<PAGE>
PART I. - FINANCIAL INFORMATION
CONSOLIDATED RESOURCES HEALTH CARE FUND IV
CONSOLIDATED BALANCE SHEETS
(Unaudited)
June 30, December 31,
1997 1996
-------------- ----------------
ASSETS
Current assets:
Cash and cash equivalents $ 461,450 $ 723,569
Accounts receivable and
third party settlement 235,121 165,545
Prepaid expenses 27,917 901
Property held for sale 581,566 613,198
--------------- ----------------
Total current assets 1,306,054 1,503,213
--------------- ----------------
Restricted escrows and other deposits 21,029 46,979
Deferred loan costs, net of accumulated
amortization of $106,242 50,000 -
--------------- ----------------
Total other assets 71,029 46,979
--------------- ----------------
$ 1,377,083 $ 1,550,192
=============== ================
LIABILITIES AND PARTNERS' DEFICIT
Current liabilities:
Current maturities of long-term
obligations including debt in default $ 1,598,652 $ 1,656,836
Trade accounts payable 150,803 156,163
Accrued compensation 95,567 103,960
Insurance payable 58,386 58,062
Accrued interest 19,038 17,916
Accrued real estate taxes 17,353 29,455
-------------- --------------
Total current liabilities 1,939,799 2,022,392
Partners' equity (deficit):
Limited partners 124,143 211,038
General partners (686,859) (683,238)
--------------- ----------------
Total partners' deficit (562,716) (472,200)
--------------- ----------------
$ 1,377,083 $ 1,550,192
=============== ================
<PAGE>
CONSOLIDATED RESOURCES HEALTH CARE FUND IV
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
------------- ------------- ------------- ------------
<S> <C> <C> <C> <C>
Revenues:
Operating revenues $ 877,242 $ 834,202 $ 1,676,185 $ 1,725,748
Interest income 5,619 4,204 12,547 9,625
------------- ------------- ------------- --------------
Total revenues 882,861 838,406 1,688,732 1,735,373
------------- ------------- ------------- --------------
Expenses:
Operating expenses 729,255 793,144 1,504,085 1,614,358
Interest 68,166 40,705 107,424 84,236
Depreciation and amortization 39,082 39,081 78,163 113,094
Partnership administration
costs 63,394 9,708 89,576 30,554
------------- ------------- ------------- --------------
Total expenses 899,897 882,638 1,779,248 1,842,242
------------- ------------- ------------- --------------
------------- ------------- ------------- --------------
Net income (loss) $ (17,036) $ (44,232) $ (90,516) $ (106,869)
============= ============= ============= ==============
Net income(loss) per L.P. unit $ (0.62) (1.62) (3.31) (3.90)
============= ============= ============= ==============
L.P. units outstanding 26,283 26,283 26,283 26,283
============= ============= ============= ==============
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
CONSOLIDATED RESOURCES HEALTH CARE FUND IV
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six months ended June 30,
1997 1996
------------- ---------------
Operating Activities:
Cash received from residents
and government agencies $ 1,606,609 $ 1,688,027
Cash paid to suppliers and employees (1,646,208) (1,651,966)
Cash paid to restricted escrows 25,950 (12,750)
Interest received 12,547 9,625
Interest paid (106,302) (87,265)
------------- ---------------
Cash (used in) operating activities (107,404) (54,329)
------------- ---------------
Investing Activities:
Additions to property and equipment
held for sale (96,531) (26,080)
--------------- -------------
Cash (used in) investing activites (96,531) (26,080)
------------- ---------------
Financing Activities:
Principal payments on long-term obligations (58,184) (52,090)
------------- ---------------
Cash (used in) financing activities (58,184) (52,090)
------------- ---------------
Net (decrease) cash
and cash equivalents (262,119) (132,500)
Cash and cash equivalents, beginning of period 723,569 628,543
------------- ---------------
Cash and cash equivalents, end of period $ 461,450 $ 496,043
============= ===============
See accompanying notes to consolidated financial statements.
<PAGE>
CONSOLIDATED RESOURCES HEALTH CARE FUND IV
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six months ended June 30,
1997 1996
--------------- ---------------
Reconciliation of Net Loss
to Cash (Used in) Operating
Activities:
Net loss $ (90,516) $ (106,870)
Adjustments to reconcile net (loss)
to cash (used in) operating
activities:
Depreciation and amortization 78,163 113,094
Changes in assets and liabilities:
Accounts receivable (69,576) (37,721)
Other assets (27,016) (60,000)
Restricted escrow and other deposits 25,950 (12,750)
Trade accounts payable and
accrued liabilities (24,409) 49,918
--------------- ---------------
Cash (used in) operating activities $ (107,404) $ (54,329)
=============== ===============
See accompanying notes to consolidated financial statements.
<PAGE>
CONSOLIDATED RESOURCES HEALTH CARE FUND IV
CONSOLIDATED STATEMENTS OF PARTNERS' EQUITY (DEFICIT)
(Unaudited)
Total
Partners'
General Limited Deficit
--------------- ----------------- ---------------
Balance, at December 31, 1995$ (673,996) $ 432,856 $ (241,140)
Net loss (4,275) (102,594) (106,869)
---------------- ----------------- ---------------
Balance, at June 30, 1996 $ (678,271) $ 330,262 $ (348,009)
================ ================= ===============
Balance, at December 31, 1996$ (683,238) $ 211,038 $ (472,200)
Net loss (3,621) (86,895) (90,516)
---------------- ----------------- ---------------
Balance, at June 30, 1997 $ (686,859) $ 124,143 $ (562,716)
================ ================= ===============
See accompanying notes to consolidated financial statements.
<PAGE>
CONSOLIDATED RESOURCES HEALTH CARE FUND IV
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1997
NOTE 1.
The consolidated financial statements are unaudited and reflect all adjustments
(consisting only of normal recurring adjustments) which are, in the opinion of
management, necessary for a fair presentation of the financial position and
operating results for the interim periods. The results of operations for the six
months ended June 30, 1997, are not necessarily indicative of the results to be
expected for the year ending December 31, 1997.
NOTE 2.
The consolidated financial statements should be read in conjunction with the
consolidated financial statements and the notes thereto contained in the
Partnership's Annual Report on Form 10-K for the year ended December 31, 1996,
as filed with the Securities and Exchange Commission, a copy of which is
available upon request by writing to WelCare Service Corporation-IV (the
"Managing General Partner"), at 400 Perimeter Center Terrace, Suite 650,
Atlanta, Georgia, 30346.
NOTE 3.
A summary of compensation paid to or accrued for the benefit of the
Partnership's general partners and their affiliates and amounts reimbursed for
costs incurred by these parties the on behalf of the Partnership are as follows:
Six Months Ended
June 30,
1997 1996
Charged to costs and expenses:
Property management and oversight
management fees $ 95,421 $ 103,370
Financial accounting, data processing,
tax reporting, legal and compliance,
investor relations and supervision
of outside services $ 29,125 $ 30,554
NOTE 4:
Effective July 31,1997, the Partnership completed the sale of its two remaining
skilled nursing facilities Heritage Manor of Emporia ("Emporia") and Hoisington
Rehabilitation Center ("Hoisington"). The total sales price for both facilities
net of required repairs was $2,050,000. Proceeds from the sale were used to
satisfy approximately $1,640,000 in mortgage debt obligations secured by the
facilities. The Partnership received net proceeds of approximately $380,000
following the satisfaction of the debt and payment of sales expenses and
property taxes. The Partnership will recognize a gain on sale of approximately
$1,400,000 during the third quarter of 1997.
Prior to their repayment, the Partnership's two mortgage debt obligations
secured by Emporia and Hoisington were in default since these obligations
matured on April 1, 1996. The Partnership obtained an extension from the lender
to allow for the sale of the facilities.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Certain statements contained in this Management Discussion and Analysis are not
based on historical facts, but are forward-looking statements that are based
upon numerous assumptions about future conditions that may ultimately prove to
be inaccurate. Actual events and results may materially differ from anticipated
results described in such statements. The Partnership's ability to achieve such
results is subject to certain risks and uncertainties. Such risks and
uncertainties include, but are not limited to, changes in healthcare
reimbursement systems and rates, the availability of prospective purchasers for
its facilities, and other factors affecting the Partnership's business that may
be beyond its control.
At June 30, 1997, the Partnership had three general partners (the "General
Partners"), WelCare Consolidated Resources Corporation of America, a Nevada
corporation, serving as the corporate general partner ("WCRCA" or the "Corporate
General Partner"), Consolidated Associates IV, and WelCare Service
Corporation-IV ("WSC-IV" or the "Managing General Partner"), a Georgia
Corporation, serving as managing general partner.
Plan of Operations
A majority in interest of the Partnership's Limited Partners approved a
proposal, on October 18, 1994, which provides for the sale of all of the
Partnership's remaining assets and the eventual dissolution of the Partnership,
as outlined in a proxy statement dated September 28, 1994. Under the approved
proposal, the Limited Partners consented for the Managing General Partner to
attempt to sell or otherwise dispose of its remaining properties. Upon the
disposition of all of its assets, the approved proposal requires that the
Managing General Partner dissolve the Partnership.
As discussed in Item 1, Note 4, the Partnership sold its two remaining
facilities and satisfied the underlying mortgage debt obligations on July 31,
1997. The Managing General Partner currently anticipates the Partnership will be
liquidated prior to the end of 1997. At June 30, 1997 and December 31, 1996, the
Partnership held available for sale all of its nursing home facilities.
Accordingly, the Partnership has classified the facilities as Property held for
sale in the accompanying balance sheets.
Results of Operations
Six Months ended June 30, 1997 and 1996
Revenues:
Operating revenue decreased by $49,563 for the six months ended June 30, 1997,
compared to the same period in the prior year. This decrease was caused
primarily by lower census at both of the Partnership's remaining facilities. The
Emporia facility has experienced a decrease patient census due to a newly opened
home health agency in the community while the Hoisington facility traditionally
experiences a decrease in census in the spring and summer months.
Expenses:
Operating expenses decreased by $110,273 for the six months ended June 30, 1997,
as compared to the same period in the prior year. Most of this decrease
resulted from a reduction in operating expenses at Emporia due primarily to a
decline in staffing levels corresponding with the decrease in census as
previously discussed. The decrease at Emporia was offset in part by general
increases in costs at Hoisington.
Liquidity and Capital Resources
At June 30, 1997, the Partnership held cash and cash equivalents of $461,450, a
decrease of $262,119 from the amount held at December 31, 1996. The cash balance
is being held in reserve for working capital, capital improvements and operating
contingencies.
