EXHIBIT 10.6
MANAGEMENT AND SERVICING AGREEMENT
THIS MANAGEMENT AND SERVICING AGREEMENT (this "Agreement") is made as
of this 10th day of July 2000, among INTEGRATED HEALTH SERVICES, INC., a
Delaware corporation ("IHS"), the entities identified on the signature pages
hereto as "IHS Licensees" (collectively, the "IHS Licensees" and together with
IHS, the "Relevant IHS Entities," and in their capacity as "Servicer" hereunder,
"Servicer"), SENIOR HOUSING PROPERTIES TRUST, a Maryland real estate investment
trust ("SNH"), FIVE STAR QUALITY CARE, INC., a Delaware corporation ("Manager"),
the entities identified on the signature pages hereto as "Proposed Operators"
(collectively, the "Proposed Operators"), and ADVISORS HEALTHCARE GROUP, INC., a
Delaware corporation (f/k/a "Connecticut Subacute Corporation II") ("Advisors",
and together with the IHS Licensees, collectively, the "Licensees").
W I T N E S S E T H:
WHEREAS, each of the IHS Licensees holds a license to operate each of
the skilled nursing, intermediate care or residential facilities identified on
Schedule A-1 as being licensed to it (the "IHS Facilities"), and Advisors holds
a license to operate the skilled nursing, intermediate care or residential
facilities listed on Schedule A-2 (the "Advisors Facilities," together with the
IHS Facilities, collectively, the "Facilities"); and
WHEREAS, Servicer has, prior to the date hereof, provided management
services of the nature set forth in Sections 1 and 2 hereof for each of the
Facilities; and
WHEREAS, Manager has agreed to provide management services to each
Proposed Operator and Advisors with respect to each of the Facilities; and
WHEREAS, each of the Proposed Operators and Advisors leases, as tenant,
the Facilities identified as being leased by it on Schedule A; and
WHEREAS, each of the IHS Licensees has entered into an Interim Sublease
Agreement dated as of even date herewith (collectively, the "Sublease
Agreements") with the relevant Proposed Operator pursuant to which such IHS
Licensee, as subtenant of such Proposed Operator, occupies its IHS Facility; and
WHEREAS, each IHS Licensee wishes to delegate to Manager certain
authority and responsibility to manage its IHS Facility, and Advisors wishes to
delegate to Manager certain authority and responsibility to manage each Advisors
Facility, in each case pending and in anticipation of receipt by the appropriate
Proposed Operator of the licenses and determinations of need and suitability of
the types listed on Schedule B-1 necessary for the Proposed Operator to operate
such IHS Facility or Advisors Facility, as the case may be, as licensee
(individually, a "Necessary License" and collectively, the "Necessary Licenses,"
and together with all provider agreements and certifications of the types listed
on Schedule B-2 necessary for such Proposed Operator of such IHS Facility or
Advisors Facility, as the case may be, to receive Medicare and Medicaid
reimbursement for the services provided therein, individually, a "License" and
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collectively, the "Licenses"; and as used herein, the term "Relevant Licensee"
shall mean (a) with respect to any Advisors Facility (i) Advisors, prior to the
receipt of all Necessary Licenses for such Advisors Facility and (ii) the
Proposed Operator for such Advisors Facility, after the receipt of all Necessary
Licenses for such Advisors Facility; and (b) with respect to any IHS Facility
(i) the IHS Licensee for such IHS Facility, prior to the receipt of all
Necessary Licenses for such IHS Facility and (ii) the Proposed Operator for such
IHS Facility, after the receipt of all Necessary Licenses for such IHS
Facility); and
WHEREAS, Manager is willing to assume such responsibilities, provided
that it is permitted to delegate to Servicer, and that Servicer assume, certain
authority and responsibility to manage the Facilities; and
WHEREAS, Servicer is willing to assume such authority and
responsibility, all on the terms and conditions set forth herein;
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. General Duties. To the fullest extent permitted by applicable law, and
subject to the control and direction of the Relevant Licensees, each of the
Licensees and Proposed Operators hereby engages Manager, and Manager hereby
delegates to Servicer (subject to the assumption by Manager of the duties of
Servicer as provided in the last sentence of this Section 1), and Servicer
hereby assumes (subject as provided in the last sentence of this Section 1 and
as provided in Section 8.1), the responsibility to 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, 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 bill payment functions for the Facilities;
establish systems of accounts and supervise the maintenance of ledgers and other
primary accounting records by personnel of 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; serve as advisor and consultant in connection with policy
decisions to be made by the Relevant Licensee; to operate, maintain and
administer the information management systems of the Facilities; prepare and
furnish reports and economic and statistical data in connection with or relative
to the management of the Facilities to the Relevant Licensee as the Relevant
Licensee may request in order to comply with applicable law and regulations;
represent the Facilities in its dealings with creditors, patients, personnel,
agents for collection and insurers; file with applicable state Medicaid programs
and the Medicare programs and all other public and private third party
reimbursement programs (collectively, "third party payors") all required claims
for payment and
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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; act as agent for
Relevant Licensee in disbursing or collecting the funds of the Facilities, and
in paying the debts and fulfilling the obligations of the Facilities incurred
subsequent to the Effective Time (as hereafter defined); market the services of
the Facilities; 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. In
addition, each of the Licensees and Proposed Operators hereby engage Manager to
secure such engineering, legal, and other specialized technical and professional
services as may be necessary to advise or to represent the Licensees and
Proposed Operators for each Facility in connection with any matter involving or
arising out of the operation of the Facilities or the conduct of the Facilities.
Manager shall, at all times during the term of this Agreement keep Servicer
reasonably informed as to any matters with respect to which any such
engineering, legal or other services are retained and with respect to the advice
rendered and actions taken with respect to such matters. Servicer is neither
authorized nor obligated to perform such functions. If, as provided in Section
8.2 hereof, Manager advises Servicer in writing that Servicer may discontinue
the provision of certain described services to be provided by Servicer under
this Section 1 and/or Section 2 hereof, Manager shall automatically be deemed to
have assumed full responsibility for providing such services to the Relevant
Licensee under the terms of this Section 1 and/or Section 2 as if Manager were
the "Servicer" referred to herein or therein.
2. Specific Duties. To the fullest extent permitted by applicable law, and
subject to the control and direction of the Relevant Licensee, and without
limiting the generality of the foregoing, Servicer shall have the following
specific duties:
2.1 Employees. Servicer shall recruit, evaluate, and select, subject to
such review by Relevant Licensee as shall be required by applicable law and
regulations, 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 administrative personnel for the
day-to-day operations of the Facilities (collectively, "Personnel"). Such
Personnel shall be employees of Servicer (subject to the following sentence),
provided Manager, Advisors and the Proposed Operator of the relevant Facility
shall have full responsibility for payment of their wages, salaries, and other
compensation and benefits (in accordance with Section 4). Anything in this
Section 2.1 to the contrary notwithstanding, Manager shall offer employment to
all such Personnel at or as soon after the Effective Time as is reasonably
practicable, but not later than sixty (60) days after the Effective Time, in any
event. Servicer shall establish such personnel policies, wage structures, and
staff schedules as it deems necessary and advisable in accordance with
applicable law. Servicer shall have authority to hire and discharge employees
who, immediately prior to the Effective Time, were employed at the Facilities.
Servicer shall maintain payroll records and shall prepare weekly and monthly
payrolls, and returns of withholding taxes. Servicer acknowledges that the
ability of Manager to make any such offer may be subject to receipt of the
Necessary Licenses and that in any event, Manager will first have to implement
an appropriate accounting and payroll function. Servicer agrees to cooperate
with Manager in connection with such offers of employment and to release any
Personnel to whom Manager offers employment
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from any employment agreements, non-competition, non-solicitation and
non-disclosure agreements or common law obligations to which they may be party
or subject. Notwithstanding anything to the contrary contained in this
Agreement, Servicer shall have no liability whatsoever to or with respect to any
of the Personnel or by reason of any actions taken or omitted by any of the
Personnel, in each case relating to any period on or after the Effective Time
(regardless of the fact that the Personnel may be employees of Servicer).
Notwithstanding anything to the contrary contained in this Agreement, the
Manager shall not be required or permitted to offer employment at any time to
any person then employed as a member of the IHS corporate staff ("IHS Corporate
Staff") (excluding, however, regional vice presidents and their staff (the
"RVPs") as to which Manager has provided reasonable prior notice to IHS),
without the prior consent of IHS (which consent will not be unreasonably
withheld). If IHS shall consent to the making of any such offer, it will
cooperate with Manager with respect thereto, and if any such member of the IHS
Corporate Staff or any RVP shall become an employee of any SNH Entity, he or she
shall be deemed to belong to Personnel.
