledge
Agreement"), AMS reaffirmed its pledge of 1,000,000 common shares of beneficial
interest, $.01 par value, of HRPT Properties Trust (f/k/a Health and
Rehabilitation Properties Trust), a Maryland real estate investment trust
("HRP"), which pledge also extends to 100,000 common shares of beneficial
interest, $.01 par value, of SNH which were distributed as a distribution in
respect of such HRP shares (collectively, the "Pledged Shares"), which Pledged
Shares are currently held by REIT Management & Research, Inc., a Delaware
corporation and the successor in interest to HRPT Advisors, Inc. ("RMR") as such
pledgeholder; and
WHEREAS, the Mariner Entities have filed voluntary petitions under
Chapter 11 of the United States Bankruptcy Code, 11 U.S.C.ss.ss.101 et. seq., as
amended (the "Bankruptcy Code") on January 18, ▇▇▇▇ (▇▇▇ "▇▇▇▇▇▇▇▇ ▇▇▇▇"),
▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ Bankruptcy Court for the District of Delaware (the
"Court"), Case Nos. 00113 through 00214 (collectively, the "Cases"), which Cases
are currently pending and are being jointly administered; and
WHEREAS, the Mariner Entities wish to liquidate and terminate their
obligations to the SNH Entities under the Existing Documents in an orderly
fashion, and to cease operating and/or managing the Retained Facilities, and, in
furtherance thereof, the Mariner Entities have requested that, among other
things, the SNH Entities accept the surrender of the Master Lease and convey to
the Mariner Entities all of the SNH Entities' right, title and interest in and
to the Transferred Facilities; and
WHEREAS, the SNH Entities are willing to accept the surrender of the
Master Lease and to convey to the Mariner Entities all of their right, title and
interest in and to the Transferred Facilities, subject to, and upon, the terms
and conditions set forth herein.
NOW THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein contained, and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereto hereby agree as follows:
ARTICLE 1
DEFINITIONS
1.1 The following capitalized terms shall have the meanings set forth
below:
"Agreement" shall mean this Settlement Agreement, including all
Appendices, Schedules and Exhibits thereto, as it and they may be amended from
time to time as herein provided.
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"Business Day" shall mean any day other than a Saturday, Sunday, or any
other day on which banking institutions in The Commonwealth of Massachusetts are
authorized by law or executive action to close.
"▇▇▇▇▇▇▇▇▇▇▇ East Note" shall mean a Promissory Note, dated as of March
28, 1992, made by AMS Properties, in favor of HRP, in the original principal
amount of $1,250,000.
"Consumables" shall mean, with respect to any Facility, all inventory
and consumables, including, without limitation, food, central supplies, unopened
linens and housekeeping supplies and other consumables, customarily used or
consumed in the day-to-day operation of such Facility.
"Contracts" shall mean, with respect to any Facility, each instrument,
contract and agreement to which the Mariner Operator of such Facility is a party
that directly benefits, relates to or affects (i) such Facility, or (ii) the
operation of or the provision of services in conjunction with such Facility.
"Cross-Default/Cross-Collateralization Agreement" shall mean that
certain Guaranty, Cross-Default and Cross-Collateralization Agreement by AMS
Properties and GCIHCC, dated as of June 30, 1992, pursuant to which AMS
Properties and GCIHCC cross-defaulted, cross-collateralized and guaranteed each
other's obligations to SPTMNR.
"Employee Accruals" shall mean, with respect to any Facility, all
Employee Benefits which have been or would have been earned, accrued and/or
payable in accordance with existing employee benefit plans, or shall be or would
be earned, accrued and/or payable in accordance with existing employee benefit
plans, but which remain unpaid with respect to or for any period ending prior to
the Effective Time.
"Employee Benefits" shall mean, with respect to any Facility, all
wages, salary, health insurance coverage, disability coverage, severance pay,
withholding, social security or other employment taxes, vacation and sick pay,
bonuses, commissions, pensions, profit sharing, stock option or other
arrangements or other fringe benefits or other employee benefit plans, practices
or arrangements, whether written or oral, covering any present or former
employee of such Facility as of the moment preceding the Effective Time, whether
or not yet payable.
"Facility" shall mean, as the context may require, any or all of the
Retained Facilities, the Subleased Facilities and the Transferred Facilities.
"Fresno Facility" shall mean that certain Facility having an address of
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇.
"Fresno Sublease" shall mean a Sublease, dated March 31, 1993, between
AMS Properties, as sublandlord, and Covenant Care, Inc., as subtenant and
successor by assignment from Pleasant Care Corporation.
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"Governmental Authority" shall mean all agencies, authorities, bodies,
boards, commissions, courts, instrumentalities, legislatures and offices of any
nature whatsoever, of any government unit or political subdivision, whether
federal, state, county, district, municipal, city or otherwise, and whether now
or hereafter in existence.
"GranCare Guaranties" shall mean, collectively, various guaranty
agreements, including, without limitation, a certain guaranty, dated as of
October 31, 1997, pursuant to which GranCare guaranteed the payment and
performance of each and every obligation and liability of AMS Properties and
GCIHCC (each of which is a wholly-owned subsidiary of GranCare) to SPTMNR.
"Hazardous Substances" shall mean any hazardous substances (as defined
by the Comprehensive Environmental Response, Compensation and Liability Act
("CERCLA"), as now in effect), hazardous wastes (as defined by the Resource
Conservation and Recovery Act ("RCRA"), as now in effect), pollutants or
contaminants, oils, radioactive materials, asbestos in any form or condition, or
any pollutants or contaminants or hazardous, dangerous or toxic chemicals,
materials or substances within the meaning of any other applicable Federal,
state or local law, regulation, ordinance or requirements relating to or
imposing liability or standards of conduct concerning any hazardous, toxic or
dangerous waste, all as now in effect.
"Mariner Entities' Guaranties" shall mean, as the context may require,
any or all of the Cross-Default/Cross-Collateralization Agreement, the GranCare
Guaranties and the Mariner Guaranty.
"Mariner Guaranty" shall mean that certain guaranty, dated as of
October 31, 1997, pursuant to which Mariner guaranteed the payment and
performance of each and every obligation and liability of GranCare (a
wholly-owned subsidiary of Mariner), AMS Properties and GCIHCC to SPTMNR.
"Mariner Operator" shall mean, with respect to any Facility, the
Mariner Entity that operates such Facility and holds the Permits for such
Facility as of the Effective Time.
"Master Lease" shall mean that certain master lease to which SPTMNR,
AMS Properties and GCIHCC are parties, which Master Lease is comprised of: (i) a
Master Lease Document General Terms and Conditions dated as of December 28, 1990
and entered into by and between HRP and AMS Properties; (ii) a Master Lease
Document General Terms and Conditions dated as of June 30, 1992 and entered into
by and between HRP and GCIHCC; (iii) twenty-six (26) facility lease supplements,
some of which are dated as of December 28, 1990, some of which are dated as of
March 27, 1992, some of which are dated June 30, 1992 and others of which are
dated as of June 29, 1998, all as entered into pursuant to the documents
described in preceding clauses (i) and (ii); and (iv) the
Cross-Default/Cross-Collateralization Agreement, all as amended to date.
"Permits" shall mean, with respect to any Facility, all licenses,
approvals, certificates of need, determinations of need, franchises,
accreditations, certificates, certifications, consents, permits and other
authorizations benefiting, relating to or affecting the operation of such
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Facility or the operation of programs or provision of services in conjunction
with such Facility, issued by or entered into with any Governmental Authority,
Third Party Payor or accreditation body (including, without limitation, the
Provider Agreements), and all renewals, replacements and substitutions therefor.
"Permitted Encumbrances" shall mean, with respect to any Facility, all
Permitted Personal Property Encumbrances and all Permitted Real Property
Encumbrances for such Facility.
"Permitted Personal Property Encumbrances" shall mean, (i) with respect
to any personal property present at or used in connection with the operation of
any Transferred Facility, any and all security interests and liens affecting
such personal property other than those arising by, through or under, any SNH
Entity (except that those security interests and liens arising by, through or
under, any SNH Entity as a result of a Mariner Entity's failure to pay or
perform any obligation required to be paid by it as lessee under the Master
Lease prior to the Effective Time shall be Permitted Personal Property
Encumbrances), and (ii) with respect to any personal property present at or used
in connection with the operation of any Retained Facility, those security
interests and liens listed in Schedule 1.1.1 attached hereto (and specifically
excluding, without limitation, any security interests and liens arising by,
through or under any Mariner Entity, or which has been granted by order of the
Court).
"Permitted Real Property Encumbrances" shall mean, (i) with respect to
the real property and the improvements at each Transferred Facility, any and all
liens and encumbrances affecting such real estate and improvements other than
those arising by, through or under, any SNH Entity (except that those liens and
encumbrances arising by, through or under any SNH Entity as a result of any
Mariner Entity's failure to pay or perform any obligation required to be paid by
it as lessee under the Master Lease prior to the Effective Time (such as,
without limitation, the obligation to pay real estate taxes thereunder), shall
be Permitted Real Property Encumbrances), and (ii) with respect to the real
property and the improvements at any Retained Facility, those liens and
encumbrances affecting such real property and improvements existing at the time
the applicable SNH Entity acquired title to such Retained Facility or those
liens and encumbrances arising by, through or under, any SNH Entity (except that
those liens and encumbrances arising by, through or under any SNH Entity as a
result of any Mariner Entity's failure to pay or perform any obligation required
to be paid by it as lessee under the Master Lease prior to the Effective Date
(such as, without limitation, the obligation to pay real estate taxes
thereunder)), and specifically excluding, without limitation, those liens and
encumbrances arising by, through or under any Mariner Entity, or which have been
granted by order of the Court.
"Person" shall mean all individuals, corporations, general and limited
partnerships, limited liability companies, stock companies or associations,
joint ventures, unincorporated associations, companies, trusts, banks, trust
companies, land trusts, business trusts, Governmental Authorities and other
entities of every kind and nature.
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"Pre-Closing Obligations" shall mean, with respect to any Facility, all
debts, liabilities and obligations, whether known or unknown, absolute, mature
or not yet due, liquidated or non-liquidated, contingent, non-contingent, direct
or indirect or otherwise (including, without limitation, payroll, accrued
vacation and other employee benefits and obligations and all other accrued,
vested and unpaid obligations of any kind and all Employee Accruals) relating to
such Facility, and/or arising under any Permits or Contracts or under any other
agreements or instruments (including under Provider Agreements or otherwise
under Third Party Payor Programs), or relating to the management or operation of
such Facility, or arising out of the acts or omissions of any Mariner Entity, in
each case arising out of or attributable to conditions or events occurring prior
to the Effective Time (including, without limitation, those obligations and
liabilities described in Section 10.4 hereof).
"Provider Agreements" shall mean, with respect to any Facility, all
participation, provider and reimbursement agreements or arrangements in effect
for the benefit of or relating to or affecting the operation of any Facility, or
the operation of programs or provision of services therein, relating to any
right of payment or other claim arising out of or in connection with such
Facility's participation in any Third Party Payor Program.
"Retained Facility" shall mean, collectively, the health care and
health care related facilities described in Schedule 1.1.2 hereto, which
facilities shall be retained by SPTMNR pursuant to this Agreement.
"Settlement Documents" shall mean, collectively, this Agreement and
each agreement, undertaking or instrument delivered pursuant to Article 3 and
Article 6 hereof.
"South Dakota Facilities" shall mean that certain Facility having an
address of ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, together with that certain
Facility located at 15th and Michigan and/or 1251 Arizona SW in Huron, South
Dakota.
"South Dakota Subleases" shall mean, collectively, (i) a Sublease,
dated as of March 31, 1994, between GCIHCC, as sublandlord, and HealthQuest,
Inc., as subtenant, and (ii) a Sublease, dated as of May 1, 1994, between
GCIHCC, as sublandlord, and HealthQuest, Inc., as subtenant.
"Subleased Facilities" shall mean, collectively, the health care and
health care related facilities described in Schedule 1.1.3 hereto, which
facilities are currently subleased by AMS Properties or GCIHCC pursuant to the
Subleases.
"Subleases" shall mean, as the context may require, any or all of the
Fresno Sublease and the South Dakota Subleases.
"Subtenants" shall mean (i) with respect to the Fresno Facility,
Covenant Care, Inc., and (ii) with respect to the South Dakota Facilities,
HealthQuest, Inc.
"Third Party Payor Programs" shall mean all third party payor programs
in which any Facility participates, including, without limitation, Medicare,
Medicaid, CHAMPUS, Blue
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Cross and/or Blue Shield, TriCare, managed care plans, other private insurance
programs, workers compensation and employee assistance programs.
"Third Party Payors" shall mean Medicare, Medicaid, CHAMPUS, Blue Cross
and/or Blue Shield, TriCare, private insurers and any other Person which
maintains Third Party Payor Programs.
"Transferred Facilities" shall mean, collectively, the health care and
health care related facilities described in Schedule 1.1.4 hereto, which
facilities shall be transferred by SPTMNR to the Mariner Entities pursuant to
this Agreement.
1.2 The following terms shall have the meanings set forth in the
sections of this Agreement referred to below:
Defined Term: Defined In:
AMS Properties Introduction
Account Transfer Time Section 10.3
Agreed Deficiency Section 4.1
Agreement Introduction
Approval Order Section 2.2
Bankruptcy Code Recitals
Cases Recitals
Chase Section 6.15
Court Recitals
Damages Section 10.5
Effective Time Section 5.1
Exchange Act Section 13.8
Existing A/R Accounts Section 10.3
Existing Documents Section 2.1
Existing Mariner Obligations Section 2.1
Facilities Recitals
GCIHCC Recitals
GranCare Introduction
HRP Recitals
Indemnitee Section 10.5
Interim Management Agreement Section 3.5
Interim Occupancy Agreement Section 3.5
Mariner Introduction
Mariner Entities Introduction
NYSE Requirements Section 13.8
New A/R Accounts Section 10.3
New Manager Introduction
New Operators Introduction
Outside Effective Time Section 5.1
Petition Date Recitals
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Pledged Shares Recitals
Post-Effective A/R Section 10.3
RMR Recitals
SNH Introduction
SNH Declaration Section 13.10
SNH Entities Introduction
SPTMNR Introduction
SPTMNR Declaration Section 13.11
Security Deposit Recitals
Share Pledge Agreement Recitals
Title Commitments Section 7.5
Transaction Approval Motion Section 2.2
Transferred Facilities Recitals
Transferred Real Estate Section 3.6
True-Up Time Section 10.2.2
ARTICLE 2
ACKNOWLEDGMENT OF OBLIGATIONS
2.1 Mariner Obligations. Each of the Mariner Entities hereby
acknowledges that, subject to the effect of the filing of the Cases, it is
unconditionally liable to SPTMNR for the full and immediate payment and
performance of each of the obligations under the terms of the Master Lease and
the other documents, instruments and agreements listed in Schedule 2.1 hereto
(collectively, the "Existing Documents"), plus all charges that may arise under
the various documents executed or delivered by any of the Mariner Entities
evidencing or relating to such obligations, plus all costs of collection
incurred in connection with such obligations by the SNH Entities and the
reasonable fees and expenses incurred by attorneys for the SNH Entities
(hereinafter all such obligations are referred to as the "Existing Mariner
Obligations"), and that none of the Mariner Entities has any defenses,
counterclaims or set-offs with respect to the full and immediate payment of any
or all of the Existing Mariner Obligations other than as may arise by reason of
the filing of the Cases.
2.2 Court Approval. Promptly following execution of this Agreement by
all parties and otherwise within fifteen (15) Business Days after such date, the
Mariner Entities will file a motion with the Court seeking authority to proceed
with the transactions and other matters provided for in this Agreement (the
"Transaction Approval Motion"), together with a proposed form of order (the
"Approval Order") and the Approval Order shall be in a form, and include such
provisions, as the SNH Entities and the Mariner Entities may deem appropriate
under the circumstances.
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ARTICLE 3
TRANSACTIONS TO OCCUR AT THE EFFECTIVE TIME
At the Effective Time, the parties hereto shall effect the following
transactions:
3.1 Surrender of Master Lease. AMS Properties and GCIHCC shall assume,
assign and surrender to the New Operator designated by SPTMNR all of AMS
Properties' and GCIHCC's right, title and interest in, to and under the Master
Lease, and such New Operator shall accept such assignment and surrender,
whereupon all of AMS Properties' and GCIHCC's rights and obligations thereunder
(and the rights and obligations of the Mariner Entities under the Mariner
Entities' Guaranties) shall terminate. All cure payments allocable to
pre-Petition Date periods will be waived.
3.2 Transfer of Personal Property, Etc. AMS Properties and/or GCIHCC
(as applicable) shall, whether by assignment or by assumption and assignment,
assign to the New Operator designated by SPTMNR all of their right, title and
interest in and to any tangible and associated intangible personal property
(including, without limitation, all furniture, furnishings, fixtures, equipment
(not including cash and account receivables but including any Consumables and
computer equipment) and, subject to and upon the terms and conditions of any
applicable licensing agreements with respect thereto, all software and other
software licenses used in the normal course of business operations at the
Retained Facilities. The SNH Entities acknowledge and agree that the terms of
certain site licenses entered into between the Mariner Entities and Microsoft
Corporation and other software licenses for non-proprietary software prohibit
the assignment and transfer of those licenses to the SNH Entities. The Mariner
Entities and the SNH Entities further agree to enter into licensing agreements,
in a form and substance reasonably satisfactory to both parties, to permit the
SNH Entities to use and operate certain clinical software which has been
internally developed by the Mariner Entities to assist in the operation of the
Retained Facilities including, without limitation, those software programs which
are used to track the Minimum Data Set of Medicaid Statistics for each patient
in the Retained Facilities.
3.3. Transfer of Contracts and Permits. AMS Properties and/or GCIHCC
(as applicable) shall assume and assign, set over and transfer to the New
Manager or New Operator all of their right, title and interest in and to (i) all
of the Subleases (other than the right, title and interest of GCIHCC in and to
the Tenant Purchase and Sale Agreement referred to in each of the South Dakota
Subleases, or in and to any promissory note delivered by any Subtenant pursuant
thereto or otherwise delivered in connection with any such Subleases), (ii) to
the extent permitted by law, all of the Permits with respect to the Retained
Facilities that the New Manager or the New Operators elect to assume, and (iii)
all of the Contracts with respect to the Retained Facilities that the New
Manager or the New Operators elect to assume as provided in Section 10.7 hereof,
but specifically excluding, in each of the immediately preceding clauses (i),
(ii) and (iii) any Pre-Closing Obligations (except, in the case of the
Contracts, as otherwise provided in Section 10.7 hereof).
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3.4 Transfer and Release of Certain Collateral. The Mariner Entities
shall transfer and assign to SPTMNR, all of their right, title and interest in
and to (a) the Security Deposit and (b) the Pledged Shares and the proceeds
thereof, and the SNH Entities shall release to GranCare, free and clear of all
liens, claims and encumbrances arising by, through or under any SNH Entity, any
pledges of any stock of AMS Properties or GCIHCC or other collateral securing
the Master Lease or any related guaranties, including, without limitation, any
interest in accounts receivable arising prior to the Effective Time.