As discussed in Item 1, Note 4, the Partnership sold its last two properties and
in conjunction with the sale, satisfied its remaining secured debt obligations
and received cash of approximately $380,000 from the closing. Current cash
reserves should be sufficient to meet the Partnership's obligations prior to its
liquidation, which is currently scheduled to occur sometime before the end of
1997. As of June 30, 1997, the Partnership was not obligated to perform any
major capital additions or renovations and has no remaining capital obligations
with respect to its recently sold facilities.
Significant changes have and will continue to be made in government
reimbursement programs, and such changes could have a material impact on future
reimbursement formulas. Based on information currently available, Management
does not believe that proposed legislation will have an adverse effect on the
Partnership's operations. However, as health care reform is ongoing, the
long-term effects of such changes cannot be accurately predicted at the present
time.
<PAGE>
PART II - OTHER INFORMATION
Item 5.
Effective July 31,1997, the Consolidated Resources Health Care Fund IV, (the
"Registrant") closed the sale of its two remaining skilled nursing facilities
Heritage Manor of Emporia ("Emporia") and Hoisington Rehabilitation Center
("Hoisington"), to Midwest Nursing Home Investors,
L.L.C., an Georgia limited liability company unrelated to the Registrant. The
total sales price for both facilities net of required repairs was $2,050,000.
Proceeds from the sale were used to satisfy approximately $1,640,000 in mortgage
debt obligations secured by the facilities. The Partnership received net
proceeds of approximately $380,000 following the satisfaction of the debt and
payment of sales expenses and property taxes. The Partnership will recognize a
gain on sale of approximately $1,400,000 during the third quarter of 1997.
Results from the operation of these facilities included in the Registrant's
financial statements for the year ended December 31, 1996 and the six months
ended June 30, 1997 were as follows:
(Unaudited)
Emporia Hoisington
Year Ended December 31, 1996
Revenues $ 1,648,079 $ 1,707,277
Expenses 1,827,604 1,534,918
----------------------------
Net income (loss) (179,525) 172,359
Six Months Ended June 30, 1997
Revenues 908,532 759,292
Expenses 872,246 789,155
----------------------------
Net income (loss) $ 36,286 $ (29,863)
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.1 Purchaser and Sale Agreement by and between Midwest Nursing Home Investors,
L.L.C. and Consolidated Resources Health Care Fund IV on June 1, 1997.
(Included as a separate document in the June 30, 1997 Form 10-Q filed via
EDGAR)
(b) Reports on Form 8-K
None
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
CONSOLIDATED RESOURCES HEALTH CARE FUND IV
By: WELCARE SERVICE CORPORATION - IV
Managing General Partner
Date: August 14, 1997 By: /s/ J. Stephen Eaton
- --------------------- -------------------------
J.Stephen Eaton,
President
Date: August 14, 1997 By: /s/ Alan C. Dahl
- --------------------- -------------------------
Alan C.Dahl,
Chief Financial Officer
of the Corporate
General Partner
PURCHASE AND SALE AGREEMENT
(EMPORIA & HOISINGTON)
(Fund IV)
THIS PURCHASE AND SALE AGREEMENT (the "Agreement"), made and entered into
as of this 1st day of June, 1997, by and between Midwest Nursing Home Investors,
L.L.C., a Georgia limited liability company, (the "Purchaser"), and Consolidated
Resources Health Care Fund IV, a Georgia limited partnership (the "Seller").
W I T N E S S E T H:
WHEREAS, Seller has certain right, title and interest in and to real and
personal property comprising certain nursing home facilities listed on Exhibit
"A" attached hereto (such real property and personal property and the businesses
conducted thereon are hereinafter collectively referred to as the "Facilities");
WHEREAS, Seller wishes to sell all of its right, title and interest in and
to such Facilities, including the businesses thereof, to Purchaser and Purchaser
wishes to buy all of Seller's right, title and interest in and to such
Facilities subject to and upon the terms and conditions herein set forth.
NOW, THEREFORE, in consideration of the premises, the mutual covenants
herein contained, and other good and valuable consideration, the receipt,
adequacy, and sufficiency of which are hereby acknowledged, Seller and
Purchaser hereby agree as follows:
SECTION 1. PURCHASE AND SALE
Upon the terms and conditions set forth herein, Seller shall sell to
Purchaser and Purchaser shall purchase from Seller all of Seller's right, title
and interest in and to the following (the "Facility Assets"):
(a) All those certain tracts or parcels of real property relating to
the Facilities, TOGETHER WITH all and singular appurtenances now or
hereafter belonging thereto, said real property being more particularly
described in Exhibits "B-1" and "B-2" attached hereto and by reference
made a part hereof, and being hereinafter together referred to as the
"Land"; TOGETHER WITH all the improvements and appurtenances thereon
situated, and all fixtures, furniture, personal property and supplies
attached thereto or appurtenant thereto and used in connection therewith,
consisting, without limitation, of the Facilities containing licensed
patient beds which conform with the licenses granted, all plumbing,
heating, lighting and cooking fixtures, air conditioning fixtures and
units, ranges, refrigerators, dishwashers, disposals, trash mashers, hot
water heaters and equipment, boilers, bathroom and kitchen cabinets,
antennae, and to the extent located on the Land, mantels, door mirrors,
venetian blinds, shades, drapes, screens, awnings, window boxes, storm
doors, ice makers, mail boxes, weather vanes, flagpoles, pumps, shrubbery,
outdoor statuary, carpeting, and licenses and permits, TOGETHER WITH all
right, title and interest, if any, of Seller in and to any land lying in
the bed of any street, road or avenue, open or proposed, in front of or
adjoining said Land to the center line thereof, and together with all
right, title and interest of Seller in and to any award made or to be made
in lieu thereof, and in and to any unpaid award for damage to said Land by
reason of change of grade of any street; together with all right, title
and interest of Seller in and to any award made or to be made in lieu
thereof, together with all right, title and interest of Seller to the use
of strips and rights-of-way abutting or adjoining said Land, if any; (said
Land, improvements, appurtenances, fixtures and property at the facilities
being hereinafter collectively referred to as the "Real Property"); and
(b) All licenses, permits, equipment, furniture, furnishings,
fixtures, inventory, supplies and all other personal property located on
the Real Property or used in connection with the businesses of the
Facilities as going concerns and with the operation of the Facilities
located thereon, including without limitation all of those items of
personal property set forth and described in Exhibits "C-1" and "C-2"
attached hereto (such personal property is hereinafter referred to as the
"Tangible Personal Property").
(c) All accounts receivable to the extent arising from the operation
of the Facilities, and all proceeds therefrom (the "Intangible Personal
Property") (the Tangible Personal Property and the Intangible Personal
Property being hereinafter referred to as the "Personal Property").
SECTION 2. PURCHASE PRICE AND FINANCING
2.01. Purchase Price. The total purchase price payable by Purchaser to
Seller for the Real Property and Personal Property of the Facilities shall be
TWO MILLION FIVE HUNDRED FIFTY THOUSAND AND NO/100 DOLLARS ($2,550,000.00) (the
"Purchase Price"), subject to adjustment as provided in this Agreement. The
Purchase Price shall be paid by Purchaser in cash or by wire transfer of
immediately available funds at Closing.
2.02. Compliance with Section 1060 of the Internal Revenue Code. Seller
and Purchaser agree that Exhibits "D-1" and "D-2" in which the parties have
allocated the Purchase Price among the assets purchased, has been jointly
prepared by the parties hereto. The parties agree that they shall fully comply
with the requirements of Section 1060 of the Internal Revenue Code of 1986, as
amended, and the regulations promulgated thereunder, relating to allocation
rules for certain applicable asset acquisitions, and the parties further agree
to use Exhibits "D-1" and "D-2" as the basis for completing Form 8594 entitled
"Asset Acquisition Statement Under Section 1060," which they shall both file on
a timely basis with the Internal Revenue Service.
2.03. Adjustment for Capital Repairs, Improvements, and Replacements. The
gross Purchase Price set forth in Section 2.01 shall be adjusted by debiting
Seller and crediting Purchaser the sum of FIVE HUNDRED THOUSAND AND NO/100
DOLLARS ($500,000.00), an amount stipulated by Seller and Purchaser to reflect
the capital improvements repairs, replacements and reserves needed to place the
Facility Assets into the condition required for Purchaser's acquisition. The
aforesaid adjustment shall be made and reflected on the closing statement signed
by Seller and Purchaser at Closing. SECTION 3. SELLER'S REPRESENTATIONS,
WARRANTIES AND COVENANTS.
As used herein in this Section and elsewhere in this Agreement the
following terms shall have the following meanings:
"Knowledge of Seller" or "Seller's Knowledge" shall mean the actual
knowledge of any executive officer of WelCare Service Corporation-IV, as
the managing general partner of Seller, or of any executive officer of
Seller's managing agent as of the date a representation or warranty is
made.
"Knowledge of Purchaser" or "Purchaser's Knowledge" shall mean the
actual knowledge of Purchaser and the actual knowledge of any member of
Purchaser.
"Material" or "Materially," when used with reference to any claim,
obligation, event, omission or other development, shall mean a claim,
obligation, event, omission or other development having a value or
potential financial impact in excess of $25,000.00 for each separate
Facility, provided, however, that the total value of all claims,
obligations, events, omissions or other developments deemed not to be
Material pursuant to this definition shall not exceed $100,000.00 for each
separate Facility. Seller hereby makes the following representations,
warranties and
covenants to Purchaser, each of which shall be deemed to be Material to the
transactions contemplated by this Agreement:
3.01. Condition of Facilities. To Seller's Knowledge upon Closing each of
the Facilities will be in good condition, comparable to, in all Material
respects, the condition existing on the date of this Agreement, ordinary wear
and tear excepted. Except as may be disclosed in Exhibit "E", to Seller's
Knowledge the heating, air conditioning, sewer, plumbing, antennae, and
electrical systems in or relating to each of the Facilities are in good working
order in all Material respects, the painted walls, window treatments, interior
and exterior doors, plumbing, roofs and carpeting of all of the buildings of the
Facilities are in good repair in all Material respects and each building of the
Facilities is free from damage by termite and insect infestations in all
Material respects and the structural supports and members of all buildings are
sound and in good repair in all Material respects. There are no latent defects
in or to the Facilities or any portions thereof of which Seller has been
notified. Upon the request of Purchaser, Seller will provide information in its
possession concerning the age of items described above. Seller shall not remove
any item of Personal Property from the Facilities prior to the Closing, except
for the purpose of repair or replacement or in the ordinary course of business,
and any such item or its replacement, as the case may be, shall be included in
this transaction. Pursuant to Section 8 of this Agreement, Purchaser has been
given the opportunity to inspect the Facilities and the financial condition of
each of the Facilities. Seller makes no representations, warranties or covenants
concerning any future financial performance of the Facilities and, except as
expressly set forth herein, Seller makes no warranties, representations or
covenants concerning the physical condition of the Facilities.
