maynard Cooper&GALE PC JUN 2 D ?n^

ATTORNEYS AT LAW STATE HEALTH PUNNINGfiEeFv£NrA3\C

June 20,2014

VIA ELECTRONIC MAIL &

US MAIL

Alva Lambert. Esq.

Executive Director

Stale Health Planning and Development Agency

100 North Union Street, Suite 870

Montgomery, Alabama 36104

Re: Notice ef Change of Ownership

Dear Mr. Lambert:

We respectfully submit the two attached Notices of Change of Ownership

pursuant to Chapter 410-I-7-.04, Rules and Regulations of the Alabama Certificate of

Need Program (the "Rules"). The Changes of Ownership involves transfer of a recently

closed 85-bed nursing home known as Salem Nursing and Rehabilitation Center of

Reform. Inc. (the '"Facility"). The following is a summary ofthe proposed transaction:

I. Facts.

1. The Facility was owned by The Medical Clinic Board of the City of Reform.

Alabama and, until March 2014 was lea.sed to Salem Nursing and

Rehabilitation Center of Reform, Inc., which held the license ("Salem") and

was managed by Allacare Corporation ("Manager").

2. In September of 2011. litigation commenced in the Federal District Court for

the Northern District of Alabama (case 2:1 l-cv-01509, Bank of New York

Mellon Trust Company v, Salem Nursing & Rehab Center ofReform, Inc.. The

Medical Clinic Board ofthe City ofReform, et al.).

3. The Facility has maintained its license and never ceased operations. All

authorized skilled nursing facility beds ai the Facility have remained in

service.

4. On March IS, 2014, the Court entered an Order appointing Derek Pierce of

Healthcare Management Partners, LLC ("Receiver" or "HMP") as Receiver,

and charging the Receiver with certain rights and responsibilities, as outlined

in the Court's Order of that dale. Among those were direction of all decisions

relating to operations of the Facility until a sale of receivership assets may be

arranged.

5. Although all actions laken by Pierce as Receiver have been pursuant to court

order, it is our understanding that your agency has determined that the 20)3

amendments to Al.A. Code §22-21-263 might require a notification lo your

44S Dexier Avenue Sum; 8040 Mon-kkimuky. Alabama 3fiKM-.ni1; 334.262.2001 Fax S34-26Z2M3

WWW.MAYNARDCOQPEfS.COM

Alva Lambert. Esq.

June 20. 2014

Page 2 of 3

agency of a "change in control'" pursuant to Ala. Admin. Code §410-1-7-

.04(1), and therefore the court-order transfer of responsibilities from the prior

owner to Pierce as Receiver is reported herein as the first step of what will

ultimately be a two stage Change ofOwnership involved in this transaction.

6. As a part of the discharge of duties assigned by the Court to Pierce as

Receiver, the Court further entered an order allowing the Receiver to sell

substantially all assets of the receivership estate, and establishing and

approving bidding procedures for such a sale.

7. At this point, the public auction has yet to be held. Following a successful

completion of that process, and the subsequent transactional closing, Un

successful bidder will submit additional filings with your agency.

S. To be properly on record, this initial change of ownership ("CHOW") will

show a transfer from the prior owner to the Receiver, supported by the

attachment of the Order of the Court.

II. Financial Scope of Project.

At this time, there has been no financial scope of the project determined, as all

actions have been taken pursuant to the attached Order of the Court. No actions

taken thus far involve the purchase of any new equipment, new operating costs, or

other capital expenditures in excess of the spending thresholds set forth in Section

22-21-263(a)(2) of the Code of Alabama.

III. Sen-ices to be Offered.

1. No New Services: The transaction does not involve the offering of any new

services at the Facility.

IV. Beds.

1. New Beds: The proposed transaction does not involve any addition or

reduction of beds.

2. Conversion of Beds: The proposed transaction docs not involve the

conversion of beds.

V. Stock and Assets.

At this point, the transaction consists of only one step: the change of ownershiprelated to granting the Receiver all rights to operate the Facility to permit the

Receiver to complete an upcoming, court approved sale. Other than the

foregoing, the transaction will not involve the acquisition of stock or assets.

Based on the above showing that there has been no (i) change in health service,

(ii) conversion of beds or (iii) increase in bed capacity we respectfully ask that you

MAYNARD COOPER&Gale pc

ATTORNEYS AT LAW

Alva Lambert, Hsq.

June 20, 2014

Page 3 of 3

exercise your authority under Chapter 410-l-7-.04(2) of the Rules and determine that a

certificate of need is not required for the consummation of the above-described proposed

transaction. In accordance with the Rules, 1 am enclosing a check in the amount of

$2,800.00, and the executed change of ownership forms.

