AMENDMENT TO PURCHASE AND SALE AGREEMENT
THIS AMENDMENT (the 'Amendment'), dated as of December 31, 1997, to that
certain Purchase and Sale Agreement, made and entered into on the 3rd day of
November, 1997 (the 'Agreement'), by and between HEALTHSOUTH CORPORATION, a
Delaware corporation ('HEALTHSOUTH'), HORIZON/CMS HEALTHCARE CORPORATION, a
Delaware corporation ('Seller'), and INTEGRATED HEALTH SERVICES, INC., a
Delaware corporation ('Buyer'), with reference to the following facts:
A. The parties desire to amend the Agreement to the extent set forth in
this Amendment and to enter into certain agreements ancillary to the Agreement
in connection with such amendments.
NOW, THEREFORE, in consideration of the foregoing recitals and the
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto,
intend to be legally bound, do hereby agree as follows:
ARTICLE 1
DEFINITIONS
For purposes of this Amendment, all capitalized terms used in this
Amendment that are not defined in this Amendment shall have the meanings
assigned to them in the Agreement.
ARTICLE 2
MATTERS RELATING TO SCHEDULES TO AGREEMENT
Section 2.1 Amendment of Certain Schedules. The Schedules to the Agreement
are hereby amended as follows:
(a) Schedule A-2 is amended to:
(i) delete the asterisks shown next to Facilities 216, 304, 188,
306 and 168 and to add Facility 218 (Medical Specialty Overhead),
reflecting that Buyer has agreed to accept such facilities as
Transferred Assets and to assume the related Assumed Liabilities;
and
(ii) delete all references to Facilities 51, 60, 292 and 273,
reflecting that Seller has agreed to retain all assets and
liabilities relating thereto as Excluded Assets and Excluded
Liabilities.
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(b) Schedule 2.1(a) is amended to add to the list of Assigned Stock
and Transferred Subsidiaries Midwest Regional Rehabilitation Center, Inc., a
Subsidiary of Seller which shall be a Transferred Subsidiary.
(c) The first sentence of Schedule 2.1(b) is amended to read as
follows: 'Horizon/CMS Healthcare Corporation or a Subsidiary or a wholly owned
partnership owns in fee simple the real property on which all facilities
identified on the attached 'Chart of Owned Facilities' are located.
(d) Schedule 2.1(c) is amended to:
(i) delete the asterisks with respect to Leases 100, 101, 102,
103, 105, 106, 203, 204, 205, 501, 502, 503, 504, 506, 127, 188
and 169, reflecting that Buyer has agreed to accept such leases
as Transferred Assets and to assume the related Assumed
Liabilities;
(ii) add references to leases relating to Advanced Clinical
Technology, Inc.'s locations in Plantation, Florida and Niles,
Ohio, reflecting that Buyer has agreed to accept such leases as
Transferred Assets and to assume the related Assumed Liabilities;
and
(iii) delete all references to leases 65, 115, 130, 157, 187,
235, 202 and 206, reflecting that Seller has agreed to retain all
assets and liabilities relating thereto as Excluded Assets and
Excluded Liabilities.
(e) Schedule 2.1(d) is hereby amended to delete the references to
interests in InHouse Rehab Associates and RehabWorks of Utah, L.L.C., which
shall be Excluded Assets and Excluded Liabilities.
(f) Schedule 7.5 is amended to delete therefrom all items except
letters of credit numbers L150065, L150066, L150067 and L906140, which shall be
the only letters of credit and bonds required to be provided by Buyer to
substitute for letters of credit and bonds heretofore maintained by Seller and
its Affiliates.
Section 2.2 Deliveries at Closing. At the Closing, the parties shall
execute and deliver such instruments of conveyance, transfer and assumption,
consistent with the terms of the Agreement, as are necessary to effect the
foregoing amendments to the Schedules.
ARTICLE 3
OTHER AGREEMENTS OF THE PARTIES
Section 3.1 Assumption of ACT 401(k) Plan. Prior to the Closing, Seller
shall assume the 401(k) plan maintained by Advanced Clinical Technology, Inc.
