PART I. - FINANCIAL INFORMATION
CONSOLIDATED RESOURCES HEALTH CARE FUND V
CONSOLIDATED BALANCE SHEETS
March 31 December 31,
1995 1994
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 379,018 $ 716,188
Accounts receivable, net of allowance
for doubtful accounts of $168,133 1,102,933 1,199,849
Prepaid expenses 216,946 357,152
Property held for sale (Notes 5 and 7) 8,733,456 10,267,062
Total current assets 10,432,353 12,540,251
Other:
Deferred loan costs, net of accumulated
amortization of $110,613 and $94,253 20,269 23,540
Total other assets 20,269 23,540
$ 10,452,622 $ 12,563,791
LIABILITIES AND PARTNERS' DEFICIT
Current liabilities:
Current maturities of long-term debt,
including debt in default of $3,624,314
and $3,491,885 (Note 8) $ 8,574,545 $ 9,982,997
Trade accounts payable 177,390 372,530
Insurance payable 78,958 98,462
Medicaid settlement payable (Note 6) 258,969 258,969
Accrued interest (Note 7) 3,382,296 4,480,481
Accrued real estate taxes 278,944 487,613
Other liabilities 247,837 293,149
Total current liabilities 12,998,939 15,974,201
Advances from former affiliates 4,348,983 4,348,983
Deferred gain on installment sale 278,166 278,166
Total liabilities 17,626,088 20,601,350
Partners' deficit:
Limited partners (6,137,918) (6,998,320)
General partners (1,035,548) (1,039,239)
Total partners' deficit (7,173,466) (8,037,559)
$ 10,452,622 $ 12,563,791
See accompanying notes to consolidated financial statements. 2
CONSOLIDATED RESOURCES HEALTH CARE FUND V
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended March 31,
1995 1994
Revenues:
Operating revenue $ 2,476,195 $2,263,227
Interest income 22,009 19,838
Total revenues 2,498,204 2,283,065
Expenses:
Operating expenses 2,392,092 2,423,434
Interest 156,767 154,715
Depreciation and amortization 93,656 100,275
Partnership administration costs 20,677 19,553
Total expenses 2,663,192 2,697,977
Operating loss (164,988) (414,912)
Loss on transfer of property (Note 7) (1,465,761) -
Litigation settlement income (Note 10) - 32,354
Loss before extraordinary gain (1,630,749) (382,558)
Extraordinary gain from extinguishment
of debt (Note 7) 2,494,842 -
Net income (loss) $ 864,093 $ (382,558)
Net income (loss) per L.P. unit
Loss before extraordinary gain (54.38) (12.41)
Extraordinary gain from extinguishment
of debt 83.45 -
Net income (loss) per L.P. unit $ 29.07 $ (12.41)
L.P. units outstanding 29,596 29,596
See accompanying notes to consolidated financial statements. 3
CONSOLIDATED RESOURCES HEALTH CARE FUND V
CONSOLIDATED STATEMENTS OF PARTNERS' DEFICIT
(Unaudited)
Total
Partners'
General Limited Deficit
Balance, at December 31, 1993 $ (966,115) $(5,243,348) $(6,209,463)
Net loss (15,302) (367,256) (382,558)
Balance, at March 31, 1994 $ (981,417) $(5,610,604) $(6,592,021)
Balance, at December 31, 1994 $(1,039,239) $(6,998,320) $(8,037,559)
Net income 3,691 860,402 864,093
Balance, at March 31, 1995 $(1,035,548) $(6,137,918) $(7,173,466)
See accompanying notes to consolidated financial statements 4
CONSOLIDATED RESOURCES HEALTH CARE FUND V
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three months ended March 31,
1995 1994
Operating Activities:
Cash received from residents and
government agencies $ 2,573,111 $ 2,146,596
Cash paid to suppliers and employees (2,471,338) (2,288,049)
Interest received 22,009 19,838
Interest paid (142,539) (130,029)
Property taxes paid (269,850) (218,110)
Cash used in operating activities (288,607) (469,754)
Investing Activities:
Additions to property and equipment (22,540) (6,525)
Cash used in investing activities (22,540) (6,525)
Financing Activities:
Principal payments on long-term debt (26,023) (31,010)
Cash used in financing activities (26,023) (31,010)
Net decrease in cash and cash equivalents (337,170) (507,380)
Cash and cash equivalents, beginning of period 716,188 1,164,637
Cash and cash equivalents, end of period $ 379,018 $ 657,257
See accompanying notes to consolidated financial statements. 5
CONSOLIDATED RESOURCES HEALTH CARE FUND V
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three months ended March 31,
1995 1994
Reconciliation of Net Income (Loss) to Cash
Used in Operating Activities:
Net income (loss) $ 864,093 $ (382,558)
Adjustments to reconcile net income (loss) to net
cash used in operating activities:
Depreciation and amortization 93,656 100,275
Loss on transfer of property 1,465,761 -
Gain on extinguishment of debt (2,494,842) -
Changes in operating assets and liabilities:
Accounts receivable 96,916 (148,985)
Other current assets 140,206 35,962
Trade accounts payable and other
current liabilities (454,397) (74,448)
Cash used in operating activities $ (288,607) $ (469,754)
See accompanying notes to consolidated financial statements. 6
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark one)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-14436
CONSOLIDATED RESOURCES HEALTH CARE FUND V
(Exact name of registrant as specified in its charter)
Georgia 58-1618135
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) (identification No.)
7000 Central Parkway, Suite 970, Atlanta, Georgia 30328
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 404-698-9040
Indicate by check mark whether the registrant, (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months, and (2) has been
subject to such filing requirements for the past 90 days.
Yes x No
EXHIBIT INDEX APPEARS ON PAGE 15
PAGE ONE OF 16 PAGES.
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CONSOLIDATED RESOURCES HEALTH CARE FUND V
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1995
NOTE 1.
The 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 Partnership's financial position and
operating results for the interim periods. The results of
operations for the three months ended March 31, 1995, are not
necessarily indicative of the results to be expected for the year
ending December 31, 1995.
NOTE 2.
The 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, 1994, as filed with the Securities and
Exchange Commission, a copy of which is available upon request by
writing to WelCare Service Corporation-V (the "Managing General
Partner"), at 7000 Central Parkway, Suite 970, Atlanta, Georgia,
30328.
NOTE 3.
A summary of compensation paid to or accrued for the benefit of
the general partners and affiliates and amounts reimbursed for
costs incurred by these parties on the behalf of the Partnership
are as follows:
Three Months Ended
March 31,
1995 1994
Charged to costs and expenses:
Property management and oversight
management fees . . . . . . . . . . $148,989 $133,570
Financial accounting, data processing,
tax reporting, legal and compliance,
investor relations and supervision
of outside services . . . . . . . . $20,677 $19,553
NOTE 4.