3.02. List of Patients. Attached hereto and made a part hereof as Exhibits
"F-1" and "F-2" is a schedule setting forth the name of each patient of each of
the Facilities, the status of payment or level of care of each patient, and an
accounting of security deposits and patient funds, which accounting is true,
complete and correct in all Material respects. The Facilities's accounting of
patient funds, which accounting is maintained as a ledger book in the offices of
each of the Facilities, is true, correct and complete in all Material respects,
subject to routine periods for posting of transactions and is available for
inspection by Purchaser in accordance with Section 8 hereof.
3.03. Financial Statements and Costs Reports. Attached hereto and made a
part hereof as Exhibit "G" are copies of the following financial statements of
the Facilities: (i) unaudited balance sheets as of the end of each of the
Facilities's last two (2) fiscal years and as of March 31, 1997, which, in all
Material respects, are true, complete and correct and accurately reflect the
financial condition of each of the Facilities at the respective dates on such
balance sheets; and (ii) unaudited statements of operations for each of the
Facilities' last two (2) fiscal years and year-to-date for the period ended
March 31, 1997, which, in all Material respects, are true, complete and correct
and accurately reflect its operations during such periods. Seller will provide
to Purchaser copies of all cost reports and any audits of cost reports under
Medicare and Medicaid, as applicable, for the two (2) years prior to the date
hereof for each of the Facilities, the Medicaid rate sheets for the last two (2)
years. Seller shall make available to Purchaser upon Purchaser's request any and
all unaudited balance sheets and statements of operations provided to them from
a comptroller's office and or Medicare intermediary and any internal accounting
working papers of the Seller used in preparing the above-referenced balance
sheets and statements of operations for each of the Facilities. Except as set
forth on Exhibit "H", there have been no Material adverse changes in the
financial condition, business or properties of each of the Facilities since
their most recent fiscal year end. Seller shall make available to Purchaser upon
Purchaser's request all internal accounting working papers prepared during the
annual financial reviews of each of the Facilities for the last two (2) fiscal
years and the current fiscal year.
3.04. Agreements, Contracts and Commitments. Attached hereto and made a
part hereof as Exhibit "I" is a list prepared by Seller of all contracts and
agreements with respect to laundry facilities, food services, equipment,
furniture, medical equipment, management, grounds maintenance and other services
of each of the Facilities which require more than 60 days notice for
cancellation without penalty. Seller shall not renew or extend any such
contracts without Purchaser's consent, which shall not be unreasonably withheld;
provided, however, that Seller may in the ordinary course of business renew
without Purchaser's consent any contract involving an amount which, when
combined with amounts payable under all other contracts which are renewed
without Purchaser's consent, is not in excess of $5,000 for each of the
Facilities. Purchaser shall assume the contracts and agreements listed in
Exhibit "I" or shall cause Seller to terminate such contracts and agreements
before Closing in accordance with Purchaser's instructions to Seller on or
before Closing. Seller shall use its reasonable best efforts to keep all
insurance policies or renewals thereof ("Policies") affecting or covering each
of the Facilities and its operations in force and effect up to and including the
date of the Closing unless the reason for such Policies ceases or such Policies
are replaced in the ordinary course of business. Seller shall deliver to
Purchaser true and correct copies of all such Policies in Seller's possession.
3.05. Discharge of Obligations. Except as may be disclosed in Exhibit "J",
to Seller's Knowledge, Seller has carried out, performed and complied with all
obligations imposed on Seller under any admission agreements, agreements with
patients or agreements with others.
3.06. Occupancy. At the time of this Agreement, each of the
Facilities has existing valid agreements with the patients occupying each of
the Facilities.
3.07. No Rebates or Allowances. Except as may be disclosed in Exhibit "J",
to Seller's Knowledge, none of the patients of the Facilities have been given
any concession or consideration for the rental of any patient room, and none of
the patients of any of the Facilities are entitled hereafter to any concessions,
rebates, and/or allowances of free occupancy for any period after the Closing.
3.08. Repair Requirements. Except as set forth in Exhibit "E", to Seller's
Knowledge, there are no outstanding requirements or recommendations by any
person, mortgagee or insurance company, requiring or recommending any repairs or
work to be done on any of the Facilities. Purchaser acknowledges receipt of the
reports set forth as Exhibit "E". Seller agrees that any deferred maintenance
items, set forth on Exhibit "E", are the responsibility of Seller. Pursuant to
Section 2.03 of this Agreement for such deferred maintenance items, Purchaser
shall receive at Closing a credit in the amount set forth therein, in lieu of
Seller undertaking to perform and warrant such repairs.
3.09. Litigation. Except as may be disclosed in Exhibit "J", to Seller's
Knowledge, there is no litigation or proceeding pending or threatened, other
than as normal or customary in the health care industry, which would Materially
adversely affect all or any part of any of the Facilities, their assets,
property or business, and Seller has no reasonable grounds to know of any basis
for any such action.
3.10. No Condemnation Proceedings. To Seller's Knowledge, there are
no pending or threatened condemnation or eminent domain proceedings which
would Materially adversely affect all or any part of any of the Facilities.
3.11. Access Public Improvements. Except as may be disclosed in Exhibit
"J", to Seller's Knowledge, all curb cut and street opening permits or licenses
required for vehicular access to and from each of the Facilities over presently
existing roads and driveways have been obtained and paid for and shall be in
full force and effect at the time of Closing. To Seller's Knowledge, no
assessments for public improvements have been made against any of the Facilities
which remain unpaid, including, without limitation, those for construction of
sewer and water lines and mains, streets, sidewalks and curbs. To Seller's
Knowledge, there are no public improvements which have been ordered to be made
and/or which have not hereto been completed, assessed and paid.
3.12. No Liens Against Personal Property. Except as may be disclosed in
Exhibit "J", all fixtures and articles of Personal Property included in this
sale at Closing will be owned by Seller, free and clear of any conditional bills
of sale, chattel mortgages, security agreements, financing statements, other
security interests, liens or encumbrances of any kind, except for any personal
property taxes (ad valorem), which are liens not yet due and payable.
3.13. Compliance with Facilities Laws. Except as may be disclosed in
Exhibit "J", each of the Facilities, including without limitation, the buildings
and improvements included thereon, shall be, at the Closing Date, in compliance
in all Material respects with all laws, ordinances, codes, regulations and
requirements of the states in which each of such Facilities are located and any
political subdivision or agency thereof, and the federal government and any
political subdivision or agency thereof, concerning and applicable to licensing
of nursing care facilities, together with such other laws, ordinances, codes,
regulations and requirements concerning and applicable to buildings and each of
the Facilities generally, as shown by the licenses previously issued to the
Seller, or its predecessor, by the states in which each of such Facilities are
located or any other state or federal government or political subdivision or
agency thereof. Each of the Facilities is fully licensed by the state in which
each such Facility is located and is in good standing as a health care provider
under the Medicaid and Medicare (if each such Facility is Medicare certified)
programs, as both programs are administered by the federal government and the
state in which each such Facility is located. The Medicare and Medicaid cost
reports for the last two (2) fiscal years and the current portion of this fiscal
year are true and correct in all Material respects except as may be disclosed in
Exhibit "J".
3.14. Leased Property. The Facilities do not lease any personal
property, equipment or fixtures used in the businesses conducted at the
Facilities by Seller, except as shown in the schedule attached hereto as
Exhibit "J".
3.15. Status of Land; Environmental Standards. Pursuant to Section 8 of
this Agreement, Purchaser, or its agents, is entitled to inspect the Facilities
and the Land, and to obtain environmental, engineering, title and survey reports
with respect to each of the Facilities. Purchaser acknowledges receipt and
approval of environmental assessment reports, title insurance commitments, and
surveys for each of the Facilities. To Seller's Knowledge, there are no matters
Materially affecting Purchaser's proposed ownership and operation of the
Facilities as currently used by Seller except as set forth in such reports.
Seller has not received notice that any of the Facilities are not in compliance
in all Material respects with all federal, state and local laws and ordinances
relating to clean air, water, waste disposal, toxic substances and other
environmental regulations. Seller has not received notice that any of the
Facilities are not in compliance in all Material respects with all laws and
ordinances relating to occupational health and safety. To Seller's Knowledge,
during the period of Seller's ownership of each of the Facilities, Seller has
not caused or permitted any of such Facilities to be used to generate,
manufacture, refine, transport, treat, store, handle, dispose, transfer, produce
or process Hazardous Substances (as hereinafter defined), or other dangerous or
toxic substances, or solid waste, except in compliance with all applicable
federal, state, and local laws or regulations. To Seller's Knowledge, during the
period of Seller's ownership of each of the Facilities, there has been no
Release (as hereafter defined) of any Hazardous Substances on or off-site of any
of the Facilities. As used herein, (a) "Hazardous Substances" include any
pollutants, dangerous substances, toxic substances, hazardous wastes, hazardous
materials, or hazardous substances as defined in or pursuant to the Resource
Conservation and Recovery Act (42 U.S.C. Section 6901, et seq.) as amended, the
Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C.
Section 9601, et seq.) as amended, the Clean Water Act (33 U.S.C. Section 1251,
et seq.) as amended, or any other federal, state or local environmental law,
ordinance, rule or regulation, and (b) "Release" means releasing, spilling,
leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, disposing or dumping. Except as may be disclosed by environmental
audits of each of the Facilities, to Seller's Knowledge, there has not been
incorporated into any of the Facilities and the Facilities do not contain, any
asbestos products, urea-formaldehyde, and other known building products which
may be harmful or injurious to human health or constitute Hazardous Substances.
3.16. Intentionally deleted.
3.17. No Management Agreements. Except as set forth in Exhibit "J",
there will be no management contracts for the Facilities at the time of
Closing.
3.18. Union Agreements and Employee Relations. Except as set forth on a
schedule attached to Exhibit "J", Seller is not a party to any union or
collective bargaining agreements, nor to the Knowledge of Seller, is there any
pending or potential attempt to unionize any of the employees of the Facilities.
Except as concerns the unions which are parties to the contracts listed on
Exhibit "J" (the "Union Contracts"), to Seller's Knowledge, during the period
commencing three (3) years prior to the date hereof, the employees of each of
the Facilities have not been the subject of a union election. Seller has
provided Purchaser copies of any grievances received by Seller during the twelve
month period immediately preceding the date hereof.
