FORM 10-KSB
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED 12/31/97 OR
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[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
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COMMISSION FILE NUMBER: 33-11863
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HEALTHCARE INVESTORS OF AMERICA, INC.
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(Name of small business issuer in its charter)
Maryland 86-0576027
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
2990 N. Swan Road, Suite 228, Tucson, Arizona 85712
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(Address of principal executive offices)
Issuer's telephone number: (520) 326-2000
Securities registered under Section 12(b) of the Exchange Act:
Title of each class: None
Name of each exchange on which registered: None
Securities registered under Section 12(g) of the Exchange Act:
None (Title of Class)
Check whether the issuer (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past
12 months (or for such shorter period that the issuer was
required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
- ---
Check if there is no disclosure of delinquent filers in response
to Item 405 of Regulation S-B contained in this form, and no
disclosure will be contained, to the best of issuer's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB [X]
The issuer's revenues for the fiscal year ended December 31, 1997
were $727,241.
The aggregate market value of the voting common stock, $.01 par
value ("Common Stock"), held by non-affiliates of the issuer as
of December 31, 1997 was $0. 397,600 shares of Common Stock
of the registrant were outstanding as of July 27, 1998.
Transitional Small Business Disclosure Format (check one):
Yes No X
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Total of sequentially numbered pages:
Exhibit Index on sequential page number:
<PAGE>
PART I
ITEM 1. BUSINESS
GENERAL DEVELOPMENT OF BUSINESS
Healthcare Investors of America, Inc. (the "Trust") is a
Maryland corporation formed on February 6, 1987. The Trust
changed its name from Harbor American Healthcare Trust, Inc.
effective December 18, 1996. The principal office of the Trust
is located at 2990 North Swan Road, Suite 228, Tucson, Arizona
85712. The Trust's present advisor is Harbor American Capital
Group, a California limited partnership ("HACG" or the
"Advisor").
During 1997, the Trust owned the real property, fixtures and
improvements used in connection with the operation of three long
term care facilities located in Florida and Colorado. These
facilities include: Bayshore Convalescent Center ("Bayshore" or
the "Florida Property"), a 150-bed skilled and intermediate care
nursing home facility located in North Miami Beach, Florida,
which was acquired in March 1988; Country View Care Center
("Country View"), an 87-bed intermediate care nursing facility
located in Longmont, Colorado, which was acquired in December
1989; and New Life Care Center ("New Life"), a 56-bed
intermediate care nursing home facility located in Greeley,
Colorado, which was acquired in December 1989. Country View and
New Life are collectively referred to herein as the "Colorado
Properties".
At December 31, 1997, two of the three properties were
leased under operating agreements. Bayshore was leased to
Bayshore Healthcare Services, Inc., an Arizona corporation
("BHS"). See Item 2. DESCRIPTION OF PROPERTY - The Florida Lease.
BHS is an affiliate of the Trust as it is owned by James R.
Sellers, an affiliate of the Advisor. New Life was leased to
Res-Care, Inc., a Kentucky corporation ("Res-Care"), an
unaffiliated entity. The terms of the lease with Res-Care
provided for lease payments based on the number of patients
residing at the Colorado Properties as well as those placed
outside of the facilities under the "Community Advantage"
program. In April 1998, the lease with Res-Care expired and
shortly thereafter New Life became an unoccupied facility.
Country View was vacated by its lessee on September 30, 1995, and
has remained unoccupied since.
Trust management worked during 1997 to develop alternative
uses for Country View and New Life. Effective July 24, 1998,
the Trust sold Country View to William E. Harper ("Harper"),
an individual not affiliated with the Trust or its Advisor,
for $262,500 in accordance with the terms of Commercial Contracts
to Buy and Sell Real Estate (the "Country View Sales Contract"),
dated June 17, 1998, as amended. At closing on July 24, 1998,
the Trust received $80,000 in cash and is the payee of two
promissory notes (the "Harper Notes"), each dated July 24, 1998,
from Harper in the respective original principal amounts of
$100,000 and $82,500. The Harper Notes pay interest only at
9.5% per annum until maturity on July 24, 2000. The Harper Notes
are secured by a Deed of Trust (the "Harper Mortgage"), dated
July 24, 1998, from Harper for the benefit of the Trust, on the
Country View property. Pursuant to the Collateral Assignment
of Promissory Notes and Deeds of Trust (the "1998 Collateral
Assignment"), dated as of July 24, 1998, the Trust assigned the
Harper Notes and the Harper Mortgage to PNC Bank, National
Association, Louisville, Kentucky (the "Bank") as security for the
debt of the Trust owing to the Bank.
After a number of attempts to privately negotiate a sale
of New Life, the Trust determined that a sale by advertised
auction was the best available method to relieve the Trust of
the financial burden of this property. Effective August 6,
1998, the Trust sold New Life at auction to Continuum Health
Partnership, Inc. ("Continuum"), a Colorado corporation not
affiliated with the Trust or its Advisor, for $250,000 in
accordance with the terms of that certain Commercial Contract
to Buy and Sell Real Estate (the "New Life Sales Contract"),
dated August 6, 1998. An additional valuation reserve of
$80,000 has accordingly been recognized as of December 31,
1997 to give effect to the further impaired value of this
property. The Trust received $15,000 on August 6, 1998
as an earnest money deposit and part payment of the purchase
price and the Trust is scheduled to receive the remaining
balance of $235,000 in cash at closing on August 24, 1998.
The proceeds from the sales of Country View and New Life did not
satisfy the outstanding debt related to these facilities.
Pursuant to separate letters of resignation, each dated
March 2, 1998, Thomas M. Clarke resigned as President, Chief
Executive Officer and Director of the Trust; Linda M. Clarke
resigned as Secretary of the Trust; John F. Lunt resigned as
Director of the Trust; and David Fancher resigned as Chief
Financial Officer of the Trust. The remaining members of the
Board of Directors, Messrs. Grady P. Hunter, F. Dale Markham and
Charles E. Trefzger voted to accept the resignations on March 19,
1998 at a meeting of the Board of Directors. As a result, two
vacancies in the Board of Directors exist.
At the same meeting of the Board of Directors, Mr. Markham
was selected to serve as Chairman, President and Chief Financial
Officer of the Trust with Joan M. Zeller to serve as Secretary of
the Trust.
In connection with the accepted resignations, effective
March 1, 1998, the remaining members of the Board of Directors of
the Trust voted to terminate the Trust advisory contract with
Lenox Healthcare Capital Services, LLC ("Lenox"). The Trust has
entered into a two year contract for advisory services with HACG.
The general partner of HACG is Heritage Advisory Corporation
("Heritage"). The stock of Heritage is owned by James R.
Sellers, an affiliate of BHS, the successor lessee of Bayshore.
The Trust's continuing plan of operation for the 1998 fiscal
year (ending December 31, 1998) is as follows: The Trust intends
to own, lease, sell or auction its remaining Properties. To the
extent it has funds available for investment (it currently has no
such funds available and no plans for raising such funds), it
will invest primarily in healthcare related properties, including
long term care facilities, assisted living facilities, medical
office buildings, retirement housing facilities, psychiatric
hospitals and substance abuse recovery centers through
acquisitions, joint ventures and mortgage loans. The Trust may
also invest in commercial, industrial and residential income
producing real properties through similar means. Since the Trust
has no available funds for such investments, its ability to
undertake such investments will be dependent upon the
availability of capital to the Trust. See Item 6. MANAGEMENT'S
DISCUSSION AND ANALYSIS OR PLAN OF OPERATION. Additionally, the
Company's mortgage notes payable matured on June 20, 1997 and the
Bank demanded payment in full by letter dated August 15, 1997.
In that connection, the Trust and the Bank entered into a
Forbearance Agreement (the "Forbearance Agreement") dated as of
April 30, 1998.
Under the Forbearance Agreement, the Bank agreed to
forbear from exercising its remedies until July 31, 1998. In
consideration therefor, the Trust agreed to increase the
outstanding principal amount of a Promissory Note (Renewal and
Increase), dated as of September 20, 1992, in favor of the Bank
from $1,000,000 to $1,681,170.45, a portion of the security of
which is a second mortgage on Bayshore. The Trust agreed to
waive any defenses, offsets or claims it may have as of the date
of the Forbearance Agreement against the Bank related to the
outstanding debt of the Trust to the Bank. The Forbearance
Agreement further required the Trust to market the Colorado
Properties and auction them by June 30, 1998, if by May 31, 1998,
the Trust had not sold or had a binding contract on the Colorado
Properties on terms reasonably acceptable to the Trust and the
Bank. The Forbearance Agreement also contained representations of
the Trust that, among other items, it is solvent and has no
present intention of filing or acquiescing in any bankruptcy or
insolvency proceeding. To the extent that the Trust would so
file or acquiesce, the Trust agreed not to contest any motion of
the Bank seeking relief from an automatic stay. Upon (i) a
breach or violation of any term, covenant or condition of the
Forbearance Agreement or related documents, (ii) a material
breach or default under any of the other loan documents in
connection with the Trust indebtedness to the Bank, or (iii) any
representation or warranty or other statement contained in the
Forbearance Agreement or related documents, or any loan documents
in connection with Trust indebtedness to the Bank being false or
misleading in any material respect or omitting a material fact
necessary to make such representation, warranty or statement not
misleading, then the Bank could terminate its forbearance. On
July 31, 1998, the Forbearance Agreement expired. To date, the Bank
has not exercised any rights it may have upon expiration of the
Forbearance Agreement.
The Trust also anticipates reviewing and evaluating other
properties for possible investment opportunities. However, the
Trust's efforts are limited by the resources available and the
Trust's ability to raise additional resources.
FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
When financial resources are available, the Trust's primary
business and industry segment is to invest in healthcare related
real properties, including long-term care facilities, assisted
living facilities, medical office buildings, retirement housing
facilities, psychiatric hospitals, and substance abuse recovery
centers through acquisitions, joint ventures and mortgage loans.
The Trust also may invest in commercial, industrial, and
residential income-producing properties through similar means.
Through April 30, 1998, New Life was leased to a lessee
unaffiliated with the Trust. Country View remained vacant and
unused. The remaining property, Bayshore, is leased to a lessee
affiliated with the Trust. See Item 1. DESCRIPTION OF BUSINESS
- - General Development of Business.
NARRATIVE DESCRIPTION OF BUSINESS
The Directors of the Trust manage and control the affairs of
the Trust and have general responsibility and ultimate authority
affecting the investments of the Trust. The Directors have
engaged the Advisor as an investment advisor to select
investments and supervise the day-to-day operations of the Trust.
HACG, as the Advisor, is engaged primarily in real estate
consulting.
The Advisor is currently evaluating the Trust's compliance with
the provisions of the Internal Revenue Code of 1986 (the "Code"), the
Treasury Regulations and other relevant laws pertaining to
qualification of the Trust as a real estate investment trust ("REIT").
In the event the Trust qualifies as a REIT, the Trust would not be
subject to federal income taxes on amounts distributed to
stockholders, provided that distributions to stockholders are
at least 95% of the Trust's real estate investment trust taxable
income and the Trust meets certain other conditions. In the
event the Trust does not qualify as a REIT, the Trust would be
taxable as a C corporation under the Code. However, as a taxable
corporation, the Trust would not owe any current tax or tax for
prior years due to its net operating loss carryovers. Therefore,
no adjustment would be required to the historical financial
statements related to any tax provision. There can be no
assurance that the Trust will qualify as a REIT for any specific
year.
The investment objectives of the Trust are (1) to provide
quarterly or more frequent cash distributions to stockholders
from operations, (2) to provide long-term capital appreciation to
stockholders, and (3) to preserve and protect the stockholders
original invested capital. When and if financial resources are
available, the Trust intends to invest primarily in healthcare
related property, including long-term care facilities, assisted
living facilities, medical office buildings, retirement housing
facilities, psychiatric hospitals and substance abuse recovery
centers through acquisitions, joint ventures, and mortgage loans.