The Partnership's consolidated financial statements have been
presented on the basis that it is a going concern, which
contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. The Partnership
has working capital deficiencies, has defaulted on certain debt
and has no assurance of any financial support from the General
Partners. These conditions raise substantial doubt about the
Partnership's ability to continue as a going concern. The
Partnership's continued existence is dependent on its ability to
7
<PAGE>
generate sufficient cash flow to obtain alternative financing
from refinancing sourcesin order to meet its ongoing obligations.
NOTE 5.
At March 31, 1995 and December 31, 1994, the Partnership included
all of its remaining facilities in Property held for sale as the
Partnership intends to dispose of its remaining facilities.
Champaign Opportunity House ("Champaign") and Village Inn Nursing
Home ("Village Inn") were reclassed to Property Held for Sale in
1991. As discussed more fully in Note 7, Champaign was
transferred in March 1995, in satisfaction of a note secured by
the facility. The net book value of the Village Inn property at
March 31, 1995, was $2,279,237.
During 1994, River Hills South and Plantation Care Center were
reclassed from property and equipment to Property held for sale.
The Partnership anticipates these properties will be disposed of
during 1995. The net book values of the properties at March 31,
1995, were $4,939,705 and $1,514,513 for River Hills South and
Plantation Care Center, respectively.
NOTE 6.
In March 1994, the Partnership received notification from the
Idaho Medicaid program that the Partnership owes the state
$149,485 and $109,484, respectively, for Medicaid overpayments
made to the Partnership during 1993 and 1992. These amounts
relate to two Idaho facilities in which the Partnership sold its
interests in 1993. These settlement amounts reduced operating
revenue in 1994 and are included in Medicaid settlements payable
in the accompanying balance sheets.
NOTE 7.
On March 24 1995, the Partnership transferred a deed in lieu of
foreclosure to the holder of the note secured by a mortgage on
Champaign. This note was recourse to the Partnership. The
General Partner successfully negotiated the transfer of deed in
full satisfaction of the note with the lender. The outstanding
principal and accrued interest on the note satisfied by the
transfer was $2,494,842. In connection with the transfer, the
Partnership paid $61,882 in back property taxes on Champaign.
The net book value of the property was $1,465,761. The
Partnership recognized a loss on the transfer of the property of
$1,465,761 and an extraordinary gain on the forgiveness of debt
of $2,494,842.
NOTE 8.
The Partnership continues not to make debt service payments on
the mortgage note secured by Village Inn. Debt service payments
on this note were ceased when this facility was closed prior to
the acquisition of the Corporate General Partner by WelCare
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Acquisition Corp. on November 20, 1990. Village Inn has tax
certificates of approximately $130,000 outstanding for accrued
real estate taxes that may require redemption by the Partnership
during 1995. The recourse note secured by Village Inn could have
an adverse effect on the Partnership and its ability to continue
as a going concern, should the holder of the note pursue its
satisfaction.
The Partnership ceased debt service on its $1,250,000 note
payable secured by a mortgage on Plantation Care Center
("Plantation"), during March 1995. The Partnership is currently
in negotiations with the lender. This note accrues interest at
7% per annum.
NOTE 9.
Effective April 1, 1995, the Partnership transferred the
operational management responsibilities for Plantation to
Westcare Management, Inc. ("Westcare"), an unaffiliated
management company. The management agreement provides for
management fees of 3.5% of gross facility revenues. The
management agreement with Westcare expires March 31, 1996.
The Partnership also signed a right of first refusal and option
agreement with Westcare with respect to Plantation. Under the
terms of the agreement, Westcare has the option to purchase
Plantation for $1,250,000, plus any unpaid interest that accrues
on the note payable secured by the facility after February 1,
1995. The purchase price is substantially equal to the
underlying secured debt on the facility. The option agreement
will continue until the management agreement is terminated.
An affiliate of the general partner, will continue to provide
accounting and data processing services to the Plantation during
the term of the Westcare management agreement.
NOTE 10.
The Partnership and Southmark Corporation ("Southmark") reached a
settlement which was effectively filed with the Bankruptcy Court
in January 1994, regarding the claims filed by the Partnership
against Southmark and Southmark's suit against the Partnership.
Under this settlement, Southmark released all claims against the
Partnership and recognized the Partnership's claims. In
settlement of the Partnership's claims, Southmark paid the
Partnership $32,354 during 1994.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
WelCare Acquisition Corp., an affiliate of WelCare International,
Inc. ("WelCare"), acquired the stock of the Partnership's
corporate general partner from Southmark Corporation on November
9
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20, 1990. The results of operations for periods prior to
November 20, 1990, occurred under the direction and management of
Southmark affiliates and not under the direction and management
of WelCare's affiliates.
Following the first full year of WelCare's affiliate's management
of the affairs of the Partnership, the Limited Partners
overwhelmingly elected WelCare Service Corporation-V, a wholly-
owned subsidiary of WelCare Acquisition Corp., as Managing
General Partner. On January 7, 1992, WelCare Service
Corporation-V was admitted 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 prior to October 18, 1997. Upon the disposition of
all of its assets, the approved proposal requires that the
Managing General Partner dissolve the Partnership.
The Partnership will continue to operate Plantation Care Center
("Plantation") and River Hills South ("RHS") as it plans to sell
all of the Partnership's facilities to prospective purchasers or
negotiate a settlement with its lenders. Accordingly, at March
31, 1995 and December 31, 1994, the Partnership classified its
remaining facilities as Property held for sale in the
accompanying balance sheets.
Results of Operations
Revenues:
Operating revenue showed an increase of $212,968 for the quarter
ended March 31, 1995, as compared to the first quarter of the
prior year. Operating revenues at Plantation decreased by
$42,223 due primarily to a lower patient census as compared to
the prior year. The decrease at Plantation was more than offset
by an increase in Medicare patient days and increased
reimbursement rates at RHS.
Expenses:
Operating expenses showed a decrease of $31,342 for the quarter
ended March 31, 1995, compared to the same period of the prior
year. Operating expenses at Plantation decreased by $89,722 due
to reduced staffing necessitated by lower patient census.
Operating expenses increased at RHS due to higher utilization of
10
<PAGE>
skilled nursing and therapy services in connection with the
increase in Medicare patient days.
Liquidity and Capital Resources
At March 31, 1995, the Partnership held cash and cash equivalents
of $379,018, a decrease of $337,170 from December 31, 1994. The
Partnership's decrease in its cash balance is primarily due to
operating requirements and the payment of back taxes in
connection with its transfer of Champaign. Cash is being held in
reserve for working capital, capital improvements and operating
contingencies.
On March 24, 1995, the General Partner negotiated the transfer of
the Partnership's interest in Champaign to the holder of a
recourse note that was secured by a mortgage on the facility.
The Partnership paid $61,882 in back taxes in connection with
this transfer and satisfied its obligation under the mortgage
with the transfer. The remaining closed facility, Village Inn,
has tax certificates of approximately $130,000 outstanding for
accrued real estate taxes that may require redemption by the
Partnership during 1995. The recourse note secured by Village
Inn could have an adverse effect on the Partnership and its
ability to continue as a going concern, should the holder of the
note pursue its satisfaction.