The payroll for the operation of each of the Facilities for the two week
periods ending nearest to and prior to May 15, 1997, and June 1, 1997, is
attached hereto as Exhibit "K" and by reference made a part hereof. To Seller's
Knowledge, prior to the period of Seller's ownership of each of the Facilities,
there have been no strikes, lockouts, or other work stoppages, picketing or
Material labor disputes (other than the negotiation of existing union contracts,
which shall not be deemed to be a labor dispute for purposes of this Agreement)
in which any of the Facilities are or were involved, and, to Seller's Knowledge,
no event has transpired which has or will have a Material adverse effect on the
relationship between Seller and its employees at any of the Facilities,
including the possible effect of the transactions contemplated by this
Agreement. Exhibit "L" sets forth the name and current annual salary and other
compensation or the rate of compensation payable by Seller to each employee at
each of the Facilities and the profit-sharing, bonus or other form of extra
compensation paid or payable by Seller to or for the benefit of each such person
for its current fiscal year. Except as may be disclosed in Exhibit "J", there
are no oral or written contracts, agreements or arrangements obligating Seller
to increase the compensation or benefits paid or payable to any of its employees
now or at any future time.
3.19. Real Property Taxes. The real estate and personal property tax
assessment on each of the Facilities as reflected on the real estate and
personal property tax bills for each of the Facilities (the "Tax Bills") for
1996 and the amount of taxes paid and unpaid in connection with the Tax Bills
are set forth in Exhibit "M".
3.20. Utilities. The financial statements included in Exhibit "G"
indicate the amounts paid for utilities and repairs and maintenance at each
of the Facilities.
3.21. No Violations of Law. Seller has not received notice from any
governmental authority of any violation by or Materially adversely affecting any
of the Facilities of any federal or state law or any municipal ordinance or
order or requirement of any governmental authority having jurisdiction over any
of the Facilities; provided, however, that Seller may have received periodically
notices of deficiencies pursuant to regulatory surveys of each of the Facilities
which are subject to correction as provided in such notices of such
deficiencies. Seller will notify Purchaser of its receipt of any such notices
prior to Closing. To Seller's Knowledge, there are no notices, suits or
judgments relating to any such violation, including without limitation, fire,
zoning, life safety, air or water pollution or health, food or drug code
violations with respect to any of the Facilities.
3.22. Maintenance of Business Operations, Employees and Goodwill. Seller
will cooperate with Purchaser to preserve and maintain each of the Facilities'
business operations intact, use its reasonable efforts to keep available to
Purchaser the services of its present employees at each of the Facilities, with
consideration for turnover in the ordinary course of business, and preserve to
the extent reasonably possible the goodwill of the Facilities' businesses.
3.23. Inventories and Trade Payables. Seller currently maintains and shall
maintain as of the Closing Date inventories and supplies reasonably sufficient
and adequate to satisfy state licensing requirements for the operation of each
of the Facilities. All such inventories and supplies shall conform to trade
standards for marketable goods, subject to such spoilage, waste and obsolescence
as is normal in each of the Facilities' ordinary course of business. At Closing,
Seller shall certify that there are no trade payables or other accounts payable
incurred in connection with the Facilities including payables for inventory,
supplies and other consumer goods in the ordinary course of the Facilities'
business, except those incurred on Seller's behalf by Centennial HealthCare
Management Corporation ("CHMC") as manager in the ordinary course of operations
of the Facilities (a list of such payables shall be attached to a certificate
furnished by CHMC at Closing). Any payables incurred by Seller and not by CHMC
as Manager of the Facilities, and any payables incurred by or on behalf of
Seller which are not the ordinary course of business shall be paid by Seller or
from funds payable to Seller at Closing. All other trade payables shall be
assumed and paid by Purchaser pursuant to this Agreement.
3.24. Organization of Seller. Seller is a limited partnership formed
and in existence under the laws of the State of Georgia and has the power and
authority to own its properties and to carry on its business as and where
such business is now conducted.
3.25. Due Authorizations; No Default. The execution, delivery and
performance of this Agreement by the managing general partner of Seller and all
other agreements and instruments to be executed by Seller in connection herewith
or pursuant hereto and the consummation of the sale contemplated hereby have
been duly authorized by all requisite corporate action on the part of the
managing general partner of Seller. When this Agreement is executed and
delivered by the managing general partner of Seller on behalf of Seller, it
shall constitute the legal, valid and binding obligation of Seller. The transfer
of Seller's right, title and interest in and to each of the Facilities to
Purchaser will not violate in any Material respect any provision of Seller's
Amended and Restated Agreement of Limited Partnership or any laws governing
Seller. Except as may be disclosed in Exhibit "J", the execution, delivery or
performance of this Agreement, or the consummation of the transactions
contemplated hereby, or compliance with any of the terms or conditions hereof,
will not result in the breach in any Material respect by Seller of any of the
terms, conditions or provisions of any agreements or instruments to which it is
a party, or to which it or its property is bound, or constitute a default in any
Material respect under such agreements or instruments.
3.26. Consents. Except as set forth in Exhibit "J" and for the agencies
and departments of the states in which the Facilities are located necessary to
issue licenses to operate each of the Facilities and authorize Medicare and
Medicaid reimbursements, there are no persons whose consent is necessary in
order for Seller to consummate the transactions contemplated by this Agreement,
including, without limitation, any such persons who are:
(a) the parties to any agreements to which the Seller is
a party or by which it is bound; and
(b) any federal, state or local governmental authorities
or regulatory agencies having jurisdiction over the Seller
(except to the extent any licensing and Medicare/Medicaid
reimbursement approval for each of the Facilities is necessary).
3.27. Notice as to Material Changes. The Seller will promptly advise
Purchaser in writing of the occurrence of any Material events which come to the
Knowledge of Seller after the date of this Agreement and prior to Closing
relating to any of those matters which are the subject of the covenants,
representations and warranties of the Seller contained herein.
3.28. Accuracy of Information. No representations, warranties or covenants
by Seller, the officers or directors of its general partner, nor any statement,
list or certificate furnished or to be furnished to Purchaser pursuant hereto,
or in connection with the transactions contemplated hereby, contains or will
contain any Materially untrue statement of fact or omits or will omit to state a
Material fact necessary to make the statements contained therein not Materially
misleading in light of the circumstances under which they were made.
3.29. Survival of Representations, Warranties and Covenants. The
warranties, representations and covenants of the Seller contained in this
Agreement shall be true and correct as of the Closing Date in all Material
respects, and such representations, warranties and covenants shall survive
the Closing and the consummation of the transactions contemplated by this
Agreement for the period set forth in Section 13.
SECTION 4. PURCHASER'S REPRESENTATIONS, WARRANTIES AND
COVENANTS.
Purchaser makes the following representations, warranties and covenants to
Seller, each of which shall be deemed to be Material to the transactions
contemplated by this Agreement.
4.01. Organization of Purchaser. Purchaser is a limited liability
company formed and existing under the laws of the State of Georgia and is, or
will be at Closing, qualified to do business in the states in which the
Facilities are located.
4.02. Due Authorization and Authority. The execution, delivery and
performance of this Agreement by Purchaser and all other agreements and
instruments to be executed by Purchaser in connection herewith or pursuant
hereto and the consummation of the purchase contemplated hereby have been duly
authorized by all requisite entity action. The performance of this Agreement by
Purchaser will not conflict with or result in the Material breach of Purchaser's
Articles of Organization or Operating Agreement, as same may now or hereafter be
amended, or any contract or commitment to which Purchaser is a party or by which
it is bound or any law, statute, ordinance, regulation or decree of any
governmental, regulatory or judicial body or entity. When this Agreement is
executed and delivered by the members of Purchaser on behalf of Purchaser, it
shall constitute the legal, valid and binding obligation of Purchaser.
4.03. Litigation. To Purchaser's Knowledge, there is no litigation
proceeding pending, or threatened, against Purchaser in any court or before any
arbitration or governmental agency, domestic or foreign, which would Materially
adversely affect Purchaser's ability to perform its obligations under this
Agreement.
4.04. No Default. Neither the execution or delivery of this Agreement
or any agreements required hereby to be executed by Purchaser nor the
performance of Purchaser in compliance with their terms shall:
(a) Materially conflict with or result in a breach or
constitute or result in a default under:
(i) any of the terms, conditions or
provisions of Purchaser's Operating Agreement;
(ii) any judgment, order, injunction,
statute, decree, regulation or ruling of any court or
governmental authority, domestic or foreign, to which
Purchaser is subject; and
(iii) any agreement, contract, or legally
binding commitment to which Purchaser is a party.
(b) give to any person any rights of termination,
cancellation or acceleration, in or with respect to any
agreements, contracts, indentures or legally binding commitments
by which Purchaser is bound; or
(c) result in the creation or imposition of (or the
obligation to create or impose) any lien, charge or encumbrance
upon any of the property or assets of Purchaser pursuant to the
terms of any indenture, mortgage, deed of trust, lease, agreement
or other instrument to which Purchaser is a party or by which it
may be bound.
4.05. Accuracy of Information. To Purchaser's Knowledge, no
representation, warranty or covenant by Purchaser nor any statement, list or
certificate furnished or to be furnished to Seller pursuant hereto, or in
connection with the transactions contemplated hereby, contains or will contain
any Materially untrue statement of fact or omits or will omit to state a
Material fact necessary to make the statements contained therein not Materially
misleading in the light of the circumstances under which they were made.
4.06. Consents. Except for the agencies and departments of the states in
which the Facilities are located necessary to issue licenses to operate the
Facilities and authorize Medicare and Medicaid reimbursements, there are no
persons whose consent is necessary in order for Purchaser to consummate the
transactions contemplated by this Agreement, including, without limitation, any
such persons who are:
(a) the parties to any agreements to which the Purchaser
is a party of or by which it is bound; and
(b) any federal, state or local governmental authorities
or regulatory agencies having jurisdiction over the Purchaser
(except to the extent any licensing and Medicare/Medicaid
reimbursement approval for the Facilities is necessary).
4.07. Survival of Representations, Warranties and Covenants. The
warranties, representations and covenants of the Purchaser contained in this
Agreement shall be true and correct in all Material respects as of the Closing,
and such representations, warranties and covenants shall survive the Closing and
the consummation of the transactions contemplated by this Agreement for the
period set forth in Section 13. SECTION 5. CONVEYANCES AND TITLE.