The Trust also may invest in commercial, industrial and
residential income producing real properties through similar
means. To the extent funds are not fully invested in real
properties or mortgage loans, the Trust may invest temporarily in
investments such as: (i) short-term government securities, (ii)
securities of government agencies, (iii) bankers' acceptances and
repurchase agreements, (iv) certificates of deposit, (v) deposits
in commercial banks, (vi) participation in pools of mortgages or
bonds and notes, and/or (vii) obligations of municipal, state,
and federal governments and government agencies.
The current and anticipated business of the Trust is not
seasonal. The results of operations of the Trust will depend
upon the availability of (i) capital to the Trust, which is
currently limited, (ii) suitable opportunities for investment and
reinvestment of its funds, and (iii) the yields available from
time to time on real estate and other investments. If capital
were to become available to the Trust, the Trust will be
competing for acceptable investments with other financial
institutions, syndicators, other REITS, investment bankers,
including banks, insurance companies, savings and loan
associations, mortgage bankers, pension funds and other real
estate investment programs (including other real estate
investment programs which may be sponsored by the sponsor or the
Advisor of the Trust in the future) that may have similar
objectives to those of the Trust. Substantially all competitors
have greater resources than the Trust, its directors, Advisor and
its affiliates. Further, certain of the directors of the Trust
and officers and directors of the general partner of the Advisor
and its affiliates are engaged for their own account, or on
behalf of other entities, in the type of activities in which the
Trust intends to be engaged. Thus, the Trust could be in
competition for investments with one or more corporations,
partnerships or trusts with which such directors or officers may
be affiliated.
The Trust, as of December 31, 1997, did not directly employ
any persons. The business of the Trust is managed by the
Advisor, with which the Trust has entered into an Advisory
Agreement. See Item 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS
AND CONTROL PERSONS - Compliance With Section 16(a) of the
Exchange Act and Item 12. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS.
ITEM 2. DESCRIPTION OF PROPERTY
BAYSHORE- Bayshore consists of a one story structure built
in 1963 and a two story addition built in 1968. The structure
totals 35,294 square feet and contains 150 beds. The Property is
located on an approximately 49,704 square foot parcel of real
estate at 16650 West Dixie Highway in North Miami Beach, Florida.
COUNTRY VIEW. Country View is a one story structure
containing approximately 21,688 square feet, constructed during
the early 1970's. The building is situated on two parcels of
land containing approximately 9.8 acres near Longmont, Colorado.
This property was operated as an intermediate care facility to
serve the mentally challenged and contains 87 beds. It is
currently unoccupied.
NEW LIFE- New Life is a one story structure containing
approximately 18,000 square feet, built in 1957. The building is
located on a parcel of land containing approximately 1.09 acres,
approximately 3 miles from Greeley, Colorado. Until April 30,
1998, this property was operated as an intermediate care nursing
home facility to serve the mentally challenged and contains 56
beds. It is now unoccupied.
THE LEASES. The Trust is a party to an operating Lease
under net lease terms on the Bayshore property. The Lease
permits the lessee thereunder to operate the property as a
healthcare facility licensed for skilled and intermediate long
term nursing services and for such additional uses as may be
approved by the Trust and consented to by the appropriate
mortgage lender.
THE COLORADO LEASES. Effective October 1, 1992, upon
rejection of the original leases, the Trust entered into the
Colorado Lease (the "Colorado Lease") of New Life with Res-Care.
The Colorado Lease had an original term of three (3) years
and originally provided for three (3) one year options to extend,
thus ending on September 30, 1998 if all options were exercised.
The initial term of this lease expired September 30, 1995. Res-
Care, as lessee of New Life, negotiated a new option to extend
the New Life lease for thirty (30) months expiring March 31,
1998. It was subsequently extended for an additional month to
April 30, 1998. Upon the New Life lease expiration, New Life
became unoccupied. Effective August 6, 1998, the Trust sold
the New Life property for $250,000. The lease of Country View
expired on September 30, 1995 and Country View remained unoccupied
at December 31, 1997. Effective July 24, 1998, the Trust sold the
Country View property for $262,500. See Item 1. BUSINESS -
General Development of Business.
The Colorado Lease was a net lease requiring Res-Care to pay
all operating expenses of the properties except for "major"
repairs which are the obligation of the Trust. "Major" repairs
included, but were not limited to, structural repairs, repairs to
the roof, walls and foundations of the buildings on the leased
premises, maintenance of the electrical wiring and fixtures,
plumbing, heating and air-conditioning equipment, sewage
treatment plant, and repair of driveways and parking areas.
The Colorado Lease provided for a basic annual rent payable
monthly (the "Annual Base Rent") equal to 115% of the "Annual
Fair Rental Allowance" as determined by the State of Colorado,
Health Facilities Division, or any other agency having
jurisdiction over such rates ("HFD"). The Annual Base Rent was
$150,000 for New Life. Upon issuance from HFD, and receipt by
Res-Care of notice ("Notice") of a new annual Fair Rental
Allowance, such Annual Fair Rental Allowance was to be
substituted in the calculation of Annual Base Rent effective as
of the date specified in the Notice. The monthly rent is
adjusted by the percentage decrease or increase in the Client
Base (as defined and adjusted in this paragraph) to arrive at an
adjusted monthly rent. The initial "Client Base" was deemed to
be 52 at New Life which was the client population resident census
of the facilities as of August 24, 1992. Any adjustments in the
monthly rent as a result of an increase or decrease in the client
population of either facility commenced the month following such
increase or decrease and were based on the average daily
population for such month. Furthermore, any decrease in the
client population of either facility which was the result of the
transfer of a client to the supported living program in the
counties of Weld and Boulder, Colorado, known as Community
Advantage, was not considered a population decrease for purposes
of arriving at the adjusted monthly rent.
The Colorado Lease provided for fixtures and equipment to
secure the landlord's interest in said lease. At termination of
the lease, title to said fixtures and equipment reverted to the
Trust. Res-Care was required to furnish regular monthly and
annual financial reports to the Trust.
THE FLORIDA LEASE. The Florida Lease was entered into
effective May 1, 1993 by the Trust with BHS. BHS is owned by
James R. Sellers, an affiliate of the Advisor. The Florida Lease
has an original term of five (5) years and provides for five (5)
five year options to extend, thus ending on March 31, 2023, if
all options are exercised. The Florida Lease, as it may be
extended, is a net lease requiring BHS to pay all operating
expenses of the properties. Minimum rents are composed of two
parts, an equity component and a debt component. The beginning
equity component is $84,000 annually, payable $7,000 monthly. A
provision has been made to increase the equity component amount
after reviewing operations for the period from May 1, 1993,
through December 31, 1993. To date, no change has been made.
The monthly debt component is an amount not less than the
principal and interest payment charged by the facility first
mortgage lender, presently the Bank.
A provision is also made for additional rents. Commencing
on January 1, 1995, and continuing so long as the Florida Lease
remains in force, additional rent shall be due in amounts equal
to five (5%) percent of the difference in Net Patient Revenues,
compared with Net Patient Revenues for the year ended December
31, 1994, as reported in the financial statements of the facility
prepared in accordance with generally accepted accounting
principles ("GAAP"). Net Patient Revenues are defined as total
revenues of the facility, including, without limitation, all
ancillary fees, room and board charges, rentals and other revenue
derived in any way from the operation of the facility, on an
accrual basis, after deduction of allowances for contractual
adjustments as they relate to third party payors and before
deduction of any and all expenses. The lessee is required to
present the amount defined as Net Patient Revenues in its regular
financial reporting.
The Florida Lease provides for fixtures and equipment to
secure the landlord's interest in the Florida Lease. At
termination of such lease, title to said fixtures and equipment
reverts to the Trust. BHS is required to furnish regular monthly
and annual financial reports to the Trust.
As of December 31, 1997, real estate taxes through 1997 of
($32,967) were due and owing on the Bayshore Convalescent Center.
These are the responsibility of the lessee. If the lessee does
not, responsibility would shift to the Trust. Trust management
is reasonably confident the lessee will make the tax payments.
THE LOANS. Each of the three (3) properties owned by the
Trust at December 31, 1997, was funded by a combination of cash
and mortgage loans. The Bank, formerly Citizens Fidelity Bank &
Trust Company, holds the loans on Bayshore and on the Colorado
Properties.
THE COLORADO PROPERTIES LOAN. The first mortgage loan to
the Bank totals $1,681,170.45 as of December 31, 1997. All
interest payments have been kept current during 1997 and through
June 20, 1998. The loan, as extended, became due on July
31, 1998. The loan is secured by first mortgages, assignments of
leases and rents thereunder.
THE BAYSHORE LOAN. The first mortgage loan to the Bank
totals $3,142,088.07 as of December 31, 1997. All interest
payments have been kept current during 1997 and through June 20
1998. The loan, as extended, became due on July 31, 1998.
The loan is secured by first mortgages, assignments of leases and
rents thereunder. In addition, the Bayshore Loan is secured by a
$1,681,170 second mortgage on the Colorado Properties.
As noted above, the Company's mortgage notes matured on July
31, 1998. This date is pursuant to the Forbearance Agreement
dated as of April 30, 1998. Management is currently seeking
sources to refinance the mortgage notes payable. Trust
management believes that the mortgage note lender will not demand
payment prior to the successful completion of any refinancing
transaction. There can be no assurance that the Trust will be
successful in its refinancing efforts or that the Bank will not
demand payment of the mortgage notes payable.
Management believes Bayshore and the Colorado Properties are
adequately insured. As of June 30, 1998 occupancy at Bayshore is
81%.
ITEM 3. LEGAL PROCEEDINGS
On March 11, 1998, John W. Madagan, Sr., d/b/a Sundance
Realty Advisors filed an action in the Commonwealth of
Massachusetts District Court Department, Pittsfield Division
entitled John W. Madagan, Sr., d/b/a Sundance Realty Advisors, v.
Lenox Healthcare, Inc. and Healthcare Investors of America, Inc.
in Civil Action No. 9827-CV-0199. This suit alleges that Lenox
Healthcare, Inc.. ("Lenox Healthcare") and the Trust owe
compensation in the amount of $50,000 to Sundance Realty Advisors
("Sundance") as a result of John W. Madagan, Sr. ("Madagan")
having introduced Lenox Healthcare and the Trust to one another.
This allegation is pursuant to a letter attached to the Complaint
dated November 8, 1996. Additional correspondence in 1997 is
alleged to have been sent by Lenox Healthcare indicating the
Trust's commitment to the compensation to Madagan for services
performed, at which time an alleged good faith partial payment to
Sundance in the amount of $4,970 was paid. The Complaint alleges
joint and several liability for both the Defendants for the
unpaid amounts, interest thereon plus attorneys fees,
disbursements, expenses and litigation and collection costs. The
Trust has responded to this Complaint. Although the Trust
intends to vigorously defend the allegations, at this time the
Trust is not in a position to comment upon the possible outcome
of this litigation or as to the loss or range of loss, if any, in
connection therewith.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Trust did not submit any matter during the fourth
quarter of 1997 requiring a vote of its shareholders.
PART II
ITEM 5. MARKET FOR TRUST'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
MARKET INFORMATION; DISCLOSURE RELATING TO LOW PRICE STOCK
The Trust Common Stock is traded in the over-the-counter
market on an electronic bulletin board established for securities
that do not meet the Nasdaq SmallCap Market listing requirements
or what is commonly referred to as the "pink sheets" under the
symbol "HCIV". As a result, holders of Common Stock should
expect to find it more difficult to dispose of, or to obtain
accurate quotations on the price of the Common Stock.
Additionally, sales practice requirements are imposed on broker-
dealers who trade in the Common Stock other than established
customers and accredited investors. For transactions covered by
this rule, the broker-dealer must make a special suitability
determination for the purchaser and must receive the purchaser's
written consent to the transaction prior to sale. Such burdens
on trading in the Common Stock should be expected to discourage
active trading which would reduce the liquidity of the Common
Stock and increase the spread between the bid and ask prices
quoted by these broker-dealers, if any, which quote the Common
Stock. The Trust has selected S. W. Ryan & Company as market
makers for its shares.
