SETTLEMENT AGREEMENT
--------------------
THIS SETTLEMENT AGREEMENT made and entered into as of the ____ day of
October, 1996 by and among ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ of Boulder, Colorado, ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇, of Camden, Maine, ▇▇▇▇▇▇▇ ▇. PRIOR, of Portland, Maine, ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, of Harpswell, Maine (referred to collectively as the "Individuals");
BIRCH GROVE MANAGEMENT COMPANY, INC., a Maine corporation, CEDAR RIDGE
MANAGEMENT, INC., a Maine corporation, CEDAR RIDGE NURSING CARE CENTER
ASSOCIATES, a Maine limited partnership, HARBOR HILL LIMITED LIABILITY COMPANY,
a Maine limited liability company, HOMEWOOD LIMITED PARTNERSHIP, a Maine limited
partnership, NURSING ADMINISTRATORS, INC., a Maine corporation, OAK GROVE
MANAGEMENT COMPANY, INC., a Maine corporation, PINE POINT NURSING CARE CENTER,
INC., a Maine corporation, RIVERRIDGE MANAGEMENT, INC., a Maine corporation,
RIVER RIDGE ASSOCIATES, a Maine general partnership, ▇▇▇▇▇ RIVER DEVELOPMENT,
INC., a Maine corporation, ▇▇▇▇▇ RIVER GROUP, a Maine corporation, SPRINGBROOK
ASSOCIATES, a Maine general partnership, SPRINGBROOK MANAGEMENT, INC., a Maine
corporation, SRG/HOMEWOOD, INC., a Maine corporation, SRG/WINDWARD GARDENS,
INC., a Maine corporation, THE WILLOWS MANAGEMENT COMPANY, INC., a Maine
corporation, ▇▇▇▇▇▇ STREAM MANAGEMENT, INC., a Maine corporation, WINDWARD
GARDENS LIMITED PARTNERSHIP, a Maine limited partnership, WOODFORD PARK NURSING
CARE CENTER, INC., a Maine corporation (collectively the "SRG Entities") and
▇▇▇▇▇ RIVER HEALTH SYSTEM LLC, a Maine limited liability company, as agent for
the SRG Entities ("SRHS"), and COMMUNITY CARE OF AMERICA, INC., a Delaware
corporation with its principal place of business in Naples, Florida ("CCA") and
CCA OF MAINE, INC., a Delaware corporation with its principal place of business
in Naples, Florida ("CCA Maine") and CCA acting on behalf of MEDICAL SUPPLY OF
AMERICA and REHAB AMBASSADORS, such entities being affiliates of CCA
W I T N E S S E T H :
WHEREAS, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and D. ▇▇▇▇▇ ▇▇▇▇▇,
High Valley Group, Inc. and Elder Solutions, Inc. (collectively the "Minority
Holders") and the Individuals entered into a certain Purchase Option Agreement
with CCA and CCA Maine dated June 23, 1995 (the "Option Agreement"); and
WHEREAS, CCA Maine entered into ten Management Agreements, all dated
June 23, 1995, with certain of the Individuals and of the SRG Entities with
respect to Woodford Park Nursing Care Center, Pine Point Nursing Care Center,
Marshwood Nursing Care Center, RiverRidge, Springbrook Nursing Care Center,
▇▇▇▇▇ River Nursing Care Center, Cedar Ridge Nursing Care Center, Sedgewood
Commons, Harbor Hill and Windward Gardens, all nursing homes owned by certain of
the SRG Entities, as well as a letter of intent dated August 14, 1995 with
respect to The Willows, Oak Grove and Birch Grove (collectively the
"Facilities") (such
Management Agreements are referred to collectively herein as the "Management
Agreements"); and
WHEREAS, CCA Maine sent the SRG Entities a written notice on July 14,
1996 stating its intention to terminate the Management Agreements; and
WHEREAS, CCA and/or CCA Maine have entered into a number of other
written agreements with certain of the Individuals, Minority Holders and/or SRG
Entities, more particularly described on Exhibit A attached hereto and made a
part hereof (collectively the "Miscellaneous Agreements"); and
WHEREAS, certain of the SRG Entities commenced suit, for injunctive
and other relief, in Superior Court, Androscoggin County, in a civil action
captioned Nursing Administrators, Inc. v. Community Care of America, Inc., et
al., Docket No. CV-96-____ (the "Lawsuit"); and
WHEREAS, the parties to this Agreement have determined that it is in
their mutual best interests to terminate the Management Agreements, modify the
Option Agreement and terminate or continue certain of the Miscellaneous
Agreements and to enter into a comprehensive financial settlement of their
mutual obligations, all on the terms and conditions set forth in this Agreement;
and
WHEREAS, as part of the consideration for this settlement, SRHS is
assuming the obligation to settle any claims owed by CCA to the SRG Entities;
NOW THEREFORE, for valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Termination of Management Agreements. Subject to the terms and
conditions of this Agreement, the Management Agreements and the letter of intent
dated August 14, 1995 with respect to Birch Grove, Oak Grove and The Willows are
hereby terminated effective the date of this Agreement. At the closing of the
settlement described in this Agreement, CCA Maine shall assign to SRHS all
accrued, unpaid management fees under the Management Agreements by assignment in
form and substance similar to that attached hereto as Exhibit B.