2.2 Purchasing. Servicer shall (subject to Section 4) purchase
substantially all necessary supplies, foodstuffs, materials, appliances, tools,
and equipment customarily used in the operation of the Facilities. Servicer
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. Servicer may, but shall not be obligated to, make such
purchases in bulk under a centralized purchasing system established by it for
other facilities under its management in order to minimize costs. Servicer shall
arrange contracts for electricity, gas, telephone, and any other utility or
service necessary to the operation of the Facilities. Servicer shall, on behalf
of the Proposed Operator and/or 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, Servicer shall
obtain the prior approval of Manager and the Relevant Licensee, except that no
such prior approval shall be required if the expenditure is made under
circumstances reasonably requiring emergency action. Without limiting the
provisions of Sections 2.4 and 4, Servicer shall, upon written request, submit
to the Proposed Operator and Licensee such certification as to expenses incurred
in the operation of the Facilities as may be reasonably required by the Proposed
Operator or Licensee in order to comply with applicable law and regulations,
including, without limitation, law and regulations applicable to preparation and
submission of cost reports.
2.3 Bookkeeping. Servicer 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 expenditures of the Facilities shall be open for
inspection by representatives of Licensee, Manager and Proposed Operator upon
reasonable notice and at reasonable times, to the extent required by Licensee,
Manager or Proposed Operator in order to comply with applicable law and
regulations, including, without limitation, law and regulations applicable to
preparation and submission of cost reports.
2.4 Financial Reports. Servicer shall: (a) as soon as reasonably
possible after the close of each calendar month (and as soon as reasonably
possible after the termination of the
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obligations of the Relevant IHS Entities, as Servicer, in accordance with
Section 8.1) furnish to the Relevant Licensee and Manager a statement of income
for the month (or portion thereof) and for the year to date, together with a
detailed statement of billings, receipts, disbursements, accounts payable and
accounts receivable; (b) in the event the Relevant 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 to conduct or submit to an audit of the
Facilities' financial performance relative to the period during which Servicer
performed services under this Agreement, make available all books and records of
the Facilities on a timely basis and cooperate fully with any auditors or
accountants designated by the Relevant 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 for submission by
the Relevant Licensee a cost report for each Facility (and including in any
event, any short-year cost report required to be submitted by the IHS Licensee
after receipt of the Necessary Licenses and provider agreements by the Proposed
Operator), showing the costs and expenditures relating to resident care for such
Facility and such other information as is required by the applicable
governmental authority, 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
Operator and Manager in a timely manner in connection with the preparation of
applications by such Proposed Operator for any Licenses with respect to the
Facilities. Servicer shall supply all information, reports, forms and data
required to be provided by it pursuant to this Section 2.4 in electronic or hard
copy form (and, in the case of clause (a) above, if such information and data
are provided in hard copy form, Servicer shall provide such information to
Manager in electronic form also, if available in the ordinary course), as
determined by Servicer consistent with its ordinary practice, unless applicable
law shall require that any such information, report, form or data be submitted
in a particular form, in which case, Servicer shall comply with such applicable
law.
The provisions of paragraphs (b), (c) and (d) of this Section 2.4 shall
survive the termination of the obligation of the Relevant IHS Entities as
Servicer under Section 8.1, to the extent such provisions relate to the period
prior to such termination.
2.5 Marketing. Servicer 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
Servicer's judgment, will tend to maintain the financial stability of the
Facilities and to ensure compliance with laws, regulations, orders and judgments
applicable to the Facilities. Servicer 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.
2.6 Notices of Proceedings. Each of Servicer, Manager and Relevant
Licensee shall promptly inform the others of the commencement of any formal or
informal investigations or proceedings known to it before any and all local,
state and federal agencies which purport to regulate any Facility to the extent
such proceeding may have a material impact upon the operation of any Facility.
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2.7 Insurance.
(a) Manager shall obtain on behalf of itself and Servicer,
Licensee, Proposed Operator and the Real Property Owners for each
Facility, as their interests may appear, commercial general liability,
all risk property, professional or malpractice liability and worker's
compensation insurance covering the Facilities, any equipment used in
connection with the Facilities, the Personnel and any other employees
located at the Facilities, and Manager, Servicer, Licensees, Proposed
Operator and the Real Property Owners for each Facility, as their
interests may appear, in such amounts and with such deductibles as are,
in each case, described in Schedule 2.7 hereto, and with such
additional provisions or coverage as may be determined by Manager.
(b) All insurance provided under this Section 2.7 shall be
issued by insurance companies with an A.M. Best Rating of not less than
A-VI and that are licensed and qualified to do business in the state of
operation of the relevant Facility.
(c) Notwithstanding the provisions for deductibles in Section
2.7, it is understood and agreed that the policies of insurance
provided for in this Section 2.7 may contain deductible or retention
provisions in such amounts as are maintained with respect to similar
type facilities in the industry. In addition to premiums, Manager and
SNH shall be responsible for all deductibles, retentions, collateral
and expenses associated with such insurance.
(d) Each of the policies of liability insurance referred to in
this Section 2.7 (including the umbrella coverage, and, for as long as
any Personnel remain employees of any Relevant IHS Entity, workman's
compensation insurance) shall name IHS, Servicer and each applicable
IHS Licensee as an insured or additional insured, as appropriate.
Manager shall provide Servicer with a Certificate of Insurance at the
Effective Time naming IHS, Servicer and each applicable IHS Licensee as
an insured or additional insured with respect to such liability
insurance, as appropriate, and within two Business Days of any
subsequent request. Manager shall notify Servicer at least (30) days in
advance of a cancellation or expiration of such policies. It is further
understood that Manager shall provide all necessary risk management
services.
2.8 Collections, Accounts, Disbursements and Termination Accounting.
(a) Billing. Servicer shall prepare and submit bills for all
moneys owing to the Relevant Licensee, whether from patients or third
party payors, for services provided by or at the Facilities at any
time, whether prior to 12:01 A.M. (Boston time) on the day following
the Closing (the "Effective Time") or after the Effective Time.
(b) Collection of Accounts Receivable.
(i) (i) Each IHS Licensee and Relevant IHS Entity acknowledges
that, pursuant to the provisions of the Settlement Agreement dated as
of April 11, 2000, as amended, among, inter alia, Integrated Health
Services, Inc., SNH, SPTIHS Properties Trust, HRES1 Properties Trust
and HRES2 Properties Trust, each a Maryland real estate investment
trust ("SPTIHS," "HRES1" and "HRES2," respectively), Manager, the
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Proposed Operators and the Licensees (the "Settlement Agreement"), the
Proposed Operators (to the extent permitted by applicable law) and
Advisors own all accounts receivable to the extent arising from
services provided by or at its respective Facility after the Effective
Time (the "Post-Effective Time Receivables"). Servicer is hereby
authorized and directed to make and effect collections of all
Post-Effective Time Receivables. With respect to all such
Post-Effective Time Receivables with respect to any Facility that are
owed by a Medicaid program or the Medicare program or other federal or
state programs (collectively, "Government Receivables") and that are
payable under the existing Provider Agreements of any Licensee,
Servicer shall endorse and deposit into the Licensee bank account for
such Facility under the name and control of the Licensee for such
Facility (a "Licensee Account"), any and all monies, checks, drafts or
other instruments or items received as payment for such Government
Receivables. With respect to all Post-Effective Time Receivables with
respect to any Facility other than Government Receivables
(collectively, "Other Receivables"), Servicer shall, subject to
paragraph (ii) below, endorse and deposit into a bank account under the
name and control of the Proposed Operator of such Facility that is
designated in writing from time to time by the Proposed Operator (each
a "Proposed Operator Account"), any and all monies, checks, drafts or
other instruments or items received as payment for such Other
Receivables. Each IHS Licensee or Relevant IHS Entity that receives any
proceeds of Post-Effective Time Receivables with respect to any
Facility, whether as a deposit in the relevant Licensee Account or
otherwise, and whether such proceeds are of Government Receivables or
Other Receivables, acknowledges that, subject to paragraph (ii) below,
it has no right to use any such proceeds for any purpose, and shall
hold any and all such proceeds in trust for the Proposed Operator of
such Facility or Advisors, as the case may be, and shall prior to the
close of business on the Business Day on which it receives such amount,
cause such funds to be paid into the applicable Proposed Operator
Account for the account of the Proposed Operator or the Licensee
Account of Advisors, as the case may be. As soon as practicable after
the Effective Time, Servicer shall (to the extent permitted by law)
instruct account debtors of each Facility to make payment directly into
the relevant Proposed Operator Account for such IHS Facility and the
Licensee Account of Advisors, as the case may be. During the term of
this Agreement, Servicer shall keep accurate and complete books and
records of all receipts with respect to all billing, accounts
receivable, all deposits and other transactions affecting any
Post-Effective Time Receivable whether to the Licensee Account, the
Proposed Operator Account or to other checking accounts, which books
and records shall be made available to Licensee, Proposed Operator and
Manager upon request, and after termination of this Agreement shall
make such books and records available to Licensee, Manager and Proposed
Operator to the extent necessary to enable Licensee, Manager and
Proposed Operator to comply with all applicable laws and regulations,
including regulations governing preparation, submission and audits of
cost reports. If any amount shall be collected within the first 60 days
after the Effective Time from an account debtor that is not
identifiable, using reasonable best efforts, as being in payment of a
Post-Effective Time Receivable, then 100% of such amount shall be
deemed to have been collected in respect of an account receivable that
was due to the Servicer or an IHS Licensee in respect of services
provided prior to the Effective Time (and the Servicer or such IHS
Licensee shall be permitted to retain such proceeds, without
limitation). If any amount shall be
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collected during the period from the 61st to the 120th day after the
Effective Time from an account debtor that is not identifiable, using
reasonable best efforts, as being in payment of a Post-Effective Time
Receivable, then 50% of such amount shall be deemed to have been
collected in respect of an account receivable that was due to the
Servicer or an IHS Licensee in respect of services provided prior to
the Effective Time (and the Servicer or such IHS Licensee shall be
permitted to retain such proceeds without limitation), and the other
50% of such amount shall be deemed to have been collected in respect of
a Post-Effective Time Receivable (and such Proposed Operator shall be
permitted to retain such proceeds without limitation). If any amount
shall be collected after the 120th day after the Effective Time from an
account debtor that is not identifiable, using reasonable best efforts,
as being in payment of a Post-Effective Time Receivable, then 100% of
such amount shall be deemed to have been collected in respect of a
Post-Effective Time Receivable (and the Proposed Operator shall be
permitted to retain such proceeds, without limitation). Each party
hereto agrees to provide written notice to each other party hereto not
affiliated with it, promptly following the last Business Day of each
calendar month, if such party has received a payment during such
calendar month that is not identifiable, using reasonable best efforts,
as being in payment of a Post-Effective Time Receivable. Such written
notice shall set out the amount of the payment and the person or entity
that made the payment. If and to the extent that Manager or any
Proposed Operator or any of their respective affiliates shall collect
any account receivable owned (or deemed to be owned) by any Relevant
IHS Entity, such person or entity shall immediately pay such amount to
such Relevant IHS Entity, and until such payment is so made, Manager
shall hold such amount in trust for the benefit of such Relevant IHS
Entity.