Based on representations made to the Advisor by the transfer
agent of the shares of the Trust, no sales occurred during 1997,
1996 and 1995. The transfer agent for the Common Stock of the
Trust is Gemisys, Inc., Evergreen, Colorado.
HOLDERS
As of July 1, 1998, there were 397,600 shares of Common
Stock outstanding, which were owned by approximately 400 holders
of record.
DIVIDENDS
The Trust last declared dividends on the Common Stock in the
amount of $0.06 per share in May, 1992. Unless property sales or
leases are made in 1998 which result in receipt by the Trust of
sale or lease proceeds, there will not likely be cash available
for distributions for purposes of declaring and paying any
dividends in 1998. Under the Code a REIT must meet certain
qualifications, including a requirement that it distribute
annually to its stockholders at least 95% of its taxable income
as that term is defined in Part II, Subchapter M of Chapter I of
the Code and regulations and rulings promulgated thereunder. The
Trust intends to distribute quarterly or more frequently to its
stockholders on a pro-rata basis substantially all cash available
for distribution. The Trust anticipates that such cash
distributions will aggregate annually at least 95% of its REIT
taxable income.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION
GENERAL
The following discussion and analysis should be read in
conjunction with the Financial Statements and Notes thereto
appearing elsewhere herein.
RESULTS OF OPERATIONS
FISCAL YEAR ENDED DECEMBER 31, 1997 COMPARED TO YEAR ENDED
DECEMBER 31, 1996.
For the year ended December 31, 1997, the Trust had a net
loss of $471,741, or $1.19 per share, as compared to a net loss
of $104,790, or $0.26 per share for 1996.
REVENUES. The Company primarily derives its revenues from
the leasing of facilities to healthcare providers. Revenues for
the year ended December 31, 1997 were $727,241, a decrease of
$31,979 or 4.2% from revenues of $759,220 for the year ended
December 31, 1996. The decrease in revenues was primarily the
result of the loss of lease revenues associated with an
unoccupied property.
DEPRECIATION AND AMORTIZATION. Depreciation and
amortization expense for the year ended December 31, 1997 was
$132,026, a decrease of $23,528 or 15.1% from $155,554 for
the year ended December 31, 1996. This decrease is the result
of the suspension of depreciation on the Country View facility
when it became vacant in September 1995.
REDUCTION IN NET CARRYING VALUE OF PROPERTY. The Company
recognized an additional valuation of $280,000 for the year ended
December 31, 1997 to give effect to the further impaired value of
the Country View and New Life properties, which were subsequently
sold on July 24, 1998 for $262,500 and August 6, 1998 for $250,000,
respectively.
INTEREST EXPENSE. For the year ended December 31, 1997,
interest expense totaled $473,498, a decrease of $35,242 or 6.9%
from $508,740 for the year ended December 31, 1996. This
decrease is the result of a decrease in the mortgage rate on the
loans on the Trust properties during 1997.
ADVISOR AND DIRECTORS FEES. Advisor and directors fees
consist of costs associated with the advisor and directors of the
Company. Advisor and directors fees for the year ended December
31, 1997 were $63,000, similar to the $63,872 paid for the year
ended December 31, 1996.
OTHER EXPENSES. Other expenses for the year ended December
31, 1997 were $250,458 an increase of $114,614 or 84.4% from
$135,844 for the year ended December 31, 1996. This increase is
primarily the result of costs associated with an increase in (i)
utilities, insurance and contract services related to an
unoccupied facility, (ii) legal costs related to an uncompleted
refinance of Bayshore and potential but unsuccessful acquisition,
and (iii) audit fees for the year ended December 31, 1997 as
compared to the same period in 1996.
OTHER MATTERS. The Trust adopted the provisions of
Statement on Financial Accounting Standards Number 121 ("SFAS
121"), "Accounting for the Impairment of Long-Lived Assets and
Long-Lived Assets to be Disposed of". The adoption of SFAS 121
did not have a material effect on the Trust's financial
statements because the Trust had previously recorded writedowns
of property carrying amounts to net realizable value.
LIQUIDITY
Cash decreased from $166,959 at December 31, 1996 to $89,965
at December 31, 1997. Rent and other receivables decreased from
$60,309 at December 31, 1996 to $29,267 at December 31, 1997.
This decrease was primarily the result of collections of long-
term notes receivable. Building and improvements net, decreased
from $4,359,998 at December 31, 1996 to $3,947,972 at December
31, 1997. This decrease was primarily the result of the
depreciation of the Company's properties and the recognition of a
$280,000 valuation reserve on the Country View and New Life properties,
which were sold for $262,500 on July 24, 1998, and $250,000 on
August 6, 1998, respectively. Mortgage notes payable
decreased from $4,971,910 at December 31, 1996 to $4,823,258 at
December 31, 1997. This decrease was primarily the result of
payments of principal on mortgaged property. Distributions in
excess of net earnings increased from ($3,747,370) at December
31, 1996 to ($4,219,111) at December 31, 1997. This increase is
the result of the net loss in 1997.
The Trust has relied solely on rental income to pay its
expenses in 1997 and 1996. Cash flows provided by operations
were $71,658 in 1997 and $65,673 in 1996.
The above discussion and the Trust's financial statements
have been presented on the basis that it is a going concern,
which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business. The Trust had
three properties remaining, one of which is under lease, thus
limiting cash flows available to pay operating expenses.
Mortgage notes payable on the Trust's properties mature on June
20, 1997 and the Bank demanded payment in full by letter dated
August 15, 1997. In that connection, the Bank entered into
the Forbearance Agreement April 30, 1998 which extended the
maturity date to July 31, 1998. See Item 1. DESCRIPTION OF
BUSINESS - General Development of Business. The current maturity
of all of the Trust's notes payable, accumulated recurring
operating losses and the carrying costs of unleased assets raise
a substantial doubt about the Trust's ability to continue as a
going concern for a reasonable period of time.
Management's plans include continuing to seek sources to
refinance the mortgage notes payable on Bayshore and minimizing
operating costs. Effective July 24, 1998, the Trust sold the
Country View property for $262,500. Effective August 6, 1998,
the Trust sold the New Life property for $250,000. See Item 1.
DESCRIPTION OF BUSINESS - General Development of Business.
There can be no assurance that the Trust's refinancing
efforts will be successful or that the Lender will not demand
payment of the mortgage notes payable.
The Trust also anticipates reviewing and evaluating other
properties for possible investment opportunities. However, the
Trust's efforts are limited by the resources available and the
Trust's ability to raise additional capital.
The Advisor is currently evaluating the Trust's compliance with
the provisions of the Code, the Treasury Regulations and other
relevant laws pertaining to qualification of the Trust as a
REIT. In the event the Trust qualifies as a REIT, the Trust
would not be subject to federal income taxes on amounts distributed
to stockholders, provided that distributions to stockholders are
at least 95% of the Trust's real estate investment trust taxable
income and the Trust meets certain other conditions. In the event
the Trust does not qualify as a REIT, the Trust would be taxable
as a C corporation under the Code. However, as a taxable corporation,
the Trust would not owe any current tax or tax for prior years due
to its net operating loss carryovers. Therefore, no adjustment
would be required to the historical financial statements related
to any tax provision. There can be no assurance that the Trust
will qualify as a REIT for any specific year.
Much national attention is currently focused on healthcare
reform. Although there is concern as to the status of
reimbursement programs on which the Trust indirectly relies for
its rental income, management believes the long term care
industry will benefit from any significant healthcare reform.
ITEM 7. FINANCIAL STATEMENTS
The financial statements are listed under Item 13: Exhibits
and Reports on Form 8-K. The financial statements are listed
herein beginning on page F-1.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
As reported in the Form 8-K for the event reported on March
19, 1998:
(i) On March 19, 1998, the Trust dismissed Arthur Andersen
LLP ("Arthur Andersen") as its independent accountants.
(ii) The 1996 Independent Auditor's Report issued by Arthur
Andersen was modified as follows: "The accompanying
financial statements have been prepared assuming that
the Trust will continue as a going concern. As
discussed in Note 1 to the financial statements, the
accumulation of losses, the carrying costs of unleased
assets and the current maturity of all of the Trust's
notes payable raise a substantial doubt about its
ability to continue as a going concern. Management's
plans concerning these matters are also described in
Note 1. The financial statements do not include any
adjustments that might result from the outcome of this
uncertainty."
The 1995 Independent Auditor's Report issued by LaVoie,
Clark, Charvoz & May ("LCC&M), the independent
accountants for the Trust in 1995 and previous years,
was modified as follows: "The accompanying financial
statements have been prepared assuming that the Trust
will continue as a going concern. As discussed in Note
1 to the financial statements, the accumulated
recurring operating losses, the carrying costs of
unleased assets and the current maturity of all of the
Trust's notes payable raise a substantial doubt about
its ability to continue as a going concern.
Management's plans concerning these matters are also
described in Note 1. The financial statements do not
include any adjustments that might result from the
outcome of this uncertainty."
(iii) The decision to change accountants was approved by the
Board of Directors.
(iv) (A) With respect to Arthur Andersen, during the fiscal
year of the Trust ended December 31, 1996, and for
the interim period from December 31, 1996 through
March 19, 1998, there were no disagreements
between Arthur Andersen and the Trust for the
respective applicable periods, whether or not
resolved, on any matter of accounting principles
or practices, financial statement disclosure, or
auditing scope or procedure, which, if not
resolved to the accountant's satisfaction, would
have caused the accountant to make reference to
the subject matter of the disagreement in
connection with the report of such accountant.
With respect to LCC&M, during the fiscal year
ended December 31, 1995, there were no
disagreements between LCC&M and the Trust, for the
applicable period, whether or not resolved, on any
matter of accounting principles or practices,
financial statement disclosure, or auditing scope
or procedure, which, if not resolved to the
accountant's satisfaction, would have caused such
accountant to make reference to the subject matter
of the disagreement in connection with the report
of such accountant.
(iv) (B) Not applicable.
(iv) (C) Not applicable.
(iv) D) Not applicable.
(iv) (E) Not applicable.
(a) (2) The Trust has engaged LCC&M as the auditor for the year
ended December 31, 1997.
(i) and (ii) Not applicable.
<PAGE>
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS; COMPLIANCE WITH SECTION 16 (a) OF THE EXCHANGE ACT
DIRECTORS
Information with respect to the Company's directors is set
forth below.
<TABLE>
Name Age Position Presently Held Director From
- ---- --- ----------------------- -------------
<S> <C> <S> <C>
Thomas M. Clarke 42 Director, President and 1996 - March 2,
Chief Financial Officer 1998
F. Dale Markham 68 Director, Chairman of 1987 to Present
the Board
Grady P. Hunter (1) 64 Director 1987 to Present
Charles E. Trefzger, Jr. (1) 39 Director 1996 to Present
</TABLE>
GENERAL
The Directors of the Trust are responsible for the
management and control of the affairs of the Trust but have
retained the Advisor to, among other things, locate, investigate,
evaluate, and recommend real property and mortgage loan
investment opportunities for the Trust. The Advisor also serves
as a consultant in connection with the investment policy
decisions made by the Directors and supervises, subject to
direction of the Directors, the day-to-day operations of the
Trust. The By-laws of the Trust provide that a majority of the
Trust's Directors must be unaffiliated with the Advisor and its
affiliates ("Unaffiliated Directors"). The remaining Directors
may be affiliates of the Trust ("Affiliated Directors").
Further, the By-laws provide that the Trust should have five
directors; however, at this time, no qualified or willing persons
to become directors have been located. Presently, the Trust has
three directors, all of whom may be considered Unaffiliated
Directors.