3.5 Interim Management and Interim Occupancy Agreements. The Mariner
Operators shall enter into an interim management agreement (an "Interim
Management Agreement"), substantially in the form attached as Schedule 3.5-A
hereto, with respect to the Retained Facilities with the New Manager under
which, to the extent and subject to the limitations imposed by applicable
licensure and certificate or determination of need laws and regulations, each
Mariner Operator shall agree to perform certain management services described
therein with respect to the operation of the Retained Facilities and, subject to
the control and direction of the Mariner Operators, as current licensees, the
New Manager may assume responsibility for certain of such services, pending
receipt by the New Manager and/or New Operator, as the case may be, of all
licenses, certificates, permits and approvals necessary to assume direct
operating control of such Retained Facility. The Mariner Operators also shall
enter into an interim occupancy agreement (an "Interim Occupancy Agreement"),
substantially in the form attached at Schedule 3.5-B hereto, with respect to
each of the Retained Facilities with the appropriate New Operator, which shall
provide that during the term of such Interim Occupancy Agreement, such Mariner
Operator shall continue to occupy such Retained Facility and have such control
over such Retained Facility as is necessary to comply with applicable licensure
and certificate of need statutes and regulations.
3.6 Conveyance of Transferred Facilities. Each SNH Entity shall (i)
convey all of its respective right, title and interest, if any, in and to the
parcels of real property described in Schedule 3.6, together with all
improvements thereon (collectively, the "Transferred Real Estate"), to AMS
Properties or its designee, and (ii) transfer and assign to AMS Properties or
its designee all of its right, title and interest, if any, in and to all
tangible and incorporated intangible personal property (including, without
limitation, all furniture, furnishings, fixtures and equipment) present at or
used in connection with the operation of the nursing facility located on the
Transferred Real Estate, in each case free and clear of all liens, claims and
encumbrances, except Permitted Encumbrances. All deeds, bills of sale,
assignments and other instruments of transfer or releases necessary to effect
such conveyances shall expressly state that they are made without
representations and warranties, express or implied, except as expressly set
forth in this Agreement.
3.7 Bankruptcy Code Provisions. Each of the transactions provided for
in Sections 3.1, 3.2, 3.3, 3.4 and 3.5 shall be completed in accordance with
Sections 105, 363(b), (f), and (m), and 365 and 1146(c) of the Bankruptcy Code,
as applicable, and the provisions of the Approval Order, with the SNH Entities
receiving the full benefits and protections of such sections and the provisions
of the Approval Order.
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ARTICLE 4
CONSIDERATION
4.1 Consideration. In consideration of the transfers and agreements
described in Article 3 hereof, the SNH Entities agree, effective at the
Effective Time, the obligations of the Mariner Entities for the payment of all
amounts due and to become due under the Master Lease, the ▇▇▇▇▇▇▇▇▇▇▇ East Note,
the GranCare Guaranties and the Mariner Guaranty, in each case as of the date
hereof, are reduced to $1,200,000.00 in the aggregate (such amount, as it may be
further reduced in accordance with the Interim Management Agreement, the "Agreed
Deficiency"). Except for the payment of the Agreed Deficiency, and without
limiting the obligations of the Mariner Entities hereunder and under the other
Settlement Documents, all of the past, present or future liabilities and
obligations of each of the Mariner Entities under the Existing Documents shall
terminate.
ARTICLE 5
CLOSING
5.1 Closing. The closing of the transactions contemplated by this
Agreement shall be held at the offices of ▇▇▇▇▇▇▇▇ & Worcester LLP, ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such other location as the
parties may agree upon in writing, at 10:00 a.m., local time, on April 12, 2000
(the "Effective Time"); provided, however that, in the event that the conditions
set forth in Article 6 hereof shall not be satisfied as of the Effective Time,
the SNH Entities shall have the right, by notice in writing to the Mariner
Entities, to extend the Effective Time from time to time to no later than 10:00
a.m., local time, on July 1, 2000 (the "Outside Effective Time"), in order to
satisfy such conditions, or in the event that the conditions set forth in
Article 7 hereof shall not be satisfied as of the Effective Time, the Mariner
Entities shall have the right, by notice in writing to the SNH Entities, to
extend the Effective Time from time to time to no later than the Outside
Effective Time in order to satisfy such conditions.
ARTICLE 6
CONDITIONS PRECEDENT TO OBLIGATIONS OF SNH ENTITIES
The obligation of the SNH Entities to consummate the transactions
contemplated by this Agreement shall be subject to the satisfaction of each of
the conditions set forth in this Article 6. The determination that any condition
set forth in this Article 6 has been satisfied or has not been satisfied shall
be made by the SNH Entities in their sole discretion (unless otherwise expressly
provided herein, such as in Section 6.2 and Section 6.12 hereof).
6.1 Trustee Approval. This Agreement and each of the transactions
contemplated hereby shall have been approved by the Board of Trustees of SNH and
by each of the "Independent Trustees" of SNH. The Independent Trustees of SNH
are those trustees who are
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not affiliated with RMR. The SNH Entities shall notify the Mariner Entities if
the Board of Trustees or any of the "Independent Trustees" do not approve of
this Agreement and each of the transactions contemplated hereby on or before
March 31, 2000.
6.2 Documentation. All documentation evidencing or implementing the
transactions contemplated by this Agreement must be in form and substance
reasonably satisfactory to the SNH Entities and their counsel.
6.3 Lien Reports. With respect to each of the Retained Facilities,
SPTMNR shall have received a satisfactory lien report showing that, as of the
Effective Time, such Retained Facility is not subject to any liens, claims or
encumbrances other than the Permitted Encumbrances.
6.4 Receipt of Certain Permits and Approvals. The SNH Entities shall
have received all necessary Permits and approvals from all federal, state and
local regulatory agencies to enable them to: (a) accept the assignment and
surrender of the Master Lease; (b) enter into the Interim Management Agreement
and the Interim Occupancy Agreements with the Mariner Operators; and (c) do such
other acts and enter into such other agreements as are necessary or desirable to
carry out the intents and purposes of this Agreement.
6.5 Due Diligence. The SNH Entities shall have completed such
investigation and received such documentation and other assurances as they shall
deem necessary, in their sole discretion, to assure themselves that there are no
material impediments to the receipt by the SNH Entities of all licenses,
certificates, permits and approvals necessary to lease and to operate, as
licensee, and to manage, as manager, the Retained Facilities as they are
currently operated, and to receive Medicare and Medicaid payments or
reimbursements for services provided at each Retained Facility.
6.6 Reports and Surveys. With respect to each of the Retained
Facilities, the SNH Entities shall have received such reports, surveys and
opinions as they shall have determined are necessary or desirable, including the
following: updated title reports, licensure and Medicare/Medicaid survey reports
and updated appraisals; each such report, survey and opinion shall be
satisfactory to the SNH Entities in their sole discretion.
6.7 No Litigation. Except as disclosed on Schedule 6.7 (and other than
the Cases), there shall be no investigation, audit, governmental proceeding,
suit or other litigation, pending or threatened, seeking to, or the effect of
which would be to, enjoin, prevent or delay consummation of the transactions
contemplated by this Agreement, attach or place a lien on any of the Facilities
or any personal property or accounts receivable associated therewith or have a
reasonable likelihood of resulting in a material reduction of Third Party
Payments thereto, by withholding, offset, recoupment or reduction of prospective
rates of payment, revoke, condition or limit any Permit or approval necessary to
the operation thereof, or which would otherwise adversely affect the
consummation of the transactions contemplated herein or interfere with any SNH
Entity's ownership, lease, use, enjoyment or operation of the Retained
Facilities.
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6.8 No Default. Consummation of the transactions contemplated in this
Agreement shall not constitute, nor with the passage of time or giving of notice
or both result in, a default or event of default under any agreement, contract,
indenture, Permit, instrument or understanding to which any of the Mariner
Entities or any of their subsidiaries is a party or by which it or any of its
properties is bound and which is enforceable against the Mariner Entities in
their capacity as debtors in possession.
6.9 True and Complete Representation. All representations and
warranties of each of the Mariner Entities hereunder and under the Settlement
Documents shall be true, complete and correct in all material respects as of the
date hereof and as of the Effective Time.
6.10 Employment Matters. The SNH Entities shall have reviewed and
approved the contracts and agreements listed in Schedule 9.15 hereof.
6.11 Condition of Retained Facilities. Neither any asset to be conveyed
or transferred to any SNH Entity pursuant to this Agreement nor the business
conducted at any of the Retained Facilities shall have been adversely affected
in any material way from the date hereof to the Effective Time, including,
without limitation: by (a) any actual or threatened interference with use; (b)
fire or other casualty or condemnation; (c) pending or threatened loss,
revocation, restriction or limitation, including, without limitation, any
pending or threatened loss, revocation, restriction or limitation which is
stayed pursuant to an order of the Bankruptcy Court, of any material license,
certification or Permit; or (d) any other material operational matter. Between
the date hereof and the Effective Time, each SNH Entity and its agents and
consultants shall have been given all reasonable access to each Retained
Facility to perform such investigations and due diligence as it deems
appropriate to determine whether each condition precedent to its obligations
hereunder has been satisfied.
6.12 Opinions. The SNH Entities and each New Operator shall have
received such opinions of counsel for the Mariner Entities as they shall
reasonably request.
6.13 Approval Order. The Court shall have entered the Approval Order
and (a) no court of competent jurisdiction shall have entered an order staying
the Approval Order pending appeal, or, in the event a stay of the Approval Order
shall have been entered, then the stay shall have been terminated; (b) all
appeal periods shall have expired with no appeal having been taken or all
appeals shall have been dismissed, or the Approval Order shall have been
affirmed, by final order no longer subject to appeal; or (c) if appealed, such
appeal shall have otherwise been settled or resolved to the satisfaction of the
SNH Entities or this condition shall have been waived by the SNH Entities. The
Approval Order as entered by the Court shall contain no modifications
unacceptable to the SNH Entities and shall include, without limitation,
provisions as follows:
(i) Findings determining that notice of the Transaction
Approval Motion and hearing thereon have been adequate under
the circumstances;
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(ii) Findings that the SNH Entities are good faith purchasers
pursuant to 11 U.S.C.ss.363(m);
(iii) Findings that the consideration provided to the Mariner
Entities by the SNH Entities is adequate;
(iv) Findings that proceeding with those matters provided for
in the Agreement is in the best interest of the Mariner
Entities and their respective creditors;
(v) Finding that Schedule 9.16, updated as appropriate, is a
complete list of Employee Accruals;
(vi) Ordering that the transfer of the Retained Facilities and
personal property present at or used in connection with the
operation of the Retained Facilities is free and clear of all
liens, claims, encumbrances and interests pursuant to Section
363(f) of the Bankruptcy Code, except for the Permitted
Encumbrances;
(vii) Ordering that the transactions pursuant to the terms and
conditions set forth in this Agreement are approved in all
respects pursuant to Sections 363(b), 363(f), 365(b), 365(f)
and 1146(c) of the Bankruptcy Code, and otherwise;
(viii) Ordering that all Medicare and Medicaid payments for
services on or after the Effective Time shall be received by
the respective Mariner Entities and delivered by each to the
SNH Entities free and clear of any liens, claims, encumbrances
or interests;
(ix) Ordering that none of the SNH Entities or their nominees
shall have any liability for any Pre-Closing Obligations or
other obligations of any Mariner Entity or their affiliates or
subsidiaries (except as otherwise expressly provided for
herein); and
(x) Ordering that, in consideration of, and upon, the SNH
Entities' or their nominees' assuming the obligation to pay
the Employee Accruals, the Mariner Entities shall pay to the
SNH Entities the cash equivalent of such Employee Accruals.
6.14 Notice. Within a reasonable time following the filing with the
Court of the Approval Motion, and prior to the hearing and relevant objection
date, the Mariner Entities shall have served notice of the Transaction Approval
Motion in a form acceptable to the SNH Entities upon those persons mutually
designated by both parties and shall publish the notice in such newspapers as
mutually designated by both parties. The Mariner Entities shall pay the costs
incurred in connection with providing notice to mutually-designated parties as
aforesaid and the Mariner Entities and the SNH Entities shall each pay half the
costs for publishing notices in mutually-designated newspapers as aforesaid. In
addition, to the extent that the SNH
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Entities shall request that any additional parties be served any such notices,
or that any such notices be published in any additional newspapers, the Mariner
Entities shall cooperate with the SNH Entities to accomplish the same, and the
SNH Entities shall pay for all such costs in connection therewith.
6.15 Chase/Lender Approval. The SNH Entities shall have received
evidence satisfactory to them that the Chase Manhattan Bank, in its capacity as
collateral agent for the Mariner Entities' pre-petition senior secured lenders
and as agent for the Mariner Entities' debtor in possession lenders (in its
capacities as the collateral agent and the debtor in possession agent,
respectively, "Chase"), has consented to, or agreed not to object to, the
transactions contemplated under this Agreement and all related documents.
6.16 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇. There shall be no filing required under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended, relating to
the consummation of the transactions contemplated by this Agreement or, if such
a filing is required, all applicable consents shall have been obtained and the
Mariner Entities shall have agreed to pay all reasonable costs incurred in
connection with such filing.
ARTICLE 7
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE MARINER ENTITIES
The obligation of each Mariner Entity to consummate the transactions
contemplated by this Agreement shall be subject to the satisfaction of each of
the conditions set forth in this Article 7. The determination that any condition
set forth in this Article 7 has been satisfied or has not been satisfied shall
be made by the Mariner Entities in their sole discretion (unless otherwise
expressly provided herein, such as in Section 7.2 hereof).
7.1 Receipt of Certain Permits. The Mariner Entities shall have
received all Permits from all federal, state and local regulatory agencies to
enable them to: (a) surrender the Master Lease; (b) enter into the Interim
Management Agreement and the Interim Occupancy Agreements with the New
Operators; and (c) do such other acts and enter into such other agreements as
are necessary or desirable to carry out the intents and purposes of this
Agreement.
7.2 Documentation. All documentation evidencing or implementing the
transactions contemplated by this Agreement shall be in form and substance
reasonably satisfactory to the Mariner Entities and their counsel.
7.3 No Litigation. There shall be no investigation, governmental
proceeding, suit or other litigation pending or threatened seeking to, or the
effect of which would be to, enjoin, prevent or delay consummation of the
transactions contemplated by this Agreement.
7.4 Lien Reports. With respect to each of the Transferred Facilities,
Mariner shall have received a satisfactory lien report showing that, as of the
Effective Time, such Transferred
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Facility is not subject to any liens, claims or encumbrances other than the
Permitted Encumbrances.
7.5 Title Commitments. The Mariner Entities shall have obtained title
commitments (the "Title Commitments") committing to insure, at prevailing market
rates, subject to standard exceptions but subject to no special exceptions for
(a) liens or encumbrances arising by or through SPTMNR, SNH, HRP or any other
subsidiary of SNH or HRP (other than those consented to by Mariner or that are
Permitted Encumbrances) or (b) mortgages, deeds of trust, attachments or similar
liens securing payment obligations arising by or through SPTMNR, SNH, HRP or any
other subsidiary of SNH or HRP (other than those that are Permitted
Encumbrances).
7.6 True and Complete Representations. All representations and
warranties of the SNH Entities shall be true, complete and correct in all
material respects as of the date hereof and as of the Effective Time.
7.7 Approval Order. The condition set forth in Section 6.13 shall have
been satisfied.
7.8 Chase/Lender Approval. The Mariner Entities shall have received
evidence satisfactory to them that Chase has consented to, or agreed not to
object to, the transactions contemplated under this Agreement and all related
documents.
7.9 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇. There shall be no filing required under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended, relating to
the consummation of the transactions contemplated by this Agreement or, if such
a filing is required, all applicable consents shall have been obtained and the
Mariner Entities shall have agreed to pay all reasonable costs incurred in
connection with such filing.
ARTICLE 8
REPRESENTATIONS AND WARRANTIES OF SNH ENTITIES
8.1 Reliance. Each of the SNH Entities, jointly and severally, hereby
makes the representations and warranties set forth in this Article 8. Each of
the SNH Entities expressly acknowledges and agrees that, notwithstanding any
provision to the contrary in this or in any other agreement between or among the
parties: (a) Mariner, AMS Properties, GCI and their respective affiliates are
relying, may rely and are and shall be justified in relying on the following
representations and warranties in entering into this Agreement and the other
agreements and instruments referred to in, contemplated by, or executed in
connection with this Agreement and the other Settlement Documents; (b) each of
the following representations and warranties is made to induce the Mariner
Entities and their respective affiliates to enter into and consummate the
transactions contemplated by this Agreement and the other agreements referred to
in or contemplated by this Agreement and the other Settlement Documents, and
their respective affiliates, are and shall be beneficiaries of these
representations and warranties; and (c) each of the following representations
and warranties shall be a continuing representation and
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warranty and shall survive the closing of the transactions contemplated by this
Agreement, the execution of any Settlement Documents, and performance
thereunder.
8.2 Organization. SPTMNR is a real estate investment trust duly
organized, validly existing and in good standing under the laws of the State of
Maryland. SPTMNR has all requisite power and authority to carry on its business
as such business is presently being conducted and, subject to approval of its
Board of Trustees, to enter into this Agreement and to consummate the
transactions contemplated hereby.
8.3 Authorization. The execution, delivery and performance of this
Agreement and each other Settlement Document and all transfers, conveyances,
surrenders of leases, assignments and deliveries provided for herein have been
duly authorized by all necessary corporate, partnership and stockholder action.
This Agreement has been duly executed by each SNH Entity and constitutes the
valid and binding obligation of each SNH Entity, enforceable in accordance with
its terms.
8.4 Successor to HRP. SPTMNR is the successor in interest to HRP under
the Master Lease and the Existing Documents, it has assumed all of HRP's rights,
duties and obligations under the Master Lease and the Existing Documents and HRP
no longer has any rights or claims thereunder.
8.5 Brokerage. The SNH Entities have not used the services of any
broker or finder in connection with the transactions contemplated by this
Agreement and they will indemnify and hold harmless the Mariner Entities from
and against all claims, actions, causes of action, costs, expenses, including
attorneys' fees, and liabilities arising in or out of, or related to any broker
or finder claiming any compensation or fee by reason of an alleged agreement or
understanding with any of the SNH Entities.
8.6 No Actions. There are no actions, proceedings, investigations or
audits pending or threatened against any of the SNH Entities, before or by any
court, arbitrator, administrative agency or other Governmental Authority which
are expected, in the reasonable judgment of the executive officers of any of the
SNH Entities, to materially and adversely affect the assets or the financial
condition or operations of any of the SNH Entities, or their ability to carry
out the transactions contemplated in this Agreement.
8.7 TRANSFERRED FACILITIES CONVEYED "AS IS". THE MARINER ENTITIES
ACKNOWLEDGE THAT THE TRANSFERRED REAL ESTATE BEING CONVEYED OR TRANSFERRED TO
AMS PROPERTIES OR ITS DESIGNEE HEREUNDER IS BEING CONVEYED AND TRANSFERRED "AS
IS, WHERE IS" WITHOUT REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE
CONDITION, TITLE, DESIGN, MERCHANTABILITY OR FITNESS FOR USE OF SUCH PROPERTY
AND NO SNH ENTITY HAS MADE, OR SHALL BE DEEMED TO HAVE MADE, ANY OTHER
REPRESENTATION OR WARRANTY, OTHER THAN AS EXPRESSLY SET FORTH IN THIS AGREEMENT
OR ANY OTHER SETTLEMENT DOCUMENT. Without limiting the generality of the
foregoing, except for representations and
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warranties expressly set forth in this Agreement or in any other Settlement
Document, the transactions contemplated by this Agreement are without any
statutory, express or implied warranty, representation, agreement, statement or
expression of opinion on the part of any SNH Entity of or with respect to (i)
the condition or title of the assets or any aspect thereof, including, without
limitation, any and all statutory, express or implied representations or
warranties related to suitability for habitation, merchantability or fitness for
a particular use or purpose, (ii) the nature or quality of construction,
structural design or engineering of the improvements located on the Transferred
Real Estate, (iii) the quality of the labor or materials included in the
improvements located on the Transferred Real Estate, (iv) the soil conditions,
drainage, topographical features, flora, fauna or other conditions of or which
affect the Transferred Real Estate, (v) any conditions at or which affect the
Transferred Real Estate with respect to any particular use, purpose development
potential or otherwise, (vi) area, size, shape, configuration, location, access,
capacity, quantity, quality, cash flow, expenses, value, condition, make, model,
composition, accuracy, completeness, applicability, assignability,
enforceability, exclusivity, usefulness, authenticity or amount, (vii) any
statutory, express, or implied, representations or warranties created by any
affirmation of fact or promise, by any description of the assets or by operation
of law, (viii) any environmental, structural, or other condition or hazard or
the absence thereof heretofore, now, or hereafter affecting in any manner any of
the Transferred Real Estate, and (ix) all other statutory, express or implied
representations and warranties whatsoever.
