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 September 30, 1997
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 0-15694
CONSOLIDATED RESOURCES HEALTH CARE FUND VI
(Exact name of registrant as specified in its charter)
Georgia 58-1677247
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) (identification No.)
400 Perimeter Center Terrace, Suite 650, Atlanta, Georgia 30346
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 770-698-9040
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
SEE EXHIBIT INDEX ON PAGE 11 .
PAGE ONE OF 12 PAGES.
<PAGE>
PART I. - FINANCIAL INFORMATION
CONSOLIDATED RESOURCES HEALTH CARE FUND VI
BALANCE SHEETS
(Unaudited)
September 30, December 31,
1997 1996
------------- -------------
ASSETS
Current assets:
Cash and cash equivalents $ 385,616 $ 929,023
Accounts receivable 851,716 536,617
Prepaid insurance 28,830 -
Other current assets - 465
Property held for sale (Note 4) 2,232,035 2,336,234
------------- -------------
Total current assets 3,498,197 3,802,339
------------- -------------
$ 3,498,197 $ 3,802,339
============= =============
LIABILITIES AND PARTNERS' EQUITY
Current liabilities:
Trade accounts payable 500,276 437,476
Accrued compensation 204,286 168,240
Provider taxes payable 44,358 21,558
Other liabilities 93,723 106,906
------------- -------------
Total liabilities 842,643 734,180
------------- -------------
Partners' equity (deficit):
Limited partners 3,068,936 3,465,037
General partners (413,382) (396,878)
------------- -------------
Total partners' equity 2,655,554 3,068,159
------------- -------------
$ 3,498,197 $ 3,802,339
============= =============
See accompanying notes to financial statements.
<PAGE>
CONSOLIDATED RESOURCES HEALTH CARE FUND VI
STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
1997 1996 1997 1996
----------- ----------- ----------- ----------
Revenues:
Operating revenues $ 1,467,957 $ 1,397,669 $ 4,228,657 $4,191,549
Interest income 6,372 8,569 24,247 24,129
------------ ------------ ------------ ----------
Total revenues 1,474,329 1,406,238 4,252,904 4,215,678
------------ ------------ ------------ ----------
Expenses:
Operating expenses 1,460,095 1,407,639 4,235,068 4,244,235
Interest - - - -
Depreciation and amortization 78,688 68,566 215,819 205,697
Partnership administration
costs 50,215 32,766 214,622 101,513
------------ ------------ ------------ ----------
Total expenses 1,588,998 1,508,971 4,665,509 4,551,445
------------ ------------ ------------ ----------
Operating loss (114,669) (102,733) (412,605) (335,767)
------------ ------------ ------------ ----------
Net loss $ (114,669) $ (102,733) $ (412,605) $(335,767)
============ ============ ============ ==========
Operating loss per L.P.unit (3.76) (3.37) (13.52) (11.00)
Net loss per L.P. unit $ (3.76) $ (3.37) $ (13.52) $ (11.00)
============ ============ ============ ==========
L.P. units outstanding 29,308 29,308 29,308 29,308
============ ============ ============ ==========
See accompanying notes to financial statements.
<PAGE>
CONSOLIDATED RESOURCES HEALTH CARE FUND VI
STATEMENTS OF CASH FLOWS
(Unaudited)
Nine months ended September 30,
1997 1996
------------- --------------
Operating Activities:
Cash received from residents
and government agencies $ 3,913,559 $ 4,497,451
Cash paid to suppliers and employees (4,258,430) (4,205,396)
Interest received 24,247 24,129
Interest paid - -
Property taxes paid (111,163) (67,349)
-------------- -------------
Cash provided by (used in) operating activities (431,787) 248,835
-------------- -------------
Investing Activities:
Payment for purchases of property
and equipment (111,620) (60,768)
-------------- ------------
Cash (used in) investing activities (111,620) (60,768)
-------------- -------------
Financing Activities:
Principal payments on long-term debt - -
Distributions to limited partners - -
-------------- -------------
Cash used in financing activities - -
-------------- -------------
Net increase(decrease) in cash and cash equivalents (543,407) 188,067
Cash and cash equivalents, beginning of period 929,023 729,876
-------------- -------------
Cash and cash equivalents, end of period $ 385,616 $ 917,943
============== =============
See accompanying notes to financial statements.
<PAGE>
CONSOLIDATED RESOURCES HEALTH CARE FUND VI
STATEMENTS OF CASH FLOWS
(Unaudited)
Nine months ended September 30,
1997 1996
------------- --------------
Reconciliation of Net Loss to Cash
Provided by Operating Activities:
$ (412,605) $ (335,767)
Net loss
Adjustments to reconcile net (loss)
to cash provided by operating
activities: 215,819 205,697
Depreciation and amortization - -
Gain on sales
Changes in assets and liabilties: (315,099) 305,901
Accounts receivable (28,830) (57,996)
Prepaid expenses and other 465 1,633
Other assets
Accounts payable and accrued liabilities 108,463 129,367
------------- --------------
Cash provided by (used in) operating activities $ (431,787) $ 248,835
------------- --------------
See accompanying notes to financial statements.
<PAGE>
CONSOLIDATED RESOURCES HEALTH CARE FUND VI
STATEMENTS OF PARTNERS' EQUITY (DEFICIT)
(Unaudited)
Total
Partners'
General Limited Equity
---------- ------------ -----------
Balance, at December 31, 1995 $(376,200) $ 3,961,300 $ 3,585,100
Net loss (13,431) (322,336) (335,767)
---------- ------------ -----------
Balance, at September 30, 1996 $(389,631) $ 3,638,964 $ 3,249,333
========== ============ ===========
Balance, at December 31, 1996 $(396,878) $ 3,465,037 $ 3,068,159
Net loss (16,504) (396,101) (412,605)
---------- ------------ -----------
Balance, at September 30, 1997 $(413,382) $ 3,068,936 $ 2,655,554
========== ============= =========
See accompanying notes to the financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
September 30, 1997
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
nine months ended September 30, 1997, are not necessarily indicative of the
results to be expected for the year ending December 31, 1997.
NOTE 2.
The financial statements should be read in conjunction with the 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-VI (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 on the behalf of the Partnership are as follows:
Nine Months Ended
September 30,
1997 1996
Charged to costs and expenses:
Property management and oversight
management fees $249,578 $251,492
Financial accounting, data processing,
tax reporting, legal and compliance,
investor relations and supervision
of outside services $65,532 $101,513
NOTE 4.
Property held for sale at September 30, 1997 and December 31, 1996, consisted of
the Partnership's two nursing home facilities; Grandview Manor Nursing Home
("Grandview") and Heritage Manor of Westwood ("Westwood").
NOTE 5.
On September 25, 1997, the Partnership closed in escrow the sale of Heritage
Manor of Westwood ("Westwood"), a 142 bed skilled nursing facility located in
Shreveport, Louisiana for a cash sales price of approximately $1,500,000. On
October 31, 1997, the facility's license was transferred to the purchaser and
escrowed cash proceeds were released to the Partnership. The Partnership will
include the results of operations for this facility in its financial statements
through October 31, 1997. The Partnership will recognize a loss on this sale of
approximately $240,000 in the fourth quarter of 1997.
On October 10, 1997, the Partnership closed in escrow the sale of Grandview
Manor Nursing Home ("Grandview"), a 118 bed skilled nursing facility located in
Camp Point, Illinois for a cash sales price of approximately $1,250,000. The
escrowed documents and funds will be released from escrow upon satisfaction of
state licensure requirements to effect the transfer of the facility's license to
the purchaser. The Partnership anticipates the license transfer will occur in
the fourth quarter of 1997 or the first quarter of 1998. The Partnership will
include the results of operations for this facility in its financial statements
until the license is transferred. The Partnership will recognize a gain on this
sale of approximately $720,000
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 September 30, 1997, the Partnership had three general partners (the "General
Partners"), Consolidated Associates VI, a Georgia general partnership,
Consolidated Resources VI, Inc. as the Corporate General Partner ("CR-VI" or the
"Corporate Partner"), and WelCare Service Corporation-VI, a Georgia corporation
as Managing General Partner ("WSC-VI" or the "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 provides that the Managing General Partner wind-up and dissolve the
Partnership.
The Partnership will continue to operate Grandview Manor Nursing Home until the
facility's license has been transferred, as discussed in more detail at Item 1,
Note 5.
Results of Operations
Revenues:
Operating revenues showed a increase of $70,288 for the quarter ended September
30, 1997 as compared to the first quarter of the prior year which was due
primarily to an increase in rates at both of the Partnership's facilities.
Expenses:
Operating expenses showed an increase of $52,456 for the quarter ended September
30, 1997 as compared to the first quarter of the prior year. The increase in
expenses was attributable to general cost increases and increased staffing costs
due to an increase in Medicare patient census as compared to the prior year.
Liquidity and Capital Resources:
At September 30, 1997, the Partnership held cash and cash equivalents of
$385,616 a decrease of $543,407 from the amount held at December 31, 1996. Cash
is being held in reserve for working capital and operating contingencies.
The Managing General Partner anticipates that a final distribution will be made
the Limited Partners during the first quarter of 1998 and that Partnership will
be wound-up and dissolved following issuance of final tax statements to the
partners during the first quarter of 1998.
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.
Based on the Partnership's present cash balance and the recent sales of its
facilities, the Managing General Partner believes the Partnership will have
sufficient cash resources to meet its ongoing operating expenses and provide for
a final distribution to the Partnership's Limited Partners.
PART II - OTHER INFORMATION
Item 5.
Facility Sales
On September 25, 1997, the Registrant closed in escrow the sale of Heritage
Manor of Westwood ("Westwood"), to Magnolia Health Services of LA, Inc., a
corporation unrelated to the Registrant for a cash sales price of
approximately $1,500,000. The escrowed documents and funds will be released
from escrow upon satisfaction of state licensure requirements to effect the
transfer of the facility's license to the purchaser. On October 31, 1997,
the facility's license was transferred to the purchaser and escrowed cash
proceeds were released to the Partnership. The Partnership will include the
results of operations for this facility in its financial statements through
October 31, 1997. The Partnership will recognize a loss on this sale of
approximately $240,000 in the fourth quarter of 1997.