OFFICERS AND DIRECTORS OF THE TRUST
The Directors and principal officers of the Trust and their
principal occupations and other affiliations during the past five
years or more, unless otherwise stated, are as follows:
Thomas M. Clarke was President and Chief Financial Officer
of the Trust from December, 1996 through March 2, 1998. He has
been President and Chief Financial Officer of Stockbridge
Investment Partners, Inc. since 1991. Mr. Clarke has over 16
years of experience in the Healthcare industry and has held
positions with public and private healthcare organizations. From
May 1987 until founding Stockbridge in 1991, Mr. Clarke was
Treasurer and Chief Financial Officer of Berkshire Health
Systems, Inc., a Pittsfield, Massachusetts based diversified
healthcare company. Mr. Clarke is a Fellow in the Healthcare
Financial Management Association. Mr. Clarke is a graduate of
the University of Maine and completed his Masters in Science in
Business at Hudson College.
Grady P. Hunter, has served as a Director of the Trust since
its formation in 1987. Mr. Hunter has been Executive Vice
President and Chief Operating Officer of RSI, Inc. and similarly
of RSI Properties, Inc. both headquartered in Cranberry Township,
PA, since October, 1995. These companies are engaged in a
national effort to develop and operate programs and facilities
serving frail, chronically impaired elderly in an assisted living
setting. Mr. Hunter was Senior Vice President and Chief
Operating Officer of Lutheran Affiliated Services, Inc. in Mars,
Pennsylvania ("LAS") from April 1991 to 1995. LAS is an owner
and operator of skilled nursing facilities, specialized care
programs and residential care communities for the elderly in
Western Pennsylvania. From January, 1988 until April, 1991, Mr.
Hunter served as Executive Vice President and Chief Operating
Officer of Retirement Systems, Inc., a firm engaged in developing
facilities and programs and consulting with developers and
operators of long term care and assisted living facilities for
the frail elderly. Mr. Hunter served as Executive Vice President
and division Chief Executive Officer for Stanley Smith Security,
Inc. ("Smith") from 1973 to 1987. Smith is one of the top ten
international contract and consulting services companies
providing electronic, transportation, security, manpower and
facility operations support services.
F. Dale Markham has served as Chairman of the Board of the
Trust since May 16, 1991. He formerly served as President, Vice
President and Secretary through December 1996, and has been a
Director of the Trust since its inception in 1987. Effective
March 3, 1998, he was elected President and Chief Financial
Officer. From 1991 until his retirement effective December 31,
1994, he was a Mortgage Banking Consultant and Founder of the
Real Estate Financing Division of Wardon Financial Corporation, a
mortgage banking firm located in Phoenix, Arizona. From 1982
through 1990, he was President, a Director, and a Principal
Stockholder of Markham, Sellers & Mony, Inc., a mortgage banking
firm which was the original managing general partner of the
current Advisor and a Sponsor of the Trust. Mr. Markham served
as President of Western American Financial Corporation, a
mortgage banking firm from 1974 to 1982. He has been involved in
mortgage banking and real estate activities since 1957.
Linda M. Clarke was the Trust Secretary from December 1996
through March 2, 1998. She has been Treasurer of Stockbridge
since 1991. Mrs. Clarke has over seven years experience in the
healthcare industry. In addition to her position with
Stockbridge, Mrs. Clarke was previously employed by the Houlton
Regional Hospital Development Office and participated in various
fundraising activities. Mrs. Clarke attended the University of
Maine and was previously employed by the Maine School
Administrative District #29 for 5 years. She continues to be
Treasurer of Stockbridge Investment Partners, Inc. as well as
Treasurer of several other privately held healthcare companies.
Upon her resignation on March 2, 1998, she was replaced by Joan
M. Zeller.
Charles E. Trefzger is the President of Chancellor Health
Services, a healthcare management company specializing in the
long term care industry. Through affiliated entities, he owns
fourteen nursing homes and six assisted living facilities. Mr.
Trefzger was Corporate Counsel for Smith/Packett Med-Com from
1986 to 1989. From 1986 to 1988, Mr. Trefzger was Corporate
Counsel to Brian Center Management Corporation. Mr. Trefzger is
a graduate of Virginia Commonwealth University and holds a Juris
Doctor from Wake Forest University.
Pursuant to separate letters of resignation, each dated
March 2, 1998, Thomas M. Clarke resigned as President, Chief
Executive Officer and Director of the Trust; Linda M. Clarke
resigned as Secretary of the Trust; John F. Lunt resigned as
Director of the Trust; and David Fancher resigned as Chief
Financial Officer of the Trust. The remaining members of the
Board of Directors, Messrs. Grady P. Hunter, F. Dale Markham and
Charles E. Trefzger voted to accept the resignations on March 19,
1998 at a meeting of the Board of Directors. As a result, two
vacancies in the Board of Directors exist.
At the same meeting of the Board of Directors, Mr. Markham
was selected to serve as Chairman, President and Chief Financial
Officer of the Trust with Joan M. Zeller to serve as Secretary of
the Trust.
In connection with the resignations, Mr. Clarke submitted a
letter (the "Clarke Letter") dated March 4, 1998 to Mr. Markham
stating that Mr. Sellers had engaged in discussions with respect
to the receipt of a formal proposal for the sale of Bayshore to
the facility manager of the facility. Mr. Clarke stated that
these actions are inconsistent with discussions held during the
February 10, 1998 Board of Directors meeting of the Trust with
respect to terminating the facility manager for blatant
violations of a certain Management Agreement dated May 1, 1993.
Mr. Clarke stated that such actions indicated, among other
things, a lack of confidence in Lenox's ability to consummate
acquisitions and provide financing to the Trust. Mr. Clarke did
not specifically request that the explanation for his resignation
be included in this Form 8-K, filed March 26, 1998.
Mr. Markham, in a letter dated March 26, 1998 to Mr. Clarke,
stated, among other things, that the reasons set forth in the
Clarke Letter seemed without merit and did not reflect the facts.
Other principals of the Trust agreed that the contents of the
Clarke Letter were not reflective of the facts. Mr. Markham also
noted that discussions involving Mr. Clarke had occurred in
connection with the unsuccessful attempts of the facility manager
to reach Mr. Clarke regarding the person to whom the facility
manager should submit his unsolicited offer to purchase Bayshore.
Mr. Markham advised that as a result of this inability to contact
Mr. Clarke, the facility manager talked with Mr. Sellers as a
member of the then Trust advisor regarding the offer to purchase.
OFFICERS AND DIRECTORS OF THE ADVISOR
During 1997, the Trust was under contract with Lenox. Mr.
and Mrs. Thomas M. Clarke own 50% of Lenox. The other 50% of
Lenox is owned by entities affiliated with James R. Sellers. In
connection with the resignations of Mr. and Mrs. Clarke and Mr.
Lunt as directors and executive officers of the Trust and Mr.
Fancher as an executive officer of the Trust, the remaining Board
members of the Trust voted to terminate the Trust advisory
contract with Lenox. As a result and effective March 1, 1998 the
Trust entered into a contract for advisory services with HACG.
The general partner of HACG is Heritage. All of the stock of
Heritage is held by James R. Sellers, an affiliate of BHS, the
lessee of Bayshore.
James R. Sellers, age 64, is the President and sole
stockholder of Heritage, an affiliate of the Advisor. Heritage
had been the Managing General Partner of the Advisor since July,
1990, when it succeeded Markham, Sellers & Mony, Inc. ("MSM").
Mr. Sellers is also the sole stockholder of BHS, the lessee of
Bayshore. Mr. Sellers has been Senior Vice President of Keystone
Mortgage Partners LLC, formerly known as Keystone Capital Group,
Inc., an Arizona based mortgage banking firm since May, 1993.
Mr. Sellers was Senior Vice President of Catalina Mortgage
Company, also an Arizona based mortgage banking firm, from July,
1990 until May, 1993. From 1982 to 1990, he served as Executive
Vice President, a director, and a principal stockholder of MSM
the original Managing General Partner of the original Advisor.
From 1974 until 1978, he served as a Vice President and
thereafter until 1982 as Senior Vice President of Western
American Financial Corporation, a mortgage banking firm, where he
supervised income property lending staffs throughout the western
United States.
ITEM 10. EXECUTIVE COMPENSATION
Set forth below is information concerning the annual
compensation for services in all capacities to the Registrant by
the President and Treasurer of the Trust for the last three
fiscal years ending December 31, 1997. Thomas M. Clarke,
President during 1997, was compensated by the Trust for services
rendered during the fiscal year ended December 31, 1997. F. Dale
Markham, former President and Treasurer of the Trust, was
compensated by the Trust for services rendered to the Trust
during the fiscal years ended December 31, 1997, 1996 and 1995,
respectively.
SUMMARY COMPENSATION TABLE
Annual Compensation
<TABLE>
Name and Principal Position Year Total Compensation
- --------------------------- ---- ------------------
<S> <C> <C>
Thomas M. Clarke, President, 1997 -0-
Chief Financial Officer and
Director
F. Dale Markham, Chairman 1997 $ 3,550 accrued, $37,650 paid
of the Board and Director 1996(1) $16,000 accrued, $21,500 paid
1995(1) $17,800 accrued, $10,000 paid
</TABLE>
- --------------------------
(1) Includes directors fees payable annually in the amount of
$11,000 per year and additional compensation for additional time
contributed ("Special Fees").
The Trust paid or accrued annual directors fees of $11,000
each to the Directors in 1997, plus a fee of $800 for each
Directors' meeting attended in person. In 1997, $11,000 in
accrued Director's fees and $24,000 in accrued Special Fees were
paid to Mr. Markham that had been accrued from previous years.
The Trust may pay officers whose only affiliation is a
result of being an officer of the Trust. The Trust is not
required to pay any compensation to officers and directors of the
Trust who are also affiliated with the Advisor or its affiliates.
Although directors and officers affiliated with the Advisor are
compensated indirectly by their relationship to the Advisor and
its affiliated companies, the Trust agreed to pay Mr. Sellers'
company, Heritage Advisory Corporation, the former advisor, the
sum of $3,000 per month beginning May 1, 1992, for an indefinite
period. Mr. Sellers voluntarily reduced the monthly payment to
$2,000 per month beginning August 1, 1993; to $1,600 per month
beginning November, 1993; and to $1,000 per month beginning April
1, 1994 which continued to October 31, 1996 after which it
ceased.
No other direct compensation was paid or payable by the
Trust during the fiscal year ended December 31, 1997.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth as of July 1, 1998 the number
and percentage of outstanding shares of Common Stock beneficially
owned by each person known by the Trust to own beneficially more
than five percent (5%) of the Trust's outstanding shares of
Common Stock, by each director of the Trust, and by all directors
and officers of the Trust as a group.
<TABLE>
Amount & Nature of Percentage of Outstanding
Name of Beneficial Owner Beneficial Ownership Shares Owned
- ------------------------ -------------------- ------------
<S> <C> <C>
Harbor American Capital 20,000 Shares (1) 5.03%
Group, a California
Limited Partnership
Herbert W. Owens 40,000 Shares 10.06%
Grady P. Hunter (2) XXX
F. Dale Markham (1) XXX
James R. Sellers (1) XXX
All Directors and Officers (1) XXX
</TABLE>
(1) The current Advisor as of July 1, 1998, Harbor American
Capital Group, owns of record and beneficially 20,000 shares of
Common stock. The former managing general partner of the
Advisor, MSM and each of the former officers, directors and
principal shareholders of MSM (F. Dale Markham, the Estate of
Marvin Mony, and James R. Sellers) may be deemed to be beneficial
owners of the shares of Common Stock owned of record by Harbor
American Capital Group.
(2) Harbor American Capital Group agreed to distribute to each
Unaffiliated Director, prior to 1989, as additional compensation,
1,000 shares of Trust Common Stock for each of the first three
fiscal years of the Trust. As of the date hereof, Harbor
American Capital Group has neither purchased any such shares from
the Public Offering nor has it purchased such shares from broker
dealers since the termination of the Public Offering.