ARTICLE 9
REPRESENTATIONS AND WARRANTIES OF THE MARINER ENTITIES
9.1 Reliance. Each of the Mariner Entities, jointly and severally,
hereby makes the representations and warranties set forth in this Article 9.
Each of the Mariner Entities expressly acknowledges and agrees that,
notwithstanding any provision to the contrary in this or in any other agreement
between or among the parties, the New Manager and/or any New Operator or their
respective affiliates: (a) SPTMNR, the New Manager, each New Operator and their
respective affiliates are relying, may rely and are and shall be justified in
relying on the following representations and warranties in entering into this
Agreement and the other agreements and instruments referred to in, contemplated
by, or executed in connection with this Agreement and the other Settlement
Documents; (b) each of the following representations and warranties is made to
induce the SNH Entities and their respective affiliates to enter into and
consummate the transactions contemplated by this Agreement and the other
agreements referred to in or contemplated by this Agreement and the other
Settlement Documents, and their respective affiliates, are and shall be
beneficiaries of these representations and warranties; and (c) each of the
following representations and warranties shall be a continuing representation
and warranty and shall survive the closing of the transactions contemplated by
this Agreement, the execution of any Settlement Documents, and performance
thereunder.
9.2 Organization. Each of the Mariner Entities is a corporation, duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation. Subject to the entry of the Approval Order,
each of the Mariner Entities has full power,
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authority and legal right to execute, deliver and perform under this Agreement,
to enter into the Interim Occupancy Agreements, Interim Management Agreement and
the other Settlement Documents and to take all other actions necessary to carry
out the intents and purposes of this Agreement.
9.3 Authorization. The execution, delivery and performance of this
Agreement and each other Settlement Document and all transfers, conveyances,
surrenders of leases, assignments and deliveries provided for herein have been
duly authorized by all necessary corporate, partnership and stockholder action.
This Agreement has been duly executed by each Mariner Entity and, subject to the
entry of the Approval Order, constitutes the valid and binding obligation of
each Mariner Entity, enforceable in accordance with its terms.
9.4 No Liabilities. None of the Mariner Entities has any liabilities
which would impair or encumber title to, or materially adversely affect the
Retained Facilities or their operations, whether absolute, contingent or fixed,
liquidated or unliquidated, matured or not yet due, of any nature, including tax
liabilities, other than liquidated, noncontingent liabilities incurred by the
Mariner Entities in the ordinary course of their businesses. Each of the Mariner
Entities has (a) filed all tax returns which it is required to file and (b)
paid, or simultaneously with the closing will have paid, any taxes levied or
assessed against it or any of its assets, or under any judgment, order, decree,
or a regulation of any court, arbitrator, administrative agency or other
Governmental Authority to which it may be subject which would, in each case, or
in the aggregate, adversely affect the assets, business, prospects, operation or
financial condition of any Retained Facility after the Effective Time.
9.5 Personal Property. The Mariner Entities own all the tangible and
intangible personal property necessary to operate each Retained Facility (other
than those assets subject to personal property leases (complete and accurate
copies of which shall be provided to the SNH Entities for review within fifteen
(15) Business Days of the execution hereof) and the tangible and intangible
personal property necessary to operate the Subleased Facilities, which personal
property is owned by the Subtenants at the Subleased Facilities) with the number
of beds, and providing such services, as are described in Schedule 9.5, free and
clear of all liens, encumbrances, charges, restrictions, conditions and adverse
claims of any kind or nature, except for Permitted Personal Property
Encumbrances. The Consumables located at each Retained Facility as of the
Effective Date and included in the personal property being transferred by the
Mariner Entities pursuant to Section 3.2 are sufficient for at least three (3)
days' operations at such Retained Facility as currently operated, which reserve
is typical and otherwise in accordance with sound business and care practices
for such Retained Facilities.
9.6 Required Consents. No material consent, approval or other
authorization of, or registration, declaration or filing with, any court or
governmental agency or commission which has not been heretofore obtained or
which will not be obtained prior to the Effective Time is required for the due
execution, delivery or performance of this Agreement and the other Settlement
Documents, the assignments and conveyances contemplated hereby or for the
validity or enforceability thereof against any of the Mariner Entities.
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9.7 No Third Party Payor Actions. To the best of their knowledge, there
are no actions, proceedings, investigations or audits claims, orders or
settlement agreements pending or threatened against any of the Mariner Entities,
before or by any court, arbitrator, administrative agency or other Governmental
Authority or Third Party Payor or its agent, including, without limitation, any
action, proceeding, investigation, audit, claim, order, or settlement agreement
likely to result in a Third Party Payor suspending, withholding, or reducing
payments to any of the Facilities for services after the Effective Time, in
order to recoup, offset, or otherwise secure for overpayments or penalties
claimed to be owed by a Mariner Entity, or to secure the payment of fines,
penalties, interest, or other costs in connection therewith, which are expected,
in the reasonable judgment of the executive officers of any of the Mariner
Entities, to materially and adversely affect the assets or the financial
condition or operations of any of the Retained Facilities, or the Mariner
Entities' ability to carry out the transactions contemplated in this Agreement,
and except as otherwise disclosed in writing to the SNH Entities within fifteen
(15) Business Days of the execution hereof.
9.8 No Violations. The execution and delivery of this Agreement, the
compliance with the provisions hereof and the consummation of the transactions
herein contemplated by each of the Mariner Entities, will not result in (a) a
breach or violation of (i) any material law or governmental rule or regulation
now in effect and applicable to any of the Mariner Entities, (ii) any provision
of the Articles of Organization, Certificate of Incorporation, or By-laws of any
of the Mariner Entities, (iii) any judgment, order or decree of any court,
arbitrator, administrative agency or other Governmental Authority binding upon
any of the Mariner Entities, (iv) any agreement or instrument to which any of
the Mariner Entities is a party and by which it is bound as a debtor in
possession or by which it or any of its properties is bound, or (b) the creation
of any lien, claim or encumbrance (other than the Permitted Encumbrances) upon
any of the Retained Facilities.
9.9 Condition of Retained Facilities. As to each of the Retained
Facilities (but, in the case of the Subleased Facilities, to the best of the
knowledge of the Mariner Entities (as such Subleased Facilities are, and have
been, operated by the Subtenants)):
(a) Each Retained Facility and its operation and use are in
compliance with all material municipal, county, state and federal laws,
regulations, ordinances, standards and orders and with all municipal,
health, building and zoning laws and regulations (including, without
limitation, the fire safety code) where the failure to comply therewith
could reasonably be anticipated to have a material adverse effect on
the business, property, condition (financial or otherwise) or operation
of the Retained Facility as it is presently being operated or the
ability to obtain any Necessary License (as such term is defined in the
Interim Management Agreement);
(b) There are no outstanding material deficiencies cited by
any Governmental Authority having jurisdiction over any Retained
Facility requiring conformity to any applicable statute, regulation,
ordinance or bylaw pertaining to the type of facility presently being
operated;
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(c) No claim, requirement or demand has been made by any
licensing or certifying agency supervising or having authority over any
Retained Facility to construct or install improvements to or on, or
otherwise alter or redesign, such Retained Facility or to provide
additional furniture, fixtures, equipment or Consumables so as to
conform to or comply with any existing law, code or standard which has
not been fully satisfied prior to the date hereof;
(d) There exists no material defect or deficiency with regard
to the structure, soil, fixtures, plumbing, septic, electrical,
mechanical or other systems of any Retained Facility which would
materially impair the use or value of such Retained Facility, and each
Retained Facility is in good repair and working order and is not
subject to any substantial deferred maintenance; there is no termite or
other infestation at any Retained Facility and there is not earth
subsidence or earth movement affecting any Retained Facility or the
property on which it is situated; and
(e) Except as set forth in Schedule 9.9(e), each Retained
Facility is duly and properly licensed under all applicable federal,
state and local laws, ordinances and regulations and in conformance
with all insurance requirements and requirements of Third Party Payor
Programs, and holds all other Permits and approvals issued, and has
satisfied all eligibility and other similar requirements imposed, by
hospital, health or similar regulatory bodies, administrative agencies
or other governmental bodies, agencies or officials, or that relate to
all Third Party Payor Programs or other private or governmental
programs for the reimbursement or payment of health care costs or
charges to provide the services and operate the number of beds at such
Retained Facility as described in Schedule 9.5 in the ordinary course
of business consistent with past practices. Other than the Approval
Order and the Chase consents required as provided in Section 6.13 and
Section 6.15 hereof, no consents, approvals or other authorizations,
registrations, declarations or filings, except those with respect to
which application has heretofore been made and received, or will have
been so received by the Effective Time, are required for the transfer
of the property to the SNH Entities and the other transactions
contemplated by this Agreement, including, without limitation, Article
3, Article 4 and Article 10 hereof, and for the Approval Order. There
is no action pending or recommended or threatened by any state or
federal agency having jurisdiction thereof, either to revoke, withdraw
or suspend any license to operate any Retained Facility, nor is there
any decision or threat, or action, pending, recommended or threatened,
not to renew or to revoke any Medicare or Medicaid certification or
Provider Agreements related to any Retained Facility, or any action of
any other type which would have a material adverse effect on any
Retained Facility, its operations or business. No liability or
obligations with respect to any matters referred to herein is being, or
shall be deemed to have been, assumed by SPTMNR or by any SNH Entity.
(f) As to the property on which each Retained Facility is
located:
(i) the Mariner Entities have not received any notice
that any buildings and improvements on the property have not
been constructed in
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compliance with the requirements of all material laws,
ordinances, rules, regulations and restrictions of record
applicable thereto, or that any bills for labor and materials
in connection with the construction thereof have not been paid
in full or provided for;
(ii) there has been no material damage to the
buildings and improvements on the property, and all
improvements are insured for full replacement value;
(iii) all public utilities or adequate and complying
private septic systems, including, but not limited to, water,
sewer, gas and electricity, to the extent necessary for the
operation of the property, are available to service the
property and are adequate for the intended use of the
property;
(iv) all Permits which are necessary to permit the
use of the property in accordance with the provisions of this
Agreement and the transactions contemplated thereby have been
obtained and are in full force and effect, and there has been
no actual or claimed violations of the terms and conditions
thereof;
(v) to the best of the knowledge of the Mariner
Entities, no Hazardous Substance, including, but not limited
to, asbestos, PCB's or ureaformaldehyde, has been generated,
released into, stored or deposited over, upon or below the
property, into any water systems on or below the surface of
the property, or in any structures located on the property,
including, without limitation, the Retained Facilities, from
any sources whatsoever, except such as are used, stored or
disposed of in full compliance with all applicable statutes,
regulations and rules pertaining thereto; and
(vi) no Mariner Entity has entered into, nor is the
property subject to, any option, lease, claim for occupancy or
other agreement other than as contemplated by this Agreement
(other than the Subleases).
9.10 Non-Foreign Status. No Mariner Entity is a "foreign person" within
the meaning of Section 1445(f) of the Internal Revenue Code.
9.11 Filing of Reports and Claims. Each of the Mariner Entities has
filed with all applicable Third Party Payor Programs all required cost reports
and claims for payment with respect to each of the Retained Facilities. All such
reports and claims for payment have been prepared and retained in material
compliance with all applicable governmental and program statutes, rules and
regulations and are true and correct in all material respects. All services to
which such cost reports and claims relate have been at all times provided in
material compliance with all applicable governmental and program statutes, rules
and regulations. The Mariner Entities have retained all records necessary to
document that all facility services have been provided as claimed. Each of the
Mariner Entities has paid or simultaneously with the Closing shall have paid any
liabilities assessed against it or any of its assets under any
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regulation, claim, settlement agreement, judgment, order, decree or regulation
of any administrative agency, Third Party Payor, Third Party Payor Program,
court or arbitrator to which it may be subject, in each case, to the extent that
such liabilities are enforceable against the Mariner Entities in their capacity
as debtors in possession.
9.12 Patient Trust Accounts. There are no deficiencies in any of the
Patient Trust Accounts held for the benefit of residents of any of the Retained
Facilities. Each Mariner Entity has at all times properly prepared and filed all
accountings for Patient Trust Accounts required by applicable law or reconciled
and rectified any improperly prepared or filed accountings.
9.13 List of Patients. On or prior to the Effective Time, each of the
Mariner Entities shall provide the SNH Entities with an accurate and complete
list of the residents of each of the Retained Facilities and the Persons or
Third Party Payor Programs responsible for payment of their charges.
9.14 Contracts. No Mariner Entity is a party to, and none of the
Retained Facilities is subject in any way to, any contract, agreement or
arrangement, written or oral with any other Mariner Entity, any directors,
partners, shareholders or officers of any Mariner Entity, any affiliate or
subsidiary of any Mariner Entity, any third party affiliated with any of the
foregoing, or with any employees, consultants, advisors or agents of any of the
foregoing, with respect to: (i) any plan, contract, agreement or arrangement,
written or oral, providing for bonuses, pensions, options, deferred
compensation, termination or severance pay, retirement payments, profit sharing
or the like that could create any liability or obligation for any of the SNH
Entities; (ii) any contract or agreement involving any joint venture or profit
sharing arrangement with respect to any Retained Facility; (iii) any option or
right of first refusal with respect to any Retained Facility; (iv) any
noncompetition agreement or similar restrictive covenant; (v) any contract or
agreement entered into outside the ordinary course of business and affecting the
assets, business, prospects, operation or financial condition of any Retained
Facility that is enforceable against the Mariner Entities in their capacity as
debtors in possession.
9.15 Labor Unions, Etc. Except as set forth in Schedule 9.15, neither
any Mariner Entity, nor any Retained Facility is a party to any contract or
agreement with a labor union, including without limitation, collective
bargaining or employment agreements, or any agreements that contain any
severance or termination pay liabilities that is enforceable against the Mariner
Entities in their capacity as debtors in possession.
9.16 Employment Matters. Except as set forth in Schedule 9.16, there
are no wages, salaries, vacation, holiday, sick pay or severance pay due or to
become due any employee of any Mariner Entity relating to, or arising out of,
such employee's employment at any Retained Facility prior to the Effective Time
that is enforceable against the Mariner Entities in their capacity as debtors in
possession.
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9.17 No Litigation. Except for the Cases, there is no suit, claim,
action, or legal, administrative, arbitration or other proceeding or
governmental or Third Party Payor investigation or audit pending, or to the best
knowledge of each Mariner Entity, threatened by or against any Mariner Entity,
or any of the Facilities, and no event or condition of any character, which
could prevent the consummation of the transactions contemplated by this
Agreement or adversely affect the SNH Entities' use or enjoyment of the Retained
Facilities or diminish the value of such properties has, to the best knowledge
of each of the Mariner Entities, occurred; and there are no judgments, decrees,
orders, ruling, writs or injunctions, against any Mariner Entity which could
adversely affect the operations or finances of the Retained Facilities, the
property on which each is situated, or the transactions contemplated herein.
9.18 Insurance. Each Mariner Entity has maintained or caused to be
maintained insurance since commencement of its operations at each of the
Retained Facilities, without any interruption of coverage, against liability,
loss or casualty on all aspects of each Retained Facility's operations,
including, but not limited to, its assets, personnel, employees, and residents,
as well as appropriate malpractice insurance. The insurance policies which
currently provide the foregoing insurance coverage are listed and described in
Schedule 9.18.
9.19 Subleases. To the best of the knowledge of the Mariner Entities,
(i) no Mariner Entity has received any notice from any Subtenant purporting to
exercise any right to renew or extend the term of any Sublease, (ii) the list of
Subleases and other documents contained in Schedule 9.19 attached hereto is
true, complete and accurate, includes all amendments thereto and constitutes the
entire agreement between the Mariner Entities and the Subtenants thereunder,
including, without limitation, any financing agreements and all agreements
entered into between the Mariner Entities and the Subtenants and any promissory
notes executed and delivered in connection therewith, and (iii) the Mariner
Entities have provided the SNH Entities with complete and accurate copies of all
documents and correspondence relating to the Subleases that are in their
possession.
9.20 Brokerage. Each of the Mariner Entities represents that it has not
used the services of any broker or finder in connection with the transactions
contemplated by this Agreement and each of the Mariner Entities will indemnify
and hold harmless the SNH Entities from and against all claims, actions, causes
of action, costs, expenses, including attorneys' fees, and liabilities arising
in or out of, or related to any broker or finder claiming any compensation or
fee by reason of an alleged agreement or understanding with any of the Mariner
Entities.
9.21 Knowledge and Expertise. Each of the Mariner Entities represents
that it has the knowledge and expertise in financial and business matters to
enable it to evaluate the risks and merits of the transactions contemplated by
this Agreement.
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ARTICLE 10
CERTAIN MATTERS RELATING TO TRANSITION OF PROPERTIES
10.1 Employees; Employee Benefits.
10.1.1 After the Effective Time and subject to the terms of the Interim
Management Agreement, the Mariner Entities shall employ qualified nursing home
administrators who shall be responsible for the functional day-to-day operation
of the Retained Facilities and supervision of personnel at the Retained
Facilities, as well as all on-site professional, custodial, food service,
cleaning, maintenance, clerical, secretarial, bookkeeping, management,
collection, and other employees for the day-to-day operations of the Retained
Facilities. All such administrators and other personnel shall be employees of
the Mariner Entities.
Notwithstanding the foregoing, the New Manager shall offer employment
to all or substantially all of the qualified nursing home administrators and
other employees at the Retained Facilities as soon after the Effective Time as
is reasonably practicable. The Mariner Entities acknowledge that the ability of
the New Manager to make any such offer is contingent upon the employees being
employable under state and Federal law and may be subject to the New Operators'
or New Manager's receipt of all licenses, permits, approvals, authorizations,
provider agreements, and certificates and determinations of need as are
necessary for the New Operators and the New Manager to operate the Facilities as
licensees and to receive Medicare and Medicaid reimbursement for the services
provided therein, and that in any event the New Manager will first have to
implement an appropriate accounting and payroll function. The Mariner Entities
further acknowledge that the New Manager may not hire all such employees on the
same date or at the same time. The Mariner Entities agree to cooperate with the
New Manager in connection with such offers of employment and to release any
personnel to whom the New Manager offers employment from any employment
agreements, non-competition, non-solicitation and non-disclosure agreements or
common law obligations relating to their employment with the Mariner Entities to
which they may be a party or subject.
10.1.2 Payroll and payroll related costs shall be prorated as of the
Effective Time.