Due to negative operating cash flow generated by Plantation, the
Partnership ceased debt service on its $1,250,000 note payable
secured by the facility during March 1995. Based on current
offers from prospective purchasers, a sale of the facility would
not satisfy this obligation. As a result, the Partnership is
currently in negotiations with the lender. As discussed in Item
1, Note 8, the facility's operational management was changed to a
local management company in contemplation of the sale of the
facility to this company. Should the Partnership be unable to
negotiate a settlement with the holder of Plantation's debt or
sell the facility at an amount equal to or in excess of its debt,
the Partnership's ability to continue as a going concern could be
adversely affected.
As of March 31, 1995, the Partnership was current on its debt
service related to its mortgage secured by RHS.
During March 1995, the Partnership was notified by the Idaho
Medicaid program that the Partnership will have to pay
approximately $258,000 in retrospective settlements related to
its previously sold Idaho facilities. The Partnership
anticipates these amounts will be due during the second quarter
11
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of 1995.
As of March 31, 1995, the Partnership was not obligated to
perform any major capital additions or renovations. No such
major capital expenditures or renovations are planned for the
next 12 months, other than necessary repairs, maintenance and
improvements which are expected to be funded by operations.
During the third quarter of 1994, a $500,000 unsecured note
receivable given by the purchaser of Brushwood Care Center, a
facility sold by the Partnership in 1991, came due.
Representatives of the purchaser are currently seeking an
extension for repayment of the note.
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
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.
The Partnership does not anticipate improved liquidity during the
remainder of 1995, due to the continued negative operating
results generated by Plantation, the potential payment of tax
certificates secured by Village Inn and the potential settlement
payments due to the Idaho Medicaid program. Should the
Partnership's cash reserves prove inadequate, the Partnership has
no existing lines of credit to draw on or the ability to borrow
against its other facilities.
12
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PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit
Number Description
10.3 Management Agreement dated March 27, 1995, between
Plantation Associates Limited Partnership and
Westcare Management, Inc.
10.4 Right of First Refusal and Option Agreement dated
April 1, 1995, between Plantation Associates Limited
Partnership and Westcare Management, Inc.
(b) Reports on Form 8-K
None
13
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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 V
By: WELCARE CONSOLIDATED RESOURCES CORPORATION
OF AMERICA,
Corporate General Partner
Date: May 15, 1995 By: /s/ J. Stephen Eaton
J. Stephen Eaton,
Sole Director and
Principal Executive Officer of the
Corporate General Partner
Date: May 15, 1995 By: /s/ Alan C. Dahl
Alan C. Dahl,
Principal Financial Officer of the
Corporate General Partner
14
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Exhibit Index
Page Exhibit
Number Number Description
16 10.3 Management Agreement dated March 27, 1995,
between Plantation Associates Limited
Partnership and Westcare Management, Inc.
10.4 Right of First Refusal and Option Agreement
dated April 1, 1995, between Plantation
Associates Limited Partnership and Westcare
Management, Inc.
15
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Exhibit 10.3
MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT("Agreement"), is made and entered
into as of this 27th day of March, 1995, by and between
PLANTATION ASSOCIATES LIMITED PARTNERSHIP, a Delaware Limited
Partnership actively doing business in the State Of Oregon,
(hereinafter referred to as the "Owner"), and WESTCARE
MANAGEMENT, INC., an Oregon Corporation, with its principal
office and place of business at 3474 Liberty Road South, Salem,
Oregon 97302 (hereinafter referred to as the "Manager").
WITNESSETH
WHEREAS, Owner is the owner of a center providing skilled nursing
care, intermediate nursing care, custodial care and other health
services at 820 Cottage Street, NE, Salem, Oregon, 97301, known
as Plantation Care Center (the "Facility"); and
WHEREAS, Owner desires to engage a professional and experienced
management Company to operate and manage the Facility, and
Manager is equipped and staffed to maintain, operate and manage
the Facility.
NOW, THEREFORE, with intent to be legally bound and in
consideration of the mutual covenants and benefits contained
herein, Owner and Manager hereby agree as follows:
I.RETENTION OF SERVICES
1.1. Retention. Upon and subject to the terms and conditions
hereinafter set forth, Owner hereby retains and appoints, and
Manager hereby accepts such retention and appointment, to render
the services on behalf of Owner specified herein.
1.2. Relationship of Parties. The relationship of Manager to
Owner is that of an independent contractor. No provision
contained herein shall be construed to create a partnership,
joint venture, or fiduciary or employment relationship.
II. MANAGEMENT OF FACILITY
2.1. Scope. Owner delegates to Manager and Manager assumes,
subject to the provisions hereof, general day to day operational
responsibility for the Facility in all respects, as more fully
set forth herein, except that Owner or its designee shall
maintain and perform all accounting functions. The following
specific powers, authorities and responsibilities are hereby
delegated to Manager by Owner, and Manager hereby assumes and
16
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undertakes the following specific powers, authorities and
responsibilities. However, nothing herein shall preclude Owner
or its authorized representative or agent from exercising the
duties or responsibilities delegated to Manager in the event
Owner deems such action to be desirable or necessary.
(a) General Management. Manager shall manage the Facility
through the supervision of resident and patient care and shall
perform all duties and functions necessary for the proper
operation of the Facility within the general policies,
directives and guidelines established by the Manager and
approved, in writing, by the Owner, which approval shall not
be unreasonably withheld. In accordance with the terms of
this Agreement the Manager will perform, bookkeeping, and
record-keeping services for the Facility, except as
hereinafter otherwise specifically provided; provide
supervision in financial matters; manage, direct and supervise
the general maintenance and repair of the Facility; manage,
direct and supervise expenses of the Facility; and supervise
the training and employment of the personnel of the Facility
through its direction and supervision of the home
administrator.
(b) Standard of Care and Quality Control. Manager shall
operate the Facility with the objective of providing quality
health care service in a prudent and cost-conscious manner.
Manager shall establish a quality control care evaluation
program for the Facility.
(c) Professional Counsel and Staff Specialists. As part of
its duties and obligations hereunder, Manager shall make
available to the Facility's personnel, for consultation and
advice, its staff of professional specialists as may be
necessary to provide the services under this Agreement. Staff
specialists will include staff and programs that are capable
of budgeting and knowledgeable of third party payments
including the Medicare and Medicaid programs. Manager will
also consult with and advise the home administrator regarding
marketing, patient activities, inventory and purchasing,
medical records systems, and procedures analysis.
(d) Licenses, Permits and Regulations. Manager shall seek to
operate the Facility in compliance, or when appropriate,
substantial compliance, with all applicable statutes,
ordinances, rules and regulations of all governmental
authorities having jurisdiction over the Facility. All
licenses, permits and approvals necessary for the operation of
the Facility may be in the name of the Owner or Manager, but
shall be maintained at Owner's expense. Owner shall cooperate
with Manager in applying for, obtaining and maintaining such
licenses and permits.