On October 10, 1997, Consolidated Resources Health Care Fund VI, (the
"Registrant"), closed in escrow the sale of Grandview Manor Nursing Home
("Grandview") to Camp Point Associates, L.L.C. , a limited liability
company unrelated to the Registrant for a cash sales price of approximately
$1,500,000. The escrowed documents and funds will be released from escrow
upon satisfaction of state licensure requirements to effect the transfer of
the facility's license to the purchaser. The Partnership anticipates the
license transfer will occur in the fourth quarter of 1997 or the first
quarter of 1998. The Partnership will include the results of operations for
this facility in its financial statements until the license is transferred.
The Partnership will recognize a gain on this sale of approximately
$720,000.
Wind-up and dissolution of Partnership
The Managing General Partner anticipates that a final distribution will be made
to the Limited Partners during the first quarter of 1998 and that
Partnership will be wound-up and dissolved following issuance of final tax
statements to the partners during the first quarter of 1998.
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.1 Asset Purchase and Real Estate Purchase Agreement made and entered between
Consolidated Resources HealthCare Fund VI and Magnolia Health Services of
LA, Inc. (Included as a separate document in the September 30, 1997 Form
10-Q filed via EDGAR)
10.2 Purchase and Sale Agreement by and between Camp Point Associates, L.L.C.,
and Consolidated Resources Health Care Fund VI. (Included as a separate
document in the September 30, 1997 Form 10-Q filed via EDGAR)
27.1 Financial Data Schedule (for SEC use only)
(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 VI
By: WELCARE SERVICE CORPORATION - VI
Managing General Partner
Date: November 14, 1997 By:/s/ J. Stephen Eaton
- --------------------- --------------------
J. Stephen Eaton,
President
Date: November 14, 1997 By:/s/ Alan C. Dahl
- --------------------- ----------------
Alan C. Dahl,
Vice President and Principal
Financial Officer
EXHIBIT INDEX
Exhibit Number Description
10.1 Asset Purchase and Real Estate Purchase Agreement made and entered between
Consolidated Resources HealthCare Fund VI and Magnolia Health Services of LA,
Inc. (Included as a separate document in the September 30, 1997 Form 10-Q filed
via EDGAR)
10.2 Purchase and Sale Agreement by and between Camp Point
Associates, L.L.C., and Consolidated Resources Health Care Fund VI. (Included as
a separate document in the September 30, 1997 Form 10-Q filed via EDGAR)
27.1 Financial Data Schedule (for SEC use only)
ASSET PURCHASE AND REAL ESTATE PURCHASE AGREEMENT
THIS ASSET PURCHASE AND REAL ESTATE PURCHASE AGREEMENT made and
entered into this _____ day of __________, 19_____, by and between:
Consolidated Resources HealthCare Fund, VI a Georgia limited
partnership, whose mailing address is 400 Perimeter Center Terrace, Suite 650,
Atlanta, GA 30346;
hereinafter referred to as "Seller", and
Magnolia Health Services of LA, Inc., a Louisiana corporation, whose
mailing address is P.O. Box 6015, Ridgeland, MS 39158, represented herein by
Elton G. Beebe, Sr., its President, duly authorized by Resolution attached
hereto as Exhibit B;
hereinafter referred to as "Purchaser".
WITNESSETH:
ARTICLE I
DEFINITIONS
1.01 Definitions. As used in this Agreement, the following terms shall
have the meanings assigned below:
"Agreement" shall mean the Asset Purchase and Real Estate
Purchase Agreement.
"Business" shall mean the nursing home facility business conducted by
the Seller in a facility commonly known as Heritage Manor of Westwood
(the "Name"), together with the movable property as described on
Exhibit D.
"Business Records" shall mean all books and records maintained by
Seller in connection with the operation of the Business.
"Closing" shall mean the consummation of the transaction contemplated
by this Agreement, as conducted in accordance with Article V herein.
"Closing Date" shall mean the date on which the Closing occurs, as
required by Section 5.01 herein.
"Contract Rights" shall mean all contract and other agreements
incident to the operation of the Business to the extent not
terminated at or prior to the Closing by Seller at the request of
Purchaser, including, but not limited to, equipment leases, service
agreements and warranties.
"Trust Deposits" shall mean all funds held by Seller for the benefit
of patients of the Facility, whether in trust, for security, for
payment of rents or otherwise.
"Equipment" shall mean all furniture, fixtures, now or hereafter
attached to or appurtenant to the Land and used in connection with
the operation of the Business, including, but not limited to, the
items described in Exhibit D, attached hereto and made a part hereof.
"Facility" shall mean collectively the Land, the improvements, the
Equipment, the Contract Rights, the Supplies, with Government
Authorizations (to the extent assignable to Purchaser), the Records,
the Name, the Deposits and all other assets of Seller whether real,
personal or mixed, which are utilized in connection with the
operation of the Business and located upon the Land (excluding
accounts receivable of the facility and cash on hand, or demand
deposits of the Seller), to the full extent of Seller's interest in
any of the foregoing.
"Government Authorizations" shall mean all licenses, permits,
certificates, consents and other authorizations from all federal,
state, municipal and other governmental agencies or authorities as
are necessary to lawfully operate the Business at the Facility.
"Improvements" shall mean the buildings and all other improvements,
including site improvements, landscaping and fixtures, now owned or
hereafter placed on the Land.
"Land" shall mean those certain tracts or parcels of land described
in Exhibit C attached hereto and made a part hereof, together with
all easements, rights of way, privileges and right benefiting same.
"Patient Records" shall mean all records of the Business pertaining
to patient medical history and treatment.
"Permitted Exceptions" shall mean only the following liens,
encumbrances, covenants, restriction, title defects and limitations
with respect to the Land.
(a) Taxes and assessments for the year 1997 and subsequent years
except for such taxes and assessments which are due and payable at
the Closing. Should assessment increase for 1997, the difference
will be due and payable for Seller's Pro-rata share upon receipt of
such tax notice.
(b) Zoning regulations and ordinances of record (and any
variances therefrom) of the counties and states in which the business
is located, which are not violated by existing structures or uses;
(c) The rights, if any, of patients of the Facility and parties
in possession of rooms and facilities of the Facility;
(d) Rights of patients or residents of the Facility to
possession thereof;
(e) Rights of Centennial HealthCare Management Corporation or
Magnolia Management Corporation under any contract for the management
of the Facility, or any replacement thereof.
(f) Such other matters as Purchaser may, in its sole discretion,
approve or be deemed to have approved.
"Supplies" shall mean all supplies and inventory on hand at the
Closing Date, including food, drugs, cleaning materials and
equipment, supplies for the maintenance of the Facility and all other
supplies and equipment used in the normal operation of the Business.
"Title Company" shall mean First American Title Insurance Company or
any other title insurance company which is approved by the Purchaser,
in its sole discretion.
"Title Policy" shall mean an ALTA Form B Owner's Title Insurance
Policy in a face amount of One Million Five Hundred Thousand and
no/100 Dollars ($1,500,000.00) which will ensure title (including
marketability coverage) to the Land subject only to the Permitted
Exceptions and will not include any preprinted standard exceptions,
such as survey exceptions and the standard lien exception.
1.02 General Construction. Whenever required by the context herein, the
singular includes the plural and masculine includes the feminine or the
neuter. The word "including" means "including without limitation". Words
such as "herein", "hereby", "hereunder" and words of similar import refer to
this Agreement as whole and not to any particular Section or Subsection of
this Agreement.
ARTICLE II
AGREEMENT AND CONSIDERATION
2.01 Agreements to Sell and Purchase. In consideration of the mutual
covenants and promises contained in this Agreement, Seller agrees to sell and
convey the Facility more particularly shown on the attached Exhibit C & D
which includes and is limited to the assets of the Business more commonly
referred to as the Heritage Manor of Westwood, located in Shreveport, LA, and
all other improvements located on said property. This Agreement shall be
executed by way of a Limited or Special Warranty Deed; said Limited or Special
Warranty Deed attached hereto and made a part hereof as Exhibit E.
2.02 Allocation of the Purchase Price. The Purchase Price shall be
$1,700,000.00 with Purchaser being given a credit of $200,000.00 at closing to
be used for physical plant renovations. The Purchase Price shall be allocated
as follows:
Land $ 107,000.00
Land Improvements 42,000.00
Buildings 1,070,000.00
Departmental FF&E 216,000.00
Office FF&E 65,000.00
2.03 Conditions to Closing. The obligation of the Purchaser to buy, as
hereinabove recited, is contingent upon the following things, and in default
of any of the following items, Purchaser is hereby given as its sole remedy
the option to terminate this Agreement, with all parties being relieved of all
obligation hereunder, without liability or responsibility of any kind or
nature.
(a) Seller tendering a legal, valid and merchantable title to
the assets being conveyed, it being understood that the buildings and
improvements are being conveyed in a "AS IS" basis, without any
warranty of fitness whatsoever.
(b) No action or proceeding shall have been threatened or
instituted before a court or other governmental body to restrain or
prohibit the transactions contemplated by this Agreement or to obtain
damages or other relief in connection with execution of this
Agreement or the consummation of the transactions contemplated
hereby; and no governmental agency shall have given notice to any
party hereto to the effect that consummation of the transactions
contemplated by this Agreement would constitute a violation of any
law or that it intends to commence proceedings to restrain
consummation of the transactions contemplated by this Agreement.
(c) Subject to the escrow provisions of Section 5.05 of this
Agreement: any statutory requirements for the valid consummation of
transactions contemplated by this Agreement shall have been
fulfilled; all appropriate orders, consents and approvals from all
regulatory agencies and other governmental authorities whose order,
consent or approval is required by law for the consummation of the
transactions contemplated by this Agreement shall have been received;
and the terms of all requisite orders, consents and approvals shall
then permit the effectuation of the transactions contemplated by this
Agreement without imposing any material condition with respect
thereto except for any such conditions that are acceptable to
Purchaser.
(d) Each of the representations and warranties of the parties
contained in this Agreement shall be true and correct in all material
respects as of the Closing, and each party shall have performed in
all material respects all obligations and complied in all material
respects with all covenants required by this Agreement to be
performed or complied with at or prior to Closing.
ARTICLE III
TITLE REVIEW
3.01 Title Insurance. Seller shall deliver to Purchaser a commitment for
an owner's Title Insurance Policy covering said immovable properties to be
delivered to Purchaser at Closing; said Closing scheduled for on or before
October 31, 1997. Purchaser shall provide written notice to Seller of its
objections to title within five (5) days after delivery of such commitment.