In addition, the Mariner Entities shall pay to the New Manager for each
Facility an amount of cash equivalent to all Employee Accruals with respect to
such Retained Facility at the Effective Time and, in connection therewith, the
SNH Entities shall assume the Mariner Entities' obligation to pay the same.
AMS Properties, GCIHCC, or the New Manager, as the case may be, shall
pay all payroll and payroll related costs, and maintain, prepare and process all
employee payroll records and tax withholding filings, relating to, or arising
out of, any employee's employment from and after the Effective Date, as provided
in the Interim Management Agreement.
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The Mariner Operator of each Retained Facility shall, as of the
Effective Time, deliver to the New Manager all personnel records for employees
at such Retained Facility. Each Mariner Operator shall have the right to retain
copies of any files which are delivered to the New Manager. The Mariner
Operators, the New Operators and the New Manager, as the case may be, each
further acknowledge and agree that, in order to facilitate the application of
the proration provisions of this Section 10.1, they shall generate terminating
payrolls and make corresponding payments to employees with respect thereto for
each Retained Facility on both the Effective Date and the date that the New
Manager shall hire all or substantially all of the employees at such Retained
Facility.
10.2 Prorations.
10.2.1 Revenues and expenses pertaining to Contracts (to the
extent applicable), utility charges for the billing period in which the
Effective Time occurs, prepaid expenses, real estate taxes, municipal charges,
payroll, Employee Accruals and Employee Benefits and other related items of
revenue or expense attributable to any Retained Facility shall be prorated
between the Mariner Operator for such Retained Facility and the relevant New
Operator as of the Effective Time. In general, such prorations shall be made so
as to reimburse such Mariner Operator for prepaid expense items, and to charge
the relevant Mariner Operator for prepaid revenue items, to the extent that the
same are attributable to periods after the Effective Time.
10.2.2 All such prorations shall be made on the basis of
actual days elapsed in the relevant accounting or revenue period and (i) in the
case of utility charges, real estate taxes, municipal charges, payroll, Employee
Accruals and Employee Benefits, shall be calculated and paid at the Effective
Time as provided in Section 10.2.3 hereof, based on invoices, remittances,
statements and other information available with respect to such charges, and, if
such invoices, remittances, statements and other information are not available
with respect to such charges, on estimates based on prior charges for such
items, (ii) in the case of all Contracts (to the extent applicable) and other
items of revenue or expense attributable to any Retained Facility, shall be
calculated and paid on the date that is the sixtieth (60th) day (the "True-Up
Time") after the Effective Time, as provided in Section 10.2.3 hereof, based on
invoices, remittances, statements and other information then available with
respect to such charges, and, if such invoices, remittances, statements and
other information continue to be unavailable with respect to such charges, on
estimates based on prior charges for such items, and (iii) to the extent that
any prorations for payments and charges outlined in the preceding clauses (i)
and (ii) are based on estimates, the SNH Entities and the Mariner Entities agree
to reconcile the estimates for such items against the actual costs therefor by
no later than September 30, 2000. The SNH Entities and the Mariner Entities
agree that the calculation of the proration at the True-Up Time shall be
performed by Ernst & Young U.S. LLP and that they shall each pay fifty percent
(50%) of the cost therefor. Notwithstanding anything contained in this Agreement
to the contrary, the SNH Entities shall be obligated to make payment for amounts
it collects on account of any prorations paid to the SNH Entities by the Mariner
Entities in accordance with this Section 10.2.
10.2.3 The accounts of the Mariner Entities and SNH Entities
created pursuant hereto shall be netted against each other. If (i) the result is
a net positive balance for the
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Mariner Entities, the SNH Entities shall pay to the Mariner Entities the amount
of such balance by corporate check, and (ii) if the result is a net positive
balance for the SNH Entities, the Mariner Entities shall pay to SPTMNR the
amount of such balance by corporate check.
10.2.4 There shall be no prorations with respect to the
Transferred Facilities (other than with respect to rent and other amounts
payable under the Master Lease), as all such expenses with respect to the
Transferred Facilities are the responsibility of the Mariner Entities prior to
the Effective Time, as lessee under the Master Lease, and thereafter, as owner
of the Transferred Facilities.
10.3 Accounts Receivable. From and after the Effective Time, (i) the
New Operators shall, to the extent permitted by applicable law, own all accounts
receivable which relate to or arise out of services provided by or at the
Retained Facilities from or after the Effective Time (the "Post-Effective A/R"),
(ii) the Mariner Operators shall make and effect collections of all
Post-Effective A/R, (iii) the Mariner Operators shall establish new bank
accounts (the "New A/R Accounts") in the name of each Mariner Operator at such
local banks to be agreed upon by the SNH Entities and the Mariner Entities, and
shall instruct all Third Party Payors and other Persons that directly deposit
monies into the existing bank accounts (the "Existing A/R Accounts") with
respect to the Retained Facilities to terminate such direct deposit and commence
depositing such monies into the New A/R Accounts from and after the date that is
sixty (60) days after the Effective Time (the "Account Transfer Time") or as
soon as is practicable thereafter (and the Mariner Entities shall take such
further action as may be reasonably necessary to cause such Third Party Payors
and other Persons to comply with such instructions so that all Post-Effective
A/R are deposited into the New A/R Accounts from and after the Account Transfer
Time or as soon as is practicable thereafter), (iv) the Mariner Operators shall
continue to endorse and deposit all monies, checks, drafts or other instruments
or items received as payment for any Post-Effective A/R with respect to any
Facility into the Existing A/R Accounts until the Account Transfer Time, (v) the
Mariner Operators shall endorse and deposit all monies, checks, drafts or other
instruments or items received as payment for any Post-Effective A/R from and
after the Account Transfer Time into the New A/R Accounts, (vi) within five (5)
days of the New Operators request therefor (but no sooner than the SNH Licensing
Date), the Mariner Operators shall assign, set over and transfer the New A/R
Accounts to the New Operators, and (vii) the Mariner Entities shall disburse all
proceeds attributable to Post-Effective A/R deposited in the Existing A/R
Accounts or the New A/R Accounts or otherwise received or held by the Mariner
Entities to the SNH Entities (or to such other Person as the SNH Entities may
direct) within five (5) days of the Mariner Entities' receipt thereof.
The SNH Entities and the Mariner Entities acknowledge and agree that
(i) the Mariner Entities shall continue to own all accounts receivable which
relate to or arise out of services provided by or at the Retained Facilities
prior to the Effective Time (the "Pre-Effective A/R"), (ii) the Mariner Entities
shall be entitled to retain all proceeds attributable to Pre-Effective A/R
deposited in the Existing A/R Accounts or the New A/R Accounts or otherwise
received or held by the Mariner Entities, and (iii) the SNH Entities shall
disburse to the Mariner Entities (or to
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such other Person as the Mariner Entities may direct) all such Pre-Effective A/R
within five (5) days of the SNH Entities' receipt thereof.
10.4 No Assumption of Liabilities. Notwithstanding anything in this
Agreement or elsewhere to the contrary, no SNH Entity is assuming, and no SNH
Entity shall be responsible for, any liability of any kind or nature whether
known or unknown, absolute, mature or not yet due, liquidated or non-liquidated,
contingent, non-contingent, direct or indirect or otherwise, of any Mariner
Entity or any other person for:
(a) Any costs or expenses, including, but not limited to,
legal fees, accounting fees, consulting and financing costs incurred by
any Mariner Entity in negotiating this Agreement or in consummating the
transactions contemplated hereby;
(b) Any claim as a result of any injury to any person arising
out of the rendering of or failure to render services by any Mariner
Entity or its or his employees, agents or representatives or any other
person performing services for or on behalf of any Mariner Entity (i)
with respect to the Retained Facilities, prior to the Effective Time
and, subject to, and upon the terms and conditions contained in the
Interim Management Agreement, after the Effective Time, and (ii) with
respect to the Transferred Facilities or any other operations of the
Mariner Entities (except as otherwise expressly set forth herein), both
prior to, and after, the Effective Time;
(c) Any liability to set off or recoupment (including set off
or recoupment against Post-Effective Time accounts receivable) by any
Third Party Payor by reason of any contractual claim, settlement, order
or judgment retroactively adjusting the amounts payable for
reimbursement purposes or recovering overpayments made or requiring the
payment of fines, penalties or damages, or reduction of prospective
payments to any Facility or interest, with respect to, or based upon,
the services rendered by any Mariner Entity (i) with respect to the
Retained Facilities, prior to the Effective Time and, subject to, and
upon the terms and conditions contained in the Interim Management
Agreement, after the Effective Time, and (ii) with respect to the
Transferred Facilities or other operations of the Mariner Entities
(except as otherwise expressly set forth herein), both prior to, and
after, the Effective Time, including liabilities that are subject to a
stay ordered by the Court and liabilities that may be collected against
the New Operator under state or Federal law;
(d) Any taxes owed by any Mariner Entity, including, but not
limited to, any investment tax recapture, depreciation recapture,
employer taxes such as F.I.C.A. and F.U.T.A., any sales or use taxes,
any personal property taxes, any withholding taxes and any workers'
compensation or unemployment insurance premiums or adjustments and, in
the case of any Mariner Entity's employees or any of its affiliates'
employees, relating to, or arising out of, such employee's employment
at any Retained Facility prior to the Effective Time; and with respect
to the Transferred Facilities or other operations of the Mariner
Entities, both prior to, and after, the Effective Time;
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(e) Any claim by any employee of any Mariner Entity for wages,
salary, vacation, holiday, sick pay, welfare, or fringe benefits,
relating to, or arising out of, such employee's employment prior to the
Effective Time, except for those Employee Accruals assumed by the New
Manager pursuant to Section 10.1 hereof and with respect to the
Transferred Facilities or other operations of the Mariner Entities
(except as otherwise expressly set forth herein), both prior to, and
after, the Effective Time;
(f) Any claim arising under any instrument, agreement,
indenture, contract or understanding to which any Mariner Entity is a
party or by which it or any of its property is bound, unless such
instrument, agreement, indenture, contract or understanding is
explicitly described and affirmed and assumed by the SNH Entities in
this Agreement or is otherwise expressly affirmed and assumed by
separate instrument in writing executed by SPTMNR; or
(g) Any claim, order or judgment otherwise arising out of the
operation of any Facility or other operations of the Mariner Entities
(except as otherwise expressly set forth herein but specifically
including any claim, order or judgment arising under any applicable
Federal, state or local statutes, laws, ordinances, rules and
regulations, licensing requirements or conditions (including Medicare
or Medicaid requirements or conditions, and environmental laws), or
involving the imposition of any lien under any applicable law), in each
case to the extent arising or attributable to conditions or events
occurring prior to the Effective Time, and, subject to, and upon the
terms and conditions contained in the Interim Management Agreement,
after the Effective Time, and (ii) with respect to the Transferred
Facilities or other operations of the Mariner Entities (except as
otherwise expressly set forth herein), both prior to, and after, the
Effective Time.
10.5 Indemnification. Without limiting any of the foregoing, each
Mariner Entity agrees, on a joint and several basis, to indemnify, defend and
hold harmless, the SNH Entities, and their respective officers, employees,
directors, trustees, managers, members, consultants and advisors, any of their
respective successors or assigns (individually an "Indemnitee") from and against
the following (collectively, "Damages"): (i) all Pre-Closing Obligations or any
contravention or non-compliance with the Approval Order, and associated claims
or liability, and all other liabilities, losses, damages, costs and expenses of
any kind (including, without limitation, the reasonable fees and disbursements
of counsel for the SNH Entities in connection with any investigative,
administrative or judicial proceeding arising out of the operation of any
Facility or other operations of the Mariner Entities (including any violation or
alleged violation of any and all applicable Federal, state or local statutes,
laws, ordinances, rules and regulations, licensing requirements or conditions,
or involving the imposition of any lien under any such applicable law)) prior to
the Effective Time or for any contravention or non-compliance with the Approval
Order, (ii) any and all liabilities, losses, damages, costs and expenses of any
kind arising out of either a breach, default, contravention, non-compliance by
any Mariner Entity of its obligations under this Agreement or the Approval Order
(including the failure of any representation by any Mariner Entity to be
accurate and complete on the date when made or deemed made), or the enforcement
of such obligations, and (iii) the existence, prior to the Effective Time, of
any Hazardous Substance on, in, or under any Retained Facility (to the
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extent provided for in the Master Lease). The SNH Entities shall, in addition to
any other rights, be entitled to payment in compensation for any of the above,
holding allowed administrative period claims for all such payments due thereon.
10.6 Post-Effective Time Liabilities (Retained Facilities). Each of the
SNH Entities acknowledges and agrees that, subject to, and upon the terms and
conditions contained in the Interim Management Agreement, the New Manager and/or
the New Operators shall indemnify the Mariner Entities from and against all
costs, expenses and liabilities arising out of the operation, maintenance and
management of the Retained Facilities after the Effective Time, except for those
costs, expenses and liabilities arising out of the gross negligence or willful
misconduct of any of the Mariner Entities.
10.7 Financial Records, Etc. Each of the SNH Entities and the Mariner
Entities agree that they shall provide such other party access to the books and
records and other financial information maintained by such party with respect to
the operation of the Facilities (both before and after the Effective Time) as
such party may reasonably request. The Mariner Entities shall provide the SNH
Entities and their accountants with such certifications with respect to such
financial information as the SNH Entities may from time to time reasonably
request.
10.8 Contracts. The Mariner Entities acknowledge that the New Operators
may desire to assume certain of the Contracts and, in connection therewith, the
Mariner Entities agree that they shall (i) within fifteen (15) Business Days of
the execution hereof, provide the SNH Entities with a complete list of the
Contracts and the status thereof (including, without limitation, amounts
outstanding under such Contracts (including those amounts outstanding prior to
the Petition Date)), (ii) assist in the New Operators' evaluation of such
Contracts by providing such information as the New Operators' may reasonably
request regarding the contracting party's performance thereunder, and (iii)
subject to Bankruptcy Court Approval, assume and assign any Contracts that the
New Operators may elect to have the Mariner Entities assume and assign to them,
provided that in no event shall any Mariner Entity be required to pay any cure
amounts, or incur any additional obligations, under any such Contract in
connection with such assumption and assignment beyond those enforceable against
the Mariner Entities in their capacity as debtors in possession (it being
intended by the parties hereto that if the New Operators elect to cause the
Mariner Entities to assume and assign any such Contract in accordance with this
Section 10.7, the New Operators will pay any cure amounts required to effect
such assumption and assignment).
10.9 Survival. The provisions of this Article 10 shall survive the
Closing hereunder.
ARTICLE 11
DAMAGE TO PROPERTY FROM CASUALTY OR TAKING
11.1 In the event of any casualty or damage to any Facility prior to
the Effective Time (which shall not be fully restored prior to the Effective
Time), all sums recovered on
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account of such insurance shall be held in trust for the benefit of and in order
to be paid over to, and all sums recoverable on such account shall be assigned
to, the appropriate SNH Entity or Mariner Entity at the Effective Time. The SNH
Entity and the Mariner Entity which owns, leases or manages such Facility shall
execute and deliver such further instruments of assignment of insurance proceeds
and other documents (including, without limitation, appropriate endorsement of
checks) as any SNH Entity or Mariner Entity may from time to time reasonably
request in order to make such insurance proceeds payable to such SNH Entity or
Mariner Entity.
11.2 In the event that prior to the Effective Time any portion of any
Retained Facility shall be taken or shall be threatened with a taking by any
exercise of the right of eminent domain, or any portion of any Retained Facility
shall sustain any direct or consequential damage for which the owner thereof
shall be entitled to compensation by any public authority, the appropriate SNH
Entity shall be entitled to bring any suit in connection with recovery therefor
in the name of such SNH Entity or, if applicable, any Mariner Entity, or both,
and all sums received on account of any such taking or damages and or an
assignment of all the owner's rights to collect damages therefor shall be
delivered to the appropriate SNH Entity together with the delivery of the
Transaction Documents. The Mariner Entities shall execute and deliver such
further instruments of assignment and such other documents (including, without
limitation, appropriate endorsements of checks and pleadings) as any SNH Entity
may from time to time reasonably request in connection with the foregoing.
11.3 In the event that prior to the Effective Time any portion of any
Transferred Facility shall be taken or shall be threatened with a taking by any
exercise of the right of eminent domain, or any portion of any Transferred
Facility shall sustain any direct or consequential damage for which the owner
thereof shall be entitled to compensation by any public authority, the
appropriate Mariner Entity shall be entitled to bring any suit in connection
with recovery therefor in the name of such Mariner Entity or, if applicable, any
SNH Entity, or both, and all sums received on account of any such taking or
damages and or an assignment of all the owner's rights to collect damages
therefor shall be delivered to the appropriate Mariner Entity together with the
delivery of the Transaction Documents. The SNH Entities shall execute and
deliver such further instruments of assignment and such other documents
(including, without limitation, appropriate endorsements of checks and
pleadings) as any Mariner Entity may from time to time reasonably request in
connection with the foregoing.
ARTICLE 12
RELEASES
12.1 Release of SNH Entities. Subject to, and in consideration for,
each SNH Entity entering into this Agreement and consummating the transactions
contemplated hereby, each Mariner Entity shall release and forever discharge,
each SNH Entity and their respective successors, assigns, agents, shareholders,
directors, officers, employees, agents, attorneys, parent corporations,
subsidiary corporations, affiliated corporations, affiliates, and each of them,
from any and all claims, debts, liabilities, demands, obligations, costs,
expenses, actions
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and causes of action, of every nature and description, whether known or unknown,
absolute, mature, or not yet due, liquidated or non-liquidated, contingent,
non-contingent, direct or indirect or otherwise, which any Mariner Entity now
has or at any time may hold, by reason of any matter, cause or thing occurred,
done, omitted or suffered to be done on or prior to the Effective Time. Each
Mariner Entity waives the benefits of any law, which may provide in substance:
"A general release does not extend to claims which the creditor does not know or
suspect to exist in his favor at the time of executing the release, which if
known by him must have materially affected his settlement with the debtor." Each
Mariner Entity understands that the facts which it believes to be true at the
time of making the release provided for herein may later turn out to be
different than it believes now or at the time of granting such release, and that
information which is not now or then known or suspected may later be discovered.
Each Mariner Entity accepts this possibility, and each Mariner Entity assumes
the risk of the facts turning out to be different and new information being
discovered; and each Mariner Entity further agrees that the release provided for
herein shall in all respects continue to be effective and not subject to
termination or rescission because of any difference in such facts or any new
information.
Notwithstanding anything to the contrary contained in this Section 14.1
or otherwise, this release shall only be effective on and as of the Effective
Time and specifically only upon the consummation of the transactions provided
for in this Agreement and not otherwise.
None of the Mariner Entities is releasing any SNH Entity from any
claims, debts, liabilities, demands, obligations, costs, expenses, actions or
causes of action arising out of this Agreement, any Settlement Document or the
transactions contemplated hereby, or otherwise, except as expressly provided
herein.