17
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III. FISCAL CONTROL, PROCEDURES AND REPORTS
3.1. Annual Plan and Budget. Manager shall prepare and submit
to Owner, for Owner's written approval, an annual plan of the
goals and objectives of the Facility and a budget to cover all
projected revenues and expenses of the Facility, including
capital improvements and the purchase of all required capital
assets. The annual plan shall include Manager's recommendations
with respect to facility operations, third-party reimbursement
matters, compliance with surveys and other inspections, personnel
administration relating to salaries and fringe benefits for all
employee groups, and staffing patterns for the Facility. Each
annual plan shall be effective upon written approval of Owner
except under exigent circumstances. If a material change in the
plan requires a new budget, Manager shall prepare a new budget
more often than annually.
The budget for the next upcoming fiscal year of Owner during
the term of this Agreement or any renewal(s) or extension(s)
hereof, to be delivered to Owner within twenty (20) days prior to
the commencement of such fiscal year shall include, but not be
limited to:
(a) A capital expenditure budget detailing a program of
anticipated capital expenditures, if any, which are required
prior to the next ensuing fiscal year, in which capital budget
of each proposed expenditure will be designated either as
mandatory or desirable, as Manager may determine.
(b) An operating budget setting forth an estimate/projection
of operating revenue and expenses for the ensuing fiscal year,
together with an explanation of anticipated changes or
modifications, if any, in facility utilization, rate and
charges to patients or residents, payroll rates and positions,
non-wage cost increases, and all other similar factors
expected to differ significantly from those prevailing during
the current fiscal year of the Facility, and the
recommendations of Manager with respect thereto, if any.
3.2. Accounting Services - Owner. The accounting services
to be performed by Owner or under Owner's supervision shall
include the following:
(a) The preparation of a monthly balance sheet and statement
of operations to be submitted to Manager within thirty (30)
days after the end of each such period, including, but not
limited to, the monthly general ledger, monthly profit loss
statement and monthly balance sheet.
(b) The maintenance of payroll functions for employees of the
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Facility, including, but not limited to, the preparation of
payroll checks, establishment of depository accounts for
withholding taxes, the filing of payroll reports and returns,
the payment of all such taxes on behalf of the Owner and the
issuance of W-2 forms to all employees.
(c) The maintenance of a complete general ledger recording and
summarizing the transactions of the Facility.
(d) The filing of all reports, including cost reports, with
the appropriate governmental reimbursement and licensing
agencies or entity, with the cost of filing same to be borne
by Owner.
(e) Perform all cash management functions.
(f) Prepare from data input from the facility staff, all
checks for accounts payable and deliver such checks to the
facility.
(g) Bill Medicare for all Medicare eligible residents.
3.3. Bookkeeping Services - Manager. The bookkeeping services
to be performed by the Manager or under the Manager's supervision
shall include the following:
(a) The maintenance of all records for resident billing, and
billing for all accounts receivable and collection of same,
with the exception of Medicare.
(b) The maintenance of all records for accounts payable and
the payment of the same.
(c) The maintenance of the following payroll functions for
employees of the Facility: The preparation of payroll time
records and the computer input of that information in
preparation for the Owner's processing and preparation of
payroll checks.
(d) Input into the facility's accounting package appropriate
billing and accounts payable data.
(e) Accounting and bookkeeping for patient trust account.
3.4. Systems and Procedures. Manager shall monitor, review
and make such recommendations as may be appropriate with respect
to all accounting and financial systems and procedures for the
Facility, including the collection and payment of all accounts
and the supervision of all accounts receivable.
3.5. Deposit and Disbursement of Funds. All revenue from
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operations and all monies otherwise received by the Facility
(except for patient trust accounts, which shall be maintained in
a separate local account) shall, upon receipt, be deposited in
one or more banking institutions approved by the Owner which are
members of the F.D.I.C., in accounts in the Owner's name all
receipts and monies arising from the operation of the Facility or
otherwise received by Manager for and on behalf of Owner. The
owner shall periodically transfer all account balances in excess
of a minimum balance to another Owner's account for payment of
all costs, expenses, and expenditures of the facility.
IV. OTHER MANAGEMENT RESPONSIBILITIES
4.1. Insurance. To the extent available upon commercially
reasonable terms, Owner shall seek to procure and maintain in
full force and effect the following insurance coverage:
(a) Insurance against loss and/or damage to the Facility under
a policy or policies covering such risks as are ordinarily
insured-against by similar facilities, including, without
limiting the generality of the foregoing, wind, fire,
lightning, explosion, aircraft, vehicles, smoke damage and
uniform standard extended coverage and vandalism and malice
mischief endorsements, limited only as may be provided in the
standard form of such endorsements at the time in use in the
state in which the Facility is located.
(b) Use and occupancy insurance, coverage loss of revenues by
reason of the total or partial suspension of, or interruption
in, the operation of the Facility caused by damage to or
destruction of any part of the Facility, with such exceptions
as are customarily imposed by insurers covering a period of
suspension or interruption.
(c) Comprehensive general public liability and landlord's
liability insurance, protecting the Owner and Manager, as
their interest may appear, against liability for injuries to
persons and/or property, occurring on, in, or about the
Facility in the minimum amount of $1 million liability to any
one person for personal injuries and/or property damage and
$million aggregate liability for any one occurrence.
(d) Worker's compensation insurance respecting all employees
of the Facility and all persons engaged in work on the
Facility, if required by applicable law.
(e) Boiler room insurance as defined and established by
governmental requirements and regulations.
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(f) Professional liability insurance in the amount of $5
million or such other basic coverage limits as may be required
under applicable state or federal law, or as are in the
opinion of the Facility's insurance advisor sufficient to
protect the Owner and Manager against liability for death,
injury, loss, or damage occurring in the Facility.
(g) Fidelity bonds or employee fidelity policy on all officers
and employees of the Owner who collect or have custody of, or
access to, the Facility's revenues.
(h) Comprehensive and/or non-owner automobile-liability
insurance.
All such insurance, to the extent appropriate, will name the
Facility, Owner, Manager, and lienholders of the Facility as co-
insureds, as their respective interests may appear. The cost of
all insurance policies shall be paid by Owner.
Owner and the Manager hereby each waive any right or
recovery against the other party for any claims that may be
brought for any loss which is covered by fire and extended
coverage insurance upon or relating to, the Facility and the
furnishings and equipment thereon. This waiver of subrogation
shall be valid and binding only in the event it is recognized and
accepted by the fire and hazard insurance companies issuing
policies required hereunder. Each party further agrees that its
sole source of reimbursement of loss or damage shall be the
insurance proceeds of the policies to be provided hereunder and
that the other party shall not be liable for any damage or loss
in excess of such insurance coverage.
4.2. Purchase of Supplies, Equipment and Inventory.
(a) Manager shall implement and maintain a system for the
purchase of all items needed for the operation of the
Facility, including all supplies, equipment and inventory.