Seller shall have the option of satisfying such objections on or before
Closing (and Seller shall have its right to adjourn the Closing for not more
than thirty (30) days in order to effect a cure, or of terminating this
Agreement, with no further liability on behalf of Seller or Purchaser.
ARTICLE IV
INSPECTION OF THE PROPERTY
4.01 Inspection of the Property. Purchaser shall have the exclusive right
from the execution of this Agreement until Closing to enter upon the property
for the purpose of inspection, examining and auditing the property. If
Purchaser, in Purchaser's sole discretion, is dissatisfied with the results of
Purchaser's inspection of the property, said dissatisfaction shall have a
reasonable basis, Purchaser may terminate this Agreement by delivering to
Seller written notice prior to Closing, in which case Purchaser may withdraw
the Agreement upon complying with the terms of 5.06.
ARTICLE V
CLOSING
5.01 Closing. The consummation of the transactions contemplated by this
Agreement (the "Closing") shall occur on or before October 31, 1997 at 11:59
p.m.
5.02 Seller's Closing Documents. At the Closing, Seller shall deliver to
Purchaser the following documents:
(a) Limited or Special Warranty Deed; Attached hereto and made
a part hereof as Exhibit E;
(b) Employee List;
(c) Owner's Title Insurance Policy (or marked commitment
authorizing the issuance of such policy);
(d) Accounts Payable. A proforma schedule of the accounts
payable for the Seller through October 31, 1997. Seller shall be
responsible for payment for all employees' actual hours worked
through October 31, 1997 at 11:59 p.m. Seller shall receive Seller's
pro-rata share of any Medicaid checks for services rendered through
October 31, 1997 which come in after date of Closing;
(e) Utility deposits;
(f) Records;
(g) Copies of all leases;
(h) Patient Trust Funds;
(i) Termite Guarantee;
(j) Equipment List;
5.03 Closing Cost. Seller shall be responsible for payment of fees of its
counsel and all costs of Seller's compliance with this Agreement. Seller
shall cause to be issued the commitment for owner's Title Policy in the amount
of $1,500,000.00 and Purchaser shall be responsible for the fees of its
counsel and all costs of Purchaser's compliance with this Agreement. As to
the cost of the title policy, Purchaser shall be responsible for payment of
the premium payable to the title insurance company in connection with the
owner's Title Policy.
5.04 Adjustments to the Purchase Price. At the Closing, the following
adjustments shall be made to the Purchase Price as of 11:59 p.m. on October
31, 1997 and shall be added to or deducted from the Purchase Price, as the
case may be.
(a) Employee Benefits and Compensation. All salaries, employee
benefits (as described in 6.01(b), unemployment taxes, withholding
taxes, FICA payments accrued vacation and sick leave for all
personnel employed by the Seller in the operation and maintenance of
the facility shall be paid by the Seller through October 31, 1997.
Purchaser shall assume no responsibility for payment of such amounts
as and when they become due.
(b) Trade Payables. All other expenses of operating or owning
the Facility, through October 31, 1997, including without limitation,
water, sewer, gas, electricity or other utility charges, shall be
paid by the Seller, and Purchaser assumes no obligation to pay any
trade payables.
(c) Accounts Receivable. All accounts receivable, specifically
including Medicaid Reimbursements (if any), accruing through to
October 31, 1997 shall be paid to Seller as received by Purchaser
with an accounting to Seller including patient name, payee, and the
date of collection.
(d) Property Taxes. All property taxes (real and personal) for
1997 shall be prorated and the portion allocable to Seller shall be
deducted from the Purchase Price. Purchaser shall not be responsible
for any property taxes prior to the Closing Date. Should the tax
assessment increase for 1997, the Seller shall pay his pro rata share
to Purchaser upon receipt of such notice.
(e) Prepaid items. All prepaid patient fees and prepaid other
items constituting revenues of the Facility shall be prorated and the
portion allocable to Purchaser shall be deducted from the Purchase
Price. All prepaid equipment leases and other prepaid items
constituting expenses of the Facility shall be prorated and the
portion allocable to Purchaser shall be added to the Purchase Price;
(f) Resident Trust Funds. At the Closing, the Resident Trust
Funds will be provided by the Seller. All Resident Trust Fund
reconciliations and records will be provided to the Purchaser at the
Closing.
5.05 Escrow Closing for Regulatory Delay and Other Conditions. If
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 or as otherwise provided herein),
Purchaser agrees (if so requested by Seller) to close the purchase in escrow
("Closing in Escrow") on or before October 12, 1997 with a mutually acceptable
escrow agent and pursuant to an escrow agreement reasonably acceptable to
Purchaser and Sellers. Purchaser shall not be required to deposit the
Purchase Price at a Closing in Escrow. Seller shall retain possession and
beneficial ownership and control of the Facility pending satisfaction of the
conditions of such Closing in Escrow and in any event through and including
October 31, 1997. Seller hereby approves a bank or financial institution
designated by Purchaser in writing as an acceptable escrow agent, or counsel
for such bank or financial institution.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
6.01 Seller's Representations and Warranties. Seller makes the following
representations and warranties to Purchaser, all of which shall be made to the
best of Seller's knowledge without investigation or inquiry of any kind:
(a) Organization of Seller. Seller is in good standing under
the laws of the State of Louisiana and is legally entitled and
licensed to own and lease its properties (including the Property) and
to carry on its business (including the Business) as and in the
places where such properties are now owned, leased or operated;
(b) Employee Benefits. Exhibit F attached hereto and made a
part hereof, sets forth as of the date of this Agreement, a complete
list and description of all employee benefits, including
hospitalization insurance, accident and health insurance, disability
insurance, death insurance, vacation policies, meals and lodging
policies and parking policies, employment contracts, bonus, stock
option, profit sharing, pension, retirement, incentive or other
similar arrangements or plans to which Seller is a party or by which
Seller or its assets or properties is bound. True and correct copies
of all documents or instruments creating, establishing or evidencing
such employee benefits have been delivered to Purchaser;
(c) Improvements. Purchaser accepts the premises as is and with
no warranty or representation whatsoever as to the fitness of any of
the facility structurally, electrically, mechanically or otherwise.
Purchaser assumes the risk and expenses for repair, maintenance or
replacement of any items from October 31, 1997 forward. As a part of
the consideration for this transaction, Purchaser waives and
relinquishes any right or cause of action in redhibition or to
rescind the sale or to reduce the purchase price by reason of any
obvious or latent defect or alleged defect in the premises.
Purchaser recognizes that this waiver is a procuring cause of this
Agreement and that such waiver was negotiated for and agreed to as
part of the overall trade between the parties.
(d) Compliance with Laws. To the best of Seller's knowledge
without investigation or inquiry, Seller is not in violation of any
federal, state or local legal or regulatory requirement of any kind
or nature whatsoever relating to the Business (including zoning and
land use laws, building, safety or health ordinances and codes,
environmental laws and civil rights laws), or of any covenants,
conditions and restrictions affecting or relating to the use and
occupancy of the Facility. Except as previously disclosed in
writing, Seller has not received any notice or complaint from any
governmental agency or authority, or has received or is aware of any
violation or any claim of violation of any law, rule, regulation,
ordinance, order writ injunction, decree, certificate, license,
permit, authorization, condition or standard related to any such
legal requirement. Seller has not received any notice from any
governmental agency or authority of any pending proceeding to take
all or any part of the Facility (whether leased or owned) by
condemnation or right of eminent domain, and, no such preceding is
threatened. Seller is not a party to any agreement or instrument, or
subject to any judgment, order, writ, injunction rule, regulation,
code or ordinance which materially and adversely affects, or might
reasonably be expected materially and adversely to affect the
operation, prospects, properties or condition, financial or otherwise
of the Business; Seller will cooperate with Purchaser and use its
best efforts to allow Purchaser to (i) procure all necessary consents
and approvals, (ii) complete and file all necessary application and
certificates, (iii) satisfy all requirements prescribed by law for,
and all conditions set forth in this Agreement to, the consummations
of the transactions contemplated hereby, and (iv) effectuate the
transactions contemplated by this Agreement at the earliest
practicable date.
(e) Litigation and Proceedings. Seller warrants it has no
knowledge of any threatened or pending litigation, proceeding or
governmental investigation pending or threatened against or relating
to the Business or Facility, including a report of any and all
deficiencies reported at the nursing home facility (other than
deficiencies shown in the latest regulatory surveys of the Facility,
as previously delivered to Purchaser), before any court, arbitrator
or administrative agency. There are no outstanding orders, rulings,
decrees, judgments, stipulations, or sanctions filed against the
nursing facility, to which Seller is a party by or with any court,
arbitrator or administrative agency which may materially and
adversely affect the Business or the Facility, and there are no
suspensions or threatened suspensions of the Medicaid Provider Number
for the nursing home facility;
(f) Governmental Authorizations. Seller has received or will
receive all of Governmental Authorizations prior to the Closing,
other than Governmental Authorizations required for Purchaser's
continued operation of the Business after the Closing, which Seller
has no obligation to obtain. Seller has received no notice, and is
not aware of any violation, deficiency, or impending requirement
which would cause additional expenditures to be made to bring the
Facility into compliance with applicable laws, regulations and
requirements or any other matter which would have material, adverse
effect on the Facility or the Business. The Facility is licensed for
142 nursing home facility beds. Seller shall indemnify Purchaser
from any costs or expense related to any violation, deficiency, or
impending requirement which would cause an additional expenditure to
be made to the Facility after the date of Closing, if Seller is or
was aware of the violation deficiency or impending request prior to
Closing and failed to deliver same to Purchaser.
(g) Taxes and Assessments. All taxes and assessments against
the Facility or resulting from the operation of the Business
(including payroll taxes) which are due and payable on or before the
date hereof either have been paid or the funds are in escrow to pay
said taxes. There are no agreements, waivers or other arrangements
providing for an extension of time with respect to the assessment of
any type of tax or deficiency against Seller, nor are there any
actions, suits, proceedings, investigations or claims for additional
taxes and assessments asserted by any taxing authority;
(h) Hazardous Substances. To the best of Seller's knowledge,
without investigation or inquiry of any kind, Seller has not caused
the Facility to become contaminated by any known hazardous substance,
as defined in any law or regulation of the United States or any state
or local government, or by any other substance, the removal or
encapsulation of which is mandated by any of the aforesaid laws or
regulations. To the best of Seller's knowledge, without
investigation or inquiry of any kind, Seller has complied with all
such laws and regulations regarding underground storage tanks,
asbestos, insulation, storage fuel tanks and grease traps;
(i) Inventory. As of October 31, 1997, inventories of food,
medicine, supplies, towels and linens shall not be less, in quantity
or value, than in normal operating levels of the Facility. Until
that time, the Facility will be operated only in the normal course
with due regard for proper maintenance and repair of the Facility.