Discussions between Harbor American Capital Group and Mr. Hunter,
the only Unaffiliated Director involved, have been held as to
the elimination of this distribution to the Unaffiliated
Director; however, no final agreement has been reached with
respect to this form of compensation.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information set forth below summarizes certain
transactions between the Trust and its directors and/or five
percent (5%) shareholders during fiscal year 1997. The former
managing general partner of the Advisor (MSM), and each of the
principal shareholders of MSM (F. Dale Markham, the Estate of
Marvin Mony and James R. Sellers) and present officer, director
and shareholder of Heritage (James R. Sellers), may be deemed to
be the beneficial owners of more than 5% of the shares of Common
Stock of the Trust.
ACQUISITION FEES
The Advisor receives acquisition fees with respect to each
real property purchased by or on behalf of the Trust, equal to up
to 5% of the contract price for the property. No such properties
were purchased during 1997 and therefore no acquisition fees were
paid.
ADVISORY FEE
During the fiscal year ended December 31, 1997, the Trust
paid Advisory Fees to Harbor American Capital Group, the current
advisor, in the amount of $0.00 and $20,000 to Lenox, the then
advisor. James R. Sellers is the owner of Heritage which is the
managing general partner of Harbor American Capital Group and was
a 35% owner of Lenox during 1997; he is the owner of BHS, which
serves as lessee of the Florida Property. During 1997, BHS paid
lease rentals of $463,915 to the Trust.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.
Index of Financial Statements
The following financial statements of Healthcare Investors
of America, Inc. are included.
Report of Independent Public Accountants -
Year Ended December 31, 1996. F-1
Independent Auditor's Report - Year
ended December 31, 1997. F-2
Balance sheets - December 31, 1997 and 1996. F-3
Statements of operations - Years ended
December 31, 1997 and 1996. F-4
Statements of cash flows - Years ended
December 31, 1997 and 1996. F-5
Notes to financial statements -
December 31, 1997. F-6
REPORTS ON FORM 8-K
On March 26, 1998 the Trust filed Form 8-K regarding a
change in the Company's principal executive offices, resignation
of certain directors and executive officers, change in the
principal accountant and the election of certain new executive
officers and directors of the Trust.
EXHIBITS
See attached list of Exhibits.
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) 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.
Dated: August 12, 1998 HEALTHCARE INVESTORS OF AMERICA, INC.
BY: /s/ F. Dale Markham
------------------------------------
F. Dale Markham
Director, President and Chief
Financial Officer (Principal
Executive, Financial and Accounting
Officer)
In accordance with the Exchange Act, this report has been
signed below by the persons on behalf of the Registrant in the
capacities and on the dates indicated.
Dated: August 12, 1998 BY: /s/ F. Dale Markham
-------------------------------------
F. Dale Markham
Director, President and Chief
Financial Officer (Principal
Executive, Financial and Accounting
Officer)
Dated: August 12, 1998 BY: /s/ Grady P. Hunter
-------------------------------------
Grady P. Hunter, Director
Dated: August 12, 1998 BY: /s/ Charles E. Trefzger, Jr.
-------------------------------------
Charles E. Trefzger, Jr., Director
SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED
PURSUANT TO SECTION 15(D) OF THE EXCHANGE ACT BY NON-REPORTING
ISSUERS.
No annual report or proxy material has been sent to the
Trust's stockholders. An annual report and proxy material will
be sent to the Trust's stockholders subsequent to the filing of
his Form 10-KSB. The Trust shall furnish to the Securities and
Exchange Commission four copies of any annual report or proxy
material that is sent to the Trust's stockholders.
<PAGE>
EXHIBITS
TO
FORM 10-KSB
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR
HEALTHCARE INVESTORS OF AMERICA, INC.
FOR FISCAL YEAR ENDED
DECEMBER 31, 1997
3.2* Articles of Amendment and Restatement of Trust filed as
Exhibit I to Pre-Effective Amendment No. 1 to the
Trust's Registration Statement on Form S-11
(Registration No. 33-11863) filed June 2, 1987.
3.3* Third Amended and Restated Bylaws of Trust filed as
Exhibit 3.2 to Form 10-K filed March 30, 1988.
10.1* Advisory Service Agreement dated as of May 18, 1988
between the Trust and Harbor American Capital Group, a
California Limited Partnership ("HACG") filed as
exhibit 10.1 to Pre-Effective Amendment No. 1 to the
Trust's Registration Statement on Form S-11
(Registration No. 33-11863) filed June 2, 1987.
10.2* Advisory Service Agreement dated as of June 25, 1987
between HACG and Health Concepts Advisory Company filed
as Exhibit 10.2 to Form 10-K filed March 30, 1988.
10.3* Advisory Service Agreement dated as of June 25, 1987
between HACG and Markham, Sellers & Mony, Inc. filed as
Exhibit 10.3 to Form 10-K filed March 30, 1988.
10.9(a)* Dividend Reinvestment Agreement and Plan dated as of
June 24, 1987 between the Trust, Federated Transfer
Agents, and LCS, Inc. Company ("Federated") and HACG
filed as Appendix A to Pre-Effective Amendment No. 2 to
the Trust's Registration Statement on Form S-11
(Registration No. 33-11863) filed July 2, 1987.
10.9(b)* Amendment to Dividend Reinvestment Agreement and Plan
dated as of December 11, 1987 between the Trust,
Federated and HACG filed as Exhibit 10.9(b) to Form
10-K filed on March 30, 1988.
10.9(c)* Second Amendment dated April 1, 1987 between the Trust,
Federated and HACG (filed as Amendment to Appendix "A"
to the Prospectus and incorporated by reference).
10.10* Warrant Agreement dated as of July 8, 1987 between the
Trust and Federated filed as Exhibit 10.10 to Form 10-K
filed on March 30, 1988.
10.11* Agreement between HACG and the Trust filed as Exhibit
10.12 to Pre-Effective Amendment No. 2 to the Trust's
Registration Statement on Form S-11 (Registration No.
33-11863) filed July 2, 1987.
10.12* Master Facility Lease Agreement dated as of March 1,
1988 between the Trust and HCC-Bayshore Convalescent
Center, Inc. ("HCC-Bayshore") filed as Exhibit 10.12 to
Form 10-K filed on March 30, 1988.
10.13* Security Agreement dated as of March 1, 1988 between the
Trust and HCC-Bayshore filed as Exhibit 10.13 to Form
10-K filed March 30, 1988.
10.14* Loan Agreement dated as of March 1, 1988 between the
Trust and Citizens Fidelity Bank & Trust Company
("Citizens") filed as Exhibit 10.14 to Form 10-K filed
on March 30, 1988.
10.15* Addendum to Loan Agreement dated as of March 1, 1988
between the Trust and Citizens filed as Exhibit 10.15 to
Form 10-K filed on March 30, 1988.
10.16* Promissory Note dated as of March 1, 1988 between the
Trust and Citizens filed as Exhibit 10.16 to Form 10-K
filed on March 30, 1988.
10.17* Assignment of HCC-Bayshore Security Agreement dated as
of March 1, 1988 between the Trust and Citizens filed as
Exhibit 10.17 to Form 10-K filed on March 30, 1988.
10.18* Mortgage dated as of March 1, 1988 between the Trust and
Citizens filed as Exhibit 10. 18 to Form 10-K filed on
March 30, 1988.
10.19* Assignment of Leases and Rents dated as of March 1, 1988
between the Trust and Citizens filed as Exhibit 10.19 to
Form 10-K filed on March 30, 1988.
10.20* Supplement to Assignment of Leases and Rents dated as of
March 1, 1988 between the Trust and Citizens filed as
Exhibit 10.20 to Form 10-K filed on March 30, 1988.
10.21* Real Property Purchase Agreement dated as of March 1,
1988 between the Trust and Medical Resources Development
Corporation, a Florida corporation, filed as Exhibit
10.24 to Post Effective Amendment No. 1 to the Trust's
Registration Statement on Form S-11 (Registration No.
33-11863) filed April 13, 1988.
10.22* Indemnification Agreement dated March 9, 1988 between
the Trust and HCC- Bayshore, filed as Exhibit 10.25 to
Post Effective Amendment No. 1 to the Trust's
Registration Statement on Form S-11 (Registration No.
33-11863) filed April 13, 1988.
10.23* Real Property Purchase Agreement dated as December 27,
1989 by and among (I) HCC-Country View Care Center, Inc.
("HCC-Country View"), a Kentucky corporation; (ii) HCC-
New Life Care Center, Inc. ("HCC-New Life"), a Kentucky
corporation (collectively HCC-Country View and HCC New
Life are referred to as the "Sellers"); (iii) the Trust;
and (iv) HACG, and exhibits thereto.
10.24* Master Facility Lease dated as of December 27, 1989
between the Trust and HCC-Country View.
10.25* Master Facility Lease dated as of December 27, 1989
between the Trust and HCC-New Life.
10.26* Master Facility Lease dated as of December 27, 1989
between the Trust and Citizens.
10.27* Amended and Restated Promissory Note dated as of
December 27, 1989 from the Trust to Citizens.
10.28* Assumption Agreement and Amendment of Deeds of Trust and
Security Agreement dated as December 27, 1989 by and
among (i) the Trust (ii) Citizens; (iii) HCC-Country
View and (iv) HCC-New Life.
10.29* Supplement to Assignment of Leases and Rents (Country
View) dated as of December 27, 1989 from the Trust to
Citizens.
10.30* Supplement to Assignment of Leases and Rents (New Life)
dated as of December 27, 1989 from the Trust to
Citizens.
10.31* Second CV Note dated as of December 27, 1989 from the
Trust to HCC-Country View.
10.32* Second NL Note dated as of December 27, 1989 from the
Trust to HCC-Country View.
10.33* Second Deed of Trust dated as of December 27, 1989 from
the Trust for the benefit of Sellers.
10.34* Third CV Note dated as of December 27, 1989 from the
Trust to HCC-Country View.
10.35* Third NL Note dated as of December 27, 1989 from the
Trust to HCC-New Life.
10.36* Third Deed of Trust dated as of December 27, 1989 from
the Trust for the benefit of HCC-Country View.
10.37* Third Deed of Trust dated as of December 27, 1989 from
the Trust for the benefit of HCC-New Life.
10.38* Country View Security Agreement dated as of December 27,
1989 from HCC Country View to the Trust.
10.39* New Life Security Agreement dated as of December 27,
1989 from HCC New Life to the Trust.
10.40* Collateral Assignment of Notes and Loan Documents dated
as of December 27, 1989 from the Sellers to Citizens.
10.41* Collateral Assignment of Second Deed of Trust dated as
of December 27, 1989 from the Sellers to Citizens.
10.42* Assignment of Country View Security Agreement dated as
of December 27, 1989 from the Trust to Citizens.
10.43* Assignment of New Life Security Agreement dated as of
December 27, 1989 from the Trust to Citizens.
10.44* Personal Property Purchase Agreement dated as of April
17, 1989 between EMNH, Inc., HCC-Marshall Manor Nursing
Horne, Inc. and HCC, filed as Exhibit 10.45 to Form 10-K
filed April 1, 1991.
10.45* Personal Property Purchase Agreement dated as of April
17, 1989 between EMNH, Inc., HCC-Eaton Manor Nursing
Home, Inc. and HCC, filed as Exhibit 10.45 to Form 10-K
filed April 1, 1991.
10.46* Amendment to HCC-Eaton Purchase dated as of October 6,
1989 between EMNH, Inc., HCC-Eaton Manor Nursing Horne,
Inc. and HCC, filed as Exhibit 10.46 to Form 10-K filed
April 1, 1991.
10.47* Amendment to HCC-Marshall Purchase dated as of October
6, 1989 between EMNH, Inc., HCC-Eaton Manor Nursing
Home, Inc. and HCC, filed as Exhibit 10.47 to Form 10-K
filed April 1, 1991.
10.48* Second Amendment to HCC-Eaton Purchase dated as of
December 28, 1989 between EMNH, Inc., HCC-Eaton Manor
Nursing Home, Inc. and HCC, filed as Exhibit 10.48 to
Form 10-K filed April 1, 1991.