Manager shall seek to secure the lowest cost for these items
reasonably available under the circumstances, including the
credit-worthiness of Owner, consistent with the directive of
Owner. All purchases may be made in the name of the Facility
or Owner and for the account of the Facility.
(b) Manager may purchase any item described in Section 4.2 (a)
above from a company operated or affiliated with Manager;
provided, however, that the purchase price for such items is
equal to, or less than, the prices for such items generally
available in the market area of Facility.
(c) Where applicable, the actions or conduct of the Manager in
fulfilling its obligations under Section 4.2 are subject to
the terms and conditions of Section 4.3.
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(d) Manager agrees to abide by all corporate purchasing
contracts, including, but not limited to its agreements with
Red Line and Professional Therapy Services, Inc.
4.3. Contracts and Other Services. In accordance with its
annual plan and budget, Manager shall, in the name of and for the
account of the Facility, negotiate and execute such agreements
and contracts which it may deem necessary or advisable for the
operation of the Facility, including the furnishing of utilities,
extermination, refuse removal, and other services provided to the
Facility by independent contracts. Manager shall obtain the
prior written approval of Owner for any contract or agreement not
included in the annual plan and budget and involving an aggregate
annual expenditure of more than $10,000.00 or having a
noncancellable term longer than sixty days and any contract or
agreement effecting Medicare reimbursement.
4.4. Capital Improvements, Repairs and Replacements. The
Manager shall, in the name of and for the account of the
Facility, negotiate and execute such agreements and contracts
which it may deem advisable for the capital improvements to, or
repairs of, or replacement of, the Facility's physical property,
plant and equipment in order to seek to keep and maintain the
Facility in good working order and condition to the extent such
improvements, repairs or replacements are contemplated by the
annual plan and budget, have otherwise been approved in writing
by Owner or, with respect to expenditures not to exceed $500.00,
are determined to be appropriate expenditures by Manager.
Nothing herein shall preclude the right of the Owner to require
that Manager solicit and procure three or more competitive bids
for work contemplated hereunder, or to require Manager to solicit
and procure additional competitive bids in the event Owner
believes the agreement or contract forwarded by Manager is
insufficient or inadequate for any reason.
4.5. Rates. The annual plan and budget shall contain
Manager's recommendations and suggestions for health care fees
and charges to patients and residents, ancillary service fees,
and all other costs and charges. Owner agrees to maintain a
level of rates and charges sufficient to assure the operation of
the Facility in a first-class manner and to provide for the
payment of all expenses, management fees, and reserves as may be
determined by Owner.
V. PERSONNEL
5.1. Employees, Pay Scales and Personnel Policies, Labor
Unions. All employees of the Facility including the home
administrator shall be on the Owner's payroll or leased by Owner,
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and shall be under the direction and control of the home
administrator.
5.2. Manager shall exercise reasonable care, in accordance
with industry standards, in the selection of the home
administrator and shall not be liable to Owner or to others for
any act or omission on the part of such employee unless the
Manager has failed to use reasonable care in the hiring,
directing, or supervising of the home administrator.
5.3. Manager shall have no liability for the payment of the
wages, payroll taxes, fringe benefits, and other expenses of
employment of the Facility's employees, including COBRA insurance
continuation obligations.
5.4. Owner shall have exclusive authority to contest the
validity or amount of any real estate, property or ad valorem
tax, or imposition on the Facility.
5.5. Subject to the prior, written approval of the Owner,
the Manager will negotiate on the Owner's behalf, and at the
Owner's expense, with any labor union lawfully entitled to
represent the employees of the Facility, and may approve such
agreements or contracts as it deems to be in the best interest of
all parties, subject to final written approval of the Owner.
Nothing herein shall preclude the Owner from exercising its right
to designate and authorize a representative, agent or attorney,
other than Manager, to perform the negotiations contemplated
herein and approve and execute any agreement or contract arising
therefrom.
IV. MANAGEMENT FEES AND TERMS
6.1. Term. This Agreement shall become effective at 12:01
a.m. on April 1, 1995, and, unless earlier terminated in
accordance with the provisions of this Agreement, shall terminate
at 11:59 p.m. on March 31, 1996, a period of twelve (12) months,
(the "Term"). Subject to Manager's compliance with the terms,
conditions and/or covenants set forth herein, Manager shall be
entitled to renew this Agreement for an additional twelve (12)
months period, by giving Owner written notice of such election to
renew this Agreement within ninety (90) days, but not less than
thirty (30) days, prior to the expiration of the Term.
6.2. Management Fee. The management fee ("Management Fee")
payable to Manager shall be three and one-half percent (3.5%) of
Net Patient Revenues, as defined herein. All Management Fees
shall be paid on a monthly basis with payment being due and
payable on, or before, the fifteenth (15th) of each calendar
month based upon the Net Patient Revenues of the Facility for the
preceding calendar month.
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The term, "Net Patient Revenues," with respect to the
Facility, shall mean all revenues received or receivable from or
by reason of, the operation of the Facility, or any other use of
the Facility, including, without limitation, all patient or
client revenues received or receivable for the use of or
otherwise by reason of, all rooms, beds and other facilities
provided, meals served, services performed or provided, space or
facilities subleased or goods sold on the Facility, including,
without limitation, and except as provided below, any other
arrangements with third parties relating to the possession or use
of any portion of the Facility; provided, however, that Net
Patient Revenues shall not include nonoperating revenues such as
interest income or income from the sale of assets not sold in the
ordinary course of business; and provided further that there
shall be excluded from such revenue:
(i) contractual allowances for billings disallowed by the
appropriate governmental agencies or third party providers;
and
(ii) federal, state or local sales or excise taxes and any tax
based upon, or measured by, revenues which is added to or made
a part of the amount billed to the patient or other recipient
of such services or goods, whether included in the billing or
stated separately.
(iii) ancillary supplies sold directly to residents.
VII. CAPITAL IMPROVEMENTS AND WORKING CAPITAL
7.1. Capital Items. In accordance with the terms and
conditions of this Agreement, the Owner shall have the obligation
of advancing funds for the purchase of capital assets for
improvements to the Facility and for the purchase of personal
property and equipment for the Facility specifically approved by
Owner. The Owner shall supply all funds and capital necessary to
maintain any licensing and certification for the Facility. The
Owner shall also provide funds for capital improvements to the
Facility and for auxiliary functions in accordance with the
annual plan and budget contemplated in Section 3.1 herein.
7.2. Capital Expenditures. Manager is hereby authorized to
incur expenses and liabilities in the ordinary course of
rendering the services described herein to the Facility,
including the purchase of capital assets in accordance with the
terms of this Agreement, including Sections 3.1, 4.2, 4.3 and 4.4
herein. The determination of whether an expenditure constitutes
a capital item shall be made in accordance with the accounting
policy of the Owner and generally accepted accounting principles
consistently applied.
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7.3. Working Capital. Owner shall be obligated to provide
all working capital required to timely pay all operating expenses
of the Facility, including, without limitation, the fees of
Manager. Manager understands that Owner is not currently making
debt service payments on its rate secured by the Facility and
that such debt service payments are not likely to resume.