Should you have any questions or need further information, please contact me at

334-420-0793.

Sincerely,

'Peck Fox

Enclosures

c: Leland Murphree

3

Stale Health Planning And Development Agency Alabama CON Rules & Regulations

■'■ ' HFD

CHANGE OF OWNERSHIP jun 2 0 ?[\hSTATE HcA.Tri PLANNING

_,.,_, .. — ... , , .- /.nd DEVELOPMENTAGENCYPart I: Purchasing Organization Information

Name of Organization: Derek Pierce of Healthcare Management Partners, LLC.

as Receiver

Facility Name:

(ADPH Licensure name) Salem Nursing & Rehabilitation Center of Reform, Inc.

SHPDA ID Number: 1Q7-N0001

Address (PO Box #): 515 Second Avenue NW

City, State, Zip. County. Reform

Number/Type Licensed Beds: 85 nursing home beds

Owner(s). Derek Pierce of Healthcare Manaqement Partners, LLC.

as Receiver

Operator(s): N/A

Part II: Selling Organization Information

Name of Organization: Salem Nursing & Rehabilitation Center of Reform. Inc

Address (PO Box #): same as above

City, State, Zip. County:

Number/Type Licensed Beds: 85 nursing home beds

Owner(s): Medical Clinic Board of the City of Reform

Operator(s): Altacare Corporation

Part III: Value of Consideration

Monetary Value of Purchase: S See Letter No./Type Beds: 85 skilled nursing

Terms of Purchase: Please see attached letter(add more pages as necessary <° describe (he sale)

Part IV: List of Certificate of Need Authority

Number of Beds: 85

Types of Institutional Health Services1 Nursing home beds

Slato Health Planning And Development Agency Alabama CON Rules & Regulations

List Service Area by County for Home Health Agencies:

On an Attached Sheet Please Address the Following:

*1,)The financial scope of the project to include the preliminary estimate of costs broken down by

equipment, construction, and yearly operating costs.

*2.) The services to be offered by the proposal (the applicant will state whether he has previously

offered the service and whether the service is an extension of a presently offered service, or

whether the service is a new service).

*3.) Whether the proposal will include the addition of any new beds

*4.) Whether the proposal will involve the conversion of beds.

*5.) Whether the assets and stock (if any) will be acquired.

Part V: Certification of Information

I certify that I agree to provide the information necessary (financial, utilization of services and

beds, etc.) so the new owner can have the necessary information to complete reports as

necessary for the entire fiscal year. The purchaser has agreed to these terms.

Seller(s) Signature(s): See attached Order of the Federal District Court

Owner(s): .

Operator(s)'

Title/Date:

I certify that I will be responsible for retaining records as necessary to complete reports required

for the entire fiscal year, and agree to these terms. I have enclosed a check in the amount of

$2,800* made payable to 'Alabama State Health Planning and Development Agency' to cover

the cost of the change of ownership.

_ YES _ NO The a^ove\urchas|r and|S_eJJe'r have agreed to these purchase terms.

Purchaser Signature

Title/Date Receiver, pursuant to attached order of the Federal District Court

•_ please note that the fee for a Notice of Change of Ownership includes a temporary surcharge

of $300.

Case 2:ll-cv-01509-TMP Document 57 Filed 03/18/14 Page 1 of 8 Fl LED2014Mar-l6 PM 04.03

U.S. DISTRICT COURT

N.D OF ALABAMA

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ALABAMA

SOUTHERN DIVISION

TI IE BANK OF NEW YORK )

MELLON TRUST COMPANY. N.A.. )

as Indenture Trustee. )

)Plaintiff. )

)v ) Case No. 2:1 l-cv-01509-TMP

)SALEM NURSING & REIiAB )

CENTER OF REFORM, INC., THE )

MEDICAL CLINIC BOARD OF THE )

CITY OF REFORM, ALABAMA, and )

ALTACARE CORPORATION, )

)Defendants. )

ORDER APPOINTING RECEIVER

The court has previously granted summary judgment in Savor of the

Plaintiff. The Bank of New York Mellon Trust Company. N.A., as Indenture

Trustee, and against the Defendants. The Medical Clinic Board of the City of

Reform, Alabama, and Salem Nursing & Rehab Center of Reform, Inc. Part of the

relief sought by Plaintiff is the appointment of a receiver pursuant to the following

provision in the Indenture:

Section 10.5. Appointment of Receivers. Upon the occurrence an

Event of Default, and upon the filing of a suit or other commencement

of judicial proceedings to enforce the rights of Trustee and of the

Bondholders under this Indenture. Trustee shall be entitled, as a

Pase 1 of 8

Case 2:ll-cv-01509-TMP Document 57 Filed 03/18/14 Page 2 of 8

matter ofright, and without regard to the adequacy of the security for

the Bonds or the solvency of the Company, to the appointment of a

receiver or receivers of the Trust Estate and of the rents, revenues,

earnings, income, products and profits thereof, pending such

proceedings, with such powers as the court making such appointment

shall confer.