12.2 Release of Mariner Entities. Subject to, and in consideration for
each Mariner Entity entering into this Agreement and consummating the
transactions contemplated hereby, each SNH Entity shall release and forever
discharge each Mariner Entity and their respective successors, assigns, agents,
shareholders, directors, officers, employees, agents, attorneys, parent
corporations, subsidiary corporations, affiliated corporations, affiliates, and
each of them, from any and all claims, debts, liabilities, demands, obligations,
costs, expenses, actions and causes of action, of every nature and description,
whether known or unknown, which any SNH Entity now has or at any time may hold,
by reason of any matter, cause or thing occurred, done, omitted or suffered to
be done on or prior to the Effective Time. Each SNH Entity waives the benefits
of any law, which may provide in substance: "A general release does not extend
to claims which the creditor does not know or suspect to exist in his favor at
the time of executing the release, which if known by him must have materially
affected his settlement with the debtor." Each SNH Entity understands that the
facts which it believes to be true at the time of making the release provided
for herein may later turn out to be different than it believes now or at the
time of granting such release, and that information which is not now or then
known or suspected may later be discovered. Each SNH Entity accepts this
possibility, and each SNH Entity assumes the risk of the facts turning out to be
different and new information being discovered; and each SNH Entity further
agrees that the release provided for herein shall in all
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respects continue to be effective and not subject to termination or rescission
because of any difference in such facts or any new information.
Notwithstanding anything to the contrary contained in this Section 14.2
or otherwise, this release shall only be effective on and as of the Effective
Time and specifically only upon the consummation of the transactions provided
for in this Agreement and not otherwise.
None of the SNH Entities is releasing any Mariner Entity from any
claims, debts, liabilities, demands, obligations, costs, expenses, actions or
causes of action arising out of this Agreement, any Settlement Document or the
transactions contemplated hereby, or otherwise, except as expressly provided
herein.
12.3 No Further Commitments by SNH Entities. Each Mariner Entity
further acknowledges that, from and after the Effective Time, no SNH Entity has
any existing commitments, obligations or agreements to advance credits or loans,
or to lease property, or make financial or other accommodations to any Mariner
Entity, except as may be specifically set forth in this Agreement or the
Settlement Documents.
ARTICLE 13
GENERAL PROVISIONS
13.1 MUTUAL WAIVER OF RIGHT TO JURY TRIAL. EACH PARTY HERETO HEREBY
WAIVES THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON,
ARISING OUT OF, OR IN ANY WAY RELATING TO: (I) THIS AGREEMENT, OR ANY OF THE
AGREEMENTS, INSTRUMENTS OR DOCUMENTS REFERRED TO HEREIN; OR (II) ANY OTHER
PRESENT OR FUTURE INSTRUMENT OR AGREEMENT BETWEEN OR AMONG THEM; OR (III) ANY
CONDUCT, ACTS OR OMISSIONS OF ANY PARTY HERETO OR ANY OF THEIR DIRECTORS,
TRUSTEES, OFFICERS, EMPLOYEES, AGENTS, ATTORNEYS OR ANY OTHER PERSONS AFFILIATED
WITH THEM; IN EACH OF THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT OR TORT
OR OTHERWISE.
13.2 Survival. Except as otherwise provided by this Agreement, all
covenants, agreements, representations and warranties made by each Mariner
Entity or SNH Entity herein and in all certificates and other instruments
delivered pursuant to this Agreement shall survive the execution and delivery of
the deeds to the Transferred Facilities and the closing of the transactions
contemplated hereby, and the Mariner Entities shall be and remain liable for
breaches of the provisions of this Agreement, the Interim Management Agreement
and the Interim Occupancy Agreements, contravention of the Approval Order or
otherwise for the period including the greater of one (1) year or the last
administrative claims bar date that is established by order of the Court (except
that the SNH Entities shall in all events remain liable to the Mariner Entities
for the amount of any deductible or self-insured retention amounts paid or
payable under Section 5.1(a) of the Interim Management Agreement until such
deductible or self-insured retention amounts shall have been paid). If and to
the extent the Mariner Entities
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shall emerge from the Cases pursuant to a confirmed plan of reorganization prior
to the expiration of such period, then the obligations provided herein shall be
a continuing obligation of the reorganized Mariner Entities for the duration of
such period and any plan confirmed in the Cases shall so provide.
13.3 Notices. All notices, demands and other communications hereunder
shall be in writing and delivered, telegraphed or mailed (by first class
registered or certified mail, postage prepaid) addressed as follows:
(a) if to an SNH Entity:
c/o SENIOR HOUSING PROPERTIES TRUST
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Treasurer
(b) with copy to:
▇▇▇▇▇▇▇▇ & WORCESTER LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
(c) if to any Mariner Entity:
MARINER POST-ACUTE NETWORK, INC.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Associate General Counsel
(d) with a copy to:
Powell, Goldstein, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
or to such other address as may hereafter be designated by any party for such
other purpose, and shall be effective upon receipt if hand delivered or upon the
expiration of the fifth business day after the day of mailing.
13.4 Governing Law. This Agreement shall be governed by, interpreted,
construed, applied and enforced in accordance with the Bankruptcy Code and the
laws of the Commonwealth of Massachusetts applicable to contracts between
residents of the
-34-
Commonwealth of Massachusetts which are to be performed entirely within the
Commonwealth of Massachusetts, regardless of (i) where this Agreement is
executed or delivered; or (ii) where any payment or other performance required
by this Agreement is made or required to be made; or (iii) where any breach of
any provision of this Agreement occurs, or any cause of action otherwise
accrues; or (iv) where any action or other proceeding is instituted or pending;
or (v) the nationality, citizenship, domicile, principal place of business or
jurisdiction of organization or domestication of any party; or (vi) whether the
laws of the forum jurisdiction otherwise would apply the laws of the
jurisdiction other than the Commonwealth of Massachusetts; or (vii) any
combination of the foregoing.
To the maximum extent permitted by applicable law, any action to
enforce, arising out of, or relating in any way to, any of the provisions of
this Agreement may be brought and prosecuted in such court or courts located in
the Commonwealth of Massachusetts as is provided by law; and the parties consent
to the jurisdiction of said court or courts located in the Commonwealth of
Massachusetts and to service of process by registered mail, return receipt
requested, or by any other manner provided by law.
13.5 Successors and Assigns. This Agreement shall be binding upon each
party thereto and its successors and assigns. The rights and obligations of any
party hereto under this Agreement may not be assigned by any party hereto
without the prior written consent of each of the parties hereto.
13.6 Entire Agreement. This Agreement, together with the exhibits
hereto and such other documents as are referred to herein, constitute the entire
agreement of the parties in respect of the subject matter described herein, and
may not be changed or modified except by an agreement in writing signed by the
parties hereto.
13.7 Severability. In case any one or more of the provisions contained
in this Agreement should be invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions contained
herein and therein shall not in any way be affected or impaired thereby and the
Agreement shall thereupon be reformed and construed and enforced to the maximum
extent permitted by law.
13.8 Attorneys' Fees. If any legal action is brought for the
enforcement of this Agreement, or because of an alleged dispute, breach, default
or misrepresentation in connection with any of the provisions of this Agreement,
the successful or prevailing party or parties shall be entitled to recover
attorneys' fees and other costs incurred in that action in addition to any other
relief to which it or they may be entitled.
13.9 Non-Disclosure. Until this Agreement is publicly announced by SNH
(i) the Mariner Entities, the SNH Entities, and each of their officers,
directors, employees, agents, consultants and advisors, shall keep confidential
all terms hereof and information contained herein (except to the extent required
either (a) in connection with the satisfaction of the conditions contained
herein (including, without limitation, providing such information to its
creditors and their advisors), (b) by the Securities Exchange Act of 1934, as
amended, and the
-35-
rules and regulations promulgated thereunder (the "Exchange Act"), or (c)
reporting requirements, if any, of the New York Stock Exchange ("NYSE
Requirements")), and (ii) neither any Mariner Entity nor any persons or entities
affiliated with any of them or their officers, directors, employees, agents,
consultants and advisors (within the meaning of Rule 405 under the Securities
Act of 1933, as amended) shall trade in SNH's stock. In addition, each Mariner
Entity and each SNH Entity shall obtain the approval of Mariner or SPTMNR
(respectively), which approval shall not be unreasonably withheld, prior to
making any public announcements concerning this Agreement or the transactions
contemplated hereby. Each Mariner Entity, however, acknowledges that SNH may
disclose the existence of this Agreement and the transactions contemplated
hereby in appropriate public filings under the Exchange Act, or pursuant to the
NYSE Requirements, and each Mariner Entity further agrees that it shall provide
such financial statements as are available to such Mariner Entity, as SNH shall
determine necessary for SNH to comply with reporting requirements under the
Exchange Act or NYSE Requirements, if any, with respect to this transaction.
13.10 Required Disclosure. Notwithstanding Section 13.8 hereof, each
party hereby may and shall give all required notices of the existence of this
Agreement and the pending consummation of the transactions contemplated hereby
to any and all appropriate governmental agencies..
13.11 LIMITATION ON LIABILITY. THE DECLARATION OF TRUST OF SNH, DATED
DECEMBER 16, 1998, A COPY OF WHICH, TOGETHER WITH ALL AMENDMENTS THERETO (THE
"SNH DECLARATION"), IS DULY FILED IN THE OFFICE OF THE DEPARTMENT OF ASSESSMENTS
AND TAXATION OF THE STATE OF MARYLAND, PROVIDES THAT THE NAME "SENIOR HOUSING
PROPERTIES TRUST" REFERS TO THE TRUSTEES UNDER THE SNH DECLARATION COLLECTIVELY
AS TRUSTEES, BUT NOT INDIVIDUALLY OR PERSONALLY, AND THAT NO TRUSTEE, OFFICER,
SHAREHOLDER, EMPLOYEE OR AGENT OF SNH SHALL BE HELD TO ANY PERSONAL LIABILITY,
JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM AGAINST, SNH. ALL PERSONS
DEALING WITH SNH, IN ANY WAY, SHALL LOOK ONLY TO THE ASSETS OF SNH, FOR THE
PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION.
13.12 LIMITATION ON LIABILITY. THE DECLARATION OF TRUST OF SPTMNR,
DATED JANUARY 14, 1999, A COPY OF WHICH, TOGETHER WITH ALL AMENDMENTS THERETO
(THE "SPTMNR DECLARATION"), IS DULY FILED IN THE OFFICE OF THE DEPARTMENT OF
ASSESSMENTS AND TAXATION OF THE STATE OF MARYLAND, PROVIDES THAT THE NAME
"SPTMNR PROPERTIES TRUST" REFERS TO THE TRUSTEES UNDER THE SPTMNR DECLARATION
COLLECTIVELY AS TRUSTEES, BUT NOT INDIVIDUALLY OR PERSONALLY, AND THAT NO
TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF SPTMNR SHALL BE HELD TO ANY
PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM
AGAINST, SPTMNR. ALL PERSONS DEALING WITH SPTMNR, IN ANY WAY, SHALL LOOK ONLY TO
THE ASSETS OF SPTMNR, FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY
OBLIGATION.
-36-
13.13 Costs and Expenses. The Mariner Entities shall pay any and all
costs and expenses incurred by the SNH Entities as a result of or in connection
with the transactions contemplated by this Agreement (other than attorneys' fees
of the SNH Entities), regardless of whether such transactions are consummated,
including, without limitation, (i) all taxes, including, without limitation,
documentary transfer taxes, documentary stamp taxes, mortgage taxes, intangible
taxes, sales and similar taxes applicable to the transactions contemplated
herein together with interest and penalties, if any, thereon, but excluding any
income taxes of the SNH Entities, and (ii) all costs relating to surrender,
assignnment and conveyances contemplated hereby, including, without limitation,
title reports, all costs relating to owner's or lender's title insurance
commitments and policies, and all costs and charges related to recording fees.
13.14 Confidentiality. The parties agree not to disclose or permit
their respective representatives, attorneys, auditors or agents to disclose,
except as may be required by law or performance hereunder, any confidential,
non-public information of the others which is obtained by any of them in
connection with the transactions contemplated by this Agreement.
13.15 Reservation of Rights. Each party hereto acknowledges that it and
the other parties hereto have entered into this Agreement in order to settle and
compromise certain potential claims between them and that the execution,
delivery and performance of this Agreement by the parties hereto is not an
admission of any party's obligations or liabilities whatsoever. This document is
subject to the protections of Federal Rule of Evidence 408 and all similar
provisions and supporting authorities.
13.16 Third Party Beneficiaries. This Agreement and all other
instruments executed and delivered in connection herewith are not intended to
benefit any third parties, including, without limitation, any such parties that
may have claims against any of the Mariner Entities.
-37-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the day and year first above written and their respective seals to
be hereunto affixed and attested by their respective duly authorized officers.
SENIOR HOUSING PROPERTIES TRUST,
a Maryland real estate investment trust
By: /s/ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
▇▇▇▇ ▇▇▇▇▇, Treasurer and Chief Financial Officer
SPTMNR PROPERTIES TRUST,
a Maryland real estate investment trust
By: /s/ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
▇▇▇▇ ▇▇▇▇▇, Treasurer and Chief Financial Officer
FIVE STAR QUALITY CARE, INC.,
a Delaware corporation
By: /s/ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, Treasurer and Assistant Secretary
SHOPCO-AZ, LLC,
a Delaware limited liability company
By: SENIOR HOUSING PROPERTIES TRUST,
a Maryland real estate investment trust,
its Member
By: /s/ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
▇▇▇▇ ▇▇▇▇▇, Treasurer and
Chief Financial Officer
-38-
SHOPCO-CA, LLC,
a Delaware limited liability company
By: SENIOR HOUSING PROPERTIES TRUST,
a Maryland real estate investment trust,
its Member
By: /s/ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
▇▇▇▇ ▇▇▇▇▇, Treasurer and
Chief Financial Officer
SHOPCO-COLORADO, LLC,
a Delaware limited liability company
By: SENIOR HOUSING PROPERTIES TRUST,
a Maryland real estate investment trust,
its Member
By: /s/ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
▇▇▇▇ ▇▇▇▇▇, Treasurer and
Chief Financial Officer
SHOPCO-WI, LLC,
a Delaware limited liability company
By: SENIOR HOUSING PROPERTIES TRUST,
a Maryland real estate investment trust,
its Member
By: /s/ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
▇▇▇▇ ▇▇▇▇▇, Treasurer and
Chief Financial Officer
-39-
MARINER POST-ACUTE NETWORK, INC.
(f/k/a Paragon Health Network, Inc.),
a Delaware corporation
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Its: Vice President
GRANCARE, INC.
(f/k/a New GranCare, Inc.),
a Delaware corporation
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Its: Vice President
AMS PROPERTIES, INC.,
a Delaware corporation
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Its: Vice President
GCI HEALTH CARE CENTERS, INC,
a Delaware corporation
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Its: Vice President
-40-
SCHEDULE 1.1.1
PERMITTED PERSONAL PROPERTY ENCUMBRANCES
None.
SCHEDULE 1.1.2
RETAINED FACILITIES
Property Name Property Address Tenant
-----------------------------------------------------------------------------------------------------------
Cedars Health Care Center ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ AMS Properties
Lakewood, CO
Cherrelyn Manor Nursing Home ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇▇▇▇▇▇▇ East Health Care Center ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ AMS Properties
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Greentree Health Care Center ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ AMS Properties
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
La Mesa Healthcare Center ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
La Salette Health Care & Rehabilitation Center ▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Lancaster Health Care Center ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ "J" AMS Properties
Lancaster, CA
Northwest Health Care Center 7800 West Fond du Lac Avenue AMS Properties
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Pine Manor Health Care Center East Side of County Y Highway AMS Properties
Embarrass (Clintonville), WI
River Hills West Health Care Center ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ AMS Properties
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Sunny Hill Health Care Center ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇
Sunquest Village of Yuma ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
Thousand Oaks Health Care Center ▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ AMS Properties
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Van Nuys Health Care Center ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Village Green Nursing Home ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Virginia Health Care Center ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ AMS Properties
Waukesha, WI
Woodland Health Care Center ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ AMS Properties
Brookfield, WI
SCHEDULE 1.1.3
SUBLEASED FACILITIES
Property Name Property Address Tenant
-------------------------------------------------------------------------------------------------------------------
Huron Nursing Home: ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇ GCIHCC
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Southridge Health Care Center: 3600 ▇. ▇▇▇▇▇▇ GCIHCC
Mom & Dad's Health Care Center ▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Pacific Gardens Nursing and Rehabilitation ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ AMS Properties
Center: Pleasant Care Fresno, CA
SCHEDULE 1.1.4
TRANSFERRED FACILITIES
Property Name Property Address Tenant
---------------------------------------------------------------------------------------------------------------
▇▇▇▇▇ Centers-Carbarrus ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ Centers-▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ Centers-Winston-Salem ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇-▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Flagship Health Care Center ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ AMS Properties
Newport Beach, CA
Tarzana Health Care Center ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ (5650 Reseda Road) AMS Properties
Tarzana, CA
SCHEDULE 2.1
EXISTING DOCUMENTS
1. A Master Lease comprised of: (i) a Master Lease Document General Terms and
Conditions dated as of December 28, 1990 and entered into by and between
Health and Retirement Properties Trust ("HRP"), and AMS Properties, Inc.
("AMS Properties"); (ii) a Master Lease Document General Terms and
Conditions dated as of June 30, 1992 and entered into by and between HRP
and GCI Health Care Centers, Inc. ("GCIHCC"); (iii) twenty-six (26)
facility lease supplements, some of which are dated as of December 28,
1990, some of which are dated as of March 27, 1992, some of which are dated
June 30, 1992 and others of which are dated as of June 29, 1998, all as
entered into pursuant to the documents described in preceding clauses (i)
and (ii); and (iv) Guaranty, Cross-Default and Cross-Collateralization
Agreement by AMS Properties and GCIHCC, dated as of June 30, 1992, pursuant
to which AMS Properties and GCIHCC cross-defaulted, cross-collateralized
and guaranteed each other's obligations to HRP., all as amended to date,
pursuant to which AMS and GCIHCC lease twenty-six (26) health care related
facilities (the "Leased Facilities").
2. A Guaranty, dated as of December 28, 1990, from GranCare, Inc., a
__________________ corporation ("Old GranCare") in favor of HRP pursuant to
which all obligations of AMS Properties are guaranteed; the obligations and
liabilities under such Guaranty having been assumed by GranCare, Inc., a
Delaware corporation ("GranCare"), pursuant to the Assumption Agreement.
3. Memoranda of Lease, each dated as of December 28, 1990, March 27, 1992 or
June 30, 1992 and recorded with the Registry of Deeds of the appropriate
county with respect to each Leased Facility.
4. UCC Financing Statements by AMS Properties, showing AMS Properties, as
lessee, and HRP, as lessor, filed with the appropriate State and County UCC
filing office with respect to each Leased Facility.
5. An Amended and Restated HRP Shares Pledge Agreement, dated as of June 30,
1992, between HRP and AMS Properties, pursuant to which AMS Properties has
pledged certain of its shares of HRP to HRP to secure its obligations to
HRP;
6. An Amended and Restated Voting Trust Agreement, dated as of June 30, 1992
from AMS Properties to HRPT Advisors, Inc., as voting trustee, with a
Voting Trust Certificate and Stock Power attached thereto.
7. A Security Agreement, dated as of December 28, 1990 from AMS Properties to
HRP, granting HRP a security interest in all now owned and hereafter
acquired tangible personal property and all accounts receivable, contract
rights and general intangibles of AMS Properties.
8. A Collateral Assignment of Contracts and Permits, dated as of December 28,
1990 from AMS Properties to HRP, assigning to HRP all contracts and permits
of AMS Properties.
9. UCC Financing Statements/Fixture Filings by AMS Properties, showing AMS
Properties, as debtor, and HRP, as secured party, filed with the
appropriate UCC filing office and registries of deeds to perfect the
interests of HRP as a secured creditor under the security instruments
referred to above.
10. An Amended and Restated Renovation Funding Agreement dated as of January
13, 1992, between AMS Properties and HRP.