5.01. Assignment and Bill of Sale. At Closing, conveyance of all of
Seller's right, title and interest in and to the Real Property of each of the
Facilities shall be effected by Seller's delivery of special warranty deeds. The
Personal Property of each of the Facilities shall be conveyed by general
assignment and bill of sale. Appropriate forms of such deeds and bills of sale
shall have been prepared by Seller's counsel in conformity with this Agreement
and submitted to Purchaser for its approval, which shall not be unreasonably
withheld. Good, marketable and insurable title to the Real Property and good and
marketable title to the Personal Property shall be conveyed from Seller to
Purchaser free and clear of all liens, claims, charges and encumbrances of any
kind, subject only to taxes for the current year, and those other liens, claims,
charges, encumbrances or objections, if any, approved in writing by Purchaser at
or prior to Closing (such other liens, claims, charges, encumbrances or
objections are hereinafter referred to as "Permitted Title Exceptions").
5.02. Title Defects. If examination of title of any of the Facilities
reveals any legal defect to title other than the Permitted Title Exceptions,
Purchaser shall furnish Seller with a written statement thereof on or before
Closing and Seller shall have the option to correct any legal defects, as set
forth in Section 8.04.
5.03. Non-Waiver of Title Objections. Notwithstanding anything stated
to the contrary in this Agreement, nothing herein shall be deemed to be a
waiver by Purchaser of any title objections which appear at or after
Purchaser's title examination, and Purchaser shall have the right to raise
any such objections and require that Seller cure the same for any of the
Facilities prior to Closing as a condition of Purchaser's obligation to
proceed with the Closing.
SECTION 6. CLOSING.
6.01. Place, Time and Date of Closing. The payments and deliveries
contemplated by this Agreement (other than the post-closing payments or
deliveries contemplated by this Agreement) shall be made at the offices of
Nelson Mullins Riley & Scarborough, First Union Plaza, Suite 1400, 999 Peachtree
Street, N.E., Atlanta, Georgia 30309 at 10:00 a.m., local time, on the earlier
of June 30, 1997, or the date on which the escrow conditions, are satisfied
under the Escrow Agreement, if required pursuant to Section 6.04, or at such
other place, time and date as Purchaser and Seller shall agree. The date on
which the last of such payments and deliveries occurs is the "Closing Date", and
such payments and deliveries constitute the "Closing." The Closing shall not be
deemed to have occurred unless and until all of the conditions set forth in this
Agreement have been satisfied (or appropriately waived); and none of such
actions shall be deemed to have been taken unless and until all of them have
been taken (or the requirement that they be taken appropriately waived);
provided, however, that if all such actions are taken (or appropriately waived),
then the Closing shall be effective on the Closing Date. Failure to close the
transactions contemplated by this Agreement on the date specified in the first
sentence of this Section 6.01 shall not in and of itself constitute a reason for
a party to terminate this Agreement, termination being governed by Section 9 of
this Agreement, and so long as this Agreement is not so terminated, the parties
shall continue in good faith to undertake to consummate the transactions
contemplated in this Agreement as soon as practicable.
6.02. Conveyance of Property Free and Clear of Liens. At the Closing
hereunder, all of Seller's right, title and interest in and to the Real Property
and Personal Property and the Facilities shall be conveyed free and clear of all
liens, encumbrances, restrictions, assessments (including, without limitation,
any assessments payable in installments, all of which installments have not been
paid), encroachments, and easements, except those set out in the Permitted Title
Exceptions and to which Purchaser has consented. Subject to the Permitted Title
Exceptions, Seller shall have satisfied and canceled of record all such
aforesaid assessments, liens and other encumbrances against said Real Property
and Personal Property, including, without limitation, any mortgage, indenture,
security agreement, or deed to secure debt outstanding on any portion of such
Real Property and Personal Property.
<PAGE>
6.03. Deliveries by Seller. Seller hereby agrees to, and shall,
deliver or cause to be delivered to the Purchaser at the Closing the
following, each of which shall be in form and substance reasonably
satisfactory to the Purchaser:
(a) Possession. Possession and occupancy of each of the
Facilities subject only to any Permitted Title Exceptions;
(b) Deeds. Special Warranty Deeds for each of the Facilities
conveying title to the Real Property to Purchaser, duly witnessed and
attested for recording in the states in which the Facilities are located,
free and clear of all liens, restrictions and encumbrances other than the
Permitted Title Exceptions;
(c) Title Binder; Survey. A title insurance policy for each of the
Facilities (or marked title policy commitment) issued by a reputable title
insurance company in an amount not less than the portion of the Purchase
Price allocated to the Real Property with the costs of such insurance to
be borne 50% each by Seller and Purchaser, and a survey of the Land on
which each of the Facilities is located with the costs of such surveys to
be borne 50% each by Purchaser and Seller;
<PAGE>
(d) Environmental Reports; Engineering Reports.
Environmental reports for each of the Facilities with the costs
of such reports to be borne fully by Seller, and engineering
reports for each of the Facilities with the costs of such reports
to be borne fully by Seller.
(e) Assignment of Patient Contracts. An assignment of
all patient contracts, the originals of such contracts, all
advance payments held by Seller, and all patient property or
patients' funds held by Seller and complete accounting of same
for each of the Facilities;
(f) Assignment of Warranties, Guarantees and
Indemnities. For each of the Facilities, an assignment of any
unexpired warranties, guarantees and indemnities now in effect
with respect to any part of the Real Property or Personal
Property and/or any of the mechanical systems in same;
(g) Assignment of Service Contracts. For each of the
Facilities, an assignment of all service contracts not terminated
prior to Closing;
(h) Bill of Sale. For each of the Facilities, a Limited Warranty
Bill of Sale for all of Seller's right, title and interest in and to the
Personal Property and fixtures located in each of the Facilities,
including those items described in Exhibits "C-1" and "C-2";
(i) Other Instruments. Such other endorsements,
assignments and instruments of transfer and conveyance as may be
necessary to vest in the Purchaser good and marketable title to
the assets and businesses to be sold hereunder and as shall be
reasonably requested by Purchaser;
<PAGE>
(j) Paid Tax Bill. A copy of the most recently paid real
estate tax bills for each of the Facilities;
(k) Certificates Regarding Mechanics' Liens and Other Matters. For
each of the Facilities, certificates or affidavits of Seller in form and
substance reasonably satisfactory to Purchaser regarding the status of
mechanic's liens, Seller's right to possession of each of the Facilities,
the authority and power of the Seller to complete the transactions
provided for herein, and the accuracy of Seller's representations, and
warranties and covenants contained herein;
(l) Certificate Regarding Absence of Changes. For each
of the Facilities, certificate or affidavit of Seller in form and
substance reasonably satisfactory to Purchaser that there have
been no Material changes made to any of the Facilities since the
date of this Agreement;
(m) Patient List. For each of the Facilities, a patient
list, certified as true and accurate by Seller as of the date of
Closing, setting forth the same information as set forth on
Exhibit "F-1" and "F-2";
(n) Title Insurance Company Documents. For each of the
Facilities, such documents and instruments as may be reasonably
required by Purchaser or its title insurer to carry out the
intent of the parties to this Agreement;
(o) Admission Agreements: Employee Benefits. For each
of the Facilities, the lists and payments required by Sections 14
and 15 hereof;
(p) Patient Records. For each of the Facilities, the
patient records and property described in Section 16 hereof;
(q) Repair Records. For each of the Facilities, all
painting, repair and maintenance records available to Seller;
(r) Plans and Specifications. For each of the
Facilities, the plans and specifications pursuant to which each
of the Facilities was constructed, if same are available to
Seller;
(s) As-Built Surveys. The most current "as-built"
surveys of the Facilities, if available;
(t) Trade Name Assignments. An assignment of the trade
names used by each of the Facilities; and
(u) Compliance at Closing with Facilities Laws. The
representation made by Seller in Section 3.13 hereof shall be
true and correct in all Material respects as of the Closing Date
for each of the Facilities.
Purchaser may waive delivery of any one or all of the foregoing.
6.04. Escrow Closing for Regulatory Delay and Other Conditions. If,
prior to the Closing Date, Purchaser has not received all approvals required by
any federal, state or local regulatory agency or authority with respect to the
transactions contemplated by this Agreement, or if other conditions of Closing
have not been satisfied or waived in writing on or before such Closing Date,
Purchaser and Seller shall have the option to close the purchase in escrow with
a mutually acceptable escrow agent and pursuant to an escrow agreement
reasonably acceptable to Purchaser and Seller.
6.05. Prorations. For each of the Facilities, the following items
shall be adjusted on a pro rata basis between Seller and Purchaser at the
time of the Closing or after the Closing as agreed upon by Purchaser and
Seller:
(a) Real estate and personal property ad valorem taxes
for the 12 month period succeeding the applicable tax bill due
date;
(b) Charges for electricity, gas, water and sewer and other
utilities to be based on projections from most recent invoices or on
recent meter readings;
(c) All prepayments made under the service contracts and other
agreements accepted by Purchaser pursuant to the foregoing provisions of
this Agreement;
(d) Prepaid patient charges referenced in Section 16
hereof; and
(e) Employee payroll in accordance with Section 15 hereof.
6.06. Security Deposits, Patient Property and Patient Funds. For each
of the Facilities, all security deposits, patient property and patient funds
held by Seller shall be turned over to the Purchaser at the Closing, together
with evidence reasonably satisfactory in form to Purchaser of Seller's
compliance with all applicable laws with respect to the collection and
maintenance of such security deposits, property and funds; Purchaser shall
execute a receipt therefor. Seller shall deliver to Purchaser a list of all such
security deposits and patient property and make available the ledger of patient
funds as provided in Section 3.02 hereof. Seller agrees to assist in any audit
of such deposits, property and funds. Seller and Purchaser hereby agree to
reimburse and indemnify and hold free and harmless the other party from any and
all liability in connection with any loss of deposits, patient property and
patient funds incurred by the other party's failure to comply with applicable
laws or properly to handle and account for same.
6.07. Conditions Precedent to Obligations of Purchaser. All of Purchaser's
obligations to make the deliveries and payments contemplated by Section 6 of
this Agreement are subject to the fulfillment prior to or at the Closing of each
of the following conditions, any one or more of which Purchaser may waive in
whole or in part (and at or prior to the Closing, Purchaser may request an
affidavit or a certificate of the president of the general partner of Seller or
such other evidence as Purchaser reasonably requests concerning the fulfillment
of the following conditions):
(a) Accuracy of Representations, Warranties and Covenants. The
representations and warranties of Seller contained in this Agreement shall
be true and correct in all Material respects as of the date when made and
Seller shall have performed and complied with all Material obligations,
covenants and agreements with which Seller is required by this Agreement
to perform or comply on or before the Closing.