Manager shall not be obligated to provide any working capital for
the operation of the Facility.
VIII. TERMINATION
8.1. Termination--Events of Default. The parties shall be
deemed in default hereunder in the following events:
(a) except as otherwise provided herein, if a party hereto
fails to perform any term, provision, agreement, or covenant
of the Agreement, and such default shall continue for a period
of thirty (30) days after receipt of written notice from the
non-defaulting party setting forth the specific event of
default, provided, however, that in the event any such default
is, by its nature, not susceptible of being cured within said
thirty (30) days, then such defaulting party shall have a
reasonable time to effect said cure, so long as the defaulting
party commences or causes to be commenced, such cure during
said thirty (30) days and thereafter diligently pursues the
same to completion.
(b) if a party hereto shall voluntarily apply for, or consent
to, the appointment of a receiver, trustee or liquidator of
such party of all or a substantial part of its assets; file a
voluntary petition in bankruptcy or admit in writing its
inability to pay its debts as same become due; make a general
assignment for the benefit of creditors or avail itself of any
insolvency law; or if an order, judgement or decree shall be
entered by any court of competent jurisdiction, on the
application of a creditor, adjudicating such party bankrupt or
insolvent, or appointing a receiver, trustee or liquidator for
such party and such order, judgment or decree shall continue
unstayed and in effect for any period of sixty (60)
consecutive days.
(c) if the Owner fails to make funds available to pay the
expenses of the Facility as required hereunder, including
Management Fees; and Owner fails to make them available within
ten (10) days after written request by the Manager.
(d) if the Facility or a major portion thereof, shall be
damaged or destroyed by fire or other casualty; and if the
Owner fails to undertake to repair, restore, or rebuild or
replace any such damage or destruction within forty-five (45)
days after such fire or other casualty, or shall fail to
complete such work diligently once begun; then in case of
either such event the tenn. of the Agreement may be terminated
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at the option of the Manager upon thirty (30) days' written
notice to the Owner.
(e) if the permits or licenses necessary for the operation of
the Facility are at any time suspended, terminated or revoked,
and such suspension, termination or revocation shall continue
unstayed and in effect for a period of thirty (30) consecutive
days; then in case of any such event, and upon the expiration
of the thirty (30) day period, the term of this Agreement may
be terminated at Manager's option upon five (5) days' written
notice to the Owner.
In the event any party hereto is in default as hereinabove
described, the non-defaulting party may, at its option, in
addition to its other remedies at law or in equity, terminate
this Agreement by giving the defaulting party written notice of
the decision to terminate, which termination shall be effective
immediately (unless a longer notice period is required pursuant
to paragraphs (d) or (e) above). In addition, in the event of
termination, the party hereto obligated to pay hereunder shall,
within ten (10) days of termination, deliver to the party hereto
entitled to receive such payment, all sums then due and owing
under the terms hereof.
8.2. Termination Without Cause. Either party shall have the
right to terminate this Agreement, without cause, upon. sixty
(60) days' written notice to the other party. Should Owner
terminate this agreement without cause, Owner shall be liable for
payment of management fee through the date of termination.
8.3 Termination via Sale or Lease. Should Owner either sell
or lease the Facility during the original term of this Agreement,
and the new owner or lessee wish to terminate this Agreement,
such termination shall be effective upon the effective date of
the sale or lease and Owner shall be liable for payment of
management fee through the date of termination. Sale shall
include the transfer of the facility to lender in full or partial
satisfaction of debt.
IX. MISCELLANEOUS
9.1. Condemnation of Whole Facility. If the whole of the
Facility shall be taken or condemned by eminent domain,
condemnation, compulsory acquisition or like proceedings by any
competent authority for any public or quasi-public use or
purpose, or if such a portion thereof shall be taken or condemned
as to make it imprudent or unreasonable to use the remaining
portion as a Facility of the type and class immediately preceding
such taking or condemnation; then, in either of such events, the
term of this Agreement shall cease and terminate as of the date
on which the Owner shall be required to surrender possession of
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the Facility as a consequence of such taking or condemnation.
Manager shall continue to supervise and direct the management and
operation of the Facility until such time as Owner shall be
required to surrender possession of the Facility as a consequence
of such taking or condemnation.
9.2. Partial Taking. If only a part of the Facility shall
be taken or condemned and the taking or condemnation of such part
does not make it unreasonable to operate the remaining portion as
a Facility of the type and class existing immediately preceding
such taking or condemnation, then this Agreement shall not be
terminated on account of such partial taking. In such event, the
entire award shall belong to the Owner; but out of the award to
the Owner, so much thereof as shall be reasonably necessary to
reasonably repair any physical damage to the Facility or any part
thereof, or to alter or modify the Facility or any part thereof,
so as to render the Facility a complete and satisfactory
architectural unit as a Facility of the same type and class
immediately preceding the taking or condemnation, except for a
possible reduction in size including number of beds, shall be
used for that purpose subject in all cases to any restrictions
imposed by the lender secured by the facility.
9.3. Manager's Expenses. Except as otherwise specifically
provided herein, the Facility and/or Owner shall not be
responsible for any compensation, reimbursement, travel expenses,
or out-of-pocket expenses, incurred or paid by Manager to any of
its employees for work or activities necessary to carry out the
terms and provisions of the Agreement, and the Manager's sole
compensation shall be the Management Fee (as described in
paragraph 6.2 hereof).
9.4. Books and Records. All books, records and reports
prepared or maintained by Manager or any other management company
on behalf of Owner for or in connection with the operation of the
Facility, shall be Owner's property, provided that Manager may
make such copies thereof or extracts therefrom at Manager's sole
expense, for its own use as the Manager may desire.
9.5. Cooperation at Termination. Upon the expiration or
earlier termination of this Agreement in accordance with its
terms, Manager shall cooperate fully with the Owner in effecting
an orderly transition to avoid any interruption in the rendering
of the above-described services to the Facility and, in such
event, shall promptly surrender to Owner all keys, contracts,
other documents and records maintained by Manager in connection
with the operations of the Facility within a ten (10) day time
period.
9.6. Parties Bound, Assignment. Subject to the terms and
conditions thereof, this Agreement shall be binding upon, and
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inure to the benefit of the successors and assigns of Manager and
Owner. Subject to the terms and conditions hereof, and further
subject to the prior written approval of Owner, Manager shall
have the right to assign this Agreement to any third party.
Nothing in this Agreement shall preclude Owner from selling,
leasing, assigning or transferring its interest in the Facility,
subject to the terms of this Agreement.
9.7. Notices. All Notices permitted or required hereunder
shall be in writing and shall be deemed to have been duly given
when delivered personally or when deposited in the United States
mail, postage prepaid, registered or certified mail, return
receipt requested, address to Owner or Manager, as the case may
be, as follows:
OWNER: Plantation Associates Limited Partnership
7000 Central Parkway, Suite 970
Atlanta, GA 30328
Attn: Mr. Alan Dahl and Mr. Kent Fosha, Sr.
