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HomeMy WebLinkAboutMINUTES - 10131987 - 1.53 T�= BOARD OF SUPERVISORS 1-05 FROM: Phil Batchelor, County Administrator Contra Costa DATE: October 8, 1987 CO * SUBJECT: Escrow Instruction and Agreement �'� SPECIFIC REQUEST(S) OR RECOMMENDATION(S) & BACKGROUND AND JUSTIFICATION Recommendation: On September 15, 1987, the Board of Supervisors authorized a modification of the County' s agreement with National Medical Enterprises, Inc. , for the sale of surplus county hospital beds. NME has now exercised its option to purchase the beds. The Board is requested to ratify the attached combined Escrow Instruction and Agreement and to authorize the County Administrator to execute a note on behalf of the County as provided in Exhibit A to the escrow instructions. CONTINUED ON ATTACHMENT: YES SIGNATURE; e� RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITTEE APPROVE OTHER S i GNATURE S : C&Ah //, 4101�7 ACTION OF BOARD ON October 13 , 1987 APPROVED AS RECOMMENDED OTHER e VOTE OF SUPERVISORS 1 HEREBY CERTIFY THAT THIS IS A TRUE X UNANIMOUS (ABSENT --- AND CORRECT COPY OF AN ACTION TAKEN AYES:' . NOES: AND ENTERED ON THE MINUTES OF THE BOARD ABSENT:' ABSTAIN: OF SUPERVISORS ON THE DATE SHOWN. cc: County Administrator ATTESTED October' 13 , 1987 Health Services Director -- - - - - - - ---- County Counsel PHIL BATCHELOR. CLERK OF THE BOARD OF Harris Koenig, NME SUPERVISORS AND COUNTY ADMINISTRATOR John -Muir Hospital Medical Ctr. M382/7-83 BY ,DEPUTY COMBINED ESCROW INSTRUCTION AND AGREEMENT 002 gpmn This Combined Escrow Instruction and Agreement ("Escrow Agreement" ) is made at Martinez, California effective as of the 1st day of October , 1987 , by and between National Medical Enterprises , Inc. , a Nevada corporation ("NME" ) and Contra Costa County, a political subdivision of the State of California ("County" ) . . RECITALS A. NME and County entered that certain Agreement effective March 13 , 1984 (."Option Agreement") which , among other items , granted NME an option to purchase the County' s right to operate eighty-six (86 ) of County Hospital ',s licensed beds on the terms and conditions specified in the Option Agreement . B. County hereby acknowledges timely receipt of the sum of Two Hundred Thousand Dollars ($200 ,000) provided for in Paragraph 2 of the Option Agreement . C. County hereby acknowledges timely receipt of the sum' of Two Hundred Thousand Dollars ($200 , 000 ) for extension of the option period provided under Paragraph 3 of the Option Agreement . D. County hereby acknowledges that NME is in compliance with the Option Agreement as of the effective date of - this Escrow Agreement . NME acknowledges that County is in compliance with the Option Agreement as of the effective date of this Escrow Agreement . (Page l . of 5 ) E. NME hereby exercises. its option to purchase the rights of the County to operate the said hospital beds . F. NME and the County agree that upon NME' s payment of $1 , 300 , 000 into escrow not later than October 19 1987 , the purchase price of the County' s rights to operate the said hospital beds shall have been paid in full , a .$100 , 000 discount having been allowed for early payment ; and that upon such payment , the County will place its note for $1 , 300 , 000 in Escrow to secure the hospital bed transfer to NME, and upon such transfer on or before December 31 , 1989 , said note shall be returned to the County and canceled. NOW, THEREFORE the parties agree as follows : 1 . An Escrow will be established with the law firm of McCutcnen , Doyle, Brown & Enerson as Escrow Agent for the purpose of holding and delivering the instruments described in Paragraph 2 . Both parties shall hold Escrow Agent harmless and indem- nify Escrow Agent from any costs , loss , or judgments , including attorney' s fees resulting from the performance of Escrow Agent ' s duties under this Escrow Agreement while acting in good faith . 2 . County shall deliver to Escrow Agent a duly authorized and executed Note in form and bearing interest at the rate set forth in Exhibit A. Concurrently with the delivery of such Note, Escrow Agent shall deliver to County NME' s check in the sum of One Million Three Hundred Thousand Dollars ( $1 , 300 , 000 ) . (Page 2 of 5) 3 . The Escrow shall terminate upon the earlier of the following: (a) The closing of the transactions necessary to effectuate the delicensing and transfer rights to operate 86 of the County Hospital beds to the San Ramon Hospital and such other transactions as are contemplated under the option Agreement together with the satisfaction of the Con- ditions to Closing as specified therein. Upon such Closing, NNE shall at County' s request confirm the Closing to the Escrow Agent and the Escrow Agent upon such confirmation shall return the Note to County for cancellation . (b) If NME shall deliver to Escrow Agent a notice signed by an officer of NME with signature attested to by the Secretary or Assistant Secretary of NME stating any of the following: (1 ) that NME entertains a good faith belief that County is in breach of the Option Agreement or of this Escrow Agreement or (2) that the Conditions of Closing have not been satisfied prior to the Closing Date; then fifteen days after NME' s notice to the County of such demand Escrow Agent shall forthwith deliver the . Note to NME and NME may make demand thereon according to its terms . (c) On December 31 , 1989 , if none of the events contemplated under paragraph 3( a) , or (b) of this Escrow Agreement , have occurred , Escrow shall terminate and Escrow Agent shall return the Note to County. If the Closing has not (Page 3 of 5) occurred because the County is prevented due to cir- cumstances beyond its. control from carrying out its undertakings under the Option Agreement , then County shall return to NME not later than January 31 , 1990 the sum provided for under paragraph 8(d) of the Option Agreement as 'liquidated damages . 