(ii) Notwithstanding anything to the contrary contained in
this Agreement, if the Manager, SNH, or any Proposed Operator shall
fail to make any payment to the Servicer or any IHS Licensee pursuant
to Section 4 hereof when and as due in accordance with Section 4, then
Servicer and such IHS Licensee shall be entitled to collect and retain
any amounts due in respect of Post-Effective Time Receivables to the
extent necessary to offset such amount due under Section 4. Servicer or
the applicable IHS Licensee shall promptly notify the Manager of any
such offset. The rights and remedies of Servicer and the IHS Licensees
under this paragraph (ii) shall be in addition to, and shall not be
exclusive of, any other rights or remedies that may be available to
Servicer or the IHS Licensee under this Agreement, any other agreement
between the parties, at law, in equity, or otherwise, all of which
rights may be exercised concurrently or in any order or priority.
(iii) IHS shall cause exclusive control of the Licensee
Account for the Facilities located in Connecticut to be transferred to
Advisors effective as of the Closing Date.
(c) Reduction Claims.
(i) If and to the extent that there shall be a reduction (a
"Reduction") in the amount to be paid on any account receivable due to
any IHS Licensee by a Medicaid program or the Medicare program for
services rendered at any Facility from and after the
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Effective Time (an "IHS Government Receivable") by reason of any
withholding, freeze, restriction, offset or recoupment applied against
such IHS Government Receivable for an amount payable by any IHS Entity
to the applicable Third Party Payor (as such term is defined in the
Settlement Agreement) with respect to services provided on or prior to
the Effective Time (a "Pre-Effective Date Third Party Payor Claim"),
then the SNH Entities shall have a claim against the IHS Entities (a
"Reduction Claim") that is: (1) in the amount of the Reduction; and (2)
of equal priority to the priority that would have been accorded to the
Pre-Effective Date Third Party Payor Claim in the IHS Entities'
bankruptcies, under bankruptcy or other applicable law, or if and to
the extent the Third Party Payor is not subject to the jurisdiction of
the Court or limited in its recourse by the filing of the Case (as such
term is defined in the Settlement Agreement), such other rights as the
Third Party Payor may exercise.
(ii) The Manager shall give notice of any Reduction Claim (the
"Manager's Notice") to the Senior Vice President-Finance of IHS, with
such Manager's Notice to set forth the amount of such Reduction, the
basis for the Pre-Effective Date Third Party Payor Claim (to the extent
known to Manager), and the Reduction Claim that the Manager believes
that is payable by the IHS Entities to the SNH Entities. The IHS
Entities shall then have thirty (30) days from the date of the receipt
of the Manager's Notice to pay the amount of the Reduction to the SNH
Entities. The payment by the IHS Entities of any amount in accordance
with the preceding sentence shall be without prejudice to the right of
the IHS Entities to dispute, at any time, the SNH Entities' entitlement
to any such payment, as follows:
(A) If the IHS Entities shall dispute the Third Party
Payor's basis for the Pre-Effective Date Third Party Payor
Claim or the amount of such Pre-Effective Date Third Party
Payor Claim, then the applicable IHS Entity shall have the
sole authority to dispute or settle such Pre-Effective Date
Third Party Payor Claim, and the IHS Entities shall bear the
costs and expenses of such efforts. The SNH Entities shall
cooperate in all reasonable respects with the IHS Entities in
connection with the IHS Entities' efforts to resolve or settle
such dispute. Notwithstanding anything to the contrary
contained in this Agreement or in any other Settlement
Document, the IHS Entities shall be deemed to own (and shall
be entitled to collect, retain and/or assign) any funds that
are collected in respect of any Pre-Effective Date Third Party
Payor Claim disputed in accordance with this clause (A). If
any SNH Entity shall collect any such amount, it shall
immediately pay such amount to the applicable IHS Entity.
(B) If the IHS Entities shall dispute the amount or
priority of the Reduction Claim to which the Manager believes
the SNH Entities are entitled in accordance with subsection
(c)(i) above, then the parties shall immediately submit such
dispute to binding arbitration in accordance with the
Commercial Arbitration Rules then in force of the American
Arbitration Association, and judgment upon the award rendered
by the arbitrator(s) may be entered in any court having
jurisdiction thereof. The SNH Entities shall forthwith return
to the applicable IHS Entity any amount that the arbitrator
determines to be in excess of the amount to which the SNH
Entities were entitled in accordance with subsection (c)(i)
above.
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In any such dispute, the prevailing party shall be entitled to
reimbursement of its related costs and expenses, including
reasonable attorney's fees. Moreover, if it is determined that
the SNH Entities asserted a Reduction Claim in excess of the
amount to which they were entitled, they shall be obligated to
pay to the applicable IHS Entity interest on such excess at
the rate of eight percent (8%) per annum from the date such
amount was paid to the SNH Entities until the date paid by the
SNH Entities to the applicable IHS Entity.
(d) The provisions of paragraphs (b) and (c) of this
Section 2.8 shall survive the termination of the obligations
of the Relevant IHS Entities under Section 8.
2.9 Patient-Trust Accounts. At such time as a Proposed Operator for any
Facility has all Necessary Licenses, Servicer and the applicable Licensee will
transfer the patient trust accounts held for the benefit of residents of the
relevant Facility to the Proposed Operator of that Facility. Promptly
thereafter, Servicer and the applicable Licensee will furnish to such Proposed
Operator current bank statements with respect to such accounts. Such Proposed
Operator shall thereupon assume all liabilities arising thereunder other than
liabilities for acts or omissions by the Licensee prior to the Effective Time or
arising out of gross negligence or willful misconduct of Servicer or Licensee
after the Effective Time.
3. Servicer Consideration. The Relevant IHS Entities have agreed to perform the
services that are contemplated to be rendered by them hereunder as "Servicer"
during the five (5) month period provided in Section 8.1 and as "Servicer" under
the Servicing Agreement dated as of even date among SNH, Manager, IHS and IHS
152 (the "Other Servicing Agreement"), in consideration of the release by SNH,
SPTIHS, HRES1, HRES2, Advisors and the other SNH Entities (as defined in the
Settlement Agreement) of their claims against Servicer and the other IHS
Entities (as defined in the Settlement Agreement) under the Existing Documents
(as defined in the Settlement Agreement) pursuant to the Settlement Agreement.
Such releases shall not be affected if, during the first five (5) full months of
the term of this Agreement, Manager advises Servicer, pursuant to Section 8.2,
to discontinue provision of any portion of the services provided by Servicer
hereunder or if any Facility is sold or its operation discontinued for any
reason whatsoever.