(j) Seller to be responsible for the following: Filing final
cost report of Seller through October 31, 1997.
(k) In addition to, and not as a limitation to any other
provisions in this Agreement regarding Seller's obligations, Seller
also agrees to be responsible for, and to indemnify and to hold
Purchaser and/or the Business, harmless from any and all claims,
debts, obligation, labor liability, causes or action, whether in tort
or contract, workman compensation, etc. which have arisen or shall
have arisen out of the operation of the business through October 31,
1997. Seller shall also reimburse Purchaser all expenses, reasonable
attorney fees and cost if Purchaser, on behalf of itself and/or the
business, are required to defend against any such claim, debt, etc.,
as delineated above.
6.02 Purchaser's Representations and Warranties. Purchaser agrees to be
responsible for, and to indemnify and to hold Seller and/or the Business,
harmless from any and all claims, debts, obligation, labor liability, causes
or action, whether in tort or contract, workman compensation, etc., which
arises out of the operation of the business after October 31, 1997. Purchaser
shall also reimburse Seller all expenses, reasonable attorney fees and cost if
Seller, on behalf of itself and/or the business, are required to defend
against any such claim, debt, etc., as delineated above.
6.03 Survival of Reaffirmation of Representations and Warranties. The
parties shall reaffirm the foregoing representations, warranties and
indemnities at Closing. Such representations, warranties and indemnities
shall survive Closing for a period of six (6) months and thereafter shall have
no further force or effect.
ARTICLE VII
CONDEMNATION
7.01 Condemnation. If all or any part of the Property shall be condemned
or otherwise taken through the power of eminent domain, or any proceedings
therefore commenced, prior to the Closing, Purchaser may elect:
(a) In the cases of condemnation of all of the Facility, or a
portion of the Facility which materially alters the value or use of
the Facility, to terminate and completely void this Agreement,
relieving both Purchaser and Seller of all duties and/or obligations
hereunder; or
(b) In all such cases, to take the Facility under the terms of
this Agreement and require Seller to assign to Purchaser all of
Seller's interest in and to such condemnation award.
ARTICLE VIII
DEFAULT
8.01 Events of Default. The following shall constitute events of default
under this Agreement:
(a) Any material failure by any party to abide by or perform any
of the covenants contained in this Agreement or in any exhibit or
document executed by the parties pursuant to the terms of this
Agreement.
(b) Any material inaccuracy in any warranty, representation or
certificate contained in this Agreement or in any exhibit or other
document referred to in this Agreement.
8.02 Remedy for Default. The sole remedy for default in the terms of this
Agreement by any party shall be to terminate the Agreement, whereupon each
party shall be relieved of all further obligation and liability.
ARTICLE IX
MISCELLANEOUS
9.01 Assignability. This Agreement may not be assigned by Purchaser
without Seller's prior written consent, which will not be unreasonably
withheld.
9.02 Entire Agreement. This Agreement shall constitute the entire
agreement between the parties and may not be modified except by any instrument
in writing and signed by both of them.
9.03 Construction. This Agreement shall be construed in accordance with
the Laws of the State of Louisiana.
9.04 Notices. Any notice, demand, waiver or consent required or permitted
hereunder shall be in writing and shall be given by prepaid telegram or
prepaid registered or certified mail, with return receipt requested, or by
telecopy addresses as follows:
Seller: Consolidated Resources HealthCare Fund VI
c/o Alan C. Dahl
400 Perimeter Center Terrace, Suite 650
Atlanta, GA 30306
With copy to: Jeffrey N. Plowman, Esq.
Nelson Mullins Riley & Scarborough, L.L.P.
Suite 1400
999 Peachtree Street, NE
Atlanta, GA 30309
Purchaser: Magnolia Health Services of Louisiana, Inc.
ATTN: Elton G. Beebe, Sr.
P. O. Box 6015
Ridgeland, MS 39158-6015
The date of any such notice and of service thereof shall be deemed to
be the day of dispatch. Any party may change its address for the purpose of
notice by giving written notice in accordance with the provisions of this
Section.
9.05 No Assumption of Liabilities. Notwithstanding any provision
contained in this Agreement or in any exhibit, schedule or other document
referred to in this Agreement contrary, this Agreement is intended as and
shall be deemed to and agreement for the sale of assets and none of the
provisions hereof shall be deemed to create any obligation or liability of any
party to any person or entity that is not a party to this Agreement, whether
under a third-party beneficiary theory, laws relating to transferor/transferee
liabilities or otherwise. Except as expressly provided in this Agreement, and
subject to the Permitted Exceptions, Purchaser shall not assume and shall not
discharge or be liable for any debts, liabilities, or obligation of the Seller
including, but not limited to, any (i) liabilities or obligations of the
Seller to its creditors, shareholders or owners, (ii) liabilities or
obligations of the Seller with respect to any acts, events or transactions
occurring prior to, on or after the Closing, (iii) liabilities or obligations
of the Seller for any federal, state, county or local taxes applicable to or
assessed against the Facility, or (iv) any contingent liabilities or
obligations of the Seller, whether known or unknown by the Seller or
Purchaser, at or before the Closing. Except as otherwise provided in this
Agreement, Purchaser shall have no duty whatsoever to take any action or
receive or make any payment or credit arising from or related to any services
provided or cost incurred in connection with the management and operation of
the Business prior to October 31, 1997 including, but not limited to, any
matters relating to cost reports, collections, audits, hearings, or legal
action arising therefrom; and any amounts received by Purchaser relating
thereto shall be promptly delivered to the Seller.
9.06 Counterparts; Facsimiles; Exhibits. This Agreement may be executed
in multiple identical counterparts, each of which shall be deemed an
original. Execution and delivery by a party of one counterpart shall be
deemed to constitute execution and delivery of each identical counterpart.
Signatures affixed to facsimile copies of this Agreement shall be deemed
properly executed and delivery by facsimile transmission shall be deemed an
adequate delivery. The parties shall promptly agree upon and attach any
exhibits provided for under this Agreement which are not currently attached,
and the absence of such exhibits as of the date of execution hereof shall not
affect the enforceability of this Agreement.
THUS DONE AND SIGNED at __________________________________, in the
presence of the undersigned witnesses, _______________________________________
and ___________________________________________, and me Notary, this _____ day
of __________________, 19___.
WITNESSES: SELLER:
______________________________________Consolidated Resources HealthCare Fund VI,
______________________________________A Georgia limited partnership
By: __________________________________
__________________________________
______________________________________
NOTARY PUBLIC
[SIGNATURES CONTINUED ON NEXT PAGE]
THUS DONE AND SIGNED at __________________________________, in the
presence of the undersigned witnesses, _______________________________________
and ___________________________________________, and me Notary, this _____ day
of __________________, 19___.
WITNESSES: PURCHASER:
______________________________________ Magnolia Health Services of LA, Inc.
______________________________________ ______________________________________
By: Elton G. Beebe, Sr., President
______________________________________
NOTARY PUBLIC
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (the "Agreement"), made and entered
into as of this ____ day of October, 1997, by and between Camp Point
Associates, L.L.C., an Illinois limited liability company ("Purchaser"), and
Consolidated Resources Health Care Fund VI, a Georgia limited partnership
("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 that certain nursing home facility known as
Grandview Manor Nursing Home located at 205 East Spring Street, Camp Point,
Illinois 30328 (such real property and personal property and the businesses
conducted thereon are hereinafter referred to as the "Facility");
WHEREAS, Seller wishes to sell all of its right, title and interest
in and to such Facility, including the business thereof, to Purchaser and
Purchaser wishes to buy all of Seller's right, title and interest in and to
such Facility 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:
(a) That certain tract or parcel of real property relating to the Facility,
TOGETHER WITH all and singular appurtenances now or hereafter belonging
thereto, said real property being more particularly described in Exhibit
"A", attached hereto and by reference made a part hereof, and being
hereinafter 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, including, without limitation, the Facility licensed
for 118 patient beds, containing 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 (said Land, improvements,
appurtenances, fixtures and property at the Facility being hereinafter
collectively referred to as the "Real Property"), 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; and
(b) All licenses that are transferrable, permits, equipment, furniture,
furnishings, fixtures, inventory, supplies, and the Facility's name,
telephone numbers, books, patient records, employee records, patient
contracts, and all other personal and intangible property located on the
Real Property or used in connection with the business of the Facility as a
going concern and with the operation of the Facility located thereon,
including, without limitation, all of those items of personal property set
forth and described in Exhibit "B" attached hereto (such personal property
is hereinafter referred to as the "Personal Property") but excluding
personal property set forth and described in Exhibit "C" attached hereto
(the "Excluded 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 Facility shall be ONE
MILLION TWO HUNDRED FIFTY THOUSAND DOLLARS ($1,250,000.00) (the "Purchase
Price"), subject to adjustment as provided in this Agreement. On the date
hereof, Purchaser shall deposit FIFTY THOUSAND DOLLARS ($50,000.00) with
Lawyers Title Insurance Corporation (the "Escrow Agent") to hold in an
interest bearing account as an earnest money deposit (the "Deposit") which
will be applied as set forth herein. The remainder of Purchase Price to be
paid to the Escrow Agent at Initial Closing (as hereinafter defined) in
cash or by wire transfer of immediately available funds.
2.02.Compliance with Section 1060 of the Internal Revenue Code. Seller
and Purchaser agree that Exhibit "D", 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 Exhibit "D" 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. SECTION 3.
