Document:

Exhibit 10.43

 

Exhibit 10.43

	 	 	 	 	 

FIRST AMENDMENT TO THE MASTER AGREEMENT

     THIS FIRST AMENDMENT TO THE MASTER AGREEMENT (“First Amendment”) is made as of this 1st day
of February, 1999, by and among TANDEM HEALTH CARE, INC., a Pennsylvania corporation (“THC”),
COLONIAL CARE, LLC, a Virginia limited liability company (“Colonial”), SMITH/PACKETT MED-COM, INC.,
a Virginia corporation (“SPMC”), SP ENTERPRISES, LLC, a Virginia limited liability company (“SP”);
and JAMES R. SMITH, an individual, SP GRAYSON, LLC, GENERATION LEASING COMPANY, II, LLC, GENERATION
DEVELOPMENT COMPANY, LLC, SP FISHERSVILLE, LLC, SP NEWPORT NEWS, LLC, SP KINGS DAUGHTER, LLC, SP
WILLIAMSBURG, LLC, SP WINDSOR, LLC, AND SP LAFAYETTE, LLC (“Operating Companies”).

WITNESSETH:

     WHEREAS, the parties hereto entered into that certain Master Agreement dated January 14, 1999,
evidencing their intentions to develop a joint venture concerning long term care activities among
the parties; and

     WHEREAS, since the execution of the Master Agreement, the parties have negotiated certain
changes to their arrangement; and

     WHEREAS, the parties also wish to correct any defects in the Master Agreement as executed; and

     WHEREAS, the parties desire to set forth these corrections and changes in this First
Amendment.

     NOW THEREFORE, for and in consideration of the premises and mutual covenants and agreements
set forth in the Master Agreement and this First Amendment, and other good and

 

 

valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and
intending to be legally bound hereby, the parties hereto agree as follows:

     1. Correction of Names of Parties. The names of the parties, SP Williamsburg, LLC and
Windsor, LLC, are hereby amended, each time they appear in the Master Agreement, and in this First
Amendment, to read as follows: SP Williamsburg Health Investors, LLC and SP Windsor Health
Investors, LLC.

     2. Section 1.6 Consideration. Section 1.6(c)(iii) of the Master Agreement is hereby
amended to read as follows:

Prepay the approximate $___balance outstanding on the Closing Date (the “HCFP
Balance”) of the working capital loan of the Operating Companies from HCFP, more
fully described on Schedule 2.10 or deposit
$___ into an interest bearing escrow
account, pursuant to an Escrow Agreement attached to this First Amendment as
Schedule A, and issue to SP a Promissory Note reasonably acceptable to THC as
attached hereto as Schedule 1.6(c), in the amount of the difference between
$2,100,000 and the HCFP Balance, for an amount of $___.

The remainder of Section 1.6(c) shall remain unchanged.

     3. Section 1.7
Ongoing Working Capital Commitment. Section 1.7 of the Master Agreement is
amended to read as follows:

THCV and THC shall be responsible for arranging or providing the debt required for
the ongoing working capital of THCV and other purposes agreed to by the members of
THCV, so long as the HCFP Balance, as discussed at Section 1.6(c)(iii), is either
paid in full or fully escrowed as of the Closing Date. The working capital debt
post-Closing will be a direct obligation of THCV. Such debt shall be incurred on
commercially reasonable terms. SP hereby consents to THCV entering into such
arrangements to obtain the working capital financing, or SP hereby consents to THCV
leaving in place the HCFP working capital line post-Closing. THCV will not assume
the HCFP Balance as of the Closing Date. James R. Smith agrees to consider
delivering a guarantee that would be secondary to the guarantee of THC or its
affiliates for its accounts receivable financing with Healthcare Resources, Inc., or
any other accounts receivable financing provider, including, including but not
limited to HCFP, if such guaranty is deemed by James R. Smith, in his sole
discretion to be desirable (“Smith Guaranty”).

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     4. Section 1.10 Excluded Liabilities. The reference in Section 1.10 to the amount of
the loan referenced in Section 1.4 is hereby amended to be $150,000, consistent with Section 1.4,
and not $300,000, as stated in Section 1.10 of the Master Agreement.