4. Expenses.
4.1 For purposes of this Agreement, "Expenses" shall mean, liabilities,
costs and expenses of the type listed below to the extent incurred in connection
with the operation and management of such Facility in the ordinary course of
business after the Effective Time:
(a) salary and related costs (including, without limitation,
payroll taxes, workers' compensation, costs of employee benefit plans,
travel, insurance, and fidelity bonds) of Personnel at such Facility,
including, without limitation, administrative, professional, custodial,
food service, cleaning and maintenance, operational, secretarial and
bookkeeping personnel (collectively, "Payroll Expenses");
(b) the cost of all supplies and equipment necessary for the
continued operation of such Existing Facility as a skilled nursing,
intermediate care and for
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residential facility in the ordinary course of its business, including
without limitation, the cost of all pharmaceuticals, food, fuel,
kitchen and food service equipment, linens, beds, furniture, clothing
and other supplies and equipment used in supplying services to patients
in the ordinary course;
(c) expenses attributable to the maintenance and operation of
real and personal property devoted, used or consumed in the operation
of such Facility in the ordinary course, including, without limitation,
expenses incurred in connection with maintenance and repair of such
Facility, and insurance premiums, deductibles and retentions for
insurance obtained pursuant to Section 2.7;
(d) all liabilities incurred after the Effective Time under
any Contracts (as such term is defined in the Settlement Agreement)
that any IHS Entity is required not to reject in accordance with
Section 7.6 of the Settlement Agreement (but specifically excluding any
Pre-Effective Time Obligations (as such term is defined in the
Settlement Agreement)); and
(e) all other costs, expenses and liabilities arising out of
the ownership, operation, maintenance and management of the Facilities,
including, without limitation, real estate, income and other taxes
payable in connection with the operation of the Facilities (the costs
and expenses referred to in paragraphs (b), (c), (d) and (e) hereof,
collectively, "A/P Expenses");
provided, however, that the following expenses of the Relevant IHS Entities as
"Servicer" hereunder shall be for the sole account of the Relevant IHS Entities,
shall not be subject to reimbursement hereunder, and shall be deemed excluded
from the term "Expenses": (i) the Relevant IHS Entities overhead and ordinary
administrative expenses, and 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
Relevant IHS Entities (other than Personnel) to provide centralized billing,
collection, bill 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 or other compensation of any
Personnel be an expense of Servicer; (ii) the cost of obtaining and maintaining
insurance outside of that described in Section 2.7; and (iii) any loss, cost or
expense for which Servicer is liable under Section 10.
4.2 SNH, Manager, Advisors and the Proposed Operators shall be jointly
and severally liable for the payment and satisfaction of all Expenses, when and
as the same shall become due in accordance with the terms hereof. In furtherance
thereof, Manager shall establish separate bank accounts ("Expense Accounts") for
Payroll Expense and A/P Expense under its name and control, with respect to
which Servicer shall have signing authority in order to pay Expenses. At the
close of the last Business Day of each calendar week (commencing with the
calendar week in which the Closing Date occurs), Servicer shall provide Manager
with a check register showing the payee name, the amount of such check (with
deductions, if any), the payee code and the check number for each check drawn on
the Expense Accounts during such week. On the day preceding the Closing Date and
at the close of business on the last Business Day of each calendar week
thereafter, Servicer shall provide Manager with a statement (the "Cash
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Projection") setting forth the aggregate Dollar amount of the checks that
Servicer then expects to draw on the Expense Accounts during the following
calendar week (the projected Dollar amount for such following week, the
"Projected Cash Requirement") and setting forth the amount to be deposited into
the Expense Accounts in accordance with the following sentence. By the close of
business on the Closing Date and on the second Business Day of such following
calendar week, SNH or the Proposed Operators shall deposit into the Expense
Accounts such amounts as shall be necessary so that the Aggregate Balance (as
hereinafter defined) of the Expense Accounts on such Business Day shall at least
equal the sum of: (x) the Projected Cash Requirement for the current calendar
week plus (y) $1,000,000. As used herein, the term "Aggregate Balance" shall
mean, as of the date of determination, the sum of all amounts deposited in
either Expense Account, less the aggregate dollar amount of all checks written
on either Expense Account and reflected in the check registers theretofore
furnished to Manager (whether or not such checks have been paid from such
Expense Accounts). The monies so deposited by SNH or the Proposed Operators
shall be allocated between the two Expense Accounts as Servicer may direct from
time to time, based on its Cash Projections. Servicer shall provide Manager with
a list of its payee codes (with descriptions identifying these codes) on or
prior to the Closing Date, and shall promptly inform Manager of any subsequent
modifications thereto. The Servicer shall promptly reimburse the SNH Entities
for any amounts paid out of the Expense Accounts to satisfy obligations of any
IHS Entity that are not required to be paid by any SNH Entity pursuant to this
Agreement or the Settlement Agreement or any other of the Settlement Documents
(as such term is defined in the Settlement Agreement). Nothing contained in the
foregoing sentence shall be deemed to permit the Servicer to use funds in the
Expense Accounts to satisfy its own obligations except to the extent expressly
provided in this Agreement. The provisions of the first sentence of this Section
4.2 shall survive the termination of this Agreement.
4.3 The parties acknowledge that Servicer and the Licensees shall have
no obligation to advance any funds on behalf of any of the Facilities, Manager
or the Proposed Operators. If Servicer does advance its own funds for any
Expense, SNH and the Proposed Operators shall promptly reimburse Servicer
therefor. Moreover, Manager and SNH assume all risk of loss to third parties
arising out of the failure to make any payment of any Expense. The provisions of
this Section 4.3 shall survive the termination of this Agreement.
4.4 [intentionally omitted].
5. Access to Records, Etc.
5.1 For the time and to the extent required by applicable law, Servicer
shall retain, and shall permit the Comptroller General of the United States, the
U.S. Department of Health and Human Services and duly authorized state agencies,
and their respective duly authorized representatives access to examine or copy
this Agreement and such books, documents, and records as are necessary to verify
the nature and extent of the costs of the services supplied under this
Agreement. In the event Servicer 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 Servicer
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 Servicer. This provision shall be null and void should it be
determined that Section
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1861(v)(1)(I) of the Social Security Act is not applicable to this Agreement.
The provisions of this Section 5.1 shall survive the termination of the
obligations of the Relevant IHS Entities as Servicer under Section 8.1.
5.2 For the time and to the extent required by applicable law, Manager
shall retain, and shall permit the Comptroller General of the United States, the
U.S. Department of Health and Human Services and duly authorized state agencies
and their respective duly authorized representatives access to examine or copy
this Agreement and such books, documents, and records as are necessary to verify
the nature and extent of the costs of the services supplied under this
Agreement. In the event Manager 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 Manager
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 Manager. This provision shall be null and void should it be
determined that Section 1861(v)(1)(I) of the Social Security Act is not
applicable to this Agreement.
5.3 As soon as reasonably possible after the close of each reporting
period for rate setting purposes, and not later than the applicable deadline,
the Relevant IHS Entities shall prepare for submission by the IHS Licensees,
Medicare and/or Medicaid cost reports, as applicable, for each Facility for the
reporting period during which such IHS Licensee provided facility services
(regardless whether such services were provided before or after the Effective
Date) showing the costs and expenditures relating to resident care for such
Facility and such other information as is required by the applicable
governmental authority, such report being in all material respects (including as
to form) in compliance with the requirements of such applicable governmental
authority. The provisions of this Section 5.3 shall survive the termination of
the obligations of the Relevant IHS Entities as Servicer under Section 8.1.
5.4 The Proposed Operators agree to use their best efforts to obtain
all Necessary Licenses as promptly as possible, and to use all reasonable
efforts to obtain all other Licenses as promptly as possible. Upon receipt by a
Proposed Operator of the Necessary Licenses with respect to an IHS Facility,
Manager shall give Servicer and each IHS Licensee prompt written notice thereof.
5.5 Subject to the provisions of Section 12.10 hereof, each of the IHS
Licensees and Servicer agrees to cooperate with the Manager and the Proposed
Operators in their efforts to obtain all Licenses, such cooperation to include,
without limitation, the IHS Licensees taking all action that is necessary and
reasonable to ensure that there is no period during which neither an IHS
Licensee nor a Proposed Operator is entitled to reimbursement for services
provided at the Facilities. Without limiting the foregoing, each Relevant IHS
Entity and IHS Licensee agrees to use all reasonable efforts to assist each
Proposed Operator in obtaining all Licenses as soon as possible. Such efforts
shall include (i) (to the extent required as a condition to the issuance of any
License with respect to any Facility) the preparation and filing of terminating
cost reports with respect to the Facility in compliance in all material respects
with applicable law, (ii) promptly furnishing to such Proposed Operator, upon
its request, all information and materials required to be (or that any
governmental agency or official has requested be) furnished as a condition to or
in connection with the issuance of any Licenses (including any financial, census
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and staffing data, information regarding special services and programs, Life
Safety Code Waivers and other waiver history, facility plans of correction and
compliance status, to the extent required or requested by the applicable agency
or official), in each case to the extent available to such Relevant IHS Entity
or IHS Licensee or Affiliate thereof, (iii) the filing of such notices and
documents with such agencies or officials as such agency or official may require
or request. Notwithstanding the foregoing, the SNH Entities shall promptly
reimburse the IHS Licensees and the Servicer for all third-party out-of-pocket
costs and expenses incurred in connection with this Section 5.5, including,
without limitation, reasonable attorneys' fees and expenses. The provisions of
this Section 5.5 shall survive the termination of the obligations of the
Relevant IHS Entities and IHS Licensees under Section 8.
5.6 Each party hereto agrees to comply in all material respects with
all provisions of federal and state law applicable to it in connection with the
operation of the Facilities.