(b) Deliveries. The delivery to Purchaser of those items listed in
this Section 6.03 in form and substance reasonably satisfactory to
Purchaser.
(c) Governmental Consents Obtained or Requirements Satisfied. All
authorizations, consents and approvals of any governmental or public unit,
agency, body, authority or governmental or public official or entity
necessary for the valid consummation of the transactions contemplated by
(and compliance with or performance under) this Agreement shall have been
obtained, and shall be in full force and effect, including any required
consents; provided, however, that Purchaser and Seller agree to apply
promptly for any licenses which have not been obtained as of the date of
this Agreement. Without limiting the foregoing, the Purchaser and the
Seller shall have filed, or will file, with the appropriate agencies of
the states in which the Facilities are located or subdivisions thereof, as
applicable, for all approvals necessary to permit the transfer of Seller's
right, title and interest in and to each of the Facilities and the
continued operation of each of the Facilities as a nursing care facility
under the applicable laws of the states in which the Facilities are
located. Purchaser shall send Seller copies of all correspondence related
to such applications and notices and Purchaser shall use reasonable
dispatch and make all reasonable efforts in support of gaining such
approvals. Seller shall have responsibility for providing to Purchaser any
information reasonably required by Purchaser and to otherwise cooperate
with Purchaser, as reasonably requested, to gain such approvals.
(d) No Challenge to Transaction. No injunction (temporary or
permanent) shall have been issued against Seller or Purchaser enjoining
the consummation of the transactions contemplated by this Agreement, and
no action, proceeding, investigation, regulation or legislation shall have
been instituted, threatened or proposed by any governmental or public
unit, agency, body, authority or other governmental or public officer or
entity before any court, governmental or public unit, agency, body or
authority or legislative body that has not been withdrawn, dismissed,
rescinded, dissolved or otherwise eliminated on or before the Closing
Date, to enjoin, restrain, delay, prohibit or obtain Material damages (i)
with respect to, or which is related to, or arises out of, this Agreement
or the consummation of the transactions contemplated by this Agreement or
(ii) which, in the reasonable judgment of the Purchaser, would have a
Materially adverse effect on the business or financial condition of each
of the Facilities.
(e) Consents and Releases Received. Except as provided in Subsection
(c) above, all consents reasonably necessary to complete this transaction
shall have been obtained by Seller and Seller shall provide evidence
thereof in form and substance reasonably satisfactory to Purchaser. Except
for Permitted Title Exceptions, all liens on the Real Property and
Personal Property shall have been released in full and Form UCC-3's shall
have been filed or delivered for filing as appropriate. Purchaser shall
have received consents or agreements from all parties other than Seller
that all Material contractual arrangements with Seller shall continue
unaltered in all Material respects; provided, however, that such consents
shall be required only if the failure to obtain such consent would, in the
reasonable determination of the Purchaser, have a Material adverse effect
on the business, financial condition or results of operations of any of
the Facilities; provided, further, however, that none of such consents or
other assurances shall be given on terms that Materially adversely affect
the rights of the Seller thereunder.
(f) Title Binder. The Purchaser shall have obtained with respect to
the Real Property (including, but not limited to, the Land) a commitment
for an owner's title insurance policy issued in the name of the Purchaser
and its permitted successors and assigns by such title insurer as the
Purchaser shall reasonably select (i) insuring the title to such real
properties (in a total aggregate amount equal to the Purchase Price
allocated to the Real Property) at regular rates (including examination
costs) as good, valid and marketable, title free and clear of all liens,
encumbrances and exceptions other than those that (A) involve
imperfections of title that do not, individually or in the aggregate
Materially impair the marketability of the affected property, (B) involve
easements, covenants, restrictions or other encumbrances that do not,
individually or in the aggregate, Materially detract from the value of
such property, in its current use by the Purchaser or interfere with such
use of such property, or (C) the Permitted Title Exceptions and (ii)
containing no survey exceptions or exclusions from coverage that indicate
that the Purchaser will not be able to operate the Facilities after the
Closing in the manner that it is currently being operated.
(g) Casualty Losses. On or prior to the time of Closing, each of the
Facilities shall not have sustained any loss, whether or not insured, by
reason of physical damage to the Facilities caused by fire, flood,
accident, explosions or other calamity which would Materially adversely
affect the carrying on of its business in the normal and regular course.
(h) Union Contract. Any union contract entered into
regarding the Facilities prior to the Closing Date shall be in
form and substance reasonably satisfactory to Purchaser.
(i) Insurance. Polices of insurance relating to each of the
Facilities, in form and substance reasonably satisfactory to Purchaser,
shall have been obtained by Purchaser. (Purchaser agrees to use its best
efforts to obtain appropriate insurance prior to the Closing Date.)
(j) Financing. Purchaser shall have received financing
from National Health Investors, Inc. ("National Health"), subject
to terms reasonably satisfactory to Purchaser.
(k) No Material Adverse Change. During the period prior
----------------------------
to the Closing Date, no information shall have come to the
attention of Purchaser reasonably indicating or suggesting that
the financial information regarding each of the Facilities and
Seller is incorrect or incomplete in any Material respect.
Without limiting the foregoing, any investigation of, or
information obtained with respect to, Seller or any of the
Facilities by Purchaser, or any exhibit or schedule or any
supplement hereto or any other document delivered to Purchaser in
connection with this Agreement, shall not have revealed any facts
or circumstances which, in the reasonable judgment of Purchaser,
reflect in a Materially adverse way on the financial condition,
assets, liabilities (absolute, accrued or contingent), reserves,
business or operations of any of the Facilities.
6.08. Cost of Recording. Seller shall pay the cost of recording any
------------------
deed and any documentary stamps, transfer tax, or other similar tax.
6.09. Deliveries by Purchaser. Purchaser hereby agrees to, and shall,
deliver and pay or to cause to be delivered and paid to Seller the following,
each of which shall be in form or substance reasonably satisfactory to Seller:
(a) Purchase Price. The Purchase Price as set forth in
Section 2.01 hereof.
(b) Other Documents. Such other documents, certificates
and opinions as the Seller may reasonably and timely request in
order to document more effectively the transactions contemplated
by this Agreement or to evidence the compliance by Purchaser with
any condition of this Agreement.
6.10. Conditions Precedent to Obligations of Seller. All of the
obligations of Seller to make the deliveries contemplated by this Section 6 are
subject to the fulfillment prior to or at the Closing of each of the following
conditions, any one or more of which Seller may waive in whole or in part (and
at or prior to the Closing, Seller may request an affidavit or a certificate of
Purchaser or such other evidence as it reasonably requests concerning the
fulfillment of the following conditions):
(a) Accuracy of Representations, Warranties and Covenants. The
representations and warranties of Purchaser in this Agreement shall be
true and correct in all Material respects as of the date when made and
Purchaser shall have performed or complied with all Material obligations,
covenants and agreements with which Purchaser is required by this
Agreement to perform or comply on or before the Closing.
(b) Consents Obtained or Requirements Satisfied. All authorizations,
consents and approvals of any third party, including without limitation
any governmental or public unit, agency, body, authority or other
governmental or public official or entity necessary for the valid
consummation of the transactions contemplated by (and compliance with or
performance under) this Agreement shall have been obtained, and shall be
in full force and effect; provided, however, that Purchaser and Seller
agree to apply promptly for any licenses which have not been obtained as
of the date of this Agreement. Purchaser and Seller shall have filed or be
in the process of filing documents necessary to obtain from the
appropriate agencies of the states in which the Facilities are located or
subdivisions thereof, as applicable, all approvals necessary to permit a
transfer of the Facilities under the applicable laws of the states in
which the Facilities are located.
(c) Purchase Price. Purchaser shall have delivered to
Seller the Purchase Price in the manner described in Section 6.09
hereof.
(d) Deliveries. The Purchaser shall have delivered to Seller those
other items listed in Section 6.09 hereof, in form and substance
reasonably satisfactory to Seller.
(e) Financing. Purchaser shall have received financing from National
Health, subject to terms reasonably satisfactory to both Purchaser and
Seller.
(f) No Challenge to Transaction. No injunction (temporary or
permanent) shall have been issued against Seller or Purchaser enjoining
the consummation of the transactions contemplated by this Agreement, and
no action, proceeding, investigation, regulation or legislation shall have
been instituted, threatened or proposed by any governmental or public
unit, agency, body, authority or other governmental or public officer or
entity before any court, governmental or public unit, agency, body or
authority or legislative body that has not been withdrawn, dismissed,
rescinded, dissolved or otherwise eliminated on or before the Closing
Date, to enjoin, restrain, delay, prohibit or obtain Material damages with
respect to, which is related to, or arises out of, this Agreement or the
consummation of the transactions contemplated by this Agreement.
(g) No Material Adverse Change. During the period prior to the
Closing Date, no information shall have come to the attention of Seller
indicating or suggesting that the ownership or the operation of the
Facilities, in the reasonable judgment of Seller, would be illegal or
would make the Facilities, in the reasonable judgment of Seller,
ineligible for Medicare or Medicaid reimbursement if owned by Purchaser.
SECTION 7. CONDEMNATION, RISK OF LOSS.
7.01. Condemnation. In the event of the imminent threat or institution of
any proceedings, judicial, administrative or otherwise, which shall relate to
the proposed taking of any substantial portion of any of the Facilities by
eminent domain prior to Closing, Purchaser shall have the right and option to
terminate this Agreement at any time prior to Closing by giving the Seller
written notice to such effect. Seller hereby agrees to furnish Purchaser written
notification with respect to such events of taking within three (3) days from
Seller's receipt of any notification of such events. If Purchaser should decide
to terminate this Agreement as provided above, the parties hereto shall be
released from their respective obligations and liabilities hereunder. As used
herein, a "substantial portion" of a facilities shall be deemed to include
without limitation (i) five (5%) percent or greater of the number of patient
rooms or licensed beds at the facilities, (ii) a taking which would close any
one entrance or exit of the facilities, or (iii) a taking which would cause a
loss of future gross revenues in an amount greater than ten (10%) percent of the
Facility's most recent annual gross revenues or which would cause a closing of
the operations of the facilities.
In the event Purchaser does not elect to terminate this Agreement because
of such taking, at the Closing hereof, Seller shall assign to Purchaser all its
right, title and interest in and to any proceeds arising out of such taking.