SELLER'S REPRESENTATIONS, WARRANTIES AND COVENANTS. As used herein in this
Section and elsewhere in this Agreement the following terms have the
following meanings:
"Knowledge of Seller" or "Seller's Knowledge" means the actual knowledge of any
executive officer of WelCare Service Corporation-VI or Consolidated
Resources VI, Inc., as the general partners of Seller. "Knowledge of
Purchaser" or "Purchaser's Knowledge" means the actual knowledge of
Purchaser and the actual knowledge of any managing member (or executive
officer thereof) of Purchaser. 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 Facility. Upon the Escrow Closing Date (as hereinafter
defined) the Facility 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 the Facility 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 Facility are in good repair in all material
respects and each building of the Facility is free from damage by termite
and insect infestations in all material respects. 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 Facility prior to the Escrow Closing Date, 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. Purchaser has been given the opportunity to inspect the
physical and financial condition of the Facility. Seller makes no
representations, warranties or covenants concerning any future financial
performance of the Facility and, except as expressly set forth herein,
Seller makes no warranties, representations or covenants concerning the
physical condition of the Facility.
3.02.List of Patients. Attached hereto and made a part hereof as Exhibit "F" is
a schedule setting forth the name of each patient of the Facility as of the
date hereof, 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 Facility's
accounting of patient funds, which accounting is maintained as a ledger
book in the offices of the Facility, is true, correct and complete in all
material respects, subject to routine periods for posting of transactions.
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 Facility: (i) unaudited balance sheets as of the end of the Facility's
last two (2) fiscal years and as of June 30, 1997, which, in all material
respects, are true, complete and correct and accurately reflect the
financial condition of the Facility at the respective dates on such balance
sheets; and (ii) unaudited statements of operations for the Facility's last
two (2) fiscal years and year-to-date for the period ended June 30, 1997,
which, in all material respects, are true, complete and correct and
accurately reflect its operations during such periods. Seller has provided
or 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 the Facility. Seller shall make
available to Purchaser upon Purchaser's request any and all unaudited
balance sheets and statements of operations provided to it from a
comptroller's office 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 the Facility. Except as set forth
on Exhibit "H", there have been no material adverse changes in the
financial condition, business or properties of the Facility since its 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 the Facility 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 the Facility which require more than sixty (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.
Purchaser shall assume the contracts and agreements listed in Exhibit "I"
or shall cause Seller to terminate such contracts and agreements before the
Escrow Closing Date in accordance with Purchaser's instructions delivered
to Seller on or before the Initial Closing Date. Seller shall use its
reasonable best efforts to keep all insurance policies or renewals thereof
("Policies") affecting or covering the Facility and its operations in force
and effect up to and including the Escrow Closing Date 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 on the Escrow Closing
Date.
3.05.Discharge of Obligations. Except as may be disclosed in Exhibit "J", as of
the date hereof, Seller has carried out, performed and complied with all
material obligations imposed on Seller under any admission agreements,
agreements with patients or agreements with others.
3.06.Occupancy. As of the date hereof, the Facility has existing valid
agreements with the patients occupying the Facility.
3.07.No Rebates or Allowances. Except as may be disclosed in Exhibit "J", to
Seller's Knowledge, none of the Facility's patients have been given any
concession or consideration for the rental of any patient room, and none of
the patients of the Facility are entitled hereafter to any concessions,
rebates, and/or allowances of free occupancy for any period after the
Escrow Closing Date.
3.08.Repair Requirements. Except as set forth in Exhibit "J", 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 the Facility.
3.09.Litigation. Except as may be disclosed in Exhibit "J", as of the date
hereof there is no litigation or proceeding pending or, to Seller's
Knowledge, threatened, other than as normal or customary in the health care
industry, which, if determined unfavorably to Seller, would have a material
adverse effect on all or any part of the Facility, its assets, property or
business, and Seller has no reasonable grounds to know of any basis for any
such action.
3.10.No Condemnation Proceedings. As of the date hereof there are no pending
or, to Seller's Knowledge, threatened condemnation or eminent domain
proceedings which would have a material adverse effect on the Facility or a
portion thereof.
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 the Facility over presently
existing roads and driveways have been obtained and paid for and shall be
in full force and effect on the Escrow Closing Date. To Seller's Knowledge,
no assessments for public improvements have been made against the Facility
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 on the Escrow Closing
Date 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 Facility Laws. As of the date hereof, the Initial Closing
Date and the Escrow Closing Date:
(i) the Facility is in compliance, in all material respects, with all
applicable federal, state and municipal government codes, statutes, laws,
ordinances, rules, regulations, minimum standards, licenses,
certifications, permits and authorizations necessary for use, occupancy and
operation of a 118 bed skilled and/or intermediate care nursing home
facility; (ii) except for the inventory, supplies, perishables and linens,
the Personal Property is sufficient in quality and quantity for the
operation of a 106 bed skilled and/or intermediate care nursing home
facility; (iii) the Facility is configured to house 106
skilled/intermediate residents without any restructuring, remodeling or
renovating; (iv) Seller is the holder of a non-probationary unconditional
license from the Illinois Department of Public Health for a 118 bed skilled
and/or intermediate care nursing home facility, subject to no waivers; (v)
the Facility is certified by the Illinois Department of Public Health
("IDPH"), the Illinois Department of Public Aid ("IDPA") and the Health
Care Financing Agency ("HCFA") to participate in the Medicaid and Medicare
programs, and is otherwise in good standing and substantial compliance with
all requirements as both programs are administered by the federal
government and the State of Illinois; (vi) the Facility is operating with
no outstanding certification violations and, for any certification
violation for which Seller previously received a notice, Seller has
received a written acknowledgment from either IDPH, IDPA or HCFA, as
applicable, that the violation has been corrected; (vii) the Facility is
not currently being inspected by any governmental agency and there are no
inspections for which the results of such inspection have not been
received; and
(viii) Seller has not received any (a) notice of intent to (viii) Seller has not
received any (a) notice of intent to impose or any notice of imposing any
Civil Money Penalty ("CMP"), or if Seller has received such notice, the CMP
has been paid in full, (b) notice of intent to revoke, cancel, terminate
and/or not renew the Facility's Medicaid and/or Medicare certification, (c)
notice of decertification and/or intent to decertify, or (d) notice of
intent to cease payment after a certain date for any new Medicaid and/or
Medicare residents admitted after said date. after a certain date for any
new Medicaid and/or Medicare residents admitted after said date.
3.14.Leased Property. The Facility does not lease any Personal Property used in
the business conducted at the Facility by Seller, except as shown in the
schedule attached hereto as Exhibit "J".
3.15.Status of Land; Environmental Standards. Purchaser, and its agents, were
entitled to inspect the Facility and the Land, and to obtain environmental,
engineering, title and survey reports with respect to the Facility.
Purchaser acknowledges receipt and approval of environmental assessment
reports, title insurance commitments, and surveys for the Facility. To
Seller's Knowledge, there are no matters materially affecting Purchaser's
proposed ownership and operation of the Facility as currently used by
Seller except as set forth in such reports or as otherwise set forth in
this Agreement. Seller has not received notice that the Facility is 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 the Facility is 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 the
Facility, Seller has not caused or permitted such Facility 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 the Facility, there has been no Release (as hereafter defined) of any
Hazardous Substances on site. 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
assessment of the Facility, to Seller's Knowledge, there has not been
incorporated into the Facility and the Facility does 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.No Management Agreements. There will be no management agreements for the
Facility after the Escrow Closing Date.
3.17.Union Agreements and Employee Grievances. Except as set forth in
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 Facility. 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 the Facility 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.r copies of any
grievances received by Seller during the twelve month period immediately
preceding the date hereof.
3.18.Real Property Taxes. The real estate and personal property tax assessment
on the Facility as reflected on the real estate and personal property tax
bills for the Facility (the "Tax Bills") for 1996 and the amount of taxes
paid and unpaid in connection with the Tax Bills are set forth in Exhibit
"L". Seller has not filed any request for reduction of the real estate
taxes, there are no pending, or to Seller's Knowledge, threatened
proceedings affecting the real estate taxes and Seller has not received any
notice of a proposed reassessment of the Facility.
3.19. No Violations of Law.
Seller has not received notice from any governmental authority of any
violation by the Facility of any federal or state law or any municipal
ordinance or order or requirement of any governmental authority having
jurisdiction over the Facility; provided, however, that Seller may have
received periodically notices of deficiencies pursuant to regulatory
surveys of the Facility 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 the Escrow Closing Date. 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 the
Facility.
3.20. Maintenance of Business Operations and Goodwill.
Seller will cooperate with Purchaser to preserve and maintain the Facility's
business operations intact, and to preserve, to the extent reasonably
possible, the goodwill of the Facility's business.
3.21.Inventories and Trade Payables. Seller currently maintains and shall
maintain as of the Escrow Closing Date inventories and supplies reasonably
sufficient and adequate to satisfy state licensing requirements for the
operation of the Facility. All such inventories and supplies shall conform
to trade standards for marketable goods, subject to such spoilage, waste
and obsolescence as is normal in the Facility's ordinary course of
business. Seller shall satisfy or cause to be satisfied all of the
Facility's trade payables including payables for inventory, supplies and
other consumer goods in the ordinary course of the Facility's business
prior to the Escrow Closing Date.
3.22.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 and sell its properties and to carry on its business as
and where such business is now conducted.
3.23.Due Authorizations; No Default. The execution, delivery and performance of
this Agreement by the general partners 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 general
partners of Seller. When this Agreement is executed and delivered by the
general partners 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 the Facility to Purchaser will not
violate in any Material respect any provision of Seller's limited
partnership agreement 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 Seller
is a party, or to which Seller or Seller's property is bound, or constitute
a default in any material respect under such agreements or instruments.
3.24.Consents. Except as set forth on Exhibit "J" and for the state of Illinois
agencies and departments necessary to issue licenses to operate the
Facility 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 the Facility is necessary).
3.25.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 the
Escrow Closing Date relating to any of those matters which are the subject
of the covenants, representations and warranties of the Seller contained
herein. Upon receipt of a notice of the occurrence of any material event,
Purchaser shall have the right to elect to terminate the Agreement and
receive a return of all funds deposited by Purchaser with the Escrow Agent,
together with all interest earned thereon, and neither party shall have any
further liability to the other hereunder.
3.26.Accuracy of Information. No representations, warranties or covenants by
Seller, the officers or directors of Seller's general partners, 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.
3.27.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 Escrow Closing Date in all material
respects, and such representations, warranties and covenants shall survive
the consummation of the transactions contemplated by this Agreement for the
period set forth in Section 13.
3.28.Medicare; Medicaid. Seller shall prepare and timely file all Medicare and
Medicaid Cost Reports for the time period prior to the Escrow Closing Date.