2. Limited Continuation of Option Agreement. The time during which
the option granted by the Option Agreement may be exercised, as provided in
Section 3 of the Option Agreement, is hereby made to expire at the close of
business on January 2, 1997. In the event CCA Maine exercises the option granted
in the Option Agreement pursuant to the terms of the Option Agreement on or
before January 2, 1997, and notwithstanding anything to the contrary contained
in the Option Agreement, CCA of Maine (a) shall pay as an additional
non-refundable deposit $480,000 as a condition of, and at the time of, such
exercise, in immediately available funds paid by wire transfer to SRHS as agent
and (b) shall have a period of 30 days after exercise, subject to the next
sentence, in which to close on its purchase of the Facilities. In no event shall
the Option Agreement extend beyond 5:00 PM February 3, 1997, even if the option
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has been exercised. The Option Agreement shall be deemed modified by this
Section and by other provisions of this Agreement specifically amending,
changing or modifying the Option Agreement. The Option Agreement shall be
construed together with this Agreement, and to the extent there are any
inconsistencies between the Option Agreement and this Agreement, this Agreement
shall be controlling.
3. Miscellaneous Agreements. Exhibit A attached hereto identifies
those of the Miscellaneous Agreements which shall survive and those which shall
be terminated effective as of the date of this Agreement. As to those
Miscellaneous Agreements listed on Exhibit A that are to terminate effective the
date of this Agreement, neither party shall have further liability to the other.
CCA and CCA Maine agree that they shall continue to perform their respective
obligations under those Miscellaneous Agreements that shall survive the closing
of the settlement described in this Agreement. SRHS shall be responsible for and
shall have the benefit of all cost reports and exceptions to the Routine Cost
Limitations ("RCLs"). CCA Maine shall send all work relating to 1995 Medicare
RCLs , including all work papers, diskettes and other materials to SRHS and SRHS
shall complete the 1995 Medicare RCLs. In addition, any other agreements between
CCA and/or CCA Maine and ▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇ are not affected by this
Agreement.
4. Offset of Claims. In consideration of CCA and CCA Maine waiving,
canceling and forgiving all amounts due (including any interest accrued thereon)
by certain of the SRG Entities with respect to the Facilities and more
particularly described on Exhibit C attached hereto and made a part hereof
(collectively the "Working Capital Lines"), the SRG Entities and the
Individuals, for themselves and their successors and assigns, hereby forever
waive and relinquish all claims against CCA and CCA Maine asserted in the
Lawsuit, but not including those obligations of CCA and CCA Maine undertaken,
continued or modified pursuant to this Agreement. In consideration of the
foregoing waiver and relinquishment by certain of the SRG Entities of all claims
against CCA and CCA Maine asserted in the Lawsuit, but not including those
obligations of CCA and CCA Maine undertaken, continued or modified pursuant to
this Agreement, CCA and CCA Maine, for themselves and their successors and
assigns, do hereby waive, cancel and forgive all amounts due under the Working
Capital Lines (including any interest accrued thereon). Upon executing this
Settlement Agreement, CCA Maine hereby authorizes and directs its attorney ▇▇▇▇
▇. ▇▇▇▇▇, ▇▇. to execute and to deliver to those SRG Entities that are liable on
the Working Capital Lines discharges and UCC-3 terminations of all mortgages and
financing statements securing the Working Capital Lines. CCA and CCA Maine shall
deliver the original Working Capital Line promissory notes to SRHS as agent
marked "paid in full." CCA and CCA Maine shall provide such evidence as the SRG
Entities shall request showing that NationsBank of Florida, N.A., has consented
to the cancellation of the Working Capital Lines and the return of the
collateral for the same.
5. Modification of Stock Options and Put Option with Respect to the
Individuals and Minority Holders.
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(a) With respect to the rights granted by CCA and CCA Maine to the
Individuals to acquire shares of common stock of CCA (the "Stock Options") in
and pursuant to those certain Stock Option Agreements between each of the
Individuals and CCA dated July 11, 1995, (collectively the "Stock Option
Agreements"), and notwithstanding any provisions in the Stock Option Agreements
to the contrary dealing with the vesting of the Stock Options, CCA and CCA Maine
agree that all of the shares of the common stock of CCA subject to the Stock
Options, for a total of twenty thousand (20,000) shares, are as of the date of
this Agreement fully vested with respect to the Stock Options, and, as to such
twenty thousand (20,000) shares, the Stock Options shall be nonforfeitable and
immediately exercisable, and, upon exercise thereof, all stock so acquired shall
be freely tradeable.
(b) With respect to the rights granted by CCA and CCA Maine under
Section 9(j) of the Option Agreement to require the purchase of common stock of
CCA previously issued to each of the Individuals and the Minority Holders in
connection with the payment of the deposit under Section 8(a) of the Option
Agreement (the "Put Option") covering the shares of CCA common stock held by the
Individuals, such Put Option shall continue in full force and effect, as
modified by this Section, and CCA hereby agrees that it is liable with respect
to the Put Option. Without regard to any limitations as to percentages of such
stock to be put or as to dates for such puts, all shares of stock under the Put
Option are hereby exercised and CCA acknowledges and agrees to such exercise.