('ACT') and, from and after the Closing, shall be solely responsible for the
administration and termination of such plan and for the satisfaction of all
obligations and liabilities of any kind whatsoever with respect to such plan or
the operation, assumption or termination thereof, including, but not limited to,
obligations and liabilities to plan participants and
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obligations and liabilities resulting from any adverse determination by any
governmental entity with respect to such plan, all of which obligations and
liabilities shall be deemed to be Excluded Liabilities and subject to the
indemnification provisions of Sections 11.3, 11.5 and 11.6 of the Agreement.
Section3.2 Ortenzio Litigation. HEALTHSOUTH, Seller and Buyer agree that
all rights and liabilities of Seller or any Affiliate of Seller, whether or not
such Affiliate is a Transferred Subsidiary, with respect to litigation brought
by Seller or any Affiliate of Seller against Rocco Ortenzio, Robert Ortenzio and
their Affiliates (collectively, the 'Ortenzios'), or by the Ortenzios against
Seller or any Affiliate of Seller, shall constitute Excluded Assets and Excluded
Liabilities, and Buyer and its Affiliates shall have no rights or obligations
with respect to any amounts receivable or payable with respect to the
prosecution and defense of such litigation or any judgments, awards, amounts
paid in settlement or other costs or proceeds of such litigation. Any
liabilities which may be asserted against Buyer or its Affiliates (including,
after the Closing, any Transferred Subsidiaries) with respect to such litigation
shall be subject to the indemnification provisions of Sections 11.3, 11.5 and
11.6 of the Agreement. Buyer acknowledges that neither HEALTHSOUTH nor Seller
has made any representation to Buyer concerning the value of such litigation.
Buyer shall cause the Transferred Subsidiaries to cooperate as reasonably
requested by HEALTHSOUTH or Seller, at the expense of HEALTHSOUTH or Seller,
with respect to such litigation.
Section 3.3 Other Agreements to be Executed and Delivered. At the Closing,
HEALTHSOUTH and Buyer shall execute and deliver a Service Agreement and a
Transition Services Agreement, satisfactory to HEALTHSOUTH and Buyer in form and
substance, with respect to the provision of certain leased employees to Buyer or
its Affiliates and with respect to certain information systems transition
matters, respectively.
Section 3.4 Bank Accounts and Cash Reconciliation. On the Closing Date,
Seller and its Affiliates shall assign to Buyer or designated Buyer Subsidiaries
all rights of Seller and its Affiliates in depository accounts relating to the
Transferred Assets and disbursing accounts relating to the Transferred
Subsidiaries, subject, however, to the following provisions:
(a) On the Closing Date, HEALTHSOUTH shall withdraw all collected
funds from the depository accounts and all funds in excess of outstanding checks
from the transferred disbursing accounts.
(b) On January 6, 1998, HEALTHSOUTH shall wire to accounts designated
by Buyer an amount equal to $10,000,000 less (i) the uncollected balances in the
depository accounts at the Closing Date (ii) amounts deposited into the
depository accounts on December 31, 1997 and (iii) cash and cash equivalents
otherwise inaccessible on December 31, 1997, which shall satisfy HEALTHSOUTH's
obligation to transfer cash and cash equivalents in the amount of $10,000,000
pursuant to Section 2.1(m) of the Agreement.
(c) In the event that (i) HEALTHSOUTH and Seller remove funds from the
transferred disbursing accounts so that funds in such accounts are insufficient
to cover checks outstanding at December 31, 1997, or (ii) after the payment
described in paragraph (b) above, the cash and cash equivalents deemed to have
been transferred to Buyer as of December 31, 1997 exceed $10,000,000, the
parties shall pay to each other on demand such amounts as are necessary to
reconcile such discrepancies.