10.49* Amendment to HCC-Marshall Purchase Agreement dated as of
December 28, 1989 between EMNH, Inc., HCC-Manor Nursing
Home, Inc. and HCC, filed as Exhibit 10.49 to Form 10-K
filed April 1, 1991.
10.50* Master Facility Lease dated as of April 1, 1990 between
the Trust and HCC-Marshall Manor Nursing Home, Inc.,
filed as Exhibit 10.50 to Form 10-K filed April 1, 1991.
10.51* Master Facility Lease Agreement dated as of April 1,
1990 between the Trust and HCC-Eaton Manor Nursing Home,
Inc., filed as Exhibit 10.51 to Form 10-K filed April 1,
1991.
10.52* Real Property Purchase Agreement dated as of April 17,
1989 between Eaton Investment Company and the Trust,
filed as Exhibit 10.52 to Form 10-K filed April 1, 1991.
10.53* Real Property Purchase Agreement dated as of April 17,
1989 between Calhoun Investment Company and the Trust,
filed as Exhibit 10.53 to Form 10-K filed April 1, 1991.
10.54* Amendment to Real Property Purchase Agreement dated as
of April 17, 1989 between Eaton Investment Company and
the Trust, filed as Exhibit 10.54 to Form 10-K filed
April 1, 1991.
10.55* Amendment to Real Property Purchase Agreement dated as
of April 17, 1989 between Calhoun Investment Company and
the Trust, filed as Exhibit 10.55 to Form 10-K filed
April 1, 1991.
10.56* Second Amendment to Real Property Purchase Agreement
dated as of April 17, 1989 between Eaton Investment
Company and the Trust, filed as Exhibit 10.56 to Form
10-K filed April 1, 1991.
10.57* Second Amendment to Real Property Purchase Agreement
dated as of April 17, 1989 between Calhoun Investment
Company and the Trust, filed as Exhibit 10.57 to Form
10-K filed April 1, 1991.
10-58* Promissory Note dated as of April 1, 1990 between the
Trust and D & N for Eaton Manor, filed as Exhibit 10.58
to Form 10-K filed April 1, 1991.
10.59* Promissory Note dated as of April 1, 1990 between the
Trust and D & N for Marshall Manor, filed as Exhibit
10.59 to Form 10-K filed April 1, 1991.
10.60* Mortgage, Security Agreement, Assignment of Rents,
Leases, Guaranty and Security Agreement and Financing
Statement dated as of April 1, 1990 between the Trust
and D & N for Eaton Manor, filed as Exhibit 10.60 to
Form 10-K filed April 1, 1991.
10.61* Mortgage, Security Agreement, Assignment of Rents,
Leases, Guaranty and Security Agreement and Financing
Statement dated as of April 1, 1990 between the Trust
and D & N for Marshall Manor, filed as Exhibit 10.61 to
Form 10-K filed April 1, 1991.
10.62* Lease Guaranty and Subordination dated as of April 1,
1990 from HCC and Guarantors in favor of the Trust for
Eaton Manor, filed as Exhibit 10.62 to Form 10-K filed
April 1, 1991.
10.63* Lease Guaranty and Subordination dated as of April 1,
1990 from HCC and Guarantors in favor of the Trust for
Marshall Manor, filed as Exhibit 10.63 to Form 10-K
filed April 1, 1991.
10.64* Security Agreement dated as of April 1, 1990 between
HCC-Eaton Manor and the Trust, filed as Exhibit 10.64 to
Form 10-K filed April 1, 1991.
10.65* Security Agreement dated as of April 1, 1990 between
HCC-Marshall Manor and the Trust, filed as Exhibit 10.65
to Form 10-K filed April 1, 1991.
10.66* First Omnibus Amendment Agreement dated as of September
1, 1991 between the Trust and Citizens filed as Exhibit
10.66 to Form 10-K filed May 29, 1992.
10.67* Promissory Note (Renewal) dated as of September 1, 1991
from the Trust to Citizens filed as Exhibit 10.67 to
Form 10-K filed May 29, 1992.
10.68* Mortgage dated as of September 1, 1991 from the Trust to
Citizens filed as Exhibit 10.68 to Form 10-K filed May
29, 1992.
10.69* Assignment of Leases and Rents dated as of September 1,
1991 from the Trust to Citizens filed as Exhibit 10.69
to Form 10-K filed May 29, 1992.
10.70* Extension Agreement dated as of September 1, 1991
between the Trust and Citizens filed as Exhibit 10.70 to
Form 10-K filed May 29, 1992.
10.71* Lease effective as of September 1, 1992 between the
Trust and Eaton Manor Healthcare Services, Inc., filed
as Exhibit 10.71 to Form 10-KSB filed on April 15, 1992.
10.72* Lease effective as of September 1, 1992 between the
Trust and Marshall Manor Healthcare Services, Inc.,
filed as Exhibit 10.72 to Form 10-KSB filed on April 15,
1993.
10.73* Lease dated as of September 25, 1992 between the Trust
and Res-Care, Inc. ("Res-Care")(Country View), filed as
Exhibit 10.73 to Form 10-KSB filed on April 15, 1993.
10.74* Lease dated as of September 25, 1992 between the Trust
and Res-Care (New Life), filed as Exhibit 10.74 to Form
10-KSB filed on April 15, 1993.
10.75* Second Omnibus Amendment Agreement (Bayshore) effective
as of December 4, 1992 between the Trust and Citizens
filed as Exhibit 10.75 to Form 10-K filed on April 15,
1993.
10.76* Second Amendment to Mortgage and Assignment of Leases
and Rents (re: Bayshore First Mortgage) effective as of
December 4, 1992 from the Trust to Citizens filed as
Exhibit 10.76 to Form 10-K filed on April 15, 1993.
10.77* Second Amendment to Loan Agreement (Colorado Nursing
Homes) dated as of December 4, 1992 between the Trust
and Citizens filed as Exhibit 10.77 to Form 10-K filed
on April 15, 1993.
10.78* Second Amendment to Loan Agreement (Renewal and
Increase) dated as of September 20, 1992 from the Trust
to Citizens filed as Exhibit 10.78 to Form 10-K filed on
April 15, 1993.
10.79* Second Extension Agreement (Weld Country Colorado)
effective as of December 4, 1992 between the Trust and
Citizens filed as Exhibit 10.79 to Form 10-K filed on
April 15, 1993.
10.80* First Amendment to Mortgage and Assignment of Leases and
Rents (re: Bayshore Second Mortgage) effective as of
December 4, 1992 from the Trust to Citizens filed as
Exhibit 10.76 to Form 10-K filed on April 15, 1993.
10.81* Bill of Sale effective as of December 4, 1992 from HCC-
Country View to the Trust filed as Exhibit 10.81 to Form
10-K filed on April 15, 1993.
10.82* Bill of Sale effective as of December 4, 1992 from HCC-
New Life to the Trust filed as Exhibit 10.82 to Form
10-K filed on April 15, 1993.
10.83* Bill of Sale effective as of December 4, 1992 from the
Trust to Res-Care, filed as Exhibit 10.83 to Form 10-K
filed on April 15, 1993.
10.84* Promissory Note dated as of December 4, 1992 from Res-
Care to the Trust, filed as Exhibit 10.84 to Form 10-K
filed on April 15, 1993.
10.85* Security Agreement dated as of December 4, 1992 from
Res-Care to the Trust filed as Exhibit 10.85 to Form
10-K filed on April 15, 1993.
10.86* Promissory Note dated as of December 4, 1992 from the
Trust to Citizens filed as Exhibit 10.86 to Form 10-K
filed on April 15, 1993.
10.87* Lease, as amended, dated as of April 1, 1993 between the
Trust and Bayshore Healthcare Services, Inc., filed as
Exhibit 10.87 to Form 10-K filed on April 18, 1994.
10.88* Second Supplement to Assignment of Leases and Rents
dated as of May 18, 1993 from the Trust to PNC Bank,
Kentucky, Inc. (f/k/a Citizens) ("PNC"), filed as
Exhibit 10.88 to Form 10-K filed April 18, 1994.
10.89* Subordination of Security Interest dated as of May 18,
1993 from the Trust to PNC, filed as Exhibit 10.89 to
Form 10-K filed April 18, 1994.
10.90* Agreement Concerning Interest Arrearage dated as of May
20, 1993 between the Trust and PNC, filed as Exhibit
10.90 to Form 10-K filed April 18, 1994.
10.91* Purchase and Sale Agreement dated as of March 4, 1994
between the Trust and Marshall Healthcare Investors,
L.P., a Georgia Limited partnership, filed as Exhibit
10.91 to Form 10-K filed April 18, 1994.
10.92* Amendment to Promissory Note dated as of October 31,
1994 between the Trust and PNC.
10.93* Third Extension of Leases and Rents (re: Bayshore First
Mortgage), dated as of October 31, 1994 between the
Trust and PNC.
10.94* Advisor Agreement dated November 1, 1996, between the
Trust and Lenox Capital Services, LLC ("Lenox").
10.95 Advisor Agreement, dated as of March 1, 1998, between
the Trust and Harbor American Capital Group.
10.96 Forbearance Agreement, effective as of April 30, 1998,
between the Trust and PNC Bank, National Association.
10.97 Commercial Contract to Buy and Sell Real Estate [Seller
or Private Third-Party], dated June 17, 1998, between
the Trust and William E. Harper ("Harper") - $162,500;
as amended on July 11, 1998.
10.98 Commercial Contract to Buy and Sell Real Estate [Seller
or Private Third-Party], dated June 17, 1998, between
the Trust and Harper - $100,000; as amended on July 11,
1998.
10.99 Promissory Note, dated July 24, 1998, from Harper to
and in favor of the Trust, in the original principal
amount of $100,000.
10.100 Promissory Note, dated July 24, 1998, from Harper to and
in favor of the Trust, in the original principal amount
of $82,500.
10.101 Deed of Trust, dated July 24, 1998, from Harper for the
benefit of the Trust.
10.102 Collateral Assignment of Promissory Notes and Deeds of
Trust, dated as of July 24, 1998, from the Trust to PNC.
10.103 Commercial Contract to Buy and Sell Real Estate [Seller
or Private Third-Party] dated August 6, 1998, between
the Trust and Continuum Health Partnership, Inc.
23.1 Consent of Arthur Andersen LLP dated as of August 11,
1998.
23.2 Consent of Lavoie, Clark, Charvoz & May, P.C. dated
as of August 11, 1998.
27 Financial Data Schedule
*Incorporated by reference
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Healthcare Investors of America, Inc.:
We have audited the accompanying balance sheet of HEALTHCARE INVESTORS
OF AMERICA, INC. (a Maryland Corporation) as of December 31, 1996,
and the related statements of income (loss) (with reconciliation of
distributions in excess of net earnings), and cash flows for the
year then ended. These financial statements are the responsibility
of the Trust's management. Our responsibility is to express an opinion
on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of
Healthcare Investors of America, Inc. as of December 31, 1996,
and the results of its operations and its cash flows for the year
then ended in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming
that the Trust will continue as a going concern. As discussed in
Note 1 to the financial statements, the accumulated recurring operating
losses, the carrying costs of unleased assets and the current maturity
of all of the Trust's notes payable raise a substantial doubt about
its ability to continue as a going concern. Management's plans
concerning these matters are also described in Note 1. The
financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
ARTHUR ANDERSEN LLP
Nashville, Tennessee
April 28, 1997
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors and Stockholders
Healthcare Investors of America, Inc.
Tucson, Arizona
We have audited the accompanying balance sheet of Healthcare
Investors of America, Inc., (the "Trust"), as of December 31,
1997 and the related statements of operations (with
reconciliation of distributions in excess of net earnings), and
cash flows for the year then ended. These financial statements
are the responsibility of the Trust's management. Our
responsibility is to express an opinion on these financial
statements based on our audit. Other auditors audited the
financial statements for the year ended December 31, 1996 for
which their opinion, dated April 28, 1997, contained explanation
and comment substantially similar to that contained below.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of Healthcare Investors of America, Inc. as of December 31, 1997,
and the results of its operations and its cash flows for the year
then ended in conformity with generally accepted accounting
principles.