The Individuals agree they shall not demand payment for the stock hereby put to
CCA until the earlier to occur of (i) February 28, 1997 or (ii) the sale of all
or substantially all of the assets of CCA or the sale of a majority of the
issued and outstanding shares of stock of CCA to a third party, or the merger of
CCA with or into another entity, or any similar type of transaction (each, a
"Sale Transaction"). If the sale of CCA is structured as a stock-for-stock
transaction, the Individuals and Minority Holders hereby agree to accept, in
lieu of cash, shares of stock in the acquiring entity in an amount that results
in the Individuals and Minority Holders receiving stock in the acquiring entity
of a market value on the date of closing equal to the value of the shares in CCA
held by the Individuals and Minority Holders at the price under the Put Option,
and provided that the stock of the acquiring entity is fully registered and
freely tradeable upon issuance to the Individuals and Minority Holders.
6. Continuation and Extension of Put Rights with Respect to Maine
Head Trauma Center. The put options granted to the Individuals in the Stock
Purchase Agreement (the "MHTC Agreement") among CCA, CCA Maine, Maine Head
Trauma Center, Inc. and the Individuals and others dated as of November 1, 1995
(the "MHTC Put Options") shall continue in full force and effect, and the dates
contained in Section 2.1(j) of the MHTC Agreement governing the period during
which the MHTC Put Options may be exercised are hereby changed as follows: The
shares subject to the First Put Period (as defined in the MHTC Agreement) and
the Second Put Period (as defined in the MHTC Agreement) are hereby exercised
and shall be paid at the same time as those Put Option rights set forth in
Section 5(b) above and the MHTC Agreement shall be deemed to be amended
accordingly. The Put Option price shall be as provided in the MHTC Agreement.
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7. Appointment of Agent with Respect to Put Option. The holders of
the rights described in Sections 5 and 6 above hereby irrevocably appoint ▇▇▇▇▇
▇. ▇▇▇▇▇▇, Esquire, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Broder & Micoleau, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ as agent to hold the shares of stock to be tendered under
Sections 5 and 6 and to deliver the certificates evidencing said shares upon
tender of payment as required hereunder. In the event CCA fails to make payment
of or to otherwise perform under this Agreement, CCA agrees that such holders
shall be entitled to recover from CCA their reasonable legal fees and expenses
in addition to any other damages incurred by reason of CCA's said failure. CCA
waives any conflict of interest arising from ▇▇. ▇▇▇▇▇▇'▇ serving as escrow
agent under this Section and releases ▇▇. ▇▇▇▇▇▇ from all liability except for
that arising from his intentional tortious acts.
8. Additional Consideration for Settlement. The consideration for the
Settlement described herein shall be the mutual offset described in Section 4
above. In addition, CCA and CCA Maine agree jointly and severally to pay to
SRHS, as agent for the SRG Entities and the Individuals, including, without
limitation, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, without offset or deduction, $50,000 in
immediately available funds, as follows: $25,000 on or before November 15, 1996,
and $25,000 on the earlier to occur of (i) February 28, 1997, or (ii) the
closing of a Sale Transaction, in payment of legal fees and expenses paid or
accrued by the SRG Entities and the Individuals, including ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
between September 15, 1996 and the closing of this Agreement.
9. Rehab Ambassadors. CCA represents and warrants to the SRG Entities
and the Individuals that One Hundred Twenty Thousand Dollars ($120,000.00)
previously paid to CCA in July or August 1996 was applied on that date to the
account of Rehab Ambassadors, an affiliate of CCA. Provided the $120,000 payment
was made to Rehab Ambassadors, the SRG Entities agree that they shall continue
to use the services of Rehab Ambassadors, except that the SRG Entities shall
have the right to terminate Rehab Ambassadors severally on thirty (30) days
notice. In addition, Rehab Ambassadors will be treated the same as other trade
payables, i.e., shall be paid no sooner or later than any other accounts payable
of the SRG Entities. The amounts owing to Rehab Ambassadors as of August 31,
1996 are as shown on Exhibit D hereto and are hereby confirmed by CCA and Rehab
Ambassadors.
10. Office Lease. SRHS shall enter into a Sublease with CCA Maine in
form and substance similar to that attached hereto as Exhibit E. The rent
payable by SRHS shall be the rent payable by CCA Maine to Dead River Properties,
the Landlord under the Lease. The Sublease shall be for an initial term expiring
on February 14, 1997 with the right to extend for additional six month terms.
CCA and CCA Maine acknowledge that all furniture, fixtures, machinery and
equipment located on the premises described in the Sublease belong to SRHS. Any
additions, accessions, modifications or substitutions to such equipment are
hereby transferred, sold and conveyed to SRHS.
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11. Continuation of Workers Compensation Program. The SRG Entities
agree to continue utilizing the workers compensation program currently covering
the SRG Entities' employees until the end of the current policy term, which is
March 31, 1997.