4. The Option Agreement shall continue in full force and effect until closing and the obligations , rights , and remedies of the parties shall remain unchanged except as specifically provided herein. 5. For purposes of interpreting this Escrow Agreement , NME and County acknowledge that their intent in entering into this Escrow Agreement is to provide a method by which NME may accommodate the County' s desire. for advance payment of the remainder of the purchase price , preserve the obligations of the County in favor of NNE under the Option Agreement , pending transfer of the subject. hospital bed rights , and pro- vide security to NME and a method whereby NME can recover the $1 , 300,000 paid hereunder together with interest in the event the subject transfer does not occur by December 31 , 1989 . The parties further acknowledge, that except as specifically provided herein, it is not their intent to enlarge or extend the obligations of County under the Option Agreement . 6 . 'County by its ratification of this Agreement authorizes the County Administrator or his designee to. execute the note pro- . vided for herein and such other documents and instruments as (Page 4 of 5) are necessary to implement the Escrow and perform the obliga- tions of County hereunder and under the Option Agreement . 7 . The Escrow Agent shall perform the functions contemplated under the Option Agreement modified so as to accommodate the fact that NME will have delivered to County the remaining purchase . price upon the opening, rather than closing date of Escrow and that the County' s delivery of the Note into Escrow is designed to secure the performance of County' s obligations under this Escrow Agreement and under the Option Agreement . 8. Capitalized terms in this Escrow Agreement corresponding to those in the Option Agreement are intended to have the same meaning unless the context clearly otherwise requires . ATT ST NATIONXL DICAL ENTERPRISES, INC. B EST DONT COSTA UNTY By ACCEPTED ESCRO AGENT (Page 5 of 5) EXHIBIT "A" PROMISSORY NOTE PAYABLE ON DEMAND $19'300 ,000 . 00 Contra Costa County September 30 , 1987 FOR VALUE RECEIVED, Contra Costa County ,. a. California County, ( the "Maker" ) , hereby promises to pay on demand to National Medical Enterprises , Inc . , a Nevada corporation , ( the "Holder" ) , at Martinez, California or at such other place as the Holder hereof may designate from time to time, the principal sum of One Million Three Hundred Thousand Dollars ($1 , 300 , 000 .00) , together with interest calculated daily and prorated based upon the Manufacturers Hanover Bank annual prime corporate rate as reported daily for each day of the term of this Note plus two percent (2916) . The Maker may prepay, without premium or penalty, all or any part of this- Note at any time and from time to time. All payments shall be payable in lawful money of the United States . The Maker , for itself , and its successors and assigns , hereby waives diligence , protest and notice of protest , dishonor and non- payment of this Note. If. Holder makes demand to Maker for payment of this Note , and Maker does not pay all. unpaid principal and interest to Holder within ten days of such demand, then thereafter Maker shall be obligated to pay Holder a one time late payment penalty of two percent (2%) of the then unpaid principal and interest with such' sum to be added to principal and to bear interest at the rate specified above until -paid. If action be instituted on this Note the Maker shall pay to the Holder such sum as the Court may fix as attorneys ' fees and costs . "Maker" Contra Costa County By'............................... Phil Batchelor ATTEST San Ramon Valley Community Hospital and Medical Center August 13, 1987 Contra Costa County 4Fr1=��lFl� AL Mr. Phil. Batchelor County Administrator Office of Contra Costa County County Administratof County Administration Building 651 Pine Street Martinez, CA 94553 Dear Mr. Batchelor: This letter is being sent to confirm the substantive issues that we discussed relating to our purchase of bed licenses from the County on August 7. It serves as an amendment to your November 13, 1986 letter to Mr. Gross that, in effect, modified our original agreement. We have agreed that if NME purchases the bed licenses before October 1, 1987, the balance that will be due would be reduced to $1.3 million from the $1.4 million specified in the legal option contract. This discount is to be allowed in consideration of our prepayment of the amount due. In the event payment is not received by the County on or before October 1, 1987, the payment schedule and amount will revert back to the provision's of the aforementioned November 13th letter. If this amendment is agreeable to you, please sign in the space provided below and return to me. Your prompt action on this matter is greatly appreciated. I look forward to continuing our working relationship with the County in the future. Si , Har i F. Ko nig Phil Batchelor Di or of evelopment County Administrator :ja cc: John Meyers r PROJECT OFFICE (415)830-0770 OA National Medical Enterprises 2420 Camino Ramon, Suite 229 i Health Care Facility San Ramon, California 94583