6. Duty of Servicer; Indemnity; Prohibited Transactions.
6.1 Servicer shall render the services called for hereunder in good
faith.
6.2 SNH, Manager, Advisors and the Proposed Operators, jointly and
severally, agree to indemnify and hold Servicer, IHS and each subsidiary of IHS
and their respective shareholders, officers, directors, advisors, agents,
representatives and employees (each an "Indemnified Party") harmless from and
against all Damages (as hereinafter defined), arising out of (i) any action or
omission of Servicer in connection with the provision of services under this
Agreement taken or omitted to be taken in good faith after the Effective Time,
(ii) any injury to any person suffered at any Facility, or the rendering of or
the failure to render services by, any Personnel, Manager, Advisors or any
Proposed Operator or their respective employees, agents or representatives or
any other person performing services for or on behalf of Manager, Advisors or
any Proposed Operator (including, without limitation, any obligations under
Section 1 above), or the operation of any Facility after the Effective Time,
(iii) the employment or termination of any of the Personnel after the Effective
Time, including without limitation, any wages, salaries, payroll taxes,
reimbursements, sick pay, paid time off or other vacation benefits, severance
and all other compensation and benefits incurred, earned or accrued after the
Effective Time, whether under any agreement, benefit plan or as imposed by
applicable law, (iv) arising out of any action taken or omitted by any Personnel
after the Effective Time, or (v) arising out of any failure to make any payment
when due under Section 4 above or any refusal to approve any payment in
accordance with Section 4 above; provided that no Indemnified Party shall be
entitled to indemnification for any action taken or omitted to be taken to the
extent resulting from such Indemnified Party's gross negligence, willful
misconduct or fraud, provided further that it is understood that the actions and
omissions of the Personnel shall not be deemed to be the actions or omissions of
any IHS Entity, notwithstanding that such Personnel may be employees of an IHS
Entity or under the supervision of any IHS Entity. The term "Damages" shall mean
all actual monetary and non-consequential losses, damages, liabilities, claims,
demands, penalties, judgments, costs and expenses, including, without
limitation, reasonable legal fees, suffered by an Indemnified Party, but shall
not, in any event, include any Pre-Effective Time Obligation (as defined in the
Settlement Agreement). The provisions of this Section 6.2 shall survive the
termination of this Agreement.
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6.3 Neither Servicer nor 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 Servicer 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 reimbursement),
whether direct or indirect, for any purchases of goods or services made on
behalf of the Relevant Licensee, the Proposed Operator or Manager, and neither
Servicer nor any Affiliate shall markup, increase the price, or obtain any
premium for goods or services purchased by Servicer on behalf of or for the
benefit of Relevant Licensee, Proposed Operator or Manager.
7. 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.
8. Term and Termination.
8.1 Unless the Relevant IHS Entities shall otherwise agree in writing,
on the five-month anniversary of the date hereof, their obligations as Servicer
hereunder shall be deemed to have been satisfied, terminated and discontinued in
full, and Manager shall be deemed to have assumed responsibility for the
performance thereof. Servicer and Manager agree to negotiate any extension of
such five month period in good faith; provided that in no event shall Servicer
be required to negotiate any extension to perform any services after the first
anniversary of the Effective Time.
8.2 It is the intention of Manager to assume responsibility for many of
the services provided by Servicer and described in Sections 1 and 2 during the
term of this Agreement. In connection therewith, at any time and from time to
time after the date hereof, Manager may advise Servicer, by written notice, that
Servicer may discontinue the provision of certain services described in such
notice, in which event Manager shall be deemed to have assumed full
responsibility for providing such service hereunder in lieu of Servicer (but
such discontinuance of services shall not constitute a termination of this
Agreement or affect the release referred to in Section 3 above).
8.3 Subject to the provisions of Section 8.1 that limit the obligations
of Servicer under this Agreement, the term of this Agreement shall commence at
the Effective Time and shall terminate on the third anniversary of the date
hereof; provided that Manager or SNH may terminate this Agreement upon not less
than 10 days' prior written notice to the other parties hereto. Notwithstanding
anything to the contrary contained in this Agreement or any Sublease, on such
date (a "Sublease Termination Date") as any IHS Licensee shall receive written
notice from Manager under Section 5.4 confirming that the Necessary Licenses
shall have been obtained by a Proposed Operator with respect to any IHS
Facility, all of the obligations of the applicable IHS Licensee under this
Agreement (other than in its capacity as "Servicer", subject to Section 8.1
above and the last sentence of Section 1 above) and the applicable Sublease
shall terminate with respect to such IHS Facility. After the first anniversary
of the Effective Time, Manager shall be obligated to pay a fee (the "Sublease
Extension Fee") to IHS at the rate of $2,000 per month per State in which the
Sublease Termination Date has not occurred with respect to all IHS Facilities in
such State; provided, however, that until the Sublease Termination Date shall
have occurred with respect to all of the IHS Facilities, the minimum Sublease
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Extension Fee shall be at the rate of $10,000 per month. Notwithstanding
anything to the contrary contained in this Agreement or any Sublease, each IHS
Licensee shall have the right, at any time after the earlier to occur of (x) the
termination of this Agreement and (y) the first anniversary of the Effective
Time, to terminate the obligations of such IHS Licensee under this Agreement and
each applicable Sublease (by giving notice of such termination to the Manager)
on the earlier to occur of: (x) the last administrative bar date established by
order of the Court (as such term is defined in the Settlement Agreement) and of
which the SNH Entities shall have received timely notice, (y) the second
anniversary of the Effective Time, and (z) such date as this Agreement is
terminated. Notwithstanding the foregoing, if Manager shall receive written
notice from the applicable governmental licensing authority with respect to the
Necessary Licenses for any IHS Facility that the Proposed Operator shall be
denied any Necessary License with respect to such IHS Facility, then such IHS
Facility shall not thereafter be included for purposes of determining whether
any Sublease Extension Fee shall be payable. If the Manager or the Proposed
Operator shall be in default of their obligations hereunder to Servicer or the
IHS Licensees for more than 30 days after written notice thereof from the
Servicer or the IHS Licensees to Manager and the Proposed Operator, then the
Servicer and/or the IHS Licensees shall be entitled to terminate this Agreement
and/or any of the Sublease Agreements.
8.4 Upon the effective date of termination of the obligations of the
Relevant IHS Entities, as Servicer, in accordance with Section 8.1, the Relevant
IHS Entities shall forthwith:
(a) pay over to the relevant Proposed Operator all money
collected pursuant to this Agreement owned by the Proposed Operator or
to which the Proposed Operator is otherwise entitled pursuant to this
Agreement or the Settlement Agreement;
(b) deliver to Manager, the Relevant Licensee and the Proposed
Operator a full accounting for all monies then held by the Relevant IHS
Entities; and
(c) deliver to Manager, the Relevant Licensee or Proposed
Operator, as the case may be, all property and documents of any of them
then in the custody of the Relevant IHS Entity.
9. 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 SNH or any Proposed Operator, to it at:
400 Centre Street
Newton, MA 02458
Telecopy no.: (617) 796-8349
Attention: President
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(b) with copy to:
SULLIVAN & WORCESTER LLP
One Post Office Square
Boston, MA 02109
Telecopy no.: (617) 338-2880
Attention: Alexander A. Notopoulos, Jr., Esq.
(c) if to Manager, to it at:
400 Centre Street
Newton, MA 02458
Telecopy no.: (617) 332-2261
Attention: Treasurer
(d) if to any Relevant IHS Entity or any IHS Licensee, to it
at:
c/o Integrated Health Services, Inc.
The Highlands
910 Ridgebrook Road
Sparks, MD 21152
Telecopy no.: (410) 773-1020
Attention: Daniel J. Booth, Senior Vice President,
Finance
(e) with a copy to:
Parker Chapin LLP
The Chrysler Building
405 Lexington Avenue
New York, NY 10174
Telecopy no.: (212) 704-6137
Attention: Charles P. Greenman, Esq.
and to
Blass & Driggs
461 Fifth Avenue
New York, NY 10017
Telecopy no.: (212) 447-5428
Attention: Andrew S. Bogen, Esq.
or to such other address as may hereafter be designated by any party for such
purpose. Each such notice shall be effective (i) upon receipt and written
acknowledgment, if hand delivered, (ii) upon the first Business Day following
the day when telecopied, if transmitted by telecopier, (iii) upon the next
Business Day after being placed in the possession of a recognized overnight
delivery service, if sent by a recognized overnight delivery service, or (iv)
upon the expiration of the fifth Business Day after being deposited in the
mails, if mailed.
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10. Liability of IHS Entity. No IHS Entity shall have any liability for breach
of any of its obligations under this Agreement, except for breaches resulting
from fraud, bad faith, gross negligence or willful misconduct; it being
understood that the actions and omissions of the Personnel shall not be deemed
to be the actions or omissions of any IHS Entity, notwithstanding that such
Personnel may be employees of an IHS Entity or under the supervision of any IHS
Entity. The liability of Servicer shall survive the termination of this
Agreement.