12. No Amounts Owed to Medical Supply. CCA and CCA Maine acknowledge
and confirm that none of the SRG Entities and none of the Individuals owes any
sums whatsoever to Medical Supply of America, an affiliate of CCA.
13. Representations and Warranties of CCA and CCA Maine. CCA and CCA
Maine jointly and severally warrant and represent to the Individuals and the SRG
Entities as follows:
a. Each of CCA and CCA Maine is a validly created
corporation in good standing under the laws of Delaware and has been authorized
by all necessary corporate action to execute and deliver this Agreement and to
complete the transactions described herein. Certified corporate resolutions to
that effect will be delivered to SRHS within 5 days of execution of this
Agreement.
b. Neither CCA nor CCA Maine is required to obtain the
consent of any party in order to enter into this Agreement and to perform its
respective obligations hereunder.
c. Except for the Lawsuit, there is no litigation pending or
threatened, nor any proceeding before any other court or tribunal either pending
or threatened against CCA or CCA Maine that would have a material adverse effect
upon the performance by CCA or CCA Maine of their respective obligations under
this Agreement.
d. Except for an assignment in favor of NationsBank of
Florida, N.A., CCA Maine is the holder of the promissory notes, security
agreements, and all other documents and instruments evidencing or securing the
Working Capital Lines, has not assigned or transferred the Working Capital
Lines, and has the right to discharge and terminate the same as required by the
terms of this Agreement. NationsBank of Florida N.A. has consented to the terms
of this Settlement Agreement.
14. Representations and Warranties by the SRG Entities. The SRG
Entities jointly and severally warrant to CCA and CCA Maine as follows:
a. Each of the SRG Entities is a validly created
corporation, general partnership, limited partnership or limited liability
company, as the case may be, in good standing under the laws of Maine and has
been authorized by all necessary corporate action to execute and deliver this
Agreement and to complete the transactions described herein.
b. None of the SRG Entities is required to obtain the
consent of any party in order to enter into this Agreement and to perform its
respective obligations hereunder.
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c. Except for the Lawsuit, there is no litigation pending or
threatened, nor any proceeding before any other court or tribunal either pending
or threatened against any of the SRG Entities that would have a material adverse
affect upon the performance by the SRG Entities of their respective obligations
under this Agreement.
15. Indemnification by CCA and CCA of Maine. CCA and CCA Maine, and
their respective successors and assigns, shall jointly and severally indemnify
and defend the SRG Entities, the Individuals, and their respective successors,
assigns, heirs and personal representatives from and against any and all
liability, costs, damages, and claims arising from or in any way related to (i)
all claims, demands and liabilities by or in favor of Rehab Ambassadors arising
from or in any way related to the $120,000 payment referred to in Section 9
above, including whether or not such payment was in fact received by Rehab
Ambassadors, (ii) all claims, demands and liabilities (including fines) that may
be imposed upon or asserted against the SRG Entities by reason of operational
matters within the Facilities arising from actions or omissions of CCA Maine or
any affiliates between August 15, 1995 and August 14, 1996 and (iii) any breach
of the representations and warranties set forth in Section 13 above. Upon the
happening of any event covered by this indemnity, CCA and CCA Maine shall pay
the amount of such loss upon demand. This indemnity shall also cover all costs
associated with collection or enforcement of this indemnity, including
reasonable attorneys' fees. This indemnity shall continue in full force and
effect for a period of six (6) years from the closing of this settlement.
16. Indemnification by SRG Entities. The SRG Entities and their
respective successors and assigns, shall jointly and severally indemnify and
defend CCA, CCA Maine, and their respective successors and assigns, from and
against any and all liability, costs, damages, and claims arising from or in any
way related to (i) any breach of the representations and warranties set forth in
Section 14 above, and (ii) any claims by the Minority Holders arising from the
settlement described in this Agreement, except with respect to continuing
obligations of CCA or CCA Maine to certain of the Minority Holders as described
in Sections 3, 5 and 6 above. This indemnity shall also cover all costs
associated with collection or enforcement of this indemnity, including
reasonable attorneys' fees. This indemnity shall continue in full force and
effect for a period of six (6) years from the closing of this settlement.
17. Closing. The closing of the settlement described in this
Agreement shall take place on October ___, 1996. At the closing:
a. CCA shall execute and deliver original termination
statements and mortgage discharges releasing all of the mortgages and all of the
UCC-1 financing statements covering the Facilities, in form for proper recording
and filing at the appropriate public office.
b. CCA Maine shall execute and deliver the Assignment with
respect to unpaid management fees, the form of which is attached hereto as
Exhibit B.
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c. CCA Maine and SRHS shall execute the Sublease, the form
of which is attached hereto as Exhibit E.
d. The parties shall execute such other and further
documents as shall be necessary to complete the settlement described in this
Agreement.