As of the date hereof, Seller's current Medicare daily pay rate is $153.00
and Seller's current Medicaid daily pay rate is $59.65. The current census
of the Facility as of the date hereof is 79 patients and such census will
not be less than 73 patients on the Escrow Closing Date.
SECTION 4. PURCHASER'S REPRESENTATIONS, WARRANTIES AND COVENANTS.
Purchaser makes the following representations, warranties and covenants to
Seller, 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 Illinois and is, or will be on
or before the Escrow Closing Date, qualified to do business in Illinois.
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 on the part of the Purchaser. The
performance of this Agreement by Purchaser will not conflict with or result
in the material breach of Purchaser's formation documents, including
Purchaser's 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 managing member of Purchaser, it shall
constitute the legal, valid and binding obligation of Purchaser.
4.03.Litigation. As of the date hereof, there is no litigation proceeding
pending, or to Purchaser's Knowledge, 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 nor 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 formation
documents; (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, its managing member or executive officer
thereof, 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 Illinois agencies and departments necessary to
issue licenses to operate the Facility 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 Facility 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
Escrow Closing Date, and such representations, warranties and covenants
shall survive the consummation of the transactions contemplated by this
Agreement for the period set forth in Section 13.
SECTION 5. CONVEYANCES.
On the Escrow Closing Date, conveyance of all of Seller's right, title and
interest in and to the Real Property shall be effected by the Escrow
Agent's delivery of a special warranty deed that Seller delivered to the
Escrow Agent on or before the Initial Closing Date. The Personal Property
of the Facility shall be conveyed by general assignment and bill of sale.
Appropriate forms of such deed and bill 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, set forth in Exhibit "M"
attached hereto and by reference made a part hereof (such other liens,
claims, charges, encumbrances or objections are hereinafter referred to as
"Permitted Title Exceptions").
SECTION 6. CLOSING. 6.01.
6.02. Conveyance of Property Free and Clear of Liens. On the Escrow
Closing Date, all of Seller's right, title and interest in and to the Real
Property and Personal Property and the Facility 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 the
Permitted Title Exceptions to which Purchaser has consented.
6.03.Deliveries by Seller. Seller hereby agrees to, and shall, deliver to the
Escrow Agent on or before the Initial Closing Date (or where otherwise
specifically indicated, on or before the Escrow Closing Date) the
following, each of which shall be in form and substance reasonably
satisfactory to the Purchaser:
(a) Deed. A Special Warranty Deed for the
Facility conveying title to the Real Property to Purchaser, duly witnessed
and attested for recording in Illinois, free and clear of all liens,
restrictions and encumbrances other than the Permitted Title Exceptions;
(b) Title Policy; Survey. On or before the Escrow Closing Date, a title
insurance policy for the Facility (or marked title policy commitment)
issued by the Escrow Agent in an amount not less than the Purchase Price
with the costs of such insurance to be paid by Seller, and a survey of the
Land on which the Facility is located with the costs of such survey to be
paid by Seller; (c) Environmental Report. On or before Escrow Closing Date,
that certain report of Environmental Consulting Services dated June 27,
1997, prepared by Law Engineering and Environmental Services, Inc. of
Itasca, Illinois, re-issued in favor of Purchaser. The cost of such report
shall be paid by Seller. (d) Assignment of Patient Contracts. On or before
the Escrow Closing Date, 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 the Facility; (e) Assignment of Warranties, Guarantees and
Indemnities. 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; (f)
Assignment of Service Contracts. An assignment of all service contracts not
terminated prior to the Initial Closing Date;
(g) Bill of Sale. 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 the Facility, including
those items described in Exhibits "B"; (h) 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 business to be sold hereunder and as shall be reasonably
requested by Purchaser; (i) Paid Tax Bill. A copy of the most recently paid
real estate tax bills for the Facility; (j) Certificates Regarding
Mechanics' Liens and Other Matters. Certificates or affidavits of Seller
regarding the status of mechanic's liens, Seller's right to possession of
the Facility and the authority and power of the Seller to complete the
transactions provided for herein, and on the Escrow Closing Date, a
certificate regarding the accuracy of Seller's representations, and
warranties and covenants contained herein; (k) Title Insurance Company
Documents. Such documents and instruments as may be reasonably required by
Purchaser or the Escrow Agent to carry out the intent of the parties to
this Agreement; (l) Plans and Specifications. The plans and specifications
pursuant to which the Facility was constructed, if same are available to
Seller;
(m) As-Built Survey. On or before the Escrow Closing Date, that
certain Plat of survey prepared by Klinger Associates, P.C. originally
dated July 1997, re-dated to a date within three months of the Escrow
Closing Date and re-issued in favor of Purchaser. (n) Lease Termination.
Fully executed Lease Termination in recordable form, terminating that
certain Lease by and between Grandview Manor, Inc. and Illinois Commercial
Management, Inc., effective or before the Escrow Closing Date. Purchaser
may waive delivery of any one or all of the foregoing.
6.04. Prorations.
The following items shall be adjusted on a pro rata basis between Seller
and Purchaser on or after the Escrow Closing Date: (a) General real estate
taxes for 1997 and, if the Escrow Closing Date occurs after December 31,
1997, the general real estate taxes for 1997 and 1998; (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) Any amount
due to the State of Illinois for the state assessment fee or tax, provided,
however, that any penalties or fees imposed for late payment shall be paid
by Seller.
6.05. Security Deposits and Patient Property. All security
deposits and patient property held by Seller shall be turned over to
Purchaser on the Escrow Closing Date and Purchaser shall execute a receipt
therefor. Seller shall make available to Purchaser a list of all such
security deposits and patient property as provided in Section 3.02 hereof.
Seller agrees to assist in any audit of such deposits and property. 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 and patient property incurred by the other party's failure
to comply with applicable laws or properly to handle and account for same.
6.06. Conditions Precedent to Obligations of Purchaser.
Except as otherwise provided herein, all of Purchaser's obligations to make the
deliveries and payments contemplated by this Section 6 of this Agreement on
or before the Initial Closing Date are subject to the fulfillment prior to
or on the Initial Closing Date of each of the following conditions, any one
or more of which Purchaser may waive in whole or in part: (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 Initial Closing Date. (b) Deliveries. The delivery
to the Escrow Agent of those items set forth in Section 6.03 that are
contemplated to have been delivered on or before the Initial Closing Date,
in form and substance reasonably satisfactory to Purchaser. 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 Initial Closing Date. (b) Deliveries. The delivery
to the Escrow Agent of those items set forth in Section 6.03 that are
contemplated to have been delivered on or before the Initial Closing Date,
in form and substance reasonably satisfactory to Purchaser.
c) Governmental Consents Obtained or Requirements Satisfied. Except as
contemplated otherwise by the Escrow Agreement, 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, expressly including a Section 1130.520 exemption
from the Illinois Health Facilities Planning Board. Without limiting the
foregoing, the Purchaser shall have filed, or will file, with the
appropriate Illinois agencies or subdivisions thereof, as applicable, for
all approvals necessary to permit the transfer of Seller's right, title and
interest in and to the Facility and the continued operation of the Facility
as a nursing care facility under the applicable Illinois laws. 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 Initial 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 the Facility.
(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. 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 Facility; 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 Policy. Seller shall have provided to Purchaser 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 the Escrow Agent (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 Facility after the Escrow Closing
Date in the manner that it is currently being operated.
(g) Casualty Losses. On or prior to the Initial Closing Date, the Facility
shall not have sustained any loss, whether or not insured, by reason of
physical damage to the Facility 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) No Material Adverse Change. During the period prior to the Initial Closing
Date, no information shall have come to the attention of Purchaser
reasonably indicating or suggesting that the financial information
regarding the Facility 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 the Facility 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 the Facility.
6.07. Cost of Recording. Seller shall pay
the cost of recording any deed and any documentary stamps, transfer tax, or
other similar tax.
6.08. Deliveries by Purchaser. Purchaser hereby agrees
to, and shall, deliver and pay or to cause to be delivered and paid to the
Escrow Agent on or before the Initial Closing Date the following, 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.
6.09. 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 on the Initial Closing
Date of the following conditions, any one or more of which Seller may waive
in whole or in part (and at or prior to the Initial Closing Date, 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 Initial Closing Date.haser is required by this
Agreement to perform or comply on or before the Initial Closing Date.
(b) Consents Obtained or Requirements Satisfied. Except as contemplated
otherwise by that certain Escrow Agreement, 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, expressly including a Section 1130.520 exemption from the Illinois
Health Facilities Planning Board. Purchaser and Seller shall have filed or
be in the process of filing documents necessary to obtain from the
appropriate Illinois agencies or subdivisions thereof, as applicable, all
approvals necessary to permit a transfer of the Facility under the
applicable Illinois laws. (c) Purchase Price. Purchaser shall have
delivered to the Escrow Agent the Purchase Price in the manner described in
Section 6.08 hereof. (d) Deliveries. The Purchaser shall have delivered to
the Escrow Agent those other items listed in Section 6.08 hereof, in form
and substance reasonably satisfactory to Seller.
(e) 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 Initial Closing Date, to
enjoin, restrain, delay, prohibit or obtain material damages in connection
with this Agreement or the consummation of the transactions contemplated by
this Agreement.
(f) No Material Adverse Change. During the period prior to the Initial Closing
Date, no information shall have come to the attention of Seller indicating
or suggesting that the ownership or the operation of the Facility, in the
reasonable judgment of Seller, would be illegal or would make the Facility,
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 the Facility by eminent
domain prior to the Escrow Closing Date, Purchaser shall have the right and
option to terminate this Agreement at any time prior to the Escrow Closing
Date 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 its
respective obligations and liabilities hereunder. As used herein, a
"substantial portion" of the Facility shall be deemed to include, without
limitation, (i) ten (10%) percent or greater of the number of patient rooms
or licensed beds at the Facility, (ii) a taking which would close any one
entrance or exit of the Facility, 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 Facility. In the event Purchaser does not
elect to terminate this Agreement because of such taking, at the Escrow
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 the Facility is assumed by
Seller until the Escrow Closing Date. In the event that the Facility is
substantially damaged by fire or other casualty prior to the Escrow Closing
Date, 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 its 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, as measured by the reasonably estimated cost of repair,
restoration or replacement, shall be deemed substantial for the Facility,
without excluding other damage that may be substantial.