11. Proprietary Material. The Manager and the Proposed Operators acknowledge and
agree that the Proprietary Property (as defined in the Settlement Agreement) is
and shall remain (along with any corresponding copyrights or similar rights) the
sole property of Servicer and shall not at any time be directly or indirectly
used, distributed, disclosed, copied or otherwise employed by the Manager or any
Proposed Operator, except in the provision of the services by the Servicer
during the term of this Agreement or to the extent contemplated by the
Settlement Agreement. Upon termination of this Agreement, the Manager and the
Proposed Operators shall return to the Servicer all such Proprietary Property in
their possession or control, and use their best efforts to ensure that their
employees have not retained any Proprietary Property and upon request by
Servicer, confirm compliance with the foregoing in writing. The provisions of
this Section 11 shall survive the termination of this Agreement.
12. Miscellaneous.
12.1 Amendments. Neither this Agreement nor any of the terms thereof
may be terminated, amended, supplemented, waived or modified orally, but only by
an instrument in writing signed by each party (x) against whom the enforcement
of the termination, amendment, supplement, waiver or modification shall be
sought or (y) who is affected (or whose rights, obligations or remedies are
affected) by such termination, amendment, supplement, waiver or modification.
12.2 Non-Assignability. This Agreement shall not be assigned by any
party without the consent of each other party hereto, and this Agreement shall
be binding upon and shall inure to the benefit of consented to successors and
assigns.
12.3 GOVERNING LAW. THE PROVISIONS OF THIS AGREEMENT SHALL BE
CONSTRUED, INTERPRETED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK.
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 Headings. The headings of the various articles, sections and
subsections of this Agreement have been inserted for the purpose of convenience
of reference only, are not a part of this Agreement and shall not be deemed in
any manner to modify, explain, enlarge or restrict any of the provisions of this
Agreement.
12.6 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
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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.
12.7 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.
12.8 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.
12.9 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but such counterparts
together shall constitute one and the same instrument.
12.10 Responsibility for Compliance with Law, Etc. During the term of
this Agreement, each Relevant Licensee will use reasonable commercial efforts to
keep in full force and effect all licenses, permits, approvals, authorizations,
provider agreements, and certificates or determinations of need necessary for
such Relevant Licensee to occupy and operate its Facilities and to receive
Medicare and Medicaid reimbursement for services provided therein.
Notwithstanding anything to the contrary contained in this Agreement or the
Settlement Agreement, each of the SNH Entities agrees and acknowledges that no
IHS Licensee shall be obligated to assume and/or assign to any SNH Entity any
Medicare or Medicaid provider numbers or agreements; provided that the
applicable IHS Licensees shall use their commercially reasonable efforts to
maintain such provider agreements and numbers until they no longer hold the
applicable licenses (so long as maintaining such provider agreements and numbers
do not require that the IHS Licensees assume such provider agreements and
numbers). The SNH Entities are assuming all risk arising out of their failure to
obtain Medicare and/or Medicaid provider numbers or agreements with respect to
any Facilities. SNH, Manager and each Proposed Operator jointly and severally
agree to indemnify each IHS Licensee and Relevant IHS Entity against all Damages
incurred by such IHS Licensee or Relevant IHS Entity arising out of the
discharge from any IHS Facility of any Medicare or Medicaid beneficiary who was
a resident or patient of such IHS Facility immediately prior to the time that
the applicable IHS Licensee ceases to hold a Medicare or Medicaid number or
provider agreement, resulting from the applicable Proposed Operator's inability
to timely obtain a Medicare or Medicaid provider number or agreement (to the
extent that such failure to obtain such provider number or agreement was not due
to the act or omission of any IHS Entity). The provisions of this Section 12.10
shall survive the termination of this Agreement.
12.11 THE DECLARATION OF TRUST OF SNH, DATED DECEMBER 16, 1998, A COPY
OF WHICH, TOGETHER WITH ALL AMENDMENTS THERETO (THE "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
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UNDER THE 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.
12.12 Amendment to Settlement Agreement. This Agreement is subject to
the terms of an Amendment to Settlement Agreement dated as of June 29, 2000
among, inter alia, Integrated Health Services, Inc., SNH, SPTIHS, HRES1 and
HRES2, the Manager, the Proposed Operators and the Licensees.
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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.
IHS:
INTEGRATED HEALTH SERVICES, INC., a
Delaware Corporation
By: /s/ Daniel J. Booth
Its:
IHS LICENSEES:
ECA HOLDINGS, INC., a Delaware corporation
ECA PROPERTIES, INC., a Delaware corporation
COMMUNITY CARE OF NEBRASKA, INC., a
Delaware corporation,
W.S.T. CARE, INC., a Nebraska corporation
QUALITY CARE OF LYONS, INC., a Nebraska
corporation
INTEGRATED HEALTH SERVICES AT
GRANDVIEW CARE CENTER, INC.,
a Delaware corporation
QUALITY CARE OF COLUMBUS, INC., a
Nebraska corporation
MARIETTA/SCC, INC., a Georgia corporation
GLENWOOD/SCC, INC., a Georgia corporation
DUBLIN/SCC, INC., a Georgia corporation
COLLEGE PARK/SCC, INC., a Georgia
corporation
IHS ACQUISITION NO. 112, INC., a Delaware
corporation
IHS ACQUISITION NO. 113, INC., a Delaware
corporation
IHS ACQUISITION NO. 175, INC., a Delaware
corporation
By: /s/ Daniel J. Booth
Its:
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SNH:
SENIOR HOUSING PROPERTIES TRUST, a
real estate investment trust
By: /s/ David J. Hegarty
Its: President
MANAGER:
FIVE STAR QUALITY CARE, INC., a Delaware
corporation
By: /s/ Ajay Saini
Its Treasurer
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<PAGE>
PROPOSED OPERATORS:
SHOPCO-COLORADO, LLC
SHOPCO-CT, LLC
SHOPCO-GA, LLC
SHOPCO-IA, LLC
SHOPCO-KS, LLC
SHOPCO-MI, LLC
SHOPCO-MO, LLC
SHOPCO-NE, LLC
SHOPCO-WY, LLC, each a Delaware limited
liability company
By: /s/ Jennifer B. Clark
Its: Assistant Secretary
SNH-NEBRASKA, INC.,
SNH-IOWA, INC.,
SNH-MICHIGAN, INC., each a Delaware
corporation
By: /s/ Jennifer B. Clark
Its: Assistant Secretary
ADVISORS:
ADVISORS HEALTHCARE GROUP, INC, a
Delaware corporation
By: /s/ Jennifer B. Clark
Its: Assistant Secretary
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<TABLE>
<CAPTION>
Schedule A-1
IHS Facilities
Facility Licensee Proposed Operator
------------------------------------------------------------------------ ------------------ --------------------------
<S> <C> <C>
Integrated Health Services at Canon City ECA Holdings, Shopco-Colorado, LLC
515 Fairview Street Inc. ("ECA") ("Colorado LLC")
Canon City, CO 81212
Integrated Health Services at Springs Village ECA Colorado LLC
110 W. Van Buren
Colorado Springs, CO 80907
Integrated Health Services at Delta ECA Colorado LLC
2050 South Main Street
Delta, CO 81416
Integrated Health Services at Mantey Heights ECA Colorado LLC
2823 Patterson Road
Grand Junction, CO 81506
Integrated Health Services at LaVilla Grande ECA (DBA, Colorado LLC
2501 Little Bookcliff Drive Integrated
Grand Junction, CO 81501 Health Services
at LaVilla
Grande)
College Park Health Care Center College Park/ Shopco-GA, LLC
1765 Temple Avenue SCC, Inc. ("GA LLC")
College Park, GA 30337
Community Care of America at Dublin Dublin/SCC, Inc. GA LLC
606 Simmons Street, Box 549
Dublin, GA 31040
Community Care of America at Conner Glenwood/ GA LLC
303 Fifth Street, P.O. Box 618 SCC, Inc.
Glenwood, GA 30428
Community Care of America at Marietta Marietta/ GA LLC
1480 Sandtown Road SCC, Inc.
Marietta, GA 30060
Integrated Health Services of Clarinda ECA Shopco-IA LLC
600 Manor Drive ("IA LLC")
Clarinda, IA 51632
Integrated Health Services of Council Bluffs South ECA IA LLC
34 Northcrest Drive
<PAGE>
<CAPTION>
Facility Licensee Proposed Operator
------------------------------------------------------------------------ ------------------ --------------------------
<S> <C> <C>
Council Bluffs, IA 51501
Integrated Health Services at Mediapolis ECA IA LLC
608 Prairie Street
Mediapolis, IA 52637
IHS at Pacific Place ECA IA LLC
20937 Hwy. 385 West
Pacific Junction, IA 51561
Integrated Health Services of Winterset ECA IA LLC
1015 West Summit
Winterset, IA 50273
Integrated Health Services of Iowa at Des Moines Integrated SNH-IOWA, Inc.
2348 E. Ninth Street Health Services, ("IA INC.")
Des Moines, IA 50316 Inc.