MANAGER: Westcare Management, Inc.
3474 Liberty Road S. Salem, OR 97302
Attn: Robert M. Decker, President
or to such other address(es) and to the attention of such other
person(s) or officer(s) as either party may hereafter designate
in writing by notice duly given.
9.8. Indemnity. Subject to the provisions hereof, from the
effective date of this Agreement, each party hereto hereby
respectively covenants and agrees to indemnify and hold harmless
the other party from and against any damage, loss, cost or
expenses, including, but not limited to, any and all claims,
demands, causes of action, court costs, fines, damages, judgments
and reasonable attorneys fees incurred by either such party in
connection with any of the foregoing as a result of the breach of
any provision of this Agreement by such indemnifying party. The
indemnified party will have the right, through counsel of its
choice, to control any matter to the extent it could directly or
indirectly affect said party financially.
9.9. Section Headings. The section headings throughout this
instrument are for convenience and reference only; and the words
contained therein shall not in any way be held to explain,
modify, amplify, or aid in the interpretation, construction or
meaning of the provisions of this Agreement.
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9.10. Complete Agreement. This Agreement contains the full
and complete agreements between the parties hereto, and all prior
negotiations and agreements pertaining to the subject matters
hereof are merged into this Agreement. Each party expressly
disclaims reliance upon any facts, promises, undertakings, or
reliance upon any other party, or its agents, prior to the
execution of this Agreement. This Agreement is one which cannot
be modified or altered, irrespective of what might take place or
occur, unless each of the parties hereto expressly agrees to such
modification in writing. The parties acknowledge and agree that
this Agreement is separate and distinct from, and with separate
and distinct rights, duties and obligations of, any other
agreement by and between the parties hereto.
9.11. Severability. In the event any provisions hereof
shall be held invalid by any court in any respect, such
adjudication shall not invalidate or render ineffective the
remaining provisions of this Agreement, which provisions shall
remain in full force and effect as if this Agreement had been
executed with the invalid portions thereof eliminated. It is
hereby declared the intention of the parties that they would have
executed the remaining portions of this Agreement without
including any such part, parts, or portions which may, for any
reason, be hereafter declared invalid.
9.12. Omnibus Reconciliation Act of 1980. It is hereby
understood by both parties herein that, pursuant to Section 952
of the Omnibus Reconciliation act of 1980:
(1) until the expiration of four (4) years after the
furnishing of any services pursuant to this Agreement, the
parties to this Agreement will. make available, upon written
request of the Secretary of Health and Human Services, or the
Comptroller General of the United States, or any of their
fully authorized representatives, copies of this Agreement and
any books, documents, records and other data of either party
that are necessary to certify the nature and extent of costs
incurred by either party for said service; and
(2) subject to the terms and conditions of this Agreement, if
either party to this Agreement carries out any of its duties
under this Agreement through a subcontract through a related
organization involving a value or cost of $10,000.00 or more
over a twelve (12) month period, each party will cause such
subcontract to contain a clause to the effect that, until the
expiration of four (4) years after the furnishing of any
services, pursuant to said contract, the related organization
will make available, upon written request of the Secretary of
Health and Human Services, or the Comptroller General of the
United States, or any of their duly authorized
representatives, copies of said contract and any books,
documents, records, and other data of said related
29
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organization that are necessary to certify the nature and
extent of costs incurred by either party for said services.
9.13. Governing Law, Jurisdiction and Venue. This Agreement
shall be governed by and shall be construed and interpreted in
accordance with the laws of the State of Oregon. [The parties
hereto expressly submit to the jurisdiction of all Federal and
State Courts located, sitting or presiding in the City of
Portland, County Multnomah, State of Oregon. Moreover, the
parties agree that venue to resolve or adjudicate any and all
disputes arising under, or related to, the construction of, or
the parties' obligations or performance under, this Agreement
shall be vested in either the United States District Court for
the District of Oregon, Portland, Oregon.]
9.14. Each of the parties hereto represents and warrants
that the person executing this Agreement is duly authorized to
enter into and execute this Agreement for and on behalf of the
party each such person purports to represent.
EXECUTED on this 22nd day of March, 1995.
OWNER: Plantation Associates Limited Partnership
WelCare Service Corporation-IV,
Its General Partner
BY:
TITLE:
MANAGER: Westcare Management, Inc.
BY:
Van F. Moore
TITLE: Vice President
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Exhibit 10.4
RIGHT OF FIRST REFUSAL AND OPTION AGREEMENT
(Plantation Care Center)
THIS RIGHT OF FIRST REFUSAL AND OPTION AGREEMENT (this
"Agreement") is made and entered into as of the 1st day of April,
1995, by and between PLANTATION ASSOCIATES LIMITED PARTNERSHIP, a
Delaware limited partnership ("Plantation"), and WESTCARE
MANAGEMENT, INC., a Oregon corporation ("Westcare").
W I T N E S S E T H:
WHEREAS, Plantation is the owner of a nursing care center
located at 820 Cottage Street, N.E., Salem, Oregon (the
"Facility");
WHEREAS, Plantation has engaged Westcare to manage the
Facility pursuant to that certain Management Agreement dated as
of April 1, 1995 (the "Management Agreement");
WHEREAS, Plantation and Westcare desire to provide for
Westcare to have the right of first refusal and option to
purchase the Facility, subject to the terms and conditions set
forth herein.
NOW, THEREFORE, for and in consideration of TEN AND NO/100
DOLLARS ($10.00) cash in hand and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, Plantation and Westcare hereby agree as follows:
1. Definitions. Except as defined in this Agreement,
capitalized terms shall have the meanings ascribed to such terms
in the Management Agreement.
2. Right of First Refusal.
2.1 Right of First Refusal. During the term of the
Management Agreement, Plantation shall not sell, transfer, convey
or otherwise dispose of the Facility and all real, personal and
intangible property located at the Facility or used in the
business operated on the Facility (collectively, the "Property"),
or any substantial part thereof, without first offering the same
to Westcare in accordance with the terms and provisions hereof;
provided, however, that the institution of foreclosure
proceedings by the holder of the mortgage secured by the Property
(the "Mortgagee") will not be considered a disposition subject to
Westcare's right of first refusal.
2.2 Procedures. In the event Plantation (a)
determines to sell the Property or any substantial part thereof,
(b) receives from a third party a bona fide offer to purchase the
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Property or any substantial part thereof, which Plantation
desires to accept, or (c) makes to a third party a bona fide
offer to sell the Property or any substantial part thereof, which
such third party desires to accept, Plantation shall, prior to
Plantation's sale of the Property or such part thereof, give to
Westcare written notice of Plantation's intention to sell the
Property or such part thereof, or of such offer, as applicable
(herein called a "Notice of Offer"), identifying and setting out
accurately and in detail the Property covered thereby (the
"Notice Property"), the price and all of the conditions and terms
of the proposed sale, including (in the event the Notice of Offer
details an offer made by or to Plantation to or from a third
party purchaser) the proposed purchaser and such purchaser's
intended use of the Notice Property. In each event described
above, Plantation agrees that Westcare shall have the primary
right, at its election, to purchase the Notice Property for the
price and on the terms specified in the Notice of Offer, which
option shall be exercised by Westcare's giving written notice of
exercise thereof to Plantation within fifteen (15) days after
Westcare's receipt of the Notice of Offer.