In the event that the Escrow Closing occurs, unless the damages are repaired
in full by Seller prior to the Escrow Closing Date, 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 Escrow Closing Date,
notwithstanding the fact that such losses are not deemed substantial.
SECTION 8. INSPECTION. The Purchaser, or its agents, had the right to inspect
the physical condition, environmental condition, structural competency and
good working order of the Facility(including, without limitation, the
heating, air conditioning, sewer, plumbing, antenna and electrical systems
contained therein) prior to October 6, 1997. Purchaser accepts the Facility
in its "as is" condition. Purchaser furnished Seller with a written list of
all defects in environmental condition, physical condition, structural
competency or good working order which Purchaser discovered prior to
October 6, 1997 with respect to the Facility. Purchaser waives the right to
any credit or remedy hereunder for any defects in connection with the
Facility not provided in a written notice to Seller on or before October 6,
1997. Prior to the Escrow Closing Date, Seller shall notify Purchaser in
writing that (i) prior to the Escrow Closing Date, Seller shall correct or
cause to be corrected all material defects set forth in Purchaser's notice,
(ii) instead of correcting or causing to be corrected all such defects,
Seller shall credit Purchaser on the Escrow Closing Date by a specified
amount, itemizing how much of that amount is applicable to each defect, or
(iii) Seller shall correct or cause to be corrected only certain specified
defects prior to the Escrow Closing Date, or shall credit Purchaser on the
Escrow Closing Date by a specified amount with respect to only certain
itemized defects, or both. Seller's timely failure to give Purchaser such
written notice by the Escrow 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 Escrow Closing Date under the provisions above,
Purchaser may, at its option, after receiving such notice, terminate this
Agreement and be entitled to have the Deposit and Purchase Price 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 to the other. If Seller agrees to cure such defects prior to
the Escrow Closing Date or if Seller informs Purchaser that Seller shall
not correct or cause to be corrected such defects prior to the Escrow
Closing Date under the provisions of (ii) or (iii) above, and Purchaser
does not terminate this Agreement prior to the Escrow Closing Date, then
prior to the Escrow Closing Date, Seller must correct or cause to be
corrected such defects or credit Purchaser on the Escrow Closing Date, 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.
SECTION 9. TERMINATION.
9.01.Circumstances of Termination. This Agreement may be terminated with
respect to the Facility 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 Initial Closing begins or would otherwise occur and Purchaser is
not obligated to close pursuant to Section 6.06 or Seller is not obligated
to close pursuant to Section 6.09.
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 or Seller fails to perform as
required herein, then the other 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.
Seller shall pay in full, on or before the Escrow Closing Date, all broker's
commissions or fees incurred by Seller in connection with this Agreement or
the transactions contemplated hereby, including those fees due to Henry S.
Miller Commercial. Seller shall indemnify and hold Purchaser harmless
against any broker's commissions or fees incurred by Seller that Purchaser
pays or is deemed liable therefor. Purchaser has incurred no broker's fees
or commissions in connection with this Agreement, and shall indemnify and
hold Seller harmless against any broker's fees or commissions relating to
Purchaser's purchase of the Facility.
SECTION 11. ASSIGNMENT AND APPROVAL.
Seller and Purchaser shall not assign its 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 VI
400 Perimeter Center Terrace
Suite 650
Atlanta, Georgia 30346
Telecopy Number: (770) 395-9776
With a copy to: King & Spalding
191 Peachtree Street
Atlanta, Georgia 30303-1763
Attention: Paul A. Quiros, Esquire
Telecopy Number: (404) 572-5146
To Purchaser: Camp Point Associates, L.L.C.
5940 West Touhy Avenue
Suite 35
Niles, IL 60714
Attention: Sherwin Ray
Telecopy Number: (847) 647-0242
With a copy to: Sachnoff & Weaver, Ltd.
30 South Wacker Drive
Suite 2900
Chicago, IL 60606-7484
Attention: Abraham J. Stern, Esq.
Telecopy Number: (312) 207-6400
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. All warranties and representations
and all terms and conditions of this Agreement not performed on or before
the Escrow Closing Date shall survive for a period of six (6) months after
the Escrow Closing Date and shall not be merged into the deed from Seller
to Purchaser or any other instruments executed or delivered at Initial or
Escrow 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 non-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 and signed
by all parties. This Agreement shall be construed under and governed by the
laws of the State of Illinois, without regard to the conflicts of laws
principles thereof. 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 the
Facility after the Escrow Closing Date 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 Escrow Closing Date. patients. Any prepayments by patients for services
to be rendered shall be prorated as of the Escrow Closing Date.
SECTION 15. SELLER'S OBLIGATION WITH RESPECT TO EMPLOYEES.
On the Escrow Closing Date, Seller shall terminate all employees currently
working at the Facility and pay to such employees all: (i) wages (including
bonuses, if any); (ii) benefits; and (iii) unused sick, personal and
vacation pay accrued prior to the Escrow Closing Date. Set forth on Exhibit
M is payroll and compensation information for the periods indicated. Seller
shall indemnify and hold Purchaser harmless from and against any claim
brought by a former employee of Seller in connection with such employee's
employment prior to the Escrow Closing Date. Purchaser or Purchaser's
tenant shall offer to hire all employees working at the Facility on the
Escrow Closing Date that, in Purchaser's opinion, are reasonably necessary
to continue operations at the Facility and shall be solely responsible for
any and all wages (including bonuses, if any), benefits and sick, personal
and vacation pay accrued by any employee of the Facility after the Escrow
Closing Date.
SECTION 16. PATIENT RECORDS AND PATIENT FUNDS.
On or before the Escrow Closing Date, Seller shall make available at the
Facility all patient records with respect to the business conducted in
connection with the Facility, which records Purchaser shall maintain and
make reasonably available to Seller for three (3) years after the Escrow
Closing Date, and Seller shall provide Purchaser with an updated accounting
of all patient funds and other property of patients held by Seller and
shall deliver such funds and other property to the Escrow Agent on the
Escrow Closing Date.
SECTION 17. LIABILITIES.
Except as 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 the Facility prior to
the Escrow Closing Date. Seller shall be responsible for satisfying the
creditors and trade suppliers of the Facility in accordance with Section
3.21, 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 Facility occurring on or
before the Escrow Closing Date as a result of the transactions contemplated
hereby.
SECTION 18. ACCOUNTS RECEIVABLE. On or after the Escrow Closing Date, Purchaser
shall use its reasonable best efforts to collect all payments on accounts
receivable arising from performance of patient services prior to the Escrow
Closing Date at the Facility. All payments received from government
agencies for the Facility shall be remitted to Seller if such payments are
attributable to services performed on or prior to the Escrow Closing Date,
and shall be retained by Purchaser if such payments are attributable to
services rendered after the Escrow Closing Date. Unless otherwise noted,
all payments received by Purchaser from private patients after the Escrow
Closing Date shall be applied first to any accounts receivable of such
private patients owing to Purchaser for services rendered after the Escrow
Closing Date; and then to any accounts receivables owed to Seller arising
on or prior to the Escrow Closing Date. Purchaser shall have no interest in
accounts receivable of Seller arising from services rendered on or prior to
the Escrow Closing Date. For three years after the Escrow Closing Date,
Purchaser shall provide periodic reports to Seller, not less frequently
than semiannually concerning payments of accounts receivable arising from
performance of patient services on or prior to the Escrow Closing Date,
such reports to be accompanied by payment of any amounts received by
Purchaser and not previously paid to Seller. For purposes of this Section,
"reasonable best efforts" means that Purchaser shall send statements of
accounts receivable to an appropriate party responsible for payment
thereof. Purchaser shall not be obligated to pursue any further collection
activities or bring any action to collect any of such receivables. In the
event any checks are received by Purchaser for patient services provided
after the Escrow Closing Date and such checks are made payable to the order
of Seller, Seller hereby grants to Purchaser the right to endorse such
checks and to deposit such checks in Purchaser's banking accounts, subject
to the reporting requirements in this Section.
SECTION 19. DELIVERY.
To the extent Seller is obligated to deliver records or other items to the
Escrow Agent or Purchaser on or before the Initial or Escrow Closing Date
and such items would be cumbersome or unreasonable to remove from the
Facility, such delivery may be made at the Facility, regardless of the
location of the remainder of the closing.
SECTION 20. INDEMNIFICATION BY SELLER AFTER CLOSING.
Seller shall indemnify, defend and hold Purchaser harmless from any and all
claims, demands, obligations, losses, liabilities, damages, recoveries and
deficiencies (including interest, penalties and reasonable attorneys' fees,
costs and expenses) imposed upon, incurred by or asserted against Purchaser
or a wholly owned entity thereof by reason of (a) a material breach of any
representation or warranty of Seller herein or given pursuant hereto; (b)
any material default by Seller in the performance of any of its
commitments, covenants or conditions under this Agreement, (c) for any
liability which arises from the operation of the Facility before the Escrow
Closing Date, (d) any accident, injury to or death of persons or loss of or
damage to property occurring before the Escrow Closing Date on or about the
Facility or any part thereof, resulting from an act or omission of Seller
or anyone claiming by, through or under Seller, and (e) performance of any
labor or services or the furnishing of any materials or other property in
respect of the Facility or any part thereof before the Escrow Closing Date.
In case any action, suit or proceeding is brought against Purchaser or
Purchaser's tenant by reason of any such occurrences, Seller shall, at
Seller's expense, resist and defend such action, suit or proceeding, or
cause the same to be resisted and defended. The rights of Purchaser under
this Section are without prejudice to any other remedies not inconsistent
herewith which Purchaser may have against Seller. Notwithstanding anything
in this Agreement to the contrary, the Purchaser shall not seek recourse
against and shall not recover from the Seller on account of any claim,
demand, obligation, loss, liability, damage, recovery or deficiency until,
and only to the extent, the aggregate amount thereof exceeds One Hundred
Thousand Dollars ($100,000) (the "Aggregate Liability Amount"), at which
time claims may be asserted for any amount in excess of the Aggregate
Liability Amount.
SECTION 21. REMEDIES NOT LIMITED TO REAL AND PERSONAL
PROPERTY.
The parties shall have all legal and equitable remedies available to them for
breach this Agreement and shall not be limited to the collateral of the
Real Property and Personal Property.
SECTION 22. MEDICARE/MEDICAID RECAPTURE.