18. Release by CCA and CCA of Maine. CCA and CCA of Maine, for
themselves and their respective successors and assigns, hereby remise, release
and forever discharge and, by these presents, do, for themselves and for their
agents and representatives, hereby remise, release and forever discharge the SRG
Entities, the Individuals and the Facilities and their respective heirs,
successors, agents, attorneys, personal representatives and assigns of and from
all claims, debts, demands, actions, causes of action, covenants, contracts,
controversies, agreements, promises, doings, omissions, variances, damages,
executions, claims, rights, liabilities, suits, dues, sums and sums of money,
accounts, reckonings, presentments, liens and any other claim of whatsoever kind
or nature, whether known or unknown, of every name and nature, either at law or
in equity or otherwise, which CCA and CCA Maine, or either of them, ever had,
now have or which may result in the future from the existing or past state of
things, from the beginning of time to the date of closing specified in Section
17 above, arising from, or in any way relating to, the Management Agreements,
the Option Agreement (except as provided below), and those Miscellaneous
Agreements listed on Exhibit A attached hereto that are being terminated
pursuant to this Agreement, as well as the Lawsuit. This release shall not cover
or apply to any obligations of the SRG Entities or the Individuals under this
Agreement, including, without limitation, the indemnities set forth in Section
16 above, or under the Option Agreement as it has been modified by this
Agreement, all of which obligations shall continue in full force and effect.
19. Release by the Individuals and the SRG Entities. The Individuals
and the SRG Entities, for themselves and their respective heirs, successors and
assigns, hereby remise, release and forever discharge and, by these presents,
do, for themselves and for their agents and representatives, hereby remise,
release and forever discharge CCA and CCA Maine and their respective successors,
assigns, agents and attorneys of and from all claims, debts, demands, actions,
causes of action, covenants, contracts, controversies, agreements, promises,
doings, omissions, variances, damages, executions, claims, rights, liabilities,
suits, dues, sums and sums of money, accounts, reckonings, presentments, liens
and any other claim of whatsoever kind or nature, whether known or unknown, of
every name and nature, either at law or in equity or otherwise, which the
Individuals and the SRG Entities, or any of them, ever had, now have or which
may result in the future from the existing or past state of things, from the
beginning of time to the date of closing specified in Section 17 above, arising
from, or in any way relating to, the Management Agreements, the Option Agreement
(except as provided below), and those Miscellaneous Agreements listed on Exhibit
A attached hereto that are being terminated pursuant to this Agreement, as well
as the Lawsuit. This release shall not cover or apply to (i) any obligations of
CCA or CCA Maine under this Agreement, including, without limitation, the
indemnities set forth in Section 15 above and under the Option Agreement, Stock
Option Agreement and MHTC Agreement, as they have been modified by this
Agreement, all of which
8
obligations shall continue in full force and effect, or to (ii) any liability of
CCA or CCA Maine arising from operation of the Facilities, other than the third
party reimbursement or other financial obligations that have been addressed by
this Agreement. The parties' intent is that this release shall not cover
obligations owed by CCA and CCA Maine as Manager to patients and with respect to
day-to-day operations of the Facilities.
20. Further Assurances. The parties to this Agreement agree that they
shall perform all such further acts and execute all such further documents as
may be necessary or required in order to complete the transactions described in
this Agreement.
21. Miscellaneous. Time is of the essence. This Agreement sets forth
the entire Agreement of the parties and supersedes all prior agreements and
understandings, whether oral or written. No modification or waiver of any
provision of this Agreement shall be effective unless the same shall be in
writing and executed by all parties hereto. All notices, demands, and other
communications under this Agreement shall be in writing and shall be deemed to
have been duly given to the recipient if mailed by certified mail,
postage-prepaid, or if by sent by hand delivery or by reputable overnight
delivery service, address to the recipient at the following addresses:
If to CCA and CCA Maine:
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇, Esquire
Blass & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
If to any of the SRG Entities or Individuals:
c/o ▇▇▇▇▇ River Development
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
with a copy to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esquire
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Broder &
Micoleau LLC
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇--▇.▇. ▇▇▇ ▇▇▇▇
▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Any party may change addresses by providing written notice of such change to the
other parties hereto. All representations and warranties made by the parties in
this Agreement shall survive the delivery of this Agreement shall continue in
full force and effect. This Agreement shall be binding upon and shall inure the
benefit of the parties and their respective successors, assigns, heirs and
personal representatives. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. The representations,
warranties and indemnities contained in Sections 13, 14, 15 and 16 of this
Agreement shall survive the closing of the settlement described herein. This
Agreement shall be construed under the laws of the State of Maine. Section
headings used in this Agreement are for convenience only and shall not affect
the construction of this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the day and year first written above.
WITNESS: COMMUNITY CARE OF AMERICA,
INC.
_________________________________ By:_______________________________
Name:
Title:
CCA OF MAINE, INC.
_________________________________ By:_______________________________
Name:
Title:
MEDICAL SUPPLY OF AMERICA
BY: COMMUNITY CARE OF
AMERICA, INC., its duly
authorized agent
_________________________________ By:_______________________________
Name:
Title:
10
REHAB AMBASSADORS
BY: COMMUNITY CARE OF
AMERICA, INC., its duly
authorized agent
_________________________________ By:______________________________
Name:
Title:
CEDAR RIDGE MANAGEMENT, INC.
_________________________________ By:_______________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, its President
BIRCH GROVE MANAGEMENT
COMPANY, INC.