11. A Renovation Loan Agreement, dated as of March 28, 1992, by and between AMS
Properties and HRP relating to certain renovations to be made at the
▇▇▇▇▇▇▇▇▇▇▇ East Health Care Center, Milwaukee, Wisconsin.
12. A Promissory Note, dated as of March 28, 1992, in the original principal
amount of $1,250,000, executed by AMS Properties and accepted by HRP.
13. A Security Agreement, dated as of March 28, 1992, made by AMS Properties in
favor of HRP.
14. A Pledge Agreement dated as of December 28, 1990, as supplemented by a
Pledge Agreement Supplement dated as of December 29, 1993, from Old
GranCare (as successor to AMS) to HRP pursuant to which all shares of
capital stock of AMS Properties are pledged to HRP, together with
certificates relating to the AMS Properties shares and stock powers
relating to such shares; the obligations and liabilities under such Pledge
Agreement and Pledge Agreement Supplement having been assumed by GranCare
pursuant to the Assumption Agreement.
15. A Subordination Agreement dated as of December 28, 1990 among Old GranCare
as subordinate creditor, AMS Properties as debtor, and HRP as senior
creditor; the obligations and liabilities under such Subordination
Agreement having been assumed by GranCare pursuant to the Assumption
Agreement.
16. A Subordination Agreement dated as of December 28, 1990 among HMI as
subordinate creditor, AMS Properties as debtor and HRP as senior creditor.
17. A Subordination Agreement dated as of December 28, 1990 among AMS Green
Tree as subordinate creditor, AMS Properties as debtor and HRP as senior
creditor.
18. A Subordination Agreement dated as of December 28, 1990 among Am-Cal as
subordinate creditor, AMS Properties as debtor and HRP as senior creditor.
19. A Consent Letter dated March 31, 1995 by HRP and consented to by GranCare,
AMS Properties and GCIHCC re: Subleases.
20. An Assignment of Sublease Documents dated March 31, 1995 between AMS
Properties and HRP.
21. An Assignment of Leases and Rents dated March 31, 1995 by AMS Properties
re: Subleases.
22. A Rescission Agreement and Amendment to Transaction Documents dated as of
October 1, 1994 among Old GranCare, AMS Properties, GCIHCC and HRP.
-ii-
23. An Assumption Agreement by New GranCare, Inc. in favor of HRP.
24. A Letter Agreement dated April 25, 1992, from HRP to GranCare, accepted by
GranCare.
25. A Guaranty, dated as of June 30, 1992 from Old GranCare in favor of HRP
pursuant to which all obligations of AMS Properties are guaranteed; the
obligations and liabilities under such Guaranty having been assumed by
GranCare pursuant to the Assumption Agreement referenced below.
26. A Security Agreement, dated as of June 30, 1992, from GCIHCC to HRP,
granting HRP a security interest in all tangible and intangible personal
property and including all accounts receivable, contract rights and general
intangibles.
27. An Assignment of Contracts, Licenses and Permits, dated as of June 30,
1992, from GCIHCC to HRP, assigning to HRP, all contracts, licenses and
permits used in connection with the operation of the Facilities.
28. A Pledge Agreement, dated as of June 30, 1992 Date, from GranCare pursuant
to which all of the capital stock of GCIHCC (the "GCIHCC Stock") is pledged
to HRP to secure the obligations of GCIHCC.
29. A Stock Power relating to GCIHCC Stock.
30. A Subordination Agreement dated as of June 30, 1992 among Old GranCare as
subordinate creditor, GCIHCC as debtor, and HRP as senior creditor; the
obligations and liabilities under such Subordination Agreement having been
assumed by GranCare pursuant to the Assumption Agreement.
31. A Subordination Agreement, dated as of June 30, 1992, among AMS as
subordinated creditor, GCI as the debtor and HRP as senior creditor,
pursuant to which all obligations of GCIHCC to the subordinated creditor
are subordinated.
32. A Representation Letter and Indemnification Agreement, dated June 30, 1992,
from Old GranCare, AMS and GCI, with respect to, inter alia, the continued
effectiveness of the representations and warranties made by GranCare and
GCI in, and the absence of any Defaults under, the Transaction Documents.
33. A Consent Letter dated March 31, 1995 by HRP and consented to by GCI,
GranCare and AMS re: HealthQuest Subleases.
34. An Assignment of Sublease Documents dated March 31, 1995 between GCI and
HRP re: HealthQuest Subleases.
35. An Assignment of Leases and Rents dated March 31, 1995 by GCI re:
HealthQuest Subleases.
36. A Rescission Agreement and Amendment to Transaction Documents dated as of
October 1, 1994 among GranCare, AMS, GCI and HRP.
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SCHEDULE 3.5-A
FORM OF INTERIM MANAGEMENT AGREEMENT
INTERIM MANAGEMENT AGREEMENT
THIS INTERIM MANAGEMENT AGREEMENT (this "Agreement") is made this ____
day of __________ , 2000, among Mariner Post-Acute Network, Inc., a Delaware
corporation (formerly known as Paragon Health Network, Inc.) ("Mariner"), AMS
Properties, Inc., a Delaware corporation ("AMS Properties"), GCI Health Care
Centers, Inc., a Delaware corporation ("GCIHCC" and, together with AMS
Properties, collectively, the "Mariner Licensees"), the entities listed on
Schedule A hereto, each of which is a Delaware limited liability company
(collectively, the "Proposed SNH Licensees"), and Five Star Quality Care, Inc.,
a Delaware corporation (the "Manager").
W I T N E S S E T H:
WHEREAS, SPTMNR Properties Trust, a Maryland real estate investment
trust ("SPTMNR"), is the owner of all of the real property, buildings, plant and
equipment and certain of the personal property used in connection with the
operation of the skilled nursing, intermediate care or residential facilities
listed on Schedule B (each a "Facility" and collectively, the "Facilities"); and
WHEREAS, SPTMNR currently leases the Facilities to the Mariner
Licensees; and
WHEREAS, the Mariner Licensees hold the licenses to operate the
Facilities; and
WHEREAS, pursuant to a Settlement Agreement, dated as of March __, 2000
(the "Settlement Agreement"), among Mariner, the Mariner Licensees, Senior
Housing Properties Trust, a Maryland real estate investment trust ("SNH"),
SPTMNR, the Proposed SNH Licensees and the Manager, the Mariner Licensees have
requested SPTMNR, and SPTMNR has agreed, to accept a surrender (through SPTMNR's
designees the Proposed SNH Licensees), of the Mariner Licensees' lease of the
Facilities, subject to, and upon, the terms and conditions contained therein;
and
WHEREAS, in connection therewith, the Proposed SNH Licensees are
submitting the applications, filings and other documentation necessary to
receive all governmental licenses, permits, approvals, authorizations, provider
agreements and certificates and determinations of need in order for the Proposed
SNH Licensees to operate the Facilities as licensees and to receive Medicare and
Medicaid reimbursement for the services provided therein (such licenses,
permits, approvals, authorizations, provider agreements, and certificates and
determinations of need are hereafter referred to individually, as a "Necessary
License" and collectively, as the "Necessary Licenses"); and
WHEREAS, the Proposed SNH Licensees and the Mariner Licensees desire to
enter into certain arrangements regarding the management of the Facilities and,
more specifically, to provide for the Mariner Licensees to operate the
Facilities pending, and in anticipation of, the receipt by the Proposed SNH
Licensees or the Manager of the Necessary Licenses (the date on which any
Proposed SNH Licensee or the Manager shall have received all such Necessary
Licenses with respect to a Facility being referred to herein as such Facility's
"SNH Licensing Date"), and to consult and cooperate with the Proposed SNH
Licensees' designee, the Manager, in connection therewith;
NOW, THEREFORE, for and in consideration of the premises, the mutual
covenants and agreements herein contained and other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereto agree as follows:
1. Mariner Licensee; Interim Occupancy Agreements. Each Facility shall continue
to be operated subject to the direction and control of the relevant Mariner
Licensee until such Facility's SNH Licensing Date and, in connection therewith,
each such Mariner Licensee (i) shall retain ultimate authority over the
business, policies, operations and assets of the Facility, (ii) shall remain the
responsible licensee of such Facility and, as such, be fully liable and legally
accountable at all times to all patients, governmental agencies and third
parties for all patient care and funds, and all other aspects of the operation
and maintenance of the Facility, and (iii) shall perform those general and
specific duties described in Sections 2 and 3 hereof.
In order to permit the foregoing, each Mariner Licensee is,
simultaneously herewith, entering into an Interim Occupancy Agreement
(collectively, the "Occupancy Agreements"), [in the form attached hereto as
Schedule C,] with the relevant Proposed SNH Licensee, pursuant to which the
Proposed SNH Licensee shall grant to such Mariner Licensee the right to occupy
such Facility and use certain related personal property for purposes of
exercising its rights, duties and obligations hereunder.
The Mariner Licensees, the Proposed SNH Licensees and the Manager agree
that, subject in all events to the provisions of the first paragraph of this
Section 1, the SNH Proposed Licensees or the Manager may from time to time,
notify the Mariner Licensees that the Manager is prepared to provide any one or
more of those services (the "Designated Services") designated in Schedule D
attached hereto (the "Designated Services Schedule"), with respect to any one or
more of the Facilities, and from and after the date specified in such notice,
the Mariner Licensee shall delegate to Manager and the Manager shall assume and
perform such Designated Services. The Mariner Licensees, the Proposed SNH
Licensees and the Manager shall reasonably cooperate in the transition of the
responsibility for such Designated Service(s) to the Manager, subject to the
continued authority and responsibility of the Mariner Licensee referred to
herein.
The Mariner Licensees, the Proposed SNH Licensees and the Manager
acknowledge and agree that the Mariner Licensees have agreed in this Agreement
that the Mariner Licensees may continue to provide certain services after the
SNH Licensing Date. The Mariner Licensees, the Proposed SNH Licensees and the
Manager acknowledge and agree, however, that, from and after the SNH Licensing
Date with respect to a Facility, the relevant Proposed SNH Licensee shall direct
and control the operations of such Facility and, in connection therewith, shall
have ultimate authority over the business, policies, operation and assets of the
Facility and be the responsible licensee of such Facility and, as such, be fully
liable and legally accountable at all times to all patients and governmental
agencies for all patient care and funds at such Facility, and all other aspects
of the operation and maintenance of such Facility.
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2. General Duties. The Mariner Licensees shall manage and supervise the
day-to-day operation of the Facilities with the objective of providing skilled
nursing, intermediate care and residential services to patients and residents of
the Facilities and to carry out general management functions with respect to the
Facilities, including, but not limited to, the following: supervise the
performance of all administrative functions as may be necessary in the
management and operation of the Facilities; select, hire or contract for, train,
supervise, monitor the performance of, and terminate or fire, all personnel
involved in the administration and day-to-day operations of the Facilities,
including, without limitation, professional personnel, custodial, cleaning,
maintenance, and other operational personnel, and secretarial and bookkeeping
personnel; provide accounting, billing, purchasing and ▇▇▇▇ payment functions
for the Facilities; maintain systems of accounts and supervise the maintenance
of ledgers and other primary accounting records with respect to the Facilities;
supervise the financial affairs of the Facilities; establish and supervise the
implementation of operating budgets, and establish and administer financial
controls over the operations and management of the Facilities; develop and
establish financial standards and norms by which the income, costs, and
operations of the Facilities may be evaluated; operate, maintain and administer
the information management systems of the Facilities; maintain patients' medical
records in accordance with all applicable state and Federal requirements;
furnish reports and economic and statistical data in connection with or relative
to the management of the Facilities in order to comply with applicable laws and
regulations; represent the Facilities in their dealings with regulatory
authorities, patients, personnel, agents for collection, insurers and, at the
request of the Proposed SNH Licensees, creditors; prepare and file with
applicable state Medicaid programs and the Medicare program and all other public
and private third party reimbursement programs (collectively, "third party
payors") all required cost reports; administer trust funds for the benefit of
residents of the Facilities and prepare and file all accounts for such funds
required by applicable law; maintain listings of all residents of the Facilities
and the persons or third party payors responsible for their charges; on behalf
of the SNH Entities, disburse and collect the funds of the Facilities in
accordance with the provisions of Section 9.1 hereof, and pay the debts and
fulfill the obligations of the Facilities incurred subsequent to the Effective
Time (as hereafter defined); market the services of the Facilities; manage and
supervise the admission and discharge of residents as required by state and
Federal laws; and generally see to the operations and management of the
Facilities, the marketing of their services, planning for future operations, and
the establishment and implementation of policies for the Facilities.
3. Specific Duties. The Mariner Licensees shall have the following specific
duties:
3.1 Employees. The Mariner Licensees shall recruit, evaluate, and
select qualified nursing home administrators who shall be responsible for the
functional operation of the Facilities and supervision of personnel at the
Facilities, on a day-to-day basis, as well as all on-site professional,
custodial, food service, cleaning, maintenance, clerical, secretarial,
bookkeeping, management, collection, and other employees for the day-to-day
operations of the Facilities. Such administrators and all such other personnel
shall be employees of the Mariner Licensees, and, subject to the provisions of
Section 5 hereof (providing for the Proposed SNH Licensees to pay expenses set
forth in the Expense Statement (including, without limitation, those expenses
specified in Section 5.1(a)) the Mariner Licensees shall have full
responsibility for payment of their wages, salaries, and other compensation and
benefits. The Mariner Licensees shall establish such personnel policies, wage
structures, and staff schedules as they
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deem necessary and advisable in accordance with applicable law. The Mariner
Licensees shall have authority to continue to employ and to discharge employees.
The Mariner Licensees shall maintain payroll records and shall prepare and
process employee payrolls, and returns of withholding taxes in accordance with
current payroll schedules in place at each Facility.
Anything in this Section 3.1 to the contrary notwithstanding, the
Manager shall offer employment to all or substantially all of the qualified
nursing home administrators and other employees at the Facilities as soon after
the Effective Time as is reasonably practicable. The Mariner Licensees
acknowledge that the ability of the Manager to make any such offer is contingent
upon the employees being employable under state and Federal law and may be
subject to the Proposed SNH Licensees' and the Manager's receipt of all
licenses, permits, approvals, authorizations, provider agreements, and
certificates and determinations of need as are necessary for the Proposed SNH
Licensees and the Manager to operate the Facilities as licensees and to receive
Medicare and Medicaid reimbursement for the services provided therein, and that
in any event the Manager will first have to implement an appropriate accounting
and payroll function. The Mariner Licensees further acknowledge that the Manager
may not hire all such employees on the same date or at the same time. The
Mariner Licensees agree to cooperate with the Manager in connection with such
offers of employment and to release any personnel to whom the Manager offers
employment from any employment agreements, non-competition, non-solicitation and
non-disclosure agreements or common law obligations relating to their employment
with the Mariner Licensees to which they may be a party or subject.
3.2 Purchasing. The Mariner Licensees shall (subject to Section 5)
purchase, in the name, and for the account, of the Proposed SNH Licensees, all
necessary supplies, foodstuffs, materials, appliances, tools, and equipment
customarily used in the operation of the Facilities. The Mariner Licensees shall
use commercially reasonable efforts to limit purchasing costs and to maintain
such costs at a level reasonably calculated to allow the Facilities to operate
profitably. The Mariner Licensees may, but shall not be obligated to, make such
purchases in bulk under a centralized purchasing system established by them for
other facilities under their operation or management in order to minimize costs.
The Mariner Licensees shall arrange contracts for electricity, gas, telephone,
and any other utility or service necessary to the operation of the Facilities,
in each case in the name, and for the account, of the Proposed SNH Licensees.
The Mariner Licensees shall, on their own behalf and/or on behalf of the owner
of the buildings and real property in and on which the Facilities are located
(the "Real Property Owner"), contract for and supervise the making of any
necessary repairs, alterations, and improvements to the Facilities, provided
that in the case of any repair, alteration or improvement, the cost of which
exceeds $5,000, the Mariner Licensees shall obtain the prior approval of the
Proposed SNH Licensee/Manager, except that no such prior approval shall be
required if the expenditure is made under circumstances reasonably requiring
emergency action. The Mariner Licensees shall prepare such certifications as to
expenses incurred in the operation of the Facilities as may be required in order
to comply with applicable law and regulations, including, without limitation,
law and regulations applicable to preparation and submission of cost reports.
3.3 Bookkeeping. The Mariner Licensees shall establish and maintain a
record and bookkeeping system for the operation and conduct of the Facilities in
accordance with generally accepted accounting principles. Full books of account
with entries of all receipts and
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expenditures of the Facilities shall be open for inspection by representatives
of Proposed SNH Licensees and Manager upon reasonable notice and at reasonable
times.
3.4 Financial Reports. The Mariner Licensees shall: (a) as soon as
reasonably possible after the close of each calendar month, furnish to the
Proposed SNH Licensee and Manager a statement of income for the month and for
the year to date, together with a detailed statement of ▇▇▇▇▇▇▇▇, cash receipts,
cash disbursements, accounts payable and accounts receivable (in hard copy and,
to the extent possible, in electronic format); (b) in the event the Proposed SNH
Licensee or Mariner Licensee is required by applicable law, regulations or the
provisions of any material contract to which it is a party or by which it is
bound or at such other time as the Proposed SNH Licensees may elect in their
reasonable discretion, to conduct an audit of the Facilities' financial
performance, make available all books and records of the Facilities on a timely
basis and cooperate fully with any auditors or accountants selected by Proposed
SNH Licensee; (c) as soon as reasonably possible after the close of each
applicable reporting period for rate setting purposes, and not later than the
applicable deadline, prepare and submit a cost report for each Facility (and
including in any event, any short-year cost report required to be submitted by
the Mariner Licensee or Proposed SNH Licensee), showing the costs and
expenditures relating to resident care for such Facility and such other
information as is required by the applicable governmental authority, each such
report being in all material respects (including as to form) in compliance with
the requirements of such applicable governmental authority; and (d) cooperate
with and furnish information to each Proposed SNH Licensee and Manager in a
timely manner in connection with the preparation of applications by such
Proposed SNH Licensee for any Necessary Licenses with respect to the Facilities.
3.5 Marketing. The Mariner Licensees shall use commercially reasonable
efforts to market the services of the Facilities in order to maintain the
patient or resident census at the Facilities in such numbers and of such
categories as, in the Mariner Licensees' judgment, will tend to maintain the
financial stability of the Facilities and to ensure compliance with applicable
laws, regulations, orders and judgments applicable to the Facilities. The
Mariner Licensees may design and implement programs with third party payors,
such as insurance companies, federal agencies and state and local agencies, for
services to patients on a contract basis, for the purpose of improving the
financial stability of the Facilities.
3.6 Liaison with Agencies. In consultation with the Proposed SNH
Licensees and Manager, the Mariner Licensees shall appear in, prosecute and
defend all formal and informal proceedings before any and all local, state and
federal agencies which regulate the Facilities. Each of the Mariner Licensees,
the Proposed SNH Licensees and Manager shall promptly inform the others of the
commencement of any such proceedings known to it which may have a material
impact upon the operation of the Facilities or which affect reimbursement for
services provided in or by the Facilities, including challenging any findings of
violations or the creation of a duty to correct.
3.7 Insurance. The Mariner Entities shall obtain on behalf of
themselves, the Proposed SNH Licensees, the Manager and the Real Property Owners
for each Facility, as their interests may appear, all customary liability, fire
and extended coverage, professional or malpractice liability and worker's
compensation insurance covering the Facilities, any equipment used in connection
with the Facilities, the Facilities' employees, and the Mariner Entities, the
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Proposed SNH Licensees, the Manager and the Real Property Owners for each
Facility, as their interests may appear, in such amounts and with such
deductibles and other provisions as may be reasonably agreed upon by the Mariner
Entities, the Proposed SNH Licensees, the Manager and the Real Property Owners.