In the event Westcare shall exercise the right to purchase the
Notice Property, the sale and purchase of the Notice Property
shall be closed within a reasonable time after exercise of such
right and, in any event, within sixty (60) days after Westcare's
notice to Plantation of its exercise of the right to purchase the
Notice Property. If, however, Westcare does not elect within the
time and in the manner above provided to exercise such option,
then Plantation may, at any time within sixty (60) days after
expiration of such fifteen (15) day offer period, sell the Notice
Property to any bona fide third party purchaser (in the event the
Notice of Offer was not premised on an offer to or from a
particular third party purchaser) or to the proposed purchaser
identified in the Notice of Offer, if applicable, for the price
and on the terms specified in the Notice of Offer, but any later
sale, any sale of Property other than the Notice Property, any
sale for a different price, any sale on substantially different
terms, or, if the Notice of Offer is premised on a third party
offer, any sale to a different purchaser, must again be submitted
to Westcare in a Notice of Offer as required above. If the
Notice Property is sold by Plantation to a third party after
Westcare has failed to exercise its right of first refusal with
respect to such sale as herein provided, such third party
purchaser shall take the Notice Property from Plantation free and
clear of the rights of Westcare set forth herein, and in such
event, Westcare agrees to execute such release or other
instrument as may reasonably be requested by Plantation, but any
part of the Property or interest therein which is retained or
reserved by Plantation shall remain subject to the right of first
refusal of Westcare under this Agreement.
2.3 Closing. At the closing of such purchase of the
Notice Property by Westcare pursuant to the right of first
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refusal contained herein, Plantation shall deliver to Westcare a
properly executed and acknowledged warranty deed with respect to
the Notice Property, subject to such exceptions as may have been
identified by a title examination and survey of the Property.
3. Option to Purchase the Property.
3.1 Option. Plantation hereby grants and conveys to
Westcare an irrevocable and exclusive option to purchase the
Property from Plantation.
3.2 Option Term. The term of this option to purchase
shall begin on the date of this Agreement (the "Option Initiation
Date") and shall continue until the termination of the Management
Agreement as provided therein (the "Option Termination Date").
This option may be exercised at any time from the Option
Initiation Date until the Option Termination Date by written
notice of such exercise delivered to Plantation in accordance
with the provisions of Section 5, hereof, for giving notice.
Upon the giving of such notice, this instrument shall thereupon
constitute a binding contract for the purchase and sale of the
Property between Westcare and Plantation at the price determined
in accordance with Section 3.3 hereof and upon any additional
terms to which Plantation and Westcare shall agree.
3.3 Purchase Price. If this option is exercised, the
purchase price for the Property shall be the amount of the
outstanding mortgage indebtedness encumbering the Property, which
is currently $1,250,000, plus any unpaid interest accruing after
February 1, 1995.
4. Further Assurances. Plantation hereby agrees that it will
reasonably cooperate with Westcare in Westcare's dealings with
Mortgagee in connection with Westcare's attempts to exercise its
right of first refusal or its option to purchase the Property,
pursuant to the terms of this Agreement.
5. Binding; Assignability. This Agreement shall constitute a
covenant running with the land, and the terms and provisions of
this Agreement shall be binding upon and shall inure to the
benefit of Plantation, Westcare and their respective successors
and assigns; provided, however, that Westcare may not assign this
Agreement without the prior written consent of Plantation.
6. Notices. All notices required or permitted to be given
under the terms of this Agreement shall be in writing and shall
be deemed given when delivered personally, telecopied
(transmission confirmed), or, if mailed (by first class mail with
postage prepaid, return receipt requested), when received,
addressed or telecopied, as the case may be, to the appropriate
address or telecopier number set forth below:
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To Westcare: Westcare Management, Inc.
3474 Liberty Road South
Salem, Oregon 97302
Attention: Van Moore
Telecopy Number:_______________
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To Plantation: WelCare Service Corporation - V
7000 Central Parkway
Suite 970
Atlanta, Georgia 30328
Attention: Alan C. Dahl
Telecopy Number: (404) 395-9776
Either party may change its address by giving notice to the
other party as aforesaid.
7. Entire Agreement; Amendments. This Agreement contains the
entire agreement between the parties hereto, and no prior oral or
written, and no contemporaneous oral representations or
agreements between the parties with respect to the subject matter
of this Agreement shall be of any force and effect. Any
additional amendments or modifications to this Agreement shall be
of no force or effect unless in writing and signed by both
Westcare and Plantation.
8. Governing Law. This Agreement and all the terms and
provisions and the rights and obligations of the parties hereto
shall be governed by, and construed and enforced in accordance
with, the laws of the State of Oregon to the extent allowable
(without regard to its rules of conflicts of laws).
9. Captions and Headings. The captions and headings
throughout this Agreement are for convenience and reference only,
and the words contained therein shall in no way be held or deemed
to define, limit, describe, explain, modify, amplify or add to
the interpretation, construction or meaning of any provision of
or the scope or intent of this Agreement nor in any way affect
this Agreement.
10. Counterparts. This Agreement may be executed in
counterparts, each of which shall constitute an original and all
of which together shall constitute one and the same Agreement.
IN WITNESS WHEREOF, the parties hereto have executed, sealed
and delivered this Agreement through their duly authorized
representatives, as of the date first above written.
"PLANTATION":
PLANTATION ASSOCIATES LIMITED
PARTNERSHIP, a Georgia corporation
Welcare Service Corporation - V,
Its General Partner
By:________________________________
35
<PAGE>
Alan C. Dahl, Vice President
"WESTCARE":
WESTCARE MANAGEMENT, INC.
By:_______________________________
36
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS UNAUDITED SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE MARCH 31, 1995 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-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 379018
<SECURITIES> 0
<RECEIVABLES> 1340148
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1719166
<PP&E> 8733456
<DEPRECIATION> 0
<TOTAL-ASSETS> 10452622
<CURRENT-LIABILITIES> 17626088
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> (7173466)
<TOTAL-LIABILITY-AND-EQUITY> 10452622
<SALES> 2498204
<TOTAL-REVENUES> 2498204
<CGS> 2506425
<TOTAL-COSTS> 2506425
<OTHER-EXPENSES> 0
<LOSS-PROVISION> (1465761)
<INTEREST-EXPENSE> 156767
<INCOME-PRETAX> (1630749)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 2494842
<CHANGES> 0
<NET-INCOME> 864093
<EPS-PRIMARY> 29.07
<EPS-DILUTED> 29.07
</TABLE>