     5. Section 2.17. Section 2.17 of the Master Agreement is amended and shall read as
follows:

Except as shown on Schedule 2.17, and except for Parkview, all of the buildings and
items of Tangible Personal Property owned, leased or used by Colonial or the
Operating Companies are in good operating condition and repair, comply in all
material respects with applicable laws, regulations and ordinances, including but
not limited to zoning, building and fire codes and are suitable and sufficient for
the present and intended conduct of Colonial’s or the Operating Companies’ business.
The building and items of Personal Property constituting the Parkview facility are
in working condition and neither SP nor Colonial nor Generation Development Company,
LLC is aware of any violations of life safety codes. Each building and each item of
Tangible Personal Property owned or leased by Colonial or the Operating Companies is
adequately covered by one of the insurance policies described in Section 2.26
hereto.

Any reference to building inspection reports for Parkview that are currently referenced on Schedule
2.17 shall be deleted.

     6. Section 7.7. The blanks in Section 7.7 of the Master Agreement shall each be
completed with the number of 189,516.6 shares of common stock.

     7. Section 9.1. In Section 9.1 of the Master Agreement, the reference should be to
Article 3, as opposed to Article 4.

     8. Section 9.2. In Section 9.2 of the Master Agreement, the reference should be to
Section 9.1, and not to Section 10.1.

     9. Section 8.16. The first date in Section 8.16 should read January 22, 1999, and not
January 20, 1999, as drafted.

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     10. Post Closing Items. The parties agree that the following items have not been
resolved as of the Closing Date. THC and THCV will not accept the following list of items as
exceptions to the Closing:

          (a) Removal of the Parkview Tank

          (b) Exhibit A to Schedule 2.10

          (c) Additional changes to Subordination Agreement concerning GMAC and Lafayette Villa

          (d) Housing and Urban Development Loan Information/Consents Regarding Parkview

          (e) Understanding among the parties that all Operating Agreements of the LLCs will be amended
(except THCV’s)

          (f) Sign off on Initial Balance Sheet

     11. Affirmation. In all other respects, the provisions of the Master Agreement are hereby
affirmed.

     IN WITNESS WHEREOF, each of the parties has caused this Agreement to be executed by its duly
authorized officer as of the date first above written.

	 	 	 	 	 
	 	TANDEM HEALTH CARE, INC.

 	 
	 	By:  	/s/ Lawrence R. Deering
 	 
	 	 	Lawrence R. Deering, Chairman and CEO 	 
	 	 	 	 
	 	COLONIAL CARE, LLC

 	 
	 	By:  	/s/ Deborah L. Petrine
 	 
	 	 	Deborah L. Petrine, President 	 
	 	 	 	 

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	 	SMITH/PACKETT MED-COM, INC.

 	 
	 	By:  	/s/ James R. Smith
 	 
	 	 	James R. Smith 	 
	 	 	 	 
	 	SP ENTERPRISES, LLC

 	 
	 	By:  	/s/ James R. Piehzak
 	 
	 	 	James R. Piehzak 	 
	 	 	 	 
	 	JAMES R. SMITH

 	 
	 	By:  	/s/ James R. Smith
 	 
	 	 	James R. Smith 	 
	 	 	 	 
	 	SP GRAYSON, LLC

 	 
	 	By:  	/s/ James R. Smith
 	 
	 	 	James R. Smith 	 
	 	 	 	 
	 	GENERATION LEASING COMPANY, II, LLC

 	 
	 	By:  	/s/ James R. Smith
 	 
	 	 	James R. Smith 	 
	 	 	 	 
	 	GENERATION DEVELOPMENT COMPANY, 

LLC

 	 
	 	By:  	/s/ James R. Smith
 	 
	 	 	James R. Smith 	 
	 	 	 	 
	 	SP FISHERSVILLE, LLC

 	 
	 	By:  	/s/ James R. Smith
 	 
	 	 	James R. Smith 	 
	 	 	 	 

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	 	SP NEWPORT NEWS, LLC

 	 
	 	By:  	/s/ James R. Smith
 	 
	 	 	James R. Smith 	 
	 	 	 	 
	 	SP KINGS DAUGHTERS, LLC

 	 
	 	By:  	/s/ James R. Smith
 	 
	 	 	James R. Smith 	 
	 	 	 	 
	 	SP WILLIAMSBURG HEALTH INVESTORS,

LLC

 	 
	 	By:  	/s/ James R. Smith
 	 
	 	 	James R. Smith 	 
	 	 	 	 
	 	SP WINDSOR HEALTH INVESTORS, LLC

 	 
	 	By:  	/s/ James R. Smith
 	 
	 	 	James R. Smith 	 
	 	 	 	 
	 	SP LAFAYETTE VILLA, LLC

 	 
	 	By:  	/s/ James R. Smith
 	 
	 	 	James R. Smith 	 
	 	 	 	 

- 6 -Exhibit 10.44

 