IHS at Park Place ECA IA INC
114 East Green Street
Glenwood, IA 51534
Integrated Health Services of Woodhaven ECA Shopco-KS, LLC
510 W. 7th Street
Ellinwood, KS 67526
Farmington Health Care Center IHS Acquisition Shopco-MI, LLC
34225 Grand River No. 112, Inc. ("MI LLC")
Farmington, MI 48335-3512
IHS of Michigan at Howell IHS MI LLC
3003 W. Grand River Avenue Acquisition No.
Howell, MI 48843-8539 113, Inc.
IHS at Tarkio ECA Shopco-MO, LLC
300 Cedar Street
Tarkio, MO 64491
Ainsworth Care Center Community Care Shopco-NE, LLC
143 N. Fullerton Street of Nebraska, Inc. ("NE LLC")
Ainsworth, NE 69210 ("CCN")
IHS at Ashland CCN NE LLC
1700 Furnas Street
Ashland, NE 68003
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<PAGE>
<CAPTION>
Facility Licensee Proposed Operator
------------------------------------------------------------------------ ------------------ --------------------------
<S> <C> <C>
Blue Hill Care Center CCN NE LLC
P.O. Box 156, 414 N. Wilson
Blue Hill, NE 68930
IHS at Edgar CCN NE INC
RR 1 Box 83A, 106 5th Street
Edgar, NE 68935
Wedgewood Care Center ECA NE LLC
800 Stoeger Drive
Grand Island, NE 68803
IHS at Gretna CCN NE LLC
700 Highway 6
Gretna, NE 68028
IHS at Lyons Quality Care of NE LLC
1035 Diamond Street Lyons, Inc.
Lyons, NE 68038
IHS at Milford W.S.T. Care, NE LLC
P.O. Box D, 1100 W. First Street Inc.
Milford, NE 68405
IHS at Sutherland CCN NE LLC
P.O. Box 307, 333 Maple Street
Sutherland, NE 69165
IHS of Waverly CCN NE LLC
P.O. Box 160, 11041 N. 137th Street
Waverly, NE 68462
Grandview Manor ECA Properties, SNH-Nebraska
Broad Street & Highway 4 Inc. ("NE INC")
Campbell, NE 68932
Integrated Health Services of Central City CCN NE INC
2720 South 17th Avenue
Central City, NE 68826
Mory's Haven Quality Care of NE INC
1112 Fifteenth Street Columbus, Inc.
Columbus, NE 68601
Exeter Care Center CCN NE INC
425 South Empire Avenue, P.O. Box 59
Exeter, NE 68351
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<CAPTION>
Facility Licensee Proposed Operator
------------------------------------------------------------------------ ------------------ --------------------------
<S> <C> <C>
Utica Community Center CCN NE INC
1350 Centennial Avenue
Utica, NE 68456
IHS at Laramie ECA Shopco-WY, LLC
503 South 18th Street ("WY LLC")
Laramie, WY 82070
Community Care of America at Worland ECA WY LLC
1901 Howell
Worland, WY 82401
</TABLE>
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<TABLE>
<CAPTION>
Schedule A-2
Advisors Facilities
Facility Licensee Proposed Operator
---------------------------------------------------------- ------------------------------ ----------------------------
<S> <C> <C>
Clifton House Rehabilitation Center Advisors SHOPCO-CT, LLC ("CT LLC")
181 Clifton Street, New Haven, CT 06513
Greenery Rehabilitation Center at Waterbury Advisors CT-LLC
177 Whitewood Road, Waterbury, CT 06708
Greenery Extended Care Center at Cheshire Advisors CT-LLC
50 Hazel Drive, Cheshire, CT 06410
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Schedule B-1
Necessary Licenses
Facility Necessary Licenses
--------------------------------------------------------------- ------------------------------------------------------
<S> <C>
Integrated Health Services at Canon City License to Operate an 85-bed Long-Term Care Facility
515 Fairview Street
Canon City, CO 81212
Integrated Health Services at Springs Village License to Operate a 100-bed Long-Term Care Facility
110 W. Van Buren
Colorado Springs, CO 80907
Integrated Health Services at Delta License to Operate a 90-bed Long-Term Care Facility
2050 South Main Street License to Operate a 6-bed Personal Care Boarding
Delta, CO 81416 Home
Integrated Health Services at Mantey Heights License to Operate an 82-bed Long-Term Care Facility
2825 Patterson Road
Grand Junction, CO 81506
Integrated Health Services at LaVilla Grande License to Operate a 96-bed Long-Term Care Facility
2501 Little Bookcliff Drive
Grand Junction, CO 81501
College Park Health Care Center Permit to Operate a 100-bed Nursing Home
1765 Temple Avenue
College Park, GA 30337
Community Care of America at Dublin Permit to Operate a 130-bed Nursing Home
606 Simmons Street, Box 549
Dublin, GA 31040
Community Care of America at Conner Permit to Operate a 62-bed Nursing Home
303 Fifth Street, P.O. Box 618
Glenwood, GA 30428
Community Care of America at Marietta Permit to Operate a 109-bed Nursing Home
1480 Sandtown Road
Marietta, GA 30060
Integrated Health Services of Clarinda License to Operate a 117-bed Nursing Facility
600 Manor Drive
Clarinda, IA 51632
Integrated Health Services of Council Bluffs South License to Operate a 62-bed Nursing Facility
34 Northcrest Drive
Council Bluffs, IA 51501
Integrated Health Services at Mediapolis License to Operate a 62-bed Nursing Facility
608 Prairie Street
Mediapolis, IA 52637
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<PAGE>
<CAPTION>
Facility Necessary Licenses
--------------------------------------------------------------- ------------------------------------------------------
<S> <C>
IHS at Pacific Place License to Operate a 12-bed Intermediate Care
20937 Hwy. 385 West Facility for the Mentally Retarded
Pacific Junction, IA 51561
Integrated Health Services of Winterset License to Operate an 80-bed Nursing Facility
1015 West Summit License to Operate a 19-bed Residential Care Facility
Winterset, IA 50273
Integrated Health Services of Iowa at Des Moines License to Operate a 93-bed Nursing Facility
2348 E. Ninth Street
Des Moines, IA 50316
IHS at Park Place License to Operate a 128-bed Intermediate Care
114 East Green Street Facility for the Mentally Retarded
Glenwood, IA 51534
Integrated Health Services of Woodhaven License to Operate a 54-bed Adult Care Home
510 W. 7th Street
Ellinwood, KS 67526
Farmington Health Care Center Certificate of Need
34225 Grand River License to Operate a 153-bed Nursing Home (Long Term
Farmington, MI 48335-3512 Care)
IHS of Michigan at Howell Certificate of Need
3003 W. Grand River Avenue License to Operate a 176-bed Nursing Home (Long Term
Howell, MI 48843-8539 Care)
IHS at Tarkio License to Operate a 95-bed Skilled Nursing Facility
300 Cedar Street
Tarkio, MO 64491
Ainsworth Care Center License to Operate a 50-bed Skilled Nursing Facility
143 N. Fullerton Street (Distinct Part) (Outpatient PT/Rehab)
Ainsworth, NE 69210
IHS at Ashland License to Operate a 101-bed Skilled Nursing/NSG
1700 Furnas Street Facility (Distinct Part)
Ashland, NE 68003 (Outpatient PT/Rehab, Alzheimer Unit)
Blue Hill Care Center License to Operate a 68-bed Skilled Nursing/NSG
P.O. Box 156 Facility (Distinct part)(Alzheimer Unit)
414 N. Wilson
Blue Hill, NE 68930
IHS at Edgar License to Operate a 54-bed Skilled Nursing/NSG
RR 1 Box 83A Facility (Distinct Part)
106 5th Street
Edgar, NE 68935
Wedgewood Care Center License to Operate a 74-bed Skilled Nursing/NSG
800 Stoeger Drive Facility (Outpatient Rehab, Alzheimer Unit)
Grand Island, NE 68803
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<PAGE>
<CAPTION>
Facility Necessary Licenses
--------------------------------------------------------------- ------------------------------------------------------
<S> <C>
IHS at Gretna License to Operate a 63-bed Skilled Nursing Facility
700 Highway 6
Gretna, NE 68028
IHS at Lyons License to Operate an 82-bed Skilled Nursing Facility
1035 Diamond Street
Lyons, NE 68038
IHS at Milford License to Operate a 60-bed Skilled Nursing/NSG
P.O. Box D Facility (Distinct Part)
1100 W. First Street
Milford, NE 68405
IHS at Sutherland License to Operate a 62-bed Skilled Nursing/NSG
P.O. Box 307 Facility (Distinct Part)
333 Maple Street (Alzheimer Unit)
Sutherland, NE 69165
IHS of Waverly License to Operate a 51-bed Skilled Nursing Facility
P.O. Box 160
11041 N. 137th Street
Waverly, NE 68462
Grandview Manor License to Operate a 45-bed Skilled Nursing Facility
Broad Street & Highway 4
Campbell, NE 68932
Integrated Health Services of Central City License to Operate a 70-bed Skilled Nursing