And pursuant to the following provision of the Mortgage:

Section 2.5. Receiver. If an Event of Default shall have occurred,

Mortgagee, upon application to a court of competent jurisdiction, shall

be entitled as a matter of strict right, without notice and without

regard to the occupancy or value of any security for the Secured

Indebtedness or the solvency of any party bound for its payment, to

the appointment of a receiver to take possession of and to operate the

Premises and to collect and apply the rents, issues, profits, and

revenues thereof. The receiver shall have all of the rights and powers

permitted under the laws of the suite in which the Premises are

located. Mortgagor will pay unto Mortgagee upon demand all

expenses, including receiver's fees, attorneys' fees, costs, and agent's

compensation, incurred pursuant to the provisions of this paragraph

2.05, and any such amounts paid by Mortgagee shall be added to the

Secured Indebtedness and shall be secured by this Mortgage.

Pursuant to these contractual authorizations, the court's inherent equitable powers,

and 28 U.S.C. § 1651, It is ORDERED, ADJUDGED and DECREED, as follows:

1. APPOINTMENT OF RECEIVER - Derek Pierce of Healthcare

Management Partners. LLC is appointed Receiver, effective immediately, with

respect to the Health Care Premises (as described below). The Receiver shall serve

at the pleasure of this court. The Receiver shall not be required to post a bond.

unless the court further and separately so orders. Except for malfeasance or gross

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Case 2:ll-cv-01509-TMP Document 57 Filed 03/18/14 Page 3 of 8

negligence, the Receiver shall not be liable for any loss or damage incurred by the

Receivership Estate, or any of Defendants, the Defendants' clients or associates, or

their suhsidiaries or affiliates, their officers, directors, agents, and employees, or by

any of Defendants' creditors or equity holders because of any act performed or nol

performed by him or his agents or assigns in connection with the discharge of his

duties and responsibilities hereunder.

2. POWERS OF RECEIVER - The Receiver shall immediately lake

possession of that facility owned by The Medical Clinic Board of the Cily of

Reform. Alabama ("the Board"), and financed through Bonds issued under the

Indenture by The Medical Clinic Board of the Cily of Reform, Alabama, and

leased lo the Salem Nursing & Rehab Center of Reform. Inc.. known as the Salem

Nursing &. Rehab Center, an 85-bed nursing-home facility, (hereinafter "the Health

Care Premises"), including all buildings, fixtures, appurtenances, and equipment

thereon, and shall have and exercise all authority and power necessary to ensure

the full, timely, efficient, and cost-effective management and operation of said

Health Care Premises, including, but not limited to, the following powers:

a. full power to direct, control, operate, manage, and administer all

decisions pertaining to the direction, control, operation, management, and

administration of all property, funds, accounts, and assets of the Health Care

Premises deemed by the Receiver to be necessary and proper for effecting

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Case 2:ll-cv-01509-TMP Document 57 Filed 03/18/14 Page 4 of 8

decisions pertaining to Ihe Health Care Premises, or otherwise necessary for the

expeditious discharge of his duties hereunder. including, but not limited to. the

power to lease, foreclose upon, sell, convey, encumber, or pledge the real and

personal property, revenue, and funds associated with the said Health Care

Premises, to charge and colled rents on said Health Care Premises, and to direct

and apply the revenues from said Health Care Premises as provided in the

Mortgage. Security Agreement, and Indenture executed by the Board;

b. the power to colled, receive, and take possession of. without

limitation, all goods, chattel, rights, credits, monies, effects, lands, leases, books

and records, work papers, records of account, including computer maintained

information, contracts, financial records, monies on hand in banks and other

financial initiations, and other papers and documents now held by or under the

direction, possession, custody, or control of the Health Care Premises;

c. the power to employ, appoint, promote, demote, transfer, discipline,

suspend, or terminate employees necessary for the management, operation, or

winding down of said Health Care Premises:

d. the power to enter into contracts for the employment of persons,

attorneys, accountants, outside consultants, or independent contractors, and to fix

and pay their reasonable compensation, for such purposes as: (i) managing or

operating the Health Care Premises, (ii) auditing or otherwise investigating the

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Case2:ll-cv-01509-TMP Document 57 Filed 03/18/14 Page 5 of 8

financial standing, condition, revenues, or expenses of the Health Care Premises,