_________________________________ By:_______________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, its President
CEDAR RIDGE NURSING CARE
CENTER ASSOCIATES
BY: ▇▇▇▇▇ RIVER GROUP, its
General Partner
_________________________________ By:_______________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, its President
HARBOR HILL LIMITED LIABILITY
COMPANY
_________________________________ By:_______________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, its Member
HOMEWOOD LIMITED PARTNERSHIP
11
BY: SEDGEWOOD LIMITED
LIABILITY COMPANY, its
General Partner
_________________________________ By:_______________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, its Member
NURSING ADMINISTRATORS, INC.
_________________________________ By:_______________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, its President
OAK GROVE MANAGEMENT
COMPANY, INC.
_________________________________ By:_______________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, its President
PINE POINT NURSING CARE CENTER,
INC.
_________________________________ By:_______________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, its President
RIVER RIDGE MANAGEMENT, INC.
_________________________________ By:_______________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, its President
RIVER RIDGE ASSOCIATES
BY: ▇▇▇▇▇ RIVER GROUP, its
General Partner
_________________________________ By:_______________________________
12
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, its President
▇▇▇▇▇ RIVER DEVELOPMENT, INC.
_________________________________ By:_______________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, its President
▇▇▇▇▇ RIVER GROUP
_________________________________ By:_______________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, its President
SPRINGBROOK ASSOCIATES
BY: ▇▇▇▇▇ RIVER GROUP, its
General Partner
_________________________________ By:_______________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, its President
SPRINGBROOK MANAGEMENT, INC.
_________________________________ By:_______________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, its President
SRG/HOMEWOOD, INC.
_________________________________ By:_______________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, its President
SRG/WINDWARD GARDENS, INC.
_________________________________ By:_________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, its President
13
THE WILLOWS MANAGEMENT
COMPANY, INC.
_________________________________ By:_______________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, its President
▇▇▇▇▇▇ STREAM MANAGEMENT,
INC.
_________________________________ By:_______________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, its President
WINDWARD GARDENS LIMITED
PARTNERSHIP
BY: WINDWARD GARDENS
LIMITED LIABILITY COMPANY,
its General Partner
_________________________________ By:_______________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, its Member
WOODFORD PARK NURSING CARE
CENTER, INC.
_________________________________ By:_______________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, its President
▇▇▇▇▇ RIVER HEALTH SYSTEM LLC
_________________________________ By:_______________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, its Member
--------------------------------- ----------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
14
--------------------------------- ----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------- ----------------------------------
▇▇▇▇▇▇▇ ▇. Prior
--------------------------------- ----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
LIMITED JOINDER
The undersigned, being all of the Minority Holders identified above,
hereby join in this Settlement Agreement for the purpose of agreeing to the
provisions of Sections 5(b), 6 and 7 above, as applicable.
WITNESS:
--------------------------------- ---------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------- ---------------------------------
▇▇▇▇ ▇▇▇▇▇
--------------------------------- ---------------------------------
D. ▇▇▇▇▇ ▇▇▇▇▇
--------------------------------- ---------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------- ---------------------------------
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
15
--------------------------------- ---------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------- ---------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------------------- ---------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
HIGH VALLEY GROUP, INC.
_________________________________ By:______________________________
Its:
ELDER SOLUTIONS, INC.
_________________________________ By:______________________________
Its:
--------------------------------- ---------------------------------
▇▇▇▇ ▇▇▇▇
--------------------------------- ---------------------------------
▇▇▇▇▇-▇▇▇ ▇▇▇▇▇
--------------------------------- ---------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇
--------------------------------- ---------------------------------
▇▇▇▇▇▇ ▇▇▇▇
--------------------------------- ---------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇
16
--------------------------------- ---------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇
17
SETTLEMENT AGREEMENT--LIST OF EXHIBITS
Exhibit A: Miscellaneous Agreements.
Exhibit B: Form of Assignment of unpaid management fees.
Exhibit C: List of Working Capital Lines.
Exhibit D: Rehab Ambassadors Payables.
Exhibit E: Form of Sublease.
18
EXHIBIT A
MISCELLANEOUS AGREEMENTS
MISCELLANEOUS AGREEMENTS BEING TERMINATED:
1. Side letter to ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ from CCA and CCA Maine dated June
23, 1995 re depreciation recapture.
2. Side letter between Harbor Hill Limited Liability Company and CCA
dated June 23, 1995, as amended, re Harbor Hill start-up.
3. Side letter between CCA and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ dated June 23, 1995
re automobile leases.
4. Consulting Agreement dated July 10, 1995 between CCA and ▇▇▇▇▇
River Development, Inc.
5. Services Agreement dated June 23, 1995 between CCA Maine and ▇▇▇▇▇
River Development, Inc.
6. Development Agreement term sheet dated June 30, 1995 between CCA
and ▇▇▇▇▇ River Development, Inc.
7. Replacement Promissory Note in the original principal amount of
$21,846.61 dated July 12, 1991 made by River ridge Management, Inc. in favor of
Amethyst E.G. Mountfort Revocable Trust and endorsed to CCA Maine.