2720 South 17th Avenue Facility/Nursing Facility Distinct Part
Central City, NE 68826
Mory's Haven License to Operate a 48-bed Skilled Nursing Facility
1112 Fifteenth Street Dual
Columbus, NE 68601
Exeter Care Center License to Operate a 56-bed Skilled Nursing
425 South Empire Avenue Facility/Nursing Facility Distinct Part
P.O. Box 59
Exeter, NE 68351
Utica Community Care Center License to Operate a 41-bed Skilled Nursing Facility
1350 Centennial Avenue Dual
Utica NE 68456
IHS at Laramie License to Operate a 144-bed Nursing Care Facility
503 South 18th St.
Laramie, WY 82070
Community Care of America at Worland License to Operate an 87-bed Nursing Facility
1901 Howell
Worland, WY 82401
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<CAPTION>
Facility Necessary Licenses
--------------------------------------------------------------- ------------------------------------------------------
<S> <C>
Clifton House Rehabilitation Center License to operate a 195 bed chronic and 181
Clifton Street, New Haven, CT 06513 convalescent nursing home
Greenery Rehabilitation Center at Waterbury License to operate a 180 bed chronic and
177 Whitewood Road, Waterbury, CT 06708 convalescent nursing home
Greenery Extended Care Center at Cheshire License to operate 210 bed chronic and convalescent
50 Hazel Drive, Cheshire, CT 06410 nursing home
</TABLE>
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<TABLE>
<CAPTION>
Schedule B-2
Other Licenses
Facility Other Licenses
---------------------------------------------------------------- -----------------------------------------------------
<S> <C>
Integrated Health Services at Canon City Medicare/Medicaid certification
515 Fairview Street Medicare provider agreement
Canon City, CO 81212 Medicaid provider agreement
Integrated Health Services at Springs Village Medicare/Medicaid certification
110 W. Van Buren Medicare provider agreement
Colorado Springs, CO 80907 Medicaid provider agreement
Integrated Health Services at Delta Medicare/Medicaid certification
2050 South Main Street Medicare provider agreement
Delta, CO 81416 Medicaid provider agreement
Integrated Health Services at Mantey Heights Medicare/Medicaid certification
2823 Patterson Road Medicare provider agreement
Grand Junction, CO 81506 Medicaid provider agreement
Integrated Health Services at LaVilla Grande Medicare/Medicaid certification
2501 Little Bookcliff Drive Medicare provider agreement
Grand Junction, CO 81501 Medicaid provider agreement
College Park Health Care Center Medicare/Medicaid certification
1765 Temple Avenue Medicare provider agreement
College Park, GA 30337 Medicaid provider agreement
Community Care of America at Dublin Medicare/Medicaid certification
606 Simmons Street, Box 549 Medicare provider agreement
Dublin, GA 31040 Medicaid provider agreement
Community Care of America at Conner Medicare/Medicaid certification
303 Fifth Street, P.O. Box 618 Medicare provider agreement
Glenwood, GA 30428 Medicaid provider agreement
Community Care of America at Marietta Medicare/Medicaid certification
1480 Sandtown Road Medicare provider agreement
Marietta, GA 30060 Medicaid provider agreement
Integrated Health Services of Clarinda Medicare/Medicaid certification
600 Manor Drive Medicare provider agreement
Clarinda, IA 51632 Medicaid provider agreement
Integrated Health Services of Council Bluffs South Medicare/Medicaid certification
34 Northcrest Drive Medicare provider agreement
Council Bluffs, IA 51501 Medicaid provider agreement
-
Integrated Health Services at Mediapolis Medicare/Medicaid certification
608 Prairie Street Medicare provider agreement
Mediapolis, IA 52637 Medicaid provider agreement
IHS at Pacific Place Medicaid certification
20937 Hwy. 385 West Medicaid provider agreement
Pacific Junction, IA 51561
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<PAGE>
<CAPTION>
Facility Other Licenses
--------------------------------------------------------------- ------------------------------------------------------
<S> <C>
Integrated Health Services of Winterset Medicare/Medicaid certification
1015 West Summit Medicare provider agreement
Winterset, IA 50273 Medicaid provider agreement
Integrated Health Services of Iowa at Des Moines Medicare/Medicaid certification
2348 E. Ninth Street Medicare provider agreement
Des Moines, IA 50316 Medicaid provider agreement
IHS at Park Place Medicaid certification
114 East Green Street Medicaid provider agreement
Glenwood, IA 51534
Integrated Health Services of Woodhaven Medicare/Medicaid certification
510 W. 7th Street Medicare provider agreement
Ellinwood, KS 67526 Medicaid provider agreement
Farmington Health Care Center Medicare/Medicaid certification
34225 Grand River Medicare provider agreement
Farmington, MI 48335-3512 Medicaid provider agreement
IHS of Michigan at Howell Medicare/Medicaid certification
3003 W. Grand River Avenue Medicare provider agreement
Howell, MI 48843-8539 Medicaid provider agreement
IHS at Tarkio Medicare/Medicaid certification
300 Cedar Street Medicare provider agreement
Tarkio, MO 64491 Medicaid provider agreement
Ainsworth Care Center Medicare/Medicaid certification
143 N. Fullerton Street Medicare provider agreement
Ainsworth, NE 69210 Medicaid provider agreement
IHS at Ashland Medicare/Medicaid certification
1700 Furnas Street Medicare provider agreement
Ashland, NE 68003 Medicaid provider agreement
Blue Hill Care Center Medicare/Medicaid certification
P.O. Box 156 Medicare provider agreement
414 N. Wilson Medicaid provider agreement
Blue Hill, NE 68930
IHS at Edgar Medicare/Medicaid certification
RR 1 Box 83A Medicare provider agreement
106 5th Street Medicaid provider agreement
Edgar, NE 68935
Wedgewood Care Center Medicare/Medicaid certification
800 Stoeger Drive Medicare provider agreement
Grand Island, NE 68803 Medicaid provider agreement
IHS at Gretna Medicare/Medicaid certification
700 Highway 6 Medicare provider agreement
Gretna, NE 68028 Medicaid provider agreement
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<CAPTION>
Facility Other Licenses
--------------------------------------------------------------- ------------------------------------------------------
<S> <C>
IHS at Lyons Medicare/Medicaid certification
1035 Diamond Street Medicare provider agreement
Lyons, NE 68038 Medicaid provider agreement
IHS at Milford Medicare/Medicaid certification
P.O. Box D Medicare provider agreement
1100 W. First Street Medicaid provider agreement
Milford, NE 68405
IHS at Sutherland Medicare/Medicaid certification
P.O. Box 307 Medicare provider agreement
333 Maple Street Medicaid provider agreement
Sutherland, NE 69165
IHS of Waverly Medicare/Medicaid certification
P.O. Box 160 Medicare provider agreement
11041 N. 137th Street Medicaid provider agreement
Waverly, NE 68462
Grandview Manor Medicare/Medicaid certification
Broad Street & Highway 4 Medicare provider agreement
Campbell, NE 68932 Medicaid provider agreement
Integrated Health Services of Central City Medicare/Medicaid certification
2720 South 17th Avenue Medicare provider agreement
Central City, NE 68826 Medicaid provider agreement
Mory's Haven Medicare/Medicaid certification
1112 Fifteenth Street Medicare provider agreement
Columbus, NE 68601 Medicaid provider agreement
Exeter Care Center Medicare/Medicaid certification
425 South Empire Avenue Medicare provider agreement
P.O. Box 59 Medicaid provider agreement
Exeter, NE 68351
Utica Community Center Medicare/Medicaid certification
1350 Centennial Avenue Medicare provider agreement
Utica NE 68456 Medicaid provider agreement
IHS at Laramie Medicare/Medicaid certification
503 South 18th St. Medicare provider agreement
Laramie, WY 82070 Medicaid provider agreement
Community Care of America at Worland Medicare/Medicaid certification
1901 Howell Medicare provider agreement
Worland, WY 82401 Medicaid provider agreement
Clifton House Rehabilitation Center Medicare/Medicaid certification
181 Clifton Street, New Haven, CT 06513 Medicare provider agreement
Medicaid provider agreement
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<PAGE>
<CAPTION>
Facility Other Licenses
--------------------------------------------------------------- ------------------------------------------------------
<S> <C>
Greenery Rehabilitation Center at Waterbury Medicare/Medicaid certification
177 Whitewood Road, Waterbury, CT 06708 Medicare provider agreement
Medicaid provider agreement
Greenery Extended Care Center at Cheshire Medicare/Medicaid certification
50 Hazel Drive, Cheshire, CT 06410 Medicare provider agreement
Medicaid provider agreement
</TABLE>
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<TABLE>
<CAPTION>
Schedule 2.7
Insurance
Coverage Type Limits Deductible
-----------------------------------------------------------------------------------------------------------
<S> <C> <C>
All Risk Property (bldg & contents) $140,000,000 $10,000
All Risk Property (BI) $82,000,000 $10,000
General/Professional Liability $1,000,000/$3,000,000 $50,000
Workers' Comp Statutory 0
Umbrella $10,000,000 per location NA
</TABLE>