(iii) developing and implcmenling plans and strategies for operating or ceasing

operation of the Health Care Premises;

e. the power to institute suit to recover any fees, payments, revenues,

deficiencies, funds, titles, or benefits owned to or claimed by the Health Care

Premises, or resulting from foreclosure of the Health Care Premises, together with

the power to retain and employ attorneys to advise, assist, or represent the Receiver

in connection with his responsibilities hereunder:

f. the power to resolve, remediate, compromise, intervene in. settle, or

litigate complaints against or disputes involving the Health Care Premises, and to

retain and employ attorneys to advise, assist, or represent the Receiver in

connection with his responsibilities hereunder; and

g. the power to lease, foreclose upon, sell or convey good

merchantable title to all real property, buildings, fixtures, appurtenances, and

equipment thereon on such terms and conditions as are reasonable under the

circumstances, subject to the confirmation of the court, including the power to

execute such instruments as are necessary to carry out such conveyances.

3. DUTIES OF RECEIVER -- The Receivers duties include, but are not

limited to, the following:

a. the duty to collect, marshal, and preserve all assets of the Health

Page 5 of 8

Case 2:ll-cv-01509-TMP Document 57 Filed 03/18/14 Page 6 of 8

Care Premises, including but not limited to. the real and personal property and

fixtures, rents, revenues, collectibles, accounts receivable, funds, cash, and

investments of the Health Care Premises;

b. to take any action reasonably necessary to protect and preserve the

value of the real property, including but not limited to making necessary and

reasonable expenditures for maintain, repairs, and improvements, and including the

purchase of liability' and casually insurance on said Health Care Premises;

c. to make all payments of principal, interest, late charges, and

expenses owed to the Trustee under the terms and provisions of the Bonds,

Indenture as supplemented, and Mortgage;

d. to faithfully preserve and protect the security of the Trustee in the

assets of the Health Care Premises, including payment to the Trustee of proceeds

of foreclosure of the Mortgage pertaining to the Health Care Premises; and

e. to provide a lull and complete accounting of the books, records, and

revenues of the Health Care Premises to the Trustee.

4. COMPENSATION OF RECEIVER — The Receiver shall be entitled to

reasonable compensation for his time and efforts, as well as reimbursement of any

reasonable and necessary expenses incurred carrying out his duties, subject to

review and approval by the court, which compensation shall be an expense to the

Trustee under the terms and conditions of the Bonds, Indenture, and Mortgage,

Page 6 of8

Case 2:ll-cv-01509-TMP Document 57 Filed 03/18/14 Page 7 of 8

payable by the Defendants.

5. REPORTS OF THE RECEIVER — The Receiver shall report to the

court every 180 days on the status and operations of the Health Care Premises,

including efforts to resolve the defaults under the Bonds, Indenture. Mortgage and

Lease.

6. TERMINATION OF RECEIVERSHIP — Any part}' may move the court

to terminate and dissolve the receivership created herein at any time upon a

showing that the essential purposes of the receivership to preserve the assets of the

Health Care Premises and (o make required payments to the Trustee under the

Bonds, Indenture, and Mortgage have been fulfilled.

7. INJUNCTION — The Defendants, The Medical Clinic Board of the City

of Reform. Alabama, and the Salem Nursing & Rehab Center of Reform, Inc.. and

all other persons acting in concert with, or on their behalf, shall immediately

deliver and hand over to the Receiver the Health Care Premises and all property,

chattels, equipment, books, records, accounts, funds, and monies of or related to

the Health Care Premises, and are hereby restrained and enjoined from interfering

in any way with the Health Clinic Premises, or with the Receiver, or with the

Receiver's efforts to comply with its obligations under this Order, and any

violation of this order may result in a fine, or incarceration, or both. The

Defendants and their officers, directors, employees and other persons acting in

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Case 2:ll-cv-01509-TMP Document 57 Filed 03/18/14 Page 8 of 8

concert or participation with them and other persons who have notice of this Order

by personal service or otherwise, are hereby restrained and enjoined from

destroying, mutilating, concealing, altering, transferring, or otherwise disposing of,

in any manner, directly or indirectly, any contracts, accounting data,

correspondence, advertisements, computer tapes, disks or other computerized

records, books, written or printed records, handwritten notes, telephone logs,

telephone scripts, receipt books, ledgers, personal and business canceled checks

and check registers, bank statements, appointment books, copies of federal, state,

or local business or personal income or property tax returns, and other documents

or records of any kind thai relate in any way lo the Health Care Premises or are

relevant to this action.

DONE and ORDERED this I8lh dav of March. 2014.

T. MICHAEL PUTNAM

U.S. MAGISTRATE JUDGE

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