Section 3.5 Amounts Expended to Obtain Consents and Releases. HEALTHSOUTH
shall, by check on the Closing Date, pay to Buyer the sum of $11,000,000 in
respect of liabilities incurred by Buyer in connection with obtaining all third
party consents and releases of HEALTHSOUTH and Seller obtained through the
Closing Date, including, but not limited to, liabilities in favor of Health and
Retirement Properties Trust, Connecticut Subacute Corporation II. With respect
to amounts expended as consideration for all third party consents and releases
after the Closing Date, HEALTHSOUTH and Seller
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shall reimburse Buyer for 50% of such amounts in excess of $500,000. Buyer
represents that it has agreed to accept the terms required for consent by LTC
Properties, Inc. specified in Buyer's agreement of even date herewith with LTC
Properties, Inc. (provided that guaranties for the Citation properties shall not
exceed 20% of the underlying mortgage amount) and the terms for consent required
by Zev Karkomi/Karell Capital Ventures, Inc. in Karell's letters dated December
20 and December 30, 1997.
Section 3.6 Certain Employees. The parties agree that those employees of
Seller identified on Schedule 3.6 attached hereto shall not be Retained
Employees or Hired Employees, and HEALTHSOUTH and Seller shall retain all rights
and obligations with respect to such employees other than those assumed by Buyer
pursuant to Section 2.3(n) of the Agreement.
Section 3.7 Amendment of Section 2.3(n). Section 2.3(n) of the Agreement is
hereby amended to be and read in its entirety as follows:
(n) Liabilities or obligations of Seller or the Subsidiaries
arising under the employment, change-of-control, retention bonus and
pay-to-stay agreements described on Schedule 2.3(n); provided, however,
that if HEALTHSOUTH or Seller shall have paid any amounts in respect of
such liabilities or obligations prior to the Closing Date, or shall pay
any amounts in respect of such liabilities or obligations after the
Closing Date, Buyer shall reimburse HEALTHSOUTH or Seller for the
amounts so paid upon demand on or after the Closing Date (but in no
event earlier than the date on which such amounts are paid, if paid
after the Closing Date);
Section 3.8 B&G Note. With respect to the Note from B&G Partners Limited
Partnership described in Section 2.1(g) of the Agreement, HEALTHSOUTH shall
indemnify Buyer against any failure of Buyer to receive payment of principal
valued at at least $5,000,000 by paying to Buyer, upon demand, the shortfall
between $5,000,000 and the value of the consideration received as payment of
principal; provided, however, that HEALTHSOUTH shall not be responsible for any
shortfall resulting from the surrender of securities issued by Buyer as payment
of principal on such note.
Section 3.9 Certain Development Projects. The parties agree that all right,
title and interest of Seller or any Affiliate in and to the facilities under
development in Reno, Las Vegas and Carson City, Nevada, and all liabilities and
obligations with respect thereto, are Transferred Assets and Assumed
Liabilities.
ARTICLE 4
MISCELLANEOUS
Section 4.1 Affirmation of Agreement. The parties hereby affirm to one
another their respective obligations pursuant to the Agreement and affirm the
Agreement, amended as set forth above. The parties hereby represent and warrant
to one another that none of them is in default in the performance of any of its
obligations to the other as of the date of this Amendment.
Section 4.2 Representations and Warranties. The parties represent and
warrant to one another that this Amendment has been duly authorized by all
corporate action required to be taken on each of their parts, that it has been
duly executed and delivered, that it constitutes the legal, valid and binding
obligations of each of them, except as enforcement may be subject to bankruptcy,
moratorium and similar laws and except as the availability of equitable remedies
may be subject to customary limitations.
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Section 4.3 Further Assurances. Each party hereby agrees to perform any
further acts and to execute and deliver any documents which may be reasonably
necessary to carry out the provisions of this Amendment.
IN WITNESS WHEREOF, the parties have duly executed this Amendment on the
date first above written.
HEALTHSOUTH CORPORATION
By /s/WILLIAM W. HORTON
Its Senior Vice President
HORIZON/CMS HEALTHCARE CORPORATION
By /s/WILLIAM W. HORTON
Its Vice President
INTEGRATED HEALTH SERVICES, INC.
By /s/TAYLOR PICKETT
Its Executive Vice President
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Purchase and Sale Agreement - HealthSouth Corp., Horizon/CMS Healthcare Corp. and Integrated Health Services Inc.
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