7.02. Risk of Loss. Risk of loss with respect to each of the
Facilities is assumed by Seller until Closing. In the event that a Facility
is substantially damaged by fire or other casualty prior to the Closing,
Purchaser, at its option, may:
(a) Elect to terminate this Agreement upon giving written notice of
such termination to Seller, whereupon the parties hereto shall be released
from their respective obligations hereunder, or
(b) Elect to close the sale, whereupon Purchaser shall be entitled
to and shall receive an assignment of the proceeds of any insurance due to
Seller with respect to such fire or other casualty. Aggregate damage of
$100,000 or more shall be deemed substantial for a
Facility, without excluding other damage that may be substantial.
In the event that the Closing occurs, unless the damages are repaired
in full by Seller prior to Closing, Purchaser shall be entitled to receive an
assignment of the proceeds of any insurance due to Seller (but only to the
extent of proceeds in excess of the amounts expended by Seller on any repairs
related to damage for which such proceeds are due to Seller) with respect to
fire or other casualty losses occurring between the date of this Agreement and
the Closing Date, notwithstanding the fact that such losses are not deemed
substantial. SECTION 8. INSPECTION.
8.01. Right to Inspect. The Purchaser, or its agents, has had the right to
inspect the physical condition, environmental condition, structural competency
and good working order of each of the Facilities (including, without limitation,
the heating, air conditioning, sewer, plumbing, antenna and electrical systems
contained therein) prior to Closing. At Closing Purchaser agrees to accept the
Facilities in their "as is" condition, subject however, to the Purchaser's
rights with respect to the deferred maintenance items as set forth in Section
3.08.
8.02. Environmental Audits; Surveys. Commencing upon the date of this
Agreement and extending through Closing hereunder, Purchaser has had the right
to enter the Facilities personally or through agents, employees and contractors
for the purpose of making boundary line and topographical surveys of same,
making soil tests thereof and in general making tests, analyses and
investigations of the Facilities.
8.03. Inspection of Records. Prior to Closing, all leases, books or
records of Seller pertaining to each of the Facilities may be inspected by
Purchaser at the Facilities, and Purchaser shall be supplied with copies
thereof by Seller upon request.
8.04. Seller's Options. Pursuant to Purchaser's right to inspect each of
the Facilities as provided in Section 8.01, hereof, Purchaser shall endeavor to
furnish Seller with a written list of all defects in environmental condition,
physical condition, structural competency or good working order which Purchaser
discovers prior to the Closing Date with respect to each of the Facilities;
provided, however, such defects shall not include the deferred maintenance items
as set forth in Section 3.08. Prior to Closing, Seller shall notify Purchaser in
writing with respect to each of the Facilities that (i) Seller shall and does
thereby agree to correct or cause to be corrected all such defects prior to the
Closing, (ii) instead of correcting or causing to be corrected all such defects,
Seller shall and does thereby agree to credit Purchaser at Closing with respect
to the affected Facility by a specified amount, itemizing how much of that
amount is applicable to each defect, or (iii) Seller shall and does thereby
agree to correct or cause to be corrected only certain specified defects prior
to Closing, or shall credit Purchaser at Closing by a specified amount with
respect to only certain itemized defects, or both. Seller's failure timely to
give Purchaser such written notice by the Closing Date shall be deemed to be and
shall constitute Seller's notice as provided in (ii) above. In the event Seller
notifies Purchaser that Seller shall not correct or cause to be corrected such
defects prior to the Closing under the provisions above, Purchaser may, at its
option, after receiving such notice, terminate this Agreement and be entitled to
have any earnest money or other deposits, if any, returned to Purchaser,
whereupon this Agreement shall be of no further force or effect and neither of
the parties hereto shall have any liability or obligations each to the other. If
Seller agrees to cure such defects prior to Closing or if Seller informs
Purchaser that Seller shall not correct or cause to be corrected such defects
prior to Closing under the provisions of (ii) or (iii) above, and Purchaser does
not terminate this Agreement prior to Closing, then prior to Closing, Seller
must correct or cause to be corrected such defects or credit Purchaser at
Closing, or both, and Purchaser's notification with respect to such list of
defects shall become part of this Agreement without any further action by the
parties hereto. Seller's obligations hereunder to correct or cause to be
corrected any defects shall survive the Closing as provided in Section 13
hereof.
8.05. Terms and Conditions of Inspections. Any inspections conducted
pursuant to this Section 8 shall be at any time subject to the following
terms and conditions:
(a) Seller shall have received reasonable advance notice
thereof;
(b) No such inspection shall interfere with the normal
day-to-day operation of each of the Facilities; and
(c) No due diligence objection to Closing shall be raised by
Purchaser after the Closing Date (unless otherwise agreed in the Escrow
Agreement).
SECTION 9. TERMINATION.
9.01. Circumstances of Termination. This Agreement may be terminated
with respect to the Facilities in the following circumstances:
(a) The conditions to the Agreement in Section 5 and Section 8 are
not satisfied or the termination circumstances as set forth in Sections
7.01, 7.02 and 13 occur.
(b) The Closing begins or would otherwise occur and Purchaser is not
obligated to close pursuant to Section 6.07 or Seller is not obligated to
close pursuant to Section 6.10.
(c) Seller determines, in its sole discretion, to exercise its
termination option and pays to Purchaser, the reasonable amount of its
actual costs incurred in the transaction to the date of the termination,
plus $6,000, which sums shall be paid to Purchaser as a termination fee in
lieu of damages or any other sums and as Purchaser's sole remedy with
respect to such termination; provided, however, such sums shall not exceed
$10,000 for each of the Facilities. 9.02. Effect of Termination. If this
Agreement is terminated pursuant
to Section 9.01, this Agreement shall be deemed thenceforth null and void and no
party hereto shall have any obligation or liability by reason of this Agreement
except as specifically provided herein.
9.03. Damages Upon Termination. If Purchaser fails to tender the
Purchase Price to Seller at the Closing or fails to perform as required
herein or Seller fails to perform as required herein, then either party may
exercise any rights or remedies available to it under law or at equity,
including, without limitation, specific performance and such rights or
remedies may be exercised by either party concurrently or in such order as
such party may elect.
SECTION 10. BROKER'S COMMISSION.
Each of Purchaser and Seller respectfully warrants that there are no
brokers, finders or other consultants acting on behalf of, or at the request of,
Purchaser or Seller in this transaction. Seller shall indemnify and hold
Purchaser harmless from and against the claims of all persons or entities who
claim commissions through Seller for real estate brokerage fees or commissions
or any other fees arising out of the sale and purchase of all of Seller's right,
title and interest in or to the Facilities or the transactions contemplated
hereby. Purchaser shall indemnify and hold Seller harmless from and against the
claims of all persons or entities who claim commissions through Purchaser for
real estate brokerage fees or commissions or any other fees arising out of the
purchase or sale of all of Seller's right, title and interest in or to the
Facilities or the transactions contemplated hereby. SECTION 11. ASSIGNMENT AND
APPROVAL.
Seller and Purchaser shall not assign their rights hereunder or any part
thereof to any person, firm, limited partnership or corporation, including a
corporation to be formed hereafter, or other entity, without the prior written
consent of the other party. SECTION 12. NOTICES.
All notices, demands or requests provided for or permitted to be given
pursuant to this Agreement must be in writing. If not otherwise provided
hereunder, all notices, demands or requests to be sent to any party hereto, or
any assignee or any party, shall be deemed to have been properly given or served
by delivering same personally to each party or by sending same by telecopy
(receipt confirmed) or overnight delivery addressed to such party at the
following addresses or telecopy number:
To Seller: Consolidated Resources Health Care Fund IV
Attn: Alan C. Dahl
400 Perimeter Center Terrace
Suite 650
Atlanta, Georgia 30346
Telecopy Number: (770) 395-9776
With a copy to: Nelson Mullins Riley & Scarborough
999 Peachtree Street, N.E.
First Union Plaza
Suite 1400
Atlanta, Georgia 30309
Attention: Paul A. Quiros
Telecopy Number: (404) 817-6050
To Purchaser: Midwest Nursing Home Investors, L.L.C.
Roland A. Belanger, Esq.
Suite 1100 West
5001 Spring Valley Road
Dallas, Texas 75244
Telecopy Number: (972) 419-4098
SECTION 13. MISCELLANEOUS.
This Agreement shall bind and inure to the benefit of the parties hereto
and their respective heirs, executors, administrators, legal representatives,
and permitted successors and assigns. Subject to the terms and conditions of
Section 22 of this Agreement, all warranties and representations and all terms
and conditions of this Agreement not performed at Closing shall survive the
Closing for a period of six (6) months hereunder and shall not be merged into
the Deeds from Seller to Purchaser or any other instruments executed or
delivered at Closing. If all or any portion of any of the provisions of this
Agreement shall be declared invalid by laws applicable thereto, then the
performance of such offending provision shall be excused by the parties hereto;
provided, however, that, if the performance of such excused provision Materially
affects any aspect of this transaction, then the party for whose benefit such
excused provision was inserted in this Agreement shall have the right,
exercisable by written notice given to the other party within ten (10) days
after such provision is so declared invalid, to terminate this Agreement;
whereupon this Agreement shall be null and void. The titles or captions of the
provisions of this Agreement are merely descriptive and are not representations
of matters included in or excluded from such provisions. This Agreement and the
agreements contemplated herein constitute the sole and entire agreement between
the parties hereto, and no modification hereof shall be binding unless set forth
in writing, signed by all parties and attached hereto. To the extent possible,
this Agreement shall be construed under and governed by the laws of the State of
Georgia. Where the context so requires or permits, the use of the singular form
includes the plural, and the use of the plural form includes the singular, and
the use of any gender includes any and all genders. SECTION 14. ASSUMPTION OF
SELLER'S OBLIGATIONS TO THIRD PARTIES.
Purchaser shall assume the obligations of Seller to provide future care at
each of the Facilities after the Closing to all current patients under any
admission agreements or other contracts relating to patients. Any prepayments by
patients for services to be rendered shall be prorated as of the Closing Date.
In addition Purchaser shall assume the obligation to pay all accounts payable
incurred in the ordinary course of the Facilities' business operations, to the
extent such accounts payable have been incurred by CHMC on Seller's behalf and
to the extent disclosed to Purchaser in writing and attached (or to be attached)
hereto as Schedule 14, subject, however, to the limitations set forth in
Sections 3.23 (describing Seller's duty to pay certain items, if any, on or
before Closing). SECTION 15. SELLER'S OBLIGATION WITH RESPECT TO EMPLOYEES.