Exhibit 10.44

SETTLEMENT AND RELEASE AGREEMENT

     THIS AGREEMENT is made as of the 30th day of September, 1999, by and between TANDEM HEALTH
CARE, INC., a Pennsylvania corporation (“THC”), TANDEM HEALTH CARE OF VIRGINIA, LLC, a Virginia
limited liability company (“THCV”), COLONIAL CARE, LLC, a Virginia limited liability company
(“Colonial”), SMITH/PACKETT MED-COM, INC., a Virginia corporation (“SPMC”), SP ENTERPRISES, LLC, a
Virginia limited liability company (“SP”); and JAMES R. SMITH, an individual, SP GRAYSON, LLC,
GENERATION LEASING COMPANY, II, LLC, GENERATION DEVELOPMENT COMPANY, LLC, SP FISHERSVILLE, LLC, SP
NEWPORT NEWS, LLC, SP KINGS DAUGHTERS, LLC, SP WILLIAMSBURG, LLC, SP WINDSOR, LLC, AND SP
LAFAYETTE, LLC (“Operating Companies”).

WITNESSETH:

     WHEREAS, the abovementioned parties entered into a Master Agreement as of January 14, 1999, a
true and correct copy of which is attached hereto as Exhibit “A”, concerning their joint venture
efforts; and

     WHEREAS, the parties closed on the Master Agreement on or about February 1, 1999; and

     WHEREAS, pursuant to Section 1.8 of the Master Agreement, SP prepared the SP Closing Balance
Sheet, which was to be “trued up” on or about February 1, 2000, and the balance of any excess paid
on February 1, 2001; and

     WHEREAS, the parties’ ongoing relationship has evidenced their desire to enter into this
Settlement Agreement concerning Section 1.8 of the Master Agreement in advance of the February 1,
2000 date; and

     WHEREAS, the Master Agreement, at Paragraph 18.3 permits the parties to amend the Master
Agreement by a writing signed by all parties to the Master Agreement; and

     WHEREAS, the parties are desirous of setting forth their settlement in this document.

     NOW THEREFORE, for an in consideration of the premises and the mutual covenants and agreements
set forth in this Settlement Agreement, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the
parties hereto agree as follows:

     1. The parties agree to execute the corrected First Amendment to the Master Agreement by and
among Tandem Health Care, Inc. and Colonial Care, LLC, et al., as attached hereto as Exhibit “B”,
on or before October 29, 1999.

     2. The parties agree to execute the Asset Purchase Agreement concerning the Enterprise Care
Facilities, Inc. transaction on the Franco facility, in the form attached hereto as Exhibit “C”, on
or before October 29, 1999.

 

 

     3. THCV agrees to execute a Settlement Note with SP Enterprises, LLC, in a form attached
hereto as Exhibit “D”, in the principal amount of $375,000, payments commencing on October 1, 1999,
and ending September 1, 2001, pursuant to the amortization schedule attached to said Note. This
Note evidences the following items:

          (a) “True Up” of Lafayette Villa balance sheeting excluding security deposits due and
indemnification for third party payor recoupments and settlements.

          (b) SP “true up” of closing balance sheet under Section 1.8 of the Master Agreement including,
but not limited to, all issues relating to Parkview closure, Grayson start-up costs, HCFP loan
costs written off and any future amounts ultimately collected on accounts receivable, and only
excluding the issues identified in Section 9 of this Agreement.

          (c) Settlement of Kings Daughters vacation/sick liability.

     4. THCV agrees to pay Shenandoah Therapies, Inc. $96,936.46, to be paid by a $60,000 payment
on or before October 1, 1999, with the balance amortized over the next six months at the rate of
9%. This payment shall be evidenced by the Promissory Note attached hereto as Exhibit “E”.

     5. THCV agrees to pay Rx Care, LLC $132,083.71, with $60,000 to be paid by October 15, 1999,
with the balance amortized over the next six months at the rate of 9%. This payment shall be
evidenced by the Promissory Note attached hereto as Exhibit “F”.

     6. THCV shall pay to SPMC the amount of $55,846.42, to be paid $25,000 on or before October
15, 1999, with the balance amortized over the next six months at the rate of 9%. This payment
shall be evidenced by the Promissory Note attached hereto as Exhibit “G”.