8. Replacement Promissory Note in the original principal amount of
$21,704.31 dated August 6, 1991 made by River ridge Management, Inc. in favor of
Amethyst E.G. Mountfort Revocable Trust and endorsed to CCA Maine.
9. Replacement Promissory Note in the original principal amount of
$14,470.20 dated August 2, 1991 made by River ridge Management, Inc. in favor of
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and endorsed to CCA Maine.
10. Replacement Promissory Note in the original principal amount of
$14,564.40 dated July 15, 1991 made by River ridge Management, Inc. in favor of
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and endorsed to CCA Maine.
19
11. Replacement Promissory Note in the original principal amount of
$8,000 dated August 4, 1992 made by River ridge Management, Inc. in favor of
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and endorsed to CCA Maine.
12. Replacement Promissory Note in the original principal amount of
$12,000 dated August 7, 1992 made by River ridge Management, Inc. in favor of
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and endorsed to CCA Maine.
13. Side letter to ▇▇▇▇▇ ▇▇▇▇▇ from ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ dated August 10,
1995 re Owner Entities' working capital loans.
14. Non-Competition Agreements of various dates between CCA Maine and
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
and ▇▇▇▇▇ River Development, Inc.
MISCELLANEOUS AGREEMENTS CONTINUING IN FULL FORCE AND EFFECT:
1. The MHTC Agreement and all documents and instruments executed in
connection therewith, as modified by this Agreement.
2 The Stock Options, as modified by this Agreement.
20
EXHIBIT B
ASSIGNMENT
KNOW ALL PERSONS BY THESE PRESENTS, that CCA OF MAINE, INC., a
Delaware corporation with a place of business in Naples, Florida (the
"Assignor"), for valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, hereby grants, transfers, assigns, sets over and delivers
to ▇▇▇▇▇ RIVER HEALTH SYSTEM LLC, a Maine limited liability company with a place
of business in Portland, Maine (the "Assignee"), all accrued, unpaid management
fees due to assignor under those certain Management Agreements dated June 23,
1995 with Assignor as manager with respect to Woodford Park Nursing Care Center,
Pine Point Nursing Care Center, Marshwood Nursing Care Center, RiverRidge,
Springbrook Nursing Care Center, ▇▇▇▇▇ River Nursing Care Center, Cedar Ridge
Nursing Care Center, Sedgewood Commons, Harbor Hill and Windward Gardens.
This Assignment is the assignment referred to in Section 1 of that
certain Settlement Agreement by and among Assignor, Assignee and others. This
Assignment is subject to and shall be construed consistently with such
Settlement Agreement.
IN WITNESS WHEREOF, CCA of Maine, Inc. has caused this Assignment to
be executed by _____________________________, its ________________, thereunto
duly authorized, this _____ day of October, 1996.
WITNESS: CCA OF MAINE, INC.
_________________________________ By:_______________________________
Its:
Print Name:
21
EXHIBIT C
LIST OF WORKING CAPITAL LINES
NAME OF FACILITY FACE AMOUNT OF OUTSTANDING
LINE AMOUNT AS OF
August 14, 1996
Windward Gardens Limited Partnership $145,000 $
Revolver
Windward Gardens Term Note $200,000 $
Homewood Limited Partnership Revolver $450,000 $
Nursing Administrators, Inc. Revolver $325,000 $
Springbrook Management Revolver $350,000 $ *
RiverRidge Management Revolver $570,000 $ *
Cedar Ridge Management Revolver $225,000 $ *
Pine Point Nursing Care Center, Inc. $150,000 $
Revolver
▇▇▇▇▇▇ Stream Management Revolver $200,000 $
Woodford Park Nursing Care Center, Inc. $300,000 $
Revolver
* Includes principal amount of SRG land loans with respect to land
adjacent to these Facilities.
22
EXHIBIT D
SUMMARY
ACCOUNTS PAYABLE DUE TO
REHAB AMBASSADORS
AS OF AUGUST 31, 1996
▇▇▇▇▇ River Nursing Care Center $ 93,062.89
Marshwood Nursing Care Center $ 68,747.24
Springbrook Nursing Care Center $ 89,807.52
Pine Point Nursing Care Center $ 30,495.82
Woodford Park Nursing Care Center $ 45,756.67
TOTAL: $327,870.14
23
EXHIBIT E
SUBLEASE
SUBLEASE made this ______ day of October, 1996, by and between CCA OF
MAINE, INC., a Delaware corporation with a place of business in Portland, Maine
("Landlord") and ▇▇▇▇▇ RIVER HEALTH SYSTEM LLC, a Maine limited liability
company with a place of business in Portland, Maine ("Tenant")
W I T N E S S E T H:
WHEREAS, Landlord is tenant under that certain Lease dated November
14, 1995 (the "Prime Lease") with Dead River Company, acting by and through its
division, Dead River Properties, as Landlord (the "Prime Landlord") with respect
to approximately 3,838 square feet of office space in Prime Landlord's building
known as Atlantic Place and located at ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇; and
WHEREAS, Landlord wishes to sublease such space to Tenant upon the
terms and conditions contained in this Sublease and in the Prime Lease;
NOW, THEREFORE, for valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Premises Subleased. Landlord subleases to Tenant, and Tenant
subleases from Landlord, the entire space leased to Landlord by Prime Landlord
under the terms of the Prime Lease, with all rights in common with others in
common areas in Prime Landlord's building (collectively the "Premises").