For each of the Facilities, Seller shall prepare and file all returns
required for state and federal taxes which are due on or before the Closing
Date, including but not limited to unemployment, social security and withholding
taxes. Seller shall pay to Purchaser (by means of a credit to Purchaser of
amounts owed to Seller) the amount for all current wages payable to employees
through the Closing Date and taxes with respect thereto, and shall pay all
amounts necessary to discharge any and all accrued and/or earned fringe benefits
including, without limitation, vacation, pay or sick leave, retirement benefits
and disability benefits to which employees may be entitled as of the Closing
Date. At Closing, Seller shall deliver to Purchaser a list of any and all such
amounts due employees certified by a responsible officer of Seller. SECTION 16.
PATIENT RECORDS AND PATIENT FUNDS.
At Closing, Seller shall deliver to Purchaser all patient records with
respect to the business conducted in connection with each of the Facilities,
which records Purchaser shall maintain and make reasonably available to Seller
for three (3) years after the Closing Date, and Seller shall provide Purchaser
with an updated accounting of all patient funds and other property of patients
held by Seller as set forth on Exhibit "F" and shall deliver such funds and
other property to Purchaser at Closing. SECTION 17. LIABILITIES.
Except as specifically provided in this Agreement, Purchaser shall assume
no liabilities of any kind or nature of Seller or any liabilities of any kind or
nature arising out of the business conducted with respect to each of the
Facilities prior to the Closing Date.
Seller shall be responsible for satisfying the creditors and trade
suppliers of each of the Facilities in accordance with Section 3.23 hereof.
Seller shall indemnify and hold Purchaser harmless from and against any and all
cost, loss, damage or liability which Purchaser may incur as a result of any
"employment loss" as used in the Worker Adjustment and Retraining Notification
Act of 1988 at the Facilities occurring on or after the Closing Date as a result
of the transactions contemplated hereby. SECTION 18. ACCOUNTS RECEIVABLE.
Accounts receivable arising from the performance of patient services at the
Facilities prior to the Closing Date, including Seller's right to receive
payment or reimbursement for such services from government agencies or
otherwise, are included in the Facility Assets to be transferred pursuant to
this Agreement. Accordingly, proceeds received by Seller or by Purchaser or its
manager on behalf of Seller in respect of such accounts receivable or rights of
payment or reimbursement shall be remitted to or received by Purchaser for its
account. SECTION 19. TRANSFER OF THE TRADE NAMES.
At Closing Seller shall assign any and all of its interests in the trade
names used by each of the Facilities to Purchaser.
SECTION 20. CASH AND CASH EQUIVALENTS.
Cash and cash equivalents for any of the Facilities are not included in
the Facilities Assets and shall not be transferred at Closing. Deposits held
by lenders and others are not included in Facility Assets and shall not be
transferred at Closing.
SECTION 21. DELIVERY.
To the extent Seller is obligated to deliver records or other items to
Purchaser at Closing and such items would be cumbersome or unreasonable to
remove from the Facilities, such delivery may be made at each of the Facilities,
regardless of the location of the remainder of the Closing.
SECTION 22. INDEMNIFICATION BY SELLER AFTER CLOSING.
22.01. Indemnification. If the transactions contemplated in this Agreement
are completed and closed and this Agreement is not terminated, Seller and
Purchaser shall indemnify and hold harmless each other against any loss, damage,
liability or expense (including without limitation legal and other fees)
incurred or sustained by that party as a result of or attributable to any
Material misrepresentation or Material breach of any covenant, warranty or
representation given or made by the other party and against any loss, damage,
liability or expense (including without limitation legal and other fees) which
would not have been incurred or sustained by that party if such covenants,
representations and warranties had been true and correct in all Material
respects. Seller shall indemnify and hold harmless Purchaser against any claim
by any governmental entity for Medicare or Medicaid overpayment made by such
governmental entity prior to Closing for any of the Facilities or for recapture
of depreciation resulting from the sale of the Personal Property or other change
giving rise to such recapture.
22.02. Tax Indemnification. Without limiting the requirements of the
foregoing Section 22.01, Seller will promptly indemnify and hold harmless
Purchaser against any and all liability for or with respect to taxes for any
taxable period ending on or before the Closing Date that is asserted or assessed
against any of the Facilities. Notwithstanding anything in this Section 22 to
the contrary, any indemnity payable by Seller to Purchaser pursuant to the
foregoing sentence shall be paid within (i) ten (10) days after Purchaser's
request therefor or (ii) ten (10) days prior to the date on which the liability
upon which the indemnity is based is required to be satisfied by Purchaser or
the Facilities.
22.03. Limitations. The foregoing is subject to the following
limitations:
(a) Each party shall promptly notify the other parties of any
action, claim, loss or potential action, claim or loss, in regard to which
action, claim or loss that party shall seek or may seek indemnification
pursuant to this Section 22, and in any event within thirty (30) days or
such shorter period as may be necessary to avoid a default thereof after
that party has actual knowledge of such action, claim or loss or potential
action, claim or loss, and, at such time, that party shall tender and
permit the other party to defend, at such other party's expense, any such
action, claim or loss.
(b) Claims under this Section 22, must be asserted within the
following time periods after the Closing Date:
Material misrepresentation or Material breach of any
covenant, warranty or representations - 6 months;
Any claim by any governmental entity for Medicare or Medicaid
overpayment made by such governmental entity prior to Closing - 5 years;
Recapture of depreciation resulting from the sale of the Personal
Property or other change giving rise to such recapture - 5 years;
Tax indemnification - later of 5 years or running of applicable
statute of limitations. It is understood and agreed that any such claim
may be validly asserted by Purchaser or Seller during the applicable
period if a claim has been asserted or threatened during such period which
could result in a loss, liability, damage, cost or expense for which the
Seller or Purchaser would be liable pursuant to this Section 22; and
(c) Neither Seller nor Purchaser shall have rights as to any claim
pursuant to this Section 22 in the event this Agreement is terminated
prior to the consummation of the purchase and sale contemplated in this
Agreement.
SECTION 23. EXHIBITS.
The parties shall have until Closing, to agree upon all information to be
filed as a part of the Exhibits to this Agreement. Failure of the parties to so
reasonably agree within such period shall entitle either party to terminate this
Agreement by giving written notice to such effect at Closing.
SECTION 24. REMEDIES NOT LIMITED TO REAL AND PERSONAL
PROPERTY.
The parties shall have all legal and equitable remedies available to them
for breach of this Agreement and shall not be limited to recovery from Facility
Assets or proceeds therefrom.
IN WITNESS WHEREOF, the parties hereto have executed this Purchase and
Sale Agreement as of the day and year first hereinabove written.
"SELLER"
CONSOLIDATED RESOURCES HEALTH
CARE FUND IV
By: WelCare Service Corporation-IV
Managing General Partner
By:____________________________________
Its: __________________________________
[SIGNATURES CONTINUED ON NEXT PAGE]
"PURCHASER"
MIDWEST NURSING HOME INVESTORS, L.L.C.
By: Midwest Nursing Home Management, Inc.
Managing Member
By:____________________________________
Its:___________________________________
<PAGE>
STATE OF GEORGIA ss.
ss.
COUNTY OF FULTON ss.
BEFORE me, ____________________, the undersigned officer, personally
appeared ____________, who acknowledged himself to be ______________ of WelCare
Service Corporation-IV, the managing general partner of CONSOLIDATED RESOURCES
HEALTH CARE FUND IV, and who, being authorized so to do, executed the foregoing
instrument for the purposes therein contained, by signing the name of the
corporation as managing general partner by himself as
- ----------------.
WITNESS my hand and seal at Atlanta, Georgia, this ____ day of June, 1997.
--------------------------------------
Notary Public
My Commission Expires:
- ---------------------
<PAGE>
STATE OF _______ ss.
ss.
COUNTY OF ______ ss.
BEFORE me, ____________________, the undersigned officer, personally
appeared ROLAND A. BELANGER, who acknowledged himself to be president of MIDWEST
NURSING HOME MANAGEMENT, INC., the managing member of MIDWEST NURSING HOME
INVESTORS, L.L.C. (the "LLC"), and who, being authorized so to do, executed the
foregoing instrument on behalf of the LLC for the purposes therein contained, by
signing the name of the corporation as manager by himself as its president.
WITNESS my hand and seal at _______, ________, this ____ day of _____,
1997.
--------------------------------------
Notary Public
My Commission Expires:
- ---------------------
<PAGE>
EXHIBIT INDEX
Certain exhibits to the purchase and sale agreement have been omitted. A list of
the exhibits follows:
Exhibit "A" DESCRIPTION OF FACILITIES
Exhibit "B-1" REAL PROPERTY DESCRIPTION - EMPORIA
Exhibit "B-2" REAL PROPERTY DESCRIPTION - HOISINGTON
Exhibit "C-1" PERSONAL PROPERTY INCLUDED IN SALE - EMPORIA
Exhibit "C-2" PERSONAL PROPERTY INCLUDED IN SALE - HOISINGTON
Exhibit "D-1" PURCHASE PRICE ALLOCATIONS - EMPORIA
Exhibit "D-2" PURCHASE PRICE ALLOCATIONS - HOISINGTON
Exhibit "E" SCHEDULE OF DEFICIENCIES IN THE CONDITION OF THE
FACILITIES
Exhibit "F-1" PATIENT SCHEDULES - EMPORIA
Exhibit "F-2" PATIENT SCHEDULES - HOISINGTON
Exhibit "G" FACILITIES FINANCIAL STATEMENTS
Exhibit "H-1" CHANGES IN FINANCIAL CONDITION - EMPORIA
Exhibit "H-2" CHANGES IN FINANCIAL CONDITION - HOISINGTON
Exhibit "I" LIST OF SELLER'S CONTRACTS AND AGREEMENTS
Exhibit "J" LIST OF EXCEPTIONS
Exhibit "K" PAYROLL INFORMATION
Exhibit "L" EMPLOYEE COMPENSATION
Exhibit "M" REAL ESTATE TAXES
Schedule 14 ASSUMPTION OF SELLER'S OBLIGATIONS
<PAGE>
Exhibit "A"
List of Facilities
Emporia Rehabilitation Center
Hoisington Rehabilitation Center f/k/a Heritage Manor of Hoisington
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS UNAUDITED SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE JUNE 30, 1997 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH 10-Q.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 461,450
<SECURITIES> 0
<RECEIVABLES> 235,121
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,306,054
<PP&E> 581,566
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,377,083
<CURRENT-LIABILITIES> 1,939,799
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> (562,716)
<TOTAL-LIABILITY-AND-EQUITY> 1,377,083
<SALES> 877,242
<TOTAL-REVENUES> 882,861
<CGS> 831,731
<TOTAL-COSTS> 899,897
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 68,166
<INCOME-PRETAX> (17,036)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (17,036)
<EPS-PRIMARY> (0.62)
<EPS-DILUTED> (0.62)
</TABLE>