     7. THCV agrees to pay North Florida Health Facilities II, L.P. $61,184.42, to be paid $20,000
on or before October 15, 1999, with the balance amortized over the next six months at the rate of
9%. This payment shall be evidenced by the Promissory Note attached hereto as Exhibit “H”.

     8. The parties agree that all balances used to calculate the items 4 through 7, have used
reconciled accounts due through August 31, 1999.

     9. Excluded Components. The abovementioned paragraphs 3 through 7 exclude the
Lafayette Villa security due ($136,992.50) and the indemnification for recoupment of the prior
owner’s Medicare liability ($150,000), and Medicaid rate issues. In lieu of that, Lafayette Villa
Health Investors will forestall SP Lafayette Villa, LLC’s compliance with its lease covenants to
deliver a security deposit of $136,992.50 pending a settlement of the recoupment issue with the
prior owner. Lafayette Villa Health Investors and SP Lafayette Villa, LLC, agree to a deadline of
October 31, 1999, to arrive at an ultimate settlement of this issue. Also excluded are rights of
the parties under the Master Agreement unrelated to the true up of the closing balance sheet under
Section 1.8 of the Master Agreement.

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     10. None of the provisions in this Settlement Agreement are intended to admit any liability by
any of the parties concerning matters hereto, but are intended to operate as a global settlement on
the issues involved.

     11. The parties hereto waive any further accountings under Section 1.8 of the Master
Agreement.

     12. The parties hereto hereby release each other from any further liability of every kind,
nature and description whatsoever concerning the matters addressed in paragraphs 3 through 7 of
this Agreement, not specifically excluded by paragraph 9.

     13. Each of the parties hereto represents and warrants to each other that it has the full
authority to execute this Settlement Agreement and consummate the terms as written.

     14. The parties hereby incorporate Article 18 of the Master Agreement in this Settlement
Agreement as though it were fully set forth herein.

     IN WITNESS WHEREOF, each of the parties has caused this Agreement to be executed by its duly
authorized officer as of the date first above written.

	 	 	 	 	 	 
	 	 	TANDEM HEALTH CARE, INC.

	 	 
	 

	 	By:
	 	/s/ Lawrence R. Deering	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Lawrence R. Deering, Chairman and CEO

	 	 	TANDEM HEALTH CARE OF VIRGINIA, LLC

	 

	 	By:
	 	Tandem Health Care, Inc.

	 	 
	 

	 	By:
	 	/s/ Lawrence R. Deering	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Lawrence R. Deering, Chairman and CEO

	 	 
	 	 	COLONIAL CARE, LLC

	 	 
	 

	 	By:
	 	/s/ Deborah L. Petrine
 

	 	 

	 	 	SMITH/PACKETT MED-COM, INC.

	 	 
	 

	 	By:
	 	/s/ James R. Smith	 	 
	 

	 	 	 	 
	 

	 	 	 	President

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	 	 	SP ENTERPRISES, LLC

	 	 
	 

	 	By:
	 	/s/ James R. Smith	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Manager

	 	 
	 	 	JAMES R. SMITH

	 	 
	 

	 	 	 	/s/ James R. Smith
 

	 	 
	 	 	SP GRAYSON, LLC

	 	 
	 

	 	By:
	 	/s/ James R. Smith
 

	 	 
	 	 	GENERATION LEASING COMPANY, II, LLC

	 	 
	 

	 	By:
	 	/s/ James R. Smith
 

	 	 
	 	 	GENERATION DEVELOPMENT COMPANY, LLC

	 	 
	 

	 	By:
	 	/s/ James R. Smith
 

	 	 
	 	 	SP FISHERSVILLE, LLC

	 	 
	 

	 	By:
	 	/s/ James R. Smith
 

	 	 
	 	 	SP NEWPORT NEWS, LLC

	 	 
	 

	 	By:
	 	/s/ James R. Smith
 

	 	 

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	 	 	SP KINGS DAUGHTERS, LLC

	 	 
	 

	 	By:
	 	/s/ James R. Smith
 

	 	 
	 	 	SP WILLIAMSBURG HEALTH INVESTORS, LLC

	 	 
	 

	 	By:
	 	/s/ James R. Smith
 

	 	 
	 	 	SP WINDSOR HEALTH INVESTORS, LLC

	 	 
	 

	 	By:
	 	/s/ James R. Smith
 

	 	 
	 	 	SP LAFAYETTE VILLA, LLC

	 	 
	 

	 	By:
	 	/s/ James R. Smith	 	 
	 

	 	 	 	 	 	 

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