The accompanying financial statements have been prepared assuming
that the Trust will continue as a going concern. As discussed in
Notes 1 and 7 to the financial statements, the accumulation of
losses and carrying costs of an unleased facility raise a
substantial doubt about its ability to continue as a going
concern. Management's plans concerning these matters are also
described in Notes 1 and 7. The financial statements do not
include any adjustments that might result from the outcome of
this uncertainty.
Tucson, Arizona
July 10, 1998, except for Note 7,
for which the date is August 6, 1998
<PAGE>
HEALTHCARE INVESTORS OF AMERICA, INC.
BALANCE SHEETS
<TABLE>
As of December 31,
------------------
ASSETS: 1997 1996
- ------ ---- ----
<S> <C> <C>
Real Estate Properties:
Land $ 466,301 $ 466,301
Building and improvements, net
of accumulated depreciation
and valuation reserves of
$4,409,128 and $3,997,102 at
December 31, 1997 and December 31,
1996, respectively 3,947,972 4,359,998
Prepaid expenses 3,915 9,169
Rent and other receivables 29,267 60,309
Cash and cash equivalents 89,965 166,959
---------- ----------
TOTAL ASSETS $4,537,420 $5,062,736
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY:
- ------------------------------------
Mortgage notes payable $4,823,258 $4,971,910
Accounts payable and accrued expenses 180,662 168,624
Disputed claims 92,623 -
Deferred income 3,189 12,773
---------- ----------
TOTAL LIABILITIES 5,099,732 5,153,307
---------- ----------
Stockholders' Equity (Deficiency):
Common stock, $.01 par value;
10,000,000 shares authorized,
397,600 shares issued and outstanding 3,976 3,976
Paid in capital 3,652,823 3,652,823
Distributions in excess of
net earnings (4,219,111) (3,747,370)
---------- ----------
TOTAL STOCKHOLDERS' EQUITY (562,312) (90,571)
---------- ----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $4,537,420 $5,062,736
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements..
<PAGE>
HEALTHCARE INVESTORS OF AMERICA, INC.
STATEMENTS OF OPERATIONS AND DISTRIBUTIONS
IN EXCESS OF NET EARNINGS
<TABLE>
Years Ended December 31,
------------------------
REVENUES: 1997 1996
- -------- ---- ----
<S> <C> <C>
Rental income $716,744 $709,086
Interest and other income 10,497 50,134
---------- ----------
727,241 759,220
---------- ----------
EXPENSES:
- --------
Depreciation and amortization 132,026 155,554
Reduction in net carrying value
of properties 280,000
Interest expense 473,498 508,740
Advisor, directors fees and expenses 63,000 63,872
Other operating expenses 250,458 135,844
---------- ----------
1,118,982 864,010
---------- ----------
NET LOSS $(471,741) $(104,790)
========== ==========
NET LOSS PER SHARE $(1.19) $(0.26)
====== ======
WEIGHTED AVERAGE SHARES OUTSTANDING 397,600 397,600
======= =======
DISTRIBUTIONS IN EXCESS OF NET EARNINGS
Beginning of year $(3,747,370) $(3,642,580)
Net loss (471,741) (104,790)
---------- ----------
End of year $(4,219,111) $(3,747,370)
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
HEALTHCARE INVESTORS OF AMERICA, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
Years Ended December 31,
------------------------
1997 1996
---- ----
CASH FLOWS FROM OPERATIONS:
- --------------------------
<S> <C> <C>
Net loss $(471,741) $(104,790)
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Depreciation and amortization 132,026 155,554
Reduction in net carrying value
of properties 280,000
Changes in assets and liabilities:
Rents and other receivable 31,042 17,487
Prepaid expenses 5,254 7,263
Accounts payable and accrued expenses 12,038 (257)
Disputed claims 92,623
Deferred income (9,584) (9,584)
---------- ----------
Net cash provided by operating activities 71,658 65,673
CASH FLOWS FROM FINANCING ACTIVITIES:
- ------------------------------------
Payments on long-term borrowings (148,652) (96,775)
---------- ----------
Net cash used for financing activities (148,652) (96,775)
---------- ----------
CASH AND CASH EQUIVALENTS:
- -------------------------
Decrease during year (76,994) (31,102)
Beginning of year 166,959 198,061
---------- ----------
End of year $89,965 $166,959
========== ==========
Cash paid during the year for interest $ 429,019 $ 509,295
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
HEALTHCARE INVESTORS OF AMERICA, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
NOTE 1: ORGANIZATION
- ---------------------
The affairs of Healthcare Investors of America, Inc. (the "Trust")
are managed by its advisor, Lenox Healthcare Capital Services, LLC
(the "Predecessor Advisor"), as succeeded by Harbor American
Capital Group (the "Advisor") effective March 1, 1998. The Trust
engages in acquiring and leasing health care facilities (nursing
homes and intermediate care mental retardation developmentally
disabled nursing facilities) under long-term leases.
The Advisor is currently evaluating the Trust's compliance with
the provisions of the Internal Revenue Code (the "Code"), Treasury
Regulations and other relevant laws pertaining to the qualification
of the Trust as a real estate investment trust ("REIT"). The
historical financial statements presented are prepared under the
assumption that the Trust qualified as a REIT. If the Trust
qualified as a REIT, then it is not subject to federal income
taxes on amounts distributed to stockholders provided distributions
to stockholders are at least 95% of the Trust's real estate
investment trust taxable income and the Trust meets certain other
conditions. In the event it is determined that the Trust did not
qualify as a REIT, the Trust would be taxable as a C corporation
under the Code. However, as a taxable corporation, the Trust
would not owe any current tax or tax for prior years due to its
net operating loss carryovers. Therefore, no adjustment would be
required to the historical financial statements presented related
to any tax provision.
The Advisor and the Trust's independent accountants intend to assist
the Trust in determining the best method to clarify its tax
status. The Advisor and the Trust's independent accountants
are reviewing various alternatives, including having the Trust
obtain a tax opinion as to its status, requesting a determination
letter from the Internal Revenue Service and evaluating the
applicability of reelecting status as a REIT. If a determination
is made that the Trust does not qualify as a REIT for purposes
of the Code, the Advisor intends to assist the Trust in implementing
procedures to requalify the Trust as a REIT.
The Trust's financial statements have been presented on the basis
that it is a going concern, which contemplates the realization of
assets and the satisfaction of liabilities in the normal course
of business. The Trust has three properties, one in Florida and
two in Colorado. As of December 31, 1997, the Florida Property
(defined herein) and only one of the Colorado Properties (defined
herein) were leased. Therefore, the cash flow available to pay
operating expenses is limited.
Management's plans include continuing to seek sources to
refinance the loan on the Florida Property and Colorado
Properties and/or to sell the Colorado Properties, developing
alternative uses to retain the economic viability of the Colorado
Properties, and minimizing operating costs.
The financial statements do not include any adjustments relating
to the recoverability of recorded asset amounts or the amount of
liabilities that might be necessary should the Trust be unable to
continue as a going concern.
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- ---------------------------------------------------
(1) CASH AND CASH EQUIVALENTS - For purposes of the statement of
-------------------------
cash flow, the Trust considers all short-term debt
securities purchased with an original maturity of three
months or less to be cash equivalents.
(2) BUILDINGS AND IMPROVEMENTS - Depreciation of these assets is
--------------------------
computed by the straight-line method over the useful lives
of the assets which have been estimated to be 20 to 40
years. The Trust periodically evaluates the net realizable
value of its properties and provides a valuation allowance
when it becomes probable there has been a permanent
impairment of value. Depreciation is suspended while a
facility is vacant.
(3) LOAN COSTS - Loan costs have been deferred and are being
----------
amortized using the straight-line method over the term of
the related borrowing.
(4) REVENUE RECOGNITION - Rental income from operating leases is
-------------------
recognized as earned over the life of the lease agreements.
(5) INCOME TAXES - As of December 31, 1997, the Company had net
------------
operating loss carryforwards for income tax purposes of
approximately $1,341,000 which will expire beginning in
2006. The Trust did not file its applicable Federal and
State income tax return for the periods 1992 through 1997
on a timely basis. The Trust had cumulative net operating
losses during the periods from 1991 through 1997.
The Advisor and the Trust's independent accountants are currently
evaluating the Trust's compliance with the provisions of the
Code, Treasury Regulations and other relevant laws pertaining
to the qualification of the Trust as a REIT. The historical
financial statements presented are prepared under the assumption
that the Trust qualified as a REIT. If the Trust qualified as
a REIT, then it is not subject to federal income taxes on amounts
distributed to stockholders provided distributions to stockholders
are at least 95% of the Trust's real estate investment trust
taxable income and the Trust meets certain other conditions.
In the event it is determined that the Trust did not qualify
as a REIT, the Trust would be taxable as a C corporation under
the Code. However, as a taxable corporation, the Trust would
not owe any current tax or tax for prior years due to its net
operating loss carryovers. Therefore, no adjustment would be
required to the historical financial statements presented related
to any tax provision.
The Advisor and the Trust's independent accountants intend to
assist the Trust in determining the best method to clarify its
tax status. The Advisor and the Trust's independent accountants
are reviewing various alternatives, including having the Trust
obtain a tax opinion as to its status, requesting a determination
letter from the Internal Revenue Service and evaluating the
applicability of reelecting status as a REIT. If a determination
is made that the Trust does not qualify as a REIT for the purposes
of the Code, the Advisor intends to assist the Trust in implementing
procedures to requalify the Trust.
(6) FAIR VALUE OF FINANCIAL INSTRUMENTS - The carrying values of
-----------------------------------
the financial instruments disclosed elsewhere in these
notes, are deemed to be representative of their fair values,
as the interest rates approximate market rates giving
consideration to their respective risks.
(7) USE OF ESTIMATES - Management has made certain estimates and
----------------
assumptions that affect certain reported amounts and
disclosures. Accordingly, actual results could differ from
those estimates.
NOTE 3: REAL ESTATE PROPERTIES AND LEASES
- ------------------------------------------
At December 31, 1997 and 1996 the Trust owned three nursing homes
(the "Properties"), two of which are located in Colorado (the
"Colorado Properties"), and one in Florida (the "Florida
Property"). On March 9, 1994, the Trust sold its Marshall Manor
property ("Marshall Manor") which was located in Michigan.
Included in the caption "Rent and other receivables" is the
discounted contract balance of $18,404 at December 31, 1996
resulting from the sale of Marshall Manor. The contract,
requiring quarterly payments of $18,750 was paid in full in
April 1997.
At December 31, 1997, the net book values of the Properties are
as follows:
<TABLE>
FLORIDA COLORADO
PROPERTY PROPERTIES TOTAL
-------- ---------- -----
Cost:
<S> <C> <C> <C>
Land $ 393,195 $ 73,106 $ 466,301
Buildings and Improvements 4,683,317 3,673,783 8,357,100
Accumulated Depreciation (1,147,808) (490,320) (1,638,128)
Writedown to Net
Realizable Value (2,771,000) (2,771,000)
---------- ---------- ----------
Net Carrying Value $3,928,704 $ 485,569 $4,414,273
========== ========== ==========
</TABLE>
The carrying values of the Colorado Properties were reduced in
1992 and 1993 by $2,491,000 to the amounts expected to be
realized upon disposition of such properties. The carrying value
of the Colorado Properties was reduced an additional $280,000 in
1997 based on the subsequent sale of both of the Colorado Properties.
Trust management has evaluated the carrying values of the Properties
and believes that the remaining net carrying value of each of the
Properties is realizable.
THE COLORADO PROPERTIES
Country View ("Country View"), one of the Colorado Properties,
was vacant as of December 31, 1997. As further disclosed in Note 7,
this property was subsequently sold on July 24, 1998. An additional
$200,000 impairment of value has accordingly been recognized as of
December 31, 1997.