2. Term; Right to Renew. The term of this Sublease shall be for six
months beginning on the date of this Lease and ending on February ___, 1997.
Provided Tenant is not in default under this Sublease, Tenant may renew this
Sublease for successive terms, each of six months' duration, upon the terms and
conditions contained herein, provided Tenant gives written notice to Landlord of
Tenant's election to renew at least sixty (60) days before the end of the
then-current term.
3. Rent. Tenant covenants and agrees to pay rent during the term in
the amount of ____________________________________________ Dollars ($__________)
per month, payable in advance on the first day of each month during the term.
Rent for partial months shall be prorated.
4. Utilities. Tenant shall pay all charges for gas, electricity,
lights, heat, water, sewer and telephone or other communication service used,
rendered or supplied to the Premises.
5. Use of Premises. Tenant shall use the Premises only for the
purposes allowed in Section 4.1 of the Prime Lease.
6. Maintenance and Repair. Tenant acknowledges that the Premises are
in reasonable condition as of the date of this Sublease. Tenant shall at all
times maintain the Premises in the same order and repair as they are in at the
commencement of the term, reasonable use and wear and damage by fire or other
casualty only excepted; shall keep all fixtures and equipment in the Premises,
including without limitation all heating, plumbing, electrical and mechanical
fixtures and equipment in the same operating condition as they are in on the
date of this Sublease, reasonable use and wear and damage by fire or casualty
only excepted. At the end of the term, Tenant shall surrender the Premises to
Landlord in the same condition as they were in on the date of this Sublease,
reasonable use and wear and damage by fire or other casualty only excepted.
Tenant shall make no alterations or modifications to the Premises without the
Landlord's written consent, which consent shall not be unreasonably withheld.
7. Insurance. Tenant shall maintain a policy of general liability
insurance insuring Landlord and Tenant, said policy to be in the amounts
required of the tenant under the Prime Lease. The policy shall name Landlord as
an additional insured.
8. Indemnification. Except for claims arising before the date of this
Lease, and except for claims arising at any time due in whole or in part to
Landlord's negligence or wilful acts, Tenant shall indemnify and hold Landlord
harmless from and against any and all claims for injury to persons or damage to
property in or about the Premises or arising in any way from the use or
condition of the Premises, and against any costs or damages which Landlord may
incur by reason of the assertion of any such claims.
9. Assignment and Subletting. Tenant shall not assign this Sublease
or sublet the Premises or any part thereof without the prior written consent of
Landlord, which consent shall not be unreasonably withheld. Landlord represents
and warrants to Tenant that Landlord has received all approvals from Prime
Landlord that are necessary in order for Landlord to enter into this Sublease.
10. Damage or Destruction by Fire, Eminent Domain or Casualty. In the
event that the Premises or any part thereof shall be taken by eminent domain or
shall be so damaged or destroyed by fire or unavoidable casualty, that the
Premises are thereby rendered untenantable, then either Landlord or Tenant may
terminate this Sublease upon written notice to the other and the rent shall be
prorated as of the date of such termination.
11. Tenant's Property. All property of every kind of Tenant's or
Tenant's employees or invitees which may be on the Premises during the term or
any occupancy by Tenant thereof, shall be at the sole risk and hazard of Tenant.
2
12. Default. If Tenant shall default in the performance of any of its
obligations hereunder, and such default is not cured within fifteen (15) days of
the date of a written notice from Landlord if the default is a failure to pay
rent, or thirty (30) days from the date of a written notice from Landlord in the
case of other defaults, including any default under the Prime Lease, or if
Tenant shall file or have filed against it a petition in bankruptcy or if an
assignment shall be made by Tenant for the benefit of creditors, then in any of
such cases Landlord may lawfully, immediately and at any time thereafter,
without further notice or demand, and without prejudice to any other remedies,
terminate this Sublease by written notice addressed to Tenant at the Premises,
and upon such mailing this Sublease shall terminate.
13. Successors and Assigns; Incorporation of the Prime Lease. The
provisions of this Sublease shall be binding upon and inure to the benefit of
the respective successors and assigns of Landlord and Tenant. The Prime Lease is
incorporated herein by reference and a copy of the Prime Lease is attached
hereto as Exhibit A. Tenant shall abide by all terms and conditions of the Prime
Lease.
14. Settlement Agreement. This Sublease is the Sublease referred to
in Section 10 of that certain Settlement Agreement dated as of October ___, 1996
by and among Landlord, Tenant and others, and shall be subject to and construed
consistently with, such Settlement Agreement.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Sublease
as of the date first above written.
WITNESS: CCA OF MAINE, INC., Landlord
_________________________________ By:______________________________
Its:
▇▇▇▇▇ RIVER HEALTH SYSTEM
LLC, Tenant
_________________________________ By:______________________________
Its Member
3