3.8 Technical and Professional Services. The Mariner Entities may
secure such engineering, legal, and other specialized technical and professional
services as may be necessary to advise or to represent the Mariner Entities, the
Proposed SNH Licensees, the Manager and the Real Property Owners for each
Facility, in connection with any matter involving or arising out of the
operation of the Facilities or the conduct of the Facilities.
3.9 Necessary Licenses. Upon receipt by the relevant Proposed SNH
Licensee or the Manager of the Necessary Licenses with respect to a Facility,
the Proposed SNH Licensee or the Manager shall give the relevant Mariner
Licensee prompt written notice.
3.10 Collections, Accounts, Disbursements and Termination Accounting.
(a) Billing. The Mariner Licensees shall prepare and submit
bills for all moneys owing, whether from patients or third party payors, for
services provided by or at the Facilities at any time, whether prior to ______
o'clock p.m. on [day preceding the Closing] (the "Effective Time") or after the
Effective Time.
(b) Collection of Accounts Receivable. The Mariner Licensees
acknowledge that, from and after the Effective Time, (i) the Proposed SNH
Licensees shall, to the extent permitted by applicable law, own all accounts
receivable which relate to or arise out of services provided by or at the
Facilities from or after the Effective Time (the "Post-Effective A/R"), (ii) the
Mariner Licensees shall make and effect collections of all Post-Effective A/R,
(iii) the Mariner Licensees shall establish new bank accounts (the "New A/R
Accounts") in the name of each Mariner Licensee at such local banks to be agreed
upon by the Proposed SNH Licensees and the Mariner Licensees, and shall instruct
all Third Party Payors and other Persons (as such terms are defined in the
Settlement Agreement) that directly deposit monies into the existing bank
accounts (the "Existing A/R Accounts") with respect to the Retained Facilities
to terminate such direct deposit and commence depositing such monies into the
New A/R Accounts from and after the date that is sixty (60) days after the
Effective Time (the "Account Transfer Time") or as soon as is practicable
thereafter (and the Mariner Licensees shall take such further action as may be
reasonably necessary to cause such Third Party Payors and other Persons to
comply with such instructions so that all Post-Effective A/R are deposited into
the New A/R Accounts from and after the Account Transfer Time or as soon as is
practicable thereafter), (iv) the Mariner Licensees shall continue to endorse
and deposit all monies, checks, drafts or other instruments or items received as
payment for any Post-Effective A/R with respect to any Facility into the
Existing A/R Accounts until the Account Transfer Time, (v) the Mariner Licensees
shall endorse and deposit all monies, checks, drafts or other instruments or
items received as payment for any Post-Effective A/R from and after the Account
Transfer Time into the New A/R Accounts, (vi) within five (5) days of the
applicable Proposed SNH Licensee's request therefor (but no sooner than the
applicable SNH Licensing Date), the Mariner Licensees shall assign, set over and
transfer the New A/R Accounts to the Proposed SNH Licensees, and (vii) the
Mariner Licensees shall disburse all proceeds attributable to Post-Effective A/R
deposited in the Existing A/R
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Accounts or the New A/R Accounts or otherwise received or held by the Mariner
Licensees to the Proposed SNH Licensees (or to such other Person as the Proposed
SNH Licensees may direct) within five (5) days of the Mariner Licensees' receipt
thereof.
The SNH Entities and the Mariner Licensees acknowledge and agree that
(i) the Mariner Licensees shall continue to own all accounts receivable which
relate to or arise out of services provided by or at the Facilities prior to the
Effective Time (the "Pre-Effective A/R"), (ii) the Mariner Licensees shall be
entitled to retain all proceeds attributable to Pre-Effective A/R deposited in
the Existing A/R Accounts or the New A/R Accounts or otherwise received or held
by the Mariner Licensees, and (iii) the Proposed SNH Licensees shall disburse to
the Mariner Licensees (or to such other Person as the Mariner Licensees may
direct) all such Pre-Effective A/R within five (5) days of the SNH Licensees'
receipt thereof.
(c) Books and Records. During the term of this Agreement, the
Mariner Licensees shall keep accurate and complete books and records of all
receipts with respect to all billing, accounts receivable, all deposits and
other transactions whether to the Existing A/R Accounts, the New A/R Accounts,
or to other checking accounts, which books and records shall be made available
to the SNH Licensees and the Manager upon request, and after termination of this
Agreement shall make such books and records available to the Proposed SNH
Licensees and the Manager to the extent necessary to enable the Proposed SNH
Licensee and the Manager to comply with all applicable laws and regulations,
including regulations governing preparation and submission of cost reports. The
Mariner Licensees shall timely prepare and file any cost reports which
applicable laws and regulations require that they file after the termination of
this Agreement.
3.11 Patient Trust Accounts. At such time as a Proposed SNH Licensee
has received all Necessary Licenses with respect to a Facility and has given the
Mariner Licensee notice as provided in Section 3.9, the Mariner Licensee will
transfer the patient trust accounts held for the benefit of residents of such
Facility to the Proposed SNH Licensee, together with all records and an
accounting regarding such accounts.
4. Fee. The Mariner Licensees shall earn, for services rendered by them
hereunder, a servicer fee (the "Fee") on a Facility-by-Facility basis for each
calendar month during the term of this Agreement in an amount equal to the
lesser of (i) five percent (5%) of net patient revenues (as defined below) of
such Facility for such month and (ii) an amount calculated by multiplying (A)
the sum of the Designated Services Percentages, as specified in the Designated
Services Schedule, attributable to the Designated Services being performed by
the applicable Mariner Licensee at such Facility for such month by (B) the
amount of net patient revenues of such Facility for such month.
Until the Agreed Deficiency shall have been reduced to zero (0),
payment of the Fee shall be made by dollar-for-dollar reduction of the Reduced
Deficiency (as such term is defined in the Settlement Agreement).
Notwithstanding anything to the contrary contained in this Section 4, in each of
the first three (3) months of the term hereof, the Fee earned by the Mariner
Licensees hereunder shall be not less than Four Hundred Thousand ($400,000)
(regardless of the amount of net patient revenues at the Facilities for such
month or whether the Manager shall have elected to
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discontinue the Mariner Licensees' provision of any services specified herein
during such period).
As used in this Agreement, "net patient revenues" shall mean, for any
period, the aggregate amount of all revenues (determined in accordance with
generally accepted accounting principals, consistently applied), received by, or
by reason of the operation of, such Facility during such period, but excluding
(a) revenues from professional fees or charges by physicians and unaffiliated
providers of ancillary services to the extent such charges are paid over to, or
separately billed by, such physicians and unaffiliated providers, (b)
non-operating revenues, (c) revenues attributable to services provided off-site
to non-patients, and (d) all revenues, if any, attributable to child care
services provided primarily to employees of such Facilities, but in all events
excluding any revenues generated for services provided to patients referred by
any Mariner Entity.
5. Expenses.
5.1 During the period from and after the Effective Time to, but
excluding, the date of termination of this Agreement, for each Facility, the
Mariner Licensee shall provide the Proposed SNH Licensees and the Manager with a
weekly statement of expenses of the type listed below to the extent incurred in
the operation and management of such Facility (the "Expense Statements")
accompanied by such documentation as the Proposed SNH Licensee and the Manager
shall reasonably request:
(a) salary and expenses (including, without limitation,
payroll taxes, workers' compensation, costs of employee benefit plans (or such
portion thereof as is properly allocable to such Facility), travel, insurance,
and fidelity bonds) of employees at such Facility, including, without
limitation, administrative, professional, custodial, food service, cleaning and
maintenance, operational, secretarial and bookkeeping personnel;
(b) all supplies and equipment necessary and desirable for
operation of the such Facility as a skilled nursing, intermediate care and
residential facility; food; fuel; kitchen and food service equipment; linens;
beds; furniture; clothing and all other supplies and equipment used in supplying
services to patients;
(c) expenses connected directly or indirectly with the design,
acquisition, disposition, lease, occupancy, ownership or operation of real and
personal property devoted, used or consumed in the business of such Facility,
including, without limitation, maintenance, repair, and improvement of the
Facilities, and premiums, deductibles and self-insured retention amounts with
respect to insurance (including, without limitation, the insurance required to
be obtained pursuant to Section 3.7 hereof (except that the premiums for such
insurance shall be allocated among the facilities covered thereby on such basis
as the Mariner Licensees deem commercially appropriate based on their experience
in such matters and reasonable business judgment, including an assessment by the
Mariner Licensees of the differing risk profiles associated with the facilities
and business of the Mariner Licensees, on the one hand, and the Facilities and
the business of the Proposed SNH Licensees, on the other)); and
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(d) all other costs, expenses and liabilities arising out of
the operation, maintenance and management of the Facilities, including, without
limitation, fees of professionals engaged to fulfill the Mariner Licensees'
obligations under Section 3.6 and Section 3.8, but excluding those costs,
expenses and liabilities arising out of any such Mariner Licensee's gross
negligence or willful misconduct.
5.2 The following expenses of the Mariner Licensees shall be for the
sole account of the Mariner Licensees and shall not be subject to reimbursement
hereunder: (a) overhead and ordinary administrative expenses, salary (including,
without limitation, payroll taxes, workers' compensation, costs of employee
benefit plans, travel, insurance and fidelity bonds) of financial, accounting
and other personnel employed by the Mariner Licensees to provide centralized
billing, collection, ▇▇▇▇ paying, accounting, record keeping, information
management, purchasing, personnel and policy planning services to any Facility,
it being understood that in no event shall the salary of the administrator of a
Facility be an expense of the Mariner Licensees; and (b) any losses, cost and
expenses under Section 11(a).
5.3 The Proposed SNH Licensees shall cause the Manager to establish a
bank account under its name and control and to deposit and maintain a minimum
balance therein of $100,000. The Mariner Licensees shall have signing authority
with respect to such account and weekly, upon approval of the Expense Statement,
the Manager shall fund such account with an amount sufficient (over and above
the minimum balance) to fund and for the purpose of paying the expenses set
forth in the Expense Statement. If any Mariner Licensee advances its own funds
for any approved Expense Statement expense, the Manager and the Proposed SNH
Licensees shall promptly reimburse such Mariner Licensee therefor.
5.4 Each Proposed SNH Licensee of each Facility shall pay the Manager a
monthly management fee (the "Manager's Fee") for each Facility, payable prior to
the __ day following the end of each calendar month during the term hereof, (i)
for the first two (2) months of the term hereof, in an amount equal to the costs
and expenses actually incurred by the Manager in connection with the performance
of its duties hereunder during such calendar month, and (ii) thereafter, in an
amount equal to 4.5% of net patient revenues for such Facility for such calendar
month.
6. Access to Records. For the time and to the extent required by applicable law,
including, without limitation, Section 1861(v)(1)(I) of the Social Security Act,
the Mariner Licensees shall retain, and shall permit the Comptroller General of
the United States, the U.S. Department of Health and Human Services, and their
respective duly authorized representatives, and duly authorized state
representatives, access to examine or copy this Agreement and such books,
documents, and records as are reasonably necessary to verify the nature and
extent of goods and services supplied and the costs of the goods and services
supplied, and the payments claimed under this Agreement. In the event any
Mariner Licensee provides any of its services under this Agreement pursuant to a
subcontract and if (i) the services provided pursuant to the subcontract have a
value or cost of $10,000 or more over a twelve (12) month period and (ii) the
subcontract is with a related organization, then such Mariner Licensee agrees
that the subcontract shall contain a clause requiring the subcontractor to
retain and allow access to its records on the same terms and conditions as
required by such Mariner Licensee.
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7. Duty of Mariner Licensees; Prohibited Transactions. The Mariner Licensees
shall render the services called for hereunder in good faith. Other than the
Fee, none of the Mariner Licensees or any person, firm or corporation which,
directly or indirectly owns or controls, is owned or controlled by, or is under
direct or indirect common ownership or control with the Mariner Licensees or any
person related by blood or marriage within the third degree to persons in such
control (an "Affiliate"), shall receive any remuneration (other than
reimbursements and other payments expressly provided for herein), whether direct
or indirect, for any purchases of goods or services made on behalf of the
Mariner Licensees, the Proposed SNH Licensees or the Manager, and none of the
Mariner Licensees or any of their Affiliates shall markup, increase the price,
or obtain any premium for goods or services purchased by any Mariner Licensee on
behalf of or for the benefit of the Mariner Licensees, the Proposed SNH
Licensees or the Manager.
8. Relationship of Parties. No party to this Agreement is a partner or joint
venturer with any other party, and nothing herein shall be construed so as to
make them such partners or joint venturers or impose on any of them any
liability as partners or joint venturers.
9. Term and Termination.
9.1 The term of this Agreement shall commence at the Effective Time and
shall continue in full force for twelve (12) months unless earlier terminated as
provided below, and thereafter, from month to month thereafter unless terminated
upon not less than thirty (30) days' prior written notice from the Proposed SNH
Licensees or the Mariner Licensees to the other.
Subject to the provisions of the first paragraph in Section 1 of this
Agreement, the Proposed SNH Licensees shall have the further right from time to
time to require the Mariner Licensees' to discontinue provision of any or all
services hereunder to any one or more of the Facilities upon not less than
thirty (30) days' prior written notice to the relevant Mariner Licensee.
If there is a final adverse determination with respect to any Necessary
Licenses, provided that the Proposed SNH Licensee shall have exhausted all
appeals with respect thereto, this Agreement shall terminate with respect to the
Facility(ies) which would be affected.
9.2 From and after the effective date of termination of this Agreement
in accordance with Section 9.1, the Mariner Licensees shall not be entitled to
compensation for further services hereunder (and, in the case of the
discontinuation of services at a Facility in accordance with Section 9.1, from
and after the effective date of such discontinuance, the Mariner Licensees shall
not be entitled to compensation for further services with respect to such
Facility). Upon termination or discontinuance, the relevant Mariner Licensees
shall forthwith:
(a) pay over to the relevant Proposed SNH Licensee all
collections of Post-Effective A/R received by the Mariner Licensees pursuant to
this Agreement;
(b) deliver to the relevant Proposed SNH Licensees and the
Manager a full accounting, including a statement showing all payments collected
by it and a statement of all money held by it, covering the period following the
date of the last accounting furnished to them; and
-10-
(c) deliver to the relevant Proposed SNH Licensees and the
Manager, as the case may be, all property and documents of any of them
(including, without limitation, health care and other patient records) then in
the custody of the Mariner Licensee(s).
10. Notices. All notices and other communications provided for hereunder shall
be in writing (including telecopy communication) and mailed, telecopied or
delivered addressed as follows:
(a) if to the Manager:
Five Star Quality Care, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Treasurer
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
(b) with copy to:
▇▇▇▇▇▇▇▇ & Worcester LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Telecopy No.: 617-338-2880
(c) if to the Mariner Licensees:
AMS Properties, Inc.
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Associate General Counsel
Telecopy No. ▇▇▇-▇▇▇-▇▇▇▇
and to:
GCI Health Care Centers, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Associate General Counsel
Telecopy No. ▇▇▇-▇▇▇-▇▇▇▇
(d) If to the Proposed SNH Licensees:
SHOPCO-AZ, LLC
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Treasurer
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
SHOPCO-CA, LLC
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▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Treasurer
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
SHOPCO-COLORADO, LLC
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Treasurer
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
SHOPCO-WI, LLC
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Treasurer
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
or to such other address as may hereafter be designated by any party for such
other purpose, and shall be effective upon receipt if hand delivered, when
telecopied, if transmitted by telecopier or upon the expiration of the fifth
Business Day after being deposited in the mails, if mailed.
11. Indemnification.
(a) Mariner Licensees' Indemnification. The Mariner Licensees,
jointly and severally, shall protect, indemnify and hold harmless each of the
Proposed SNH Licensees, the Manager and their respective agents, employees,
officers, directors, partners, members, trustees, attorneys, successors or
assigns (hereafter the "SNH Indemnitees," and when referred to singly, an "SNH
Indemnitee") for, from and against any and all debts, obligations, damages,
penalties, liabilities, liens, claims, causes of action, administrative orders
or notices, costs, fines, penalties or expenses (including, without limitation,
reasonable attorney's fees and expenses actually incurred) to the maximum extent
permitted by law imposed upon, incurred by or asserted against any Indemnitee
and arising in connection with any act, omission or obligation of any Mariner
Licensee hereunder, under its Interim Occupancy Agreement, or otherwise in
connection with the Mariner Licensees' activities in operating or overseeing the
operation of any of the Facilities. The Mariner Licensees, at their expense,
shall contest, resist and defend any such claim, action or proceeding asserted
or instituted against any SNH Indemnitee or may compromise or otherwise dispose
of the same, with the relevant SNH Indemnitee's prior written consent (which
consent may not be unreasonably withheld or delayed).
(b) Proposed SNH Licensees' and Manager's Indemnification. The
Proposed SNH Licensees and the Manager (collectively referred to as the SNH
Indemnitors), jointly and severally, shall protect, indemnify and hold harmless
each of the Mariner Licensees and their respective agents, employees, officers,
directors, partners, members, trustees, attorneys, successors and assigns
(hereafter the "Mariner Indemnitees" and when referred to singly, "Mariner
Indemnitee") for, from and against any and all debts, obligations, damages,
penalties, liabilities, liens, claims, causes of action, administrative orders
or notices, costs, fines, penalties, or expenses (including, without limitation,
reasonable attorney's fees and expenses actually
-12-
incurred) to the maximum extent permitted by law imposed upon, incurred by or
asserted against any Mariner Indemnitee and arising in connection with any act,
omission or obligation of any SNH Indemnitor hereunder, under the Interim
Occupancy Agreements, or otherwise in connection with the SNH Parties'
activities in operating or overseeing the operation of any of the Facilities.
The SNH Parties', at their expense, shall contest, resist and defend any such
claim, action or proceeding asserted or instituted against any Mariner
Indemnitee or may compromise or otherwise dispose of the same, with the relevant
Mariner Licensee's prior written consent (which consent may not be unreasonably
withheld or delayed).
The provisions of this Section 11 shall survive the termination of this
Agreement.
12. Miscellaneous.
12.1 This Agreement shall not be changed, modified, terminated, or
discharged in whole or in part except by an instrument in writing signed by each
of the parties hereto or their respective successors or assigns.
12.2 Non-Assignability. This Agreement shall not be assigned by any
party without the consent of the other party and this Agreement shall be binding
upon and shall inure to the benefit of consented to successors and assigns.
12.3 Governing Law. This Agreement shall be governed by, interpreted,
construed, applied and enforced in accordance with the laws of the Commonwealth
of Massachusetts applicable to contracts between residents of the Commonwealth
of Massachusetts which are to be performed entirely within the Commonwealth of
Massachusetts, regardless of (i) where this Agreement is executed or delivered;
or (ii) where any payment or other performance required by this Agreement is
made or required to be made; or (iii) where any breach of any provision of this
Agreement occurs, or any cause of action otherwise accrues; or (iv) where any
action or other proceeding is instituted or pending; or (v) the nationality,
citizenship, domicile, principal place of business or jurisdiction of
organization or domestication of any party; or (vi) whether the laws of the
forum jurisdiction otherwise would apply the laws of the jurisdiction other than
the Commonwealth of Massachusetts; or (vii) any combination of the foregoing.