Any and all claims for payment, repayment, recoupment and/or recapture arising
under the Medicare and/or Medicaid Programs and/or any other governmental
agency for any time prior to the Escrow Closing Date (collectively, a
"Recoupment"), shall be the sole and exclusive obligation of Seller and
shall, subject to Seller's right to contest the same, be paid in full by
Seller within thirty (30) days after Seller's receipt from Purchaser of a
copy of any notice from Medicare and/or Medicaid demanding a Recoupment,
unless such governmental agency accepts a payment schedule, whereby
Purchaser shall pay the Recoupment in accordance with such schedule.
Purchaser shall not be liable for any Recoupment relating to the time
period prior to the Escrow Closing Date. Seller agrees to indemnify, defend
and hold Purchaser harmless from and against any claim for Recoupment
arising under the Medicare and/or Medicaid Programs and from and against
any other claim brought by any governmental agency based upon the facts or
circumstances arising prior to the Escrow Closing Date. In the event
Medicare and/or Medicaid or any other governmental agency recoups any and
all sums overpaid to Seller for any time period prior to the Escrow Closing
Date, and said Recoupment is deducted from any payment made or to be made
to Purchaser in any period subsequent to the Escrow Closing Date, and
Seller fails or refuses to reimburse Purchaser the amount of said
Recoupment within thirty (30) days after Purchaser's demand for the same
(the "Payment Period"), then Seller shall pay to Purchaser the amount of
such Recoupment plus interest accrued from the expiration of the Payment
Period at the rate of one and one-half percent (1.5%) per month.
SECTION 23. PATIENT TRUST FUNDS. On the Escrow Closing Date, Seller will deliver
to Purchaser all deposits of patients' trust funds, if any, in the
possession of the Seller which were received by Seller on behalf of an d
for the personal use of, patients which are in the Facility together with a
list of the patients and the amount thereof to which each of said patients
is entitled. Purchaser will give or return such deposits to the patients
from time to time when and as requested by such patients. Purchaser hereby
indemnifies, saves and holds harmless Seller from and against any and all
claims arising out of or in connection with such patient trust funds or the
delivery thereof to Purchaser arising after the Escrow Closing Date. Seller
hereby indemnifies, saves and holds harmless Purchaser from and against any
and all claims arising out of or in connection with the receipt,
maintenance and/or any disbursements of such patient trust funds and/or
records of the same, on behalf of any and/or all patients prior to the
Escrow Closing Date. SECTION 24. ATTORNEYS' FEES. In the event party
employs an attorney or attorneys to enforce any of the provisions of this
Agreement, or to recover damages for breach of this Agreement, the
non-prevailing party in any action (the finality of which is not legally
contested) agrees to pay to the prevailing party all reasonable costs,
damages and expenses, including attorney's fees, expended or incurred in
connection with such action. SECTION 25. FACSIMILE SIGNATURES. This
Agreement shall be valid and binding upon the parties hereto upon delivery
by each party to the other of facsimile signature pages. Each party shall
promptly deliver an original of such signature page to the other party.
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 - VI, as managing general partner
By:__________________________________
Name:_____________________________
Its:________________________________
STATE OF GEORGIA
COUNTY OF _______
BEFORE me, ____________________, the undersigned officer, personally appeared
____________, who acknowledged himself to be ______________ of WelCare
Service Corporation-VI, managing general partner of Consolidated Resources
Health Care Fund VI, being authorized so to do, executed the foregoing
instrument for the purposes therein contained.
WITNESS my hand and seal on this ____ day of October, 1997.
______________________________________
Notary Public
My Commission Expires:
_____________________
"PURCHASER"
CAMP POINT ASSOCIATES, L.L.C.
By:______________________________
Name:_______________________
Its:__________________________
STATE OF _________
COUNTY OF _______
BEFORE me, ____________________, the undersigned officer, personally appeared
____________, who acknowledged himself to be ______________ of Camp Point
Associates, L.L.C., being authorized so to do, executed the foregoing
instrument for the purposes therein contained, by signing the name of the
limited liability company by himself as ___________________.
WITNESS my hand and seal on this ____ day of October, 1997.
______________________________________
Notary Public
My Commission Expires:
_____________________
EXHIBIT INDEX
Exhibit "A" REAL PROPERTY DESCRIPTION
Exhibit "B" PERSONAL PROPERTY INCLUDED IN SALE
Exhibit "C" PERSONAL PROPERTY EXCLUDED IN SALE
Exhibit "D" PURCHASE PRICE ALLOCATION
Exhibit "E" SCHEDULE OF DEFICIENCIES IN THE CONDITION OF THE FACILITY
Exhibit "F" PATIENT SCHEDULES
Exhibit "G" FACILITY FINANCIAL STATEMENTS
Exhibit "H" MATERIAL CHANGES IN FINANCIAL CONDITION OF THE FACILITY
Exhibit "I" LIST OF SELLER'S CONTRACTS AND AGREEMENTS
Exhibit "J" LIST OF EXCEPTIONS
Exhibit "K" REAL ESTATE TAXES
Exhibit "L" PERMITTED TITLE EXCEPTIONS
Exhibit "M" PAYROLL AND EMPLOYEE COMPENSATION INFORMATION
EXHIBIT "A"
Lot One (1) in Harold Farlow Subdivision III, a Subdivision of part of the
Southwest Quarter of Section Twenty-six (26), in Township One (1) North of
the Base Line, in Range Six (6) West of the Fourth Principal Meridian,
EXCEPT the West Fifty (50) feet of said Lot One (1) and also EXCEPT that
part of the said Lot One (1) described as follows, to-wit: Commencing at a
point on the North line of said Lot One (1) a distance of Fifty-(50) feet
East of the Northwest corner of said Lot One (1), thence East along the
North Line of said Lot One (1) a distance of Sixty-eight (68) feet, thence
South parallel with the West line of said Lot One (1) a distance of
Eighty-four (84) feet, thence West parallel with the North line of said Lot
One (1) a distance of Sixty-eight (68) feet, thence North parallel with the
West line of said Lot One (1) a distance of Eighty-four (84) feet to the
place of beginning. Also, a part of the Southwest Quarter of Section
Twenty-six (26) in Township One (1) North of the Base Line, in Range Six
(6) West of the Fourth Principal Meridian, more particularly bounded and
described as follows: Commencing at the Southeast corner of Lot One (1) in
Harold Farlow Subdivision III, a Subdivision of part of the Southwest
Quarter of said Section Twenty-six (26), running thence South 00 01' 47"
West along the East line extended of said Lot One (1) a distance of Thirty
(30) feet to a point, running thence North 89 57' 59" West parallel with
the South line of said Lot One (1), Three Hundred Sixteen (316) feet to a
point, running thence North 00 02' 40" East along the East line extended
of the West Fifty (50) feet of said Lot One (1) a distance of Thirty (30)
feet to a point of the South line of said Lot One (1) which is also Fifty
(50) feet East of the Southwest corner of said Lot One (1), running thence
South 89 57' 59" East along said South line a distance of Three Hundred
Sixteen (316) feet to the point of beginning, all situated in Adams County,
Illinois. Together with the following easements: a.An easement for ingress
and egress commencing at a point on the North line of said Lot One (1),
which point is Fifty (50) feet East of the Northwest corner of said Lot One
(1), running thence South parallel with the West line of said Lot, Two
Hundred Sixty (260) feet, thence East Ten (10) feet, thence North Two
Hundred Sixty (260) feet, thence West Ten (10) feet to the point of
beginning all as reserved in the Warranty Deed from Grandview Manor, Inc.,
as Grantor and Edwin E. Kerr and G. Ruth Kerr, husband and wife, as
grantees and recorded July 12, 1968, in Book 463 of Deeds at page 637 in
the Recorder's office of Adams County, Illinois and which easement is also
reserved in the Trustee's Deed from the Illinois National Bank of
Springfield, as grantor and Harlan Balk and Virgilee Balk, husband and
wife, as grantees and recorded April 18, 1977, in Book 496 of Deeds at page
1215 in the Recorder's Office of Adams County, Illinois; and, b.An easement
for ingress and egress over and across a part of the West Fifty (50) feet
of said Lot One (1), more particularly bounded and described as follows:
Beginning at a point on the North line of said Lot One (1), Fifty (50) feet
East of the Northwest corner of the said Lot One (1), running thence South
parallel with the West line of said Lot One (1) Two Hundred Sixty (260)
feet, thence West Five (5) feet, thence North Ninety-five (95) feet, thence
West Five (5) feet, thence North One Hundred Sixty-five (165) feet, thence
East Ten (10) feet to the point of beginning.
EXHIBIT "D"
PURCHASE PRICE ALLOCATION
15% of the Purchase Price Land
236,000 Personal Property
Remainder of Purchase Price Building
EXHIBIT "E"
SCHEDULE OF DEFICIENCIES IN CONDITION OF THE FACILITY
None.
EXHIBIT "G"
FACILITY FINANCIAL STATEMENTS
The financial information referenced in Section 3.03 was previously provided to
the Purchaser.
EXHIBIT "H"
MATERIAL CHANGES IN FINANCIAL CONDITION
None.
EXHIBIT "J"
LIST OF EXCEPTIONS
1. There are no outstanding repair requirements
or recommendations except as related to normal
wear and tear or as included in the
environmental report provided to the Purchaser.
2. The Seller is contesting and discussing
settlement of certain claims against the
Facility by HCFA. If the claims are not
resolved by the Escrow Closing Date, the
Escrow Agent will retain $30,150 or the amount
being claimed by HCFA as of the Escrow Closing
Date from the Purchase Price in escrow with
the Escrow Agent to be released upon
resolution of such claim in accordance with
the Escrow Agreement.
3. The minivan and copier are subject to leases.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS UNAUDITED SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE SEPTEMBER 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> SEP-30-1997
<CASH> 385,616
<SECURITIES> 0
<RECEIVABLES> 851,716
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,266,162
<PP&E> 2,232,035
<DEPRECIATION> 0
<TOTAL-ASSETS> 3,498,197
<CURRENT-LIABILITIES> 842,643
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 2,655,554
<TOTAL-LIABILITY-AND-EQUITY> 3,498,197
<SALES> 1,467,957
<TOTAL-REVENUES> 1,474,329
<CGS> 1,588,998
<TOTAL-COSTS> 1,588,998
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (114,669)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (114,669)
<EPS-PRIMARY> (3.760)
<EPS-DILUTED> (3.760)
</TABLE>