12.4 Entire Agreement. This Agreement, together with the other
agreements contemplated by, referred to in, or contemplated by agreements
referred to herein, together constitute the entire agreement of the parties
hereto with respect to the subject matter hereof and supersede and cancel any
preexisting agreements with respect to such subject matter.
12.5 Attorney's Fees and Costs. If any action is brought for the
enforcement of this Agreement, or because of a dispute, breach, default or
misrepresentation in connection with any of the provisions of this Agreement,
the prevailing party shall be entitled to recover reasonable attorneys' fees and
other costs incurred in that action in addition to any other relief to which it
may be entitled.
12.6 Confidentiality. The parties agree not to disclose or permit their
respective representatives, attorneys, auditors or agents to disclose, except as
may be required by law or performance hereunder, any confidential non-public
information of the others which is obtained by any of them in connection with
the transactions contemplated by this Agreement.
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12.7 Cooperation; Commercially Reasonable Efforts. The parties shall
cooperate in good faith in connection with all actions to be taken to consummate
the transactions contemplated by, and to enforce the rights created by and
perform the responsibilities imposed by, this Agreement and in order to assure
compliance with Federal, state and local laws, rules and regulations. The
parties agree to execute such amendments, modifications or supplements to this
Agreement or any other agreements between or among any of the parties hereto,
necessary or appropriate to assure such compliance.
12.8 Responsibility for Compliance with Law. During the term of this
Agreement, each Mariner Licensee will keep in full force and effect all
licenses, permits, approvals, authorizations, provider agreements, and
certificates or determinations of need necessary for such Mariner Licensee to
occupy and operate its Facilities and to receive Medicare and Medicaid
reimbursement for services provided therein and the Mariner Licensees will
cooperate with Proposed SNH Licensees in connection with the Proposed SNH
Licensees obtaining provider agreements to ensure there is no period during
which neither a Mariner Licensee nor a Proposed SNH Licensee is entitled to
reimbursement for services provided at the Facilities.
12.9 Bankruptcy Court Authorization. Mariner and the Mariner Licensees
shall seek authorization from the United States Bankruptcy Court for the
District of Delaware in order to proceed with those matters provided herein, in
conjunction with the authorization sought for proceeding with the Settlement
Agreement. The form of order providing authorization shall be in a form
acceptable to SPTMNR, the Proposed SNH Licensees and the Manager.
-14-
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed under seal by their duly authorized officers as of the date first set
forth above.
MARINER POST-ACUTE NETWORK, INC.
By:________________________________
Its (Vice) President
AMS PROPERTIES, INC.
By:________________________________
Its (Vice) President
GCI HEALTH CARE CENTERS, INC.
By:________________________________
Its (Vice) President
SHOPCO-AZ, LLC
By:________________________________
Its (Vice) President
SHOPCO-CA, LLC
By:________________________________
Its (Vice) President
SHOPCO-COLORADO, LLC
By:________________________________
Its (Vice) President
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SHOPCO-WI, LLC
By:________________________________
Its (Vice) President
FIVE STAR QUALITY CARE, INC.
By:_______________________
Its (Vice) President
-16-
SCHEDULE A
PROPOSED SNH LICENSEES
1. SHOPCO-AZ LLC, a Delaware limited liability company.
2. SHOPCO-CA LLC, a Delaware limited liability company.
3. SHOPCO-COLORADO LLC, a Delaware limited liability company.
4. SHOPCO-WI LLC, a Delaware limited liability company.
SCHEDULE B
FACILITIES
Property Name Property Address Tenant
-------------------------------------------------------------------------------------------------------------
Cedars Health Care Center ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ AMS Properties
Lakewood, CO
Cherrelyn Manor Nursing Home ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇▇▇▇▇▇▇ East Health Care Center ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ AMS Properties
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Greentree Health Care Center ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ AMS Properties
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
La Mesa Health Care Center ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
La Salette Health Care & Rehabilitation Center ▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Lancaster Health Care Center ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ "J" AMS Properties
Lancaster, CA
Northwest Health Care Center 7800 West Fond du Lac Avenue AMS Properties
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Pine Manor Health Care Center East Side of County Y Highway AMS Properties
Embarrass (Clintonville), WI
River Hills West Health Care Center ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ AMS Properties
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Sunny Hill Health Care Center ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇
Sunquest Village of Yuma ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
Thousand Oaks Health Care Center ▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ AMS Properties
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Van Nuys Health Care Center ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Village Green Nursing Home ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Virginia Health Care Center ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ AMS Properties
Waukesha, WI
Woodland Health Care Center ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ AMS Properties
Brookfield, WI
SCHEDULE C
FORM OF OCCUPANCY AGREEMENT
See attached copy.
[See Schedule 3.5-B to the Settlement Agreement.]
SCHEDULE D
Designated Services
Information Technology Support 1.0%
Reimbursement 0.5%
Accounts Payable and Payroll Processing 1.5%
Facility, Regional and Clinical 2.0%
(Quality Assurance) Operations
SCHEDULE 3.5-B
FORM OF INTERIM OCCUPANCY AGREEMENT
INTERIM OCCUPANCY AGREEMENT
This Interim Occupancy Agreement (this "Interim Occupancy Agreement")
is made this ___ day of 2000, between [insert name of applicable New Operator],
a Delaware corporation ("Sublessor"), and [insert name of applicable Mariner
Licensee], a Delaware corporation ("Sublessee").
WITNESSETH
WHEREAS, SPTMNR Properties Trust, a Maryland real estate investment
trust ("SPTMNR"), and Sublessor are parties to an Amended and Restated Master
Lease Agreement, dated as of ____________ ___, ______ (the "Lease"), with
respect to the skilled nursing facility known as "[insert name of facility]"
(the "Facility"); and
WHEREAS, SPTMNR, Sublessor, Sublessee and various other parties have
entered into a Settlement Agreement (the "Settlement Agreement"), pursuant to
which Sublessee has agreed to manage the operation of the Facility on the terms
contained therein and in an Interim Management Agreement, dated as of the date
hereof (the "Interim Management Agreement"), between Sublessor and Sublessee;
and
WHEREAS, in order to accomplish the foregoing, Sublessor has agreed to
sublease the Facility to Sublessee on the terms contained herein;
NOW THEREFORE, in consideration of the premises, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by the parties hereto, the parties hereto, intending to be bound,
hereby agree as follows:
1. Sublease. Upon and subject to the terms and conditions hereinafter
set forth, Sublessor subleases to Sublessee, and Sublessee subleases from
Sublessor, all of Sublessor's right, title and interest in, to, under or
relating to the real property, improvements, fixtures and related rights
constituting the Facility (the "Demised Premises"), including, without
limitation, any leasehold rights of Sublessor relating to the use or occupancy
thereto, and Sublessor agrees that Sublessee has and will continue to have
throughout the term of this Interim Occupancy Agreement, the right to use and
occupy the Demised Premises as the licensed operator of the Facility.
2. Term. The term of this Interim Occupancy Agreement shall commence on
the date hereof, and shall end on the earlier of (i) the date on which
Sublessee's obligation to provide services in connection with the management of
the operation of the Facility under the Interim Management Agreement shall have
expired or been terminated pursuant to the terms thereof and (ii) the SNH
Licensing Date (as defined in the Interim Management Agreement). Sublessor and
Sublessee acknowledge that under the Interim Management Agreement, Sublessor may
terminate Sublessee's provision of one or more services thereunder, and that if
Sublessor shall elect to do so, this Interim Occupancy Agreement shall remain in
effect notwithstanding such termination until Sublessor shall have elected to
terminate Sublessee's provision of all services under the Interim Management
Agreement with respect to the Facility.
3. Rent. Sublessee shall pay to Sublessor as the rent under this
Interim Occupancy Agreement (the "Rent"), all net patient revenues derived from
the operation of the Facility during the term of this Interim Occupancy
Agreement to the extent such net patient revenues are actually collected by
Sublessee. Except as expressly set forth in the preceding sentence, Sublessee
shall have no obligation to pay any amounts or perform any obligations in
respect of this Interim Occupancy Agreement; it being the purpose and intent of
Sublessor and Sublessee that this Interim Occupancy Agreement is a gross lease
and that except for the payment of the Rent, all costs, fees, taxes,
impositions, utility charges, repairs, alterations, restorations, charges,
expenses, reimbursements and obligations of every kind and manner whatsoever
relating to the Demised Premises which may arise or become due during or after
the term of this Interim Occupancy Agreement, shall be paid and discharged by
Sublessor.
4. Surrender of Possession. At the end of the term of this Interim
Occupancy Agreement, Sublessee shall surrender the Facility to Sublessor and, if
Sublessee shall fail to do so, Sublessee shall be a tenant-at-sufferance subject
to all of the terms of this Interim Occupancy Agreement except that Rent shall
be twice the Rent in effect immediately prior to the expiration or termination
hereof. Sublessee shall be liable for all damages incurred by Sublessor as a
result of such holding over.
5. No Subletting or Assignment. Sublessee shall not sublet or assign
any or all of the Facility without the prior consent of Sublessor; provided,
however, that the foregoing shall not be deemed to prohibit Sublessee from
permitting patients or residents to occupy the Facility in the ordinary course
of Sublessee's business.
6. Notices. All notices required or permitted hereunder shall be in
writing and shall be deemed to be properly given when personally delivered to
the party entitled to receive the notice or on the date of actual receipt, if
sent by certified or registered mail, postage prepaid and return receipt
requested, or one business day after being sent by nationally recognized
overnight courier service, properly addressed and postage prepaid to the party
entitled to receive such notice at the address stated below:
If to the Sublessor: ____________________
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Treasurer
with a copy to: ▇▇▇▇▇▇▇▇ & Worcester LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
If to the Sublessee: ____________________
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Associate General Counsel
-2-
with a copy to: Powell, Goldstein, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
7. Miscellaneous.
(a) All the terms and provision of this Interim Occupancy
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns. Neither party shall be
entitled to assign its rights or obligations under this Sublease without the
prior consent of the other party hereto.
(b) The headings in this Interim Occupancy Agreement are for
convenience of reference only and shall not limit or otherwise affect the terms
hereof.
(c) This Interim Occupancy Agreement shall be governed by and
construed in accordance with the internal laws of the State in which the
Facility is located, without giving effect to contrary conflicts of law
principles.
(d) This Interim Occupancy Agreement may be executed in
separate counterparts, each of which shall be considered an original, and all of
which, when taken together, shall constitute one and the same instrument.
(e) This Interim Occupancy Agreement (including the Schedules
and Exhibits hereto), and the other documents and instruments specifically
provided for herein and therein, contain the entire understanding between the
parties concerning the subject matter hereof and thereof, and except as
expressly provided for herein or therein, supersede all prior understandings and
agreements whether oral or written, between them with respect to the subject
matter hereof and thereof.
(f) Neither this Interim Occupancy Agreement nor any provision
hereof may be changed, waived, discharged or terminated except by an instrument
in writing signed by Sublessor and Sublease.
(g) Any rights or remedies that any party hereto may have
under this Interim Occupancy Agreement with respect to any matter shall not be
deemed to be such party's exclusive rights or remedies with respect to such
matter arising out of the Settlement Agreement (or any of the Transaction
Documents referred to therein), and any party may exercise its rights and
remedies under this Interim Occupancy Agreement or the Settlement Agreement (or
any of the Transaction Documents referred to therein) concurrently with any such
other rights or remedies, or in any order that it determines in its sole and
absolute discretion.
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IN WITNESS WHEREOF, the parties have caused this Interim Occupancy
Agreement to be executed and delivered by their respective officers hereunto
duly authorized.
SUBLESSOR: SUBLESSEE:
[insert name of applicable New Operator] [insert name of Mariner Licensee]
By:___________________________ By:___________________________
Its: _________________________ Its: _________________________
SCHEDULE 3.6
TRANSFERRED REAL ESTATE
[This schedule contains legal descriptions of real property.]
SCHEDULE 6.7
LITIGATION
[Omitted.]
SCHEDULE 9.5
BEDS AND SERVICES
Property Name Beds Services
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Cedars Health Care Center 175/14 Skilled Nursing Facility/Assisted Living Facility
Cherrelyn Manor Health Care Center 230 Skilled Nursing Facility
▇▇▇▇▇▇▇▇▇▇▇ East Health Care Center 215 Skilled Nursing Facility
Greentree Health Care Center 69 Skilled Nursing Facility
La Mesa Health Care Center 128 Skilled Nursing Facility
La Salette Health Care and Rehab. Center 120 Skilled Nursing Facility
Lancaster Health Care Center 99 Skilled Nursing Facility
Northwest Health Care Center 101 Skilled Nursing Facility
Pine Manor Health Care Center 83/25 Skilled Nursing Facility/Facility for Dev. Disabled
River Hills West Health Care Center 237 Skilled Nursing Facility
Sunny Hill Health Care Center 73 Skilled Nursing Facility
Sunquest Village of Yuma 80 Assisted Living Facility
Thousand Oaks Health Care Center 124 Skilled Nursing Facility
Van Nuys Health Care Center 58 Skilled Nursing Facility
Village Green Health Care Center 127 Skilled Nursing Facility
Virginia Health Care Center 105 Skilled Nursing Facility
Woodland Health Care Center 226 Skilled Nursing Facility
SCHEDULE 9.15
LABOR UNION CONTRACTS OR AGREEMENTS
1. Contract Agreement, dated as of May 1, 1998, between Local 150 Service
Employees International Union AFL-CIO-CLC and Mariner Post-Acute
Network, Inc. d/b/a The Shores Health and Rehabilitation Center,
Northwest Healthcare Center, ▇▇▇▇▇▇▇▇▇▇▇ East Health and Rehabilitation
Center, and Park Manor Heathcare Center and Healthcare Services Group,
Inc., a Contractor.
2. Collective Bargaining Agreement, dated May 1, 1998, between Mariner
Post Acute Network, d/b/a River Hills West Nursing Home and District
1199W/United Professionals for Quality Health Care, SEIU, AFL-CIO.
SCHEDULE 9.16
EMPLOYEE ACCRUALS
[Omitted.]
SCHEDULE 9.18
INSURANCE POLICIES
[Omitted.]
SCHEDULE 9.19
SUBLEASES AND OTHER DOCUMENTS
Fresno Sublease Documents
Pleasant Care Corporation
1. Tenant Purchase and Sale Agreement, dated March 31, 1993, by and among
GCI Properties, Inc.("GCI Properties"), AMS Properties and Pleasant
Care Corporation ("Pleasant Care") (Exhibits A through H missing).
2. Sublease Agreement, dated March 31, 1993, by and between AMS
Properties, as sublessor, and Pleasant Care, as subtenant.
3. Assignment and Assumption of Contracts, dated as of March 31, 1993, by
AMS Properties (Exhibit A missing).
4. ▇▇▇▇ of Sale, dated March 31, 1993, by AMS Properties (Exhibit A
missing).
5. Temporary Management Agreement, dated as of March 31, 1993, by and
between AMS Properties and Pleasant Care.
6. Management/Transition Agreement, dated as of March 31, 1993, by and
between AMS Properties and Pleasant Care.
7. Security Agreement, dated as of March 31, 1993, by and among Pleasant
Care and GCI Properties, AMS Properties and GranCare.
8. Guaranty, dated as of March 31, 1993, by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ in favor of
GCI Properties, AMS Properties and GranCare.
9. UCC-1 Financing Statement, dated March 31, 1993, by Pleasant Care in
favor of GCI Properties, AMS Properties and GranCare.
10. Assignment of Leases and Rents, dated as of March 31, 1993, by AMS
Properties to HRPT.
11. Assignment of Sublease Documents, dated as of March 31, 1993, by AMS
Properties, GCI Properties, and GranCare to HRPT.
12. Memorandum of Sublease, made as of March 31, 1993, by and between AMS
Properties and Pleasant Care.
13. UCC-1 Financing Statement (undated) by GCI Properties in favor of HRPT,
as assignee.
14. UCC-2 Financing Statement by Pleasant Care in favor of HRPT, as
assignee.
Covenant Care California, Inc.
1. Assignment and Assumption of Sublease, Consent, Waiver and Estoppel
Agreement, dated as of January 13, 1995, by and among HRPT, AMS
Properties, Pleasant Care and Covenant Care California, Inc. ("Covenant
Care").
2. Assignment of Sublease Documents, dated as of January 13, 1995, by AMS
Properties to HRPT.
3. Letter Agreement, dated as of January 13, 1995, between HRPT, AMS
Properties, GranCare and GCIHCC re: Transfer from Pleasant Care to
Covenant Care of Rights as Sublessee under Sublease, dated as of March
31, 1993.
4. Memorandum of Sublease, dated as of January 13, 1995.
5. UCC-1 Financing Statement, notarized January 11, 1995, by Covenant Care
in favor of AMS Properties.
6. UCC-2 Financing Statement, notarized January 11, 1995, by Covenant Care
in favor of AMS Properties and HRPT, as assignee
South Dakota Sublease Documents
HealthQuest, Inc. (Southridge Health Care Center/Mom & Dad's Health
Care Center)
1. Tenant Purchase and Sale Agreement, dated as of March 31, 1994, by and
between GCIHCC and HealthQuest, Inc. ("HealthQuest").
2. Sublease, dated as of March 31, 1994, by and between GCIHCC and
HealthQuest.
3. Transition Agreement dated as of March 31, 1994 by and between GCIHCC
and HealthQuest.
4. Amended and Restated Security Agreement, made as of March 31, 1994, by
and between GCIHCC and HealthQuest.
5. Assignment and Assumption of Contracts, dated as of March 31, 1994, by
GCIHCC to HealthQuest.
6. ▇▇▇▇ of Sale, dated as of March 31, 1994 by GCIHCC.
7. Amended and Restated Promissory Note, dated as of March 31, 1994, by
HealthQuest in favor of GCIHCC in the amount of $1,190,000.00.
8. Promissory Note, dated as of March 31, 1994, by HealthQuest in favor of
GCIHCC in the amount of $450,000.00.
9. Amended and Restated Guaranty of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, dated as of March
31, 1994.
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10. Omnibus First Amendment Agreement, dated as of April 15, 1994, by and
between GCIHCC and HealthQuest.
11. UCC-1 Financing Statement by HealthQuest d/b/a Mom & Dad's Home Health
Care Center in favor of GCIHCC.
HealthQuest (Huron Nursing Home/Sunquest Village)
1. Tenant Purchase and Sale Agreement, dated as of April 29, 1994, by and
between GCIHCC and HealthQuest.
2. Sublease, dated as of May 1, 1994, by and between GCIHCC and
HealthQuest.
3. Transition Agreement, dated as of April 29, 1994, by and between GCIHCC
and HealthQuest.
4. Security Agreement, made as of May 1, 1994, by and between GCIHCC and
HealthQuest.
5. Assignment and Assumption of Contracts, dated as of May 1, 1994, by
GCIHCC to HealthQuest.
6. ▇▇▇▇ of Sale, dated as of May 1, 1994, by GCIHCC.
7. Secured Promissory Note, dated as of May 1, 1994, by HealthQuest in
favor of GCIHCC in the amount of $240,000.00.
8. Secured Promissory Note, dated as of May 1, 1994, by HealthQuest in
favor of GCIHCC in the amount of $1,360,000.00.
9. Secured Promissory Note, dated as of May 1, 1994, by HealthQuest in
favor of GCIHCC in the amount of $450,000.00.
10. Guaranty of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, dated as of May 1, 1994.
11. UCC-1 Financing Statement by HealthQuest d/b/a Sunquest Village of
Huron and d/b/a Huron Nursing Home in favor of GCIHCC.
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