The other Colorado facility ("New Life") was leased to Res-Care,
Inc. ("Res-Care") at December 31, 1997. The lease provided for a
basic rent equal to 115% of the annual fair rental allowance as
determined by the State of Colorado, to be adjusted by the
percentage decrease or increase in the "client base" at the facility.
The annual base rent was $150,000 at December 31, 1997. This lease
expired on April 30, 1998. As further disclosed in Note 7, New
Life was subsequently sold on August 6, 1998. An additional
$80,000 impairment of value accordingly has been recognized as
of December 31, 1997.
New Life housed mentally retarded, developmentally disabled
("MRDD") patients for the State of Colorado. The State of
Colorado has interpreted certain federal guidelines pertaining
to the active treatment of MRDD patients and has determined that
the patients must be moved into private housing. As a result,
the MRDD patients were removed prior to the end of the lease term.
THE FLORIDA PROPERTY
Effective May 1, 1993, the Trust entered into a five year lease
with a successor lessee, Bayshore Healthcare Services, Inc.
("BHS"), an affiliate of the Advisor. BHS has the option to
renew for an additional five, five year terms. The first lease
renewal option was exercised on May 1, 1998.
The lease provides for monthly rentals consisting of an equity
component of $7,000 and a debt component equal to the amount of
the Trust's mortgage payment. Commencing January 1, 1995,
additional rents may be earned, equal to 5% of the incremental
net patient revenue increase over the 1994 base year. No
additional rent has been earned or paid to date.
In accordance with the provisions of the Forbearance Agreement
(defined herein), the monthly payment on the mortgage has been
subsequently increased to $51,958, resulting in a monthly payment
of $58,958 on the subsequently extended lease by BHS. The
unaudited financial statements of BHS reflect substantial working
capital and liquidity deficiencies. There is no assurance that
the extended terms of the lease represent a market rate or that
BHS has the liquidity to pay this amount over the duration of the
extended term of the lease.
Minimum annual lease payments, including the aforementioned
extension, expected to be received by the Trust on all leased
properties during the lease terms are as follows:
<TABLE>
FLORIDA COLORADO
YEAR ENDED DECEMBER 31, PROPERTY PROPERTIES TOTAL
- ----------------------- -------- ---------- -----
<C> <C> <C> <C>
1998 $ 598,264 $ 37,319 $ 635,583
1999 623,496 623,496
2000 623,496 623,496
2001 623,496 623,496
2002 623,496 623,496
2003 207,832 207,832
---------- ----------
$3,300,080 $ 37,319 $3,337,399
========== ========== ==========
</TABLE>
NOTE 4: MORTGAGE NOTES PAYABLE
- -------------------------------
<TABLE>
12/31/97 12/31/96
-------- --------
<S> <C> <C>
Bank mortgage note-Florida Property,
payable in monthly installments of
$38,660, including interest at 9.50%,
through July 31, 1998, at which date
the unpaid balance is due in full. $3,142,088 $3,290,740
Bank mortgage note-Colorado Properties,
interest at 9.50%, payable in monthly
installments of principal and interest,
through July 31, 1998, at which date
the unpaid balance is due in full. $1,681,170 $1,681,170
---------- ----------
Total mortgage notes payable $4,823,258 $4,971,910
========== ==========
</TABLE>
The Properties are secured by first mortgages, assignments of the
lease and rents thereunder. The bank mortgage note on the
Colorado Properties is also secured, to the extent of $1,681,170,
by a second mortgage on the Florida Property.
The Trust entered into a Forbearance Agreement which is further
discussed in Note 7.
NOTE 5: RELATED PARTY TRANSACTIONS
- -----------------------------------
Effective November 1, 1996, the Trust entered into an agreement
with the Predecessor Advisor, and affiliates of the Predecessor
Advisor, to provide various services to the Trust in exchange for
fees, as follows:
a. Advisory fees at an annual rate of the greater of $30,000 or
5% of net income of the Trust, as defined. The Trust
incurred advisory fees of $30,000 to the Predecessor Advisor
and $5,000 to the Advisor during 1997 and 1996,
respectively.
b. Property management, acquisition and disposition fees to be
paid based upon contractual agreements between the parties.
The Trust has incurred no such fees in 1996 or 1997.
Prior to November 1, 1996, the Trust was a party to an agreement
with the Advisor (who currently serves in an advisory capacity)
to provide various services to the Trust in exchange for fees, as
follows:
a. Advisory fees at an annual rate of the greater of .3% of
average invested assets of the Trust, as defined with
additional fees based on earnings. The Trust incurred
advisory fees of $23,000 during 1996.
b. Property management, acquisition and disposition fees to be
paid based upon contractual agreements between the parties.
The Trust has incurred no such fees in 1996 or 1997.
c. Incentive advisory service fees, payable annually in an
amount equal to 5% of the cash available for distribution to
stockholders for the fiscal year. The Trust did not make
any distributions to stockholders during 1996 and 1997, to
date. As a result, the Trust incurred no incentive advisory
fees for those periods.
d. Mortgage servicing fees, at varying rates dependent upon the
types of loans services. The Trust has paid no mortgage
servicing fees to date.
Leasing transactions with related parties are described in Note
3.
In 1993, BHS, as successor lessee of the Florida Property, made a
$47,921 payment of interest which had been accrued on the related
mortgage loan. This amount is being amortized over the term of
the lease.
NOTE 6: DISPUTED CLAIMS
- ------------------------
Management of the Predecessor Advisor entered into certain
transactions related to the potential debt refinancing and/or
sale of the Properties. The Trust has recorded certain
professional fees related to those transactions as disputed
claims, believing that they are obligations, not of the Trust,
but of former management or other third parties. In connection
with one of these disputes, the Trust has been named a
codefendant with the Predecessor Advisor for payment of fees
totaling approximately $50,000 which relate to establishing the
advisory relationship with the Predecessor Advisor. The advisory
relationship was terminated by the Trust for nonperformance of
management of the Predecessor Advisor. It is the opinion of
current management that these claims are the obligation of former
management due to its nonperformance.
NOTE 7: SUBSEQUENT EVENTS
- --------------------------
At December 31, 1997, two of the three Properties were
leased under operating agreements. Bayshore was leased to BHS.
BHS is an affiliate of the Trust as it is owned by James R.
Sellers, an affiliate of the Advisor. New Life was leased to
Res-Care, an unaffiliated entity, pursuant to a lease which
expired in April, 1998. Effective April 30, 1998, New Life
became an unoccupied facility upon expiration of the Res-Care
lease. On September 30, 1995, Country View was vacated by the
lessee and remains unoccupied.
The State of Colorado interpreted certain Federal
Healthcare Finance Agency guidelines pertaining to "active
treatment" of MRDD patients, such as those receiving care at the
Colorado Properties. The State's interpretation required
these patients to be moved into private housing and out of
institutional housing such as that offered at the Colorado
Properties.
The terms of the lease with Res-Care provided for lease
payments based on the number of patients residing at the Colorado
Properties as well as those placed outside of the facilities
under the "Community Advantage" program.
Therefore management believed that the Colorado Properties
might ultimately have to be used for purposes other than
the present MRDD use. Trust management worked during 1997 to
develop alternative uses for Country View and New Life.
Effective July 24, 1998, the Trust sold Country View to William
E. Harper ("Harper"), an individual not affiliated with the Trust
or its Advisor, for $262,500 in accordance with the terms of
Commercial Contracts to Buy and Sell Real Estate (the "Country
View Sales Contract"), dated June 17, 1998, as amended. An
additional valuation reserve of $200,000 has accordingly been
recognized as of December 31, 1997 to give effect to the further
impaired value of this property. At closing on July 24, 1998,
the Trust received $80,000 in cash and is the payee of two
promissory notes (the "Harper Notes"), each dated July 24, 1998,
from Harper in the respective original principal amounts of
$100,000 and $82,500. The Harper Notes pay interest only at 9.5%
per annum until maturity on July 24, 2000. The Harper Notes are
secured by a Deed of Trust (the "Harper Mortgage"), dated July
24, 1998, from Harper for the benefit of the Trust, on the
Country View property. Pursuant to the Collateral Assignment of
Promissory Notes and Deeds of Trust (the "1998 Collateral
Assignment"), dated as of July 24, 1998, the Trust assigned the
Harper Notes and the Harper Mortgage to PNC Bank, National
Association, Louisville, Kentucky (the "Bank") as security for
the debt of the Trust owing to the Bank.
After a number of attempts to privately negotiate a sale
of New Life, the Trust determined that a sale by advertised
auction was the best available method to relieve the Trust of
the financial burden of this property. Effective August 6,
1998, the Trust sold New Life at auction to Continuum Health
Partnership, Inc. ("Continuum"), a Colorado corporation not
affiliated with the Trust or its Advisor, for $250,000 in
accordance with the terms of that certain Commercial Contract
to Buy and Sell Real Estate (the "New Life Sales Contract"),
dated August 6, 1998. An additional valuation reserve of
$80,000 has accordingly been recognized as of December 31,
1997 to give effect to the further impaired value of this
property. The Trust received $15,000 on August 6, 1998 as
an earnest money deposit and part payment of the purchase
price and the Trust is scheduled to receive the remaining
balance of $235,000 in cash at closing on August 24, 1998.
The proceeds from the sales of Country View and New Life did not
satisfy the outstanding debt related to these facilities.
Pursuant to separate letters of resignation, each dated
March 2, 1998, Thomas M. Clarke resigned as President, Chief
Executive Officer and Director of the Trust; Linda M. Clarke
resigned as Secretary of the Trust; John F. Lunt resigned as
Director of the Trust; and David Fancher resigned as Chief
Financial Officer of the Trust. The remaining members of the
Board of Directors, Messrs. Grady P. Hunter, F. Dale Markham and
Charles E. Trefzger voted to accept the resignations on March 19,
1998 at a meeting of the Board of Directors. As a result, two
vacancies in the Board of Directors exist.
At the same meeting of the Board of Directors, Mr. Markham
was selected to serve as Chairman, President and Chief Financial
Officer of the Trust with Joan M. Zeller to serve as Secretary of
the Trust.
In connection with the accepted resignations, effective
March 1, 1998, the remaining members of the Board of Directors of
the Trust voted to terminate the Trust advisory contract with
Lenox Healthcare Capital Services, LLC ("Lenox"). The Trust has
entered into a two year contract for advisory services with HACG.
The general partner of HACG is Heritage Advisory Corporation
("Heritage"). The stock of Heritage is owned by James R.
Sellers, an affiliate of BHS, the successor lessee of Bayshore.
The Trust's continuing plan of operation for the 1998 fiscal
year (ending December 31, 1998) is as follows: The Trust intends
to own, lease or sell (including by auction) its Properties. To
the extent it has funds available for investment (it currently
has no such funds available and no plans for raising such funds),
it will invest primarily in healthcare related properties,
including long term care facilities, assisted living facilities,
medical office buildings, retirement housing facilities,
psychiatric hospitals and substance abuse recovery centers
through acquisitions, joint ventures and mortgage loans. The
Trust may also invest in commercial, industrial and residential
income producing real properties through similar means. Since
the Trust has no available funds for such investments, its
ability to undertake such investments will be dependent upon the
availability of capital to the Trust. The Company's
mortgage notes payable matured on June 20, 1997 and the Bank
demanded payment in full by letter dated August 15, 1997. In
that connection, the Trust and the Bank entered into
Forbearance Agreement (the "Forbearance Agreement") dated as of
April 30, 1998.
Under the Forbearance Agreement, the Bank has agreed to
forbear from exercising its remedies until July 31, 1998. In
consideration therefore, the Trust agreed to increase the
outstanding principal amount of a Promissory Note (Renewal and
Increase), dated as of September 20, 1992, in favor of the Bank
from $1,000,000 to $1,681,170, a portion of the security of which
is a second mortgage on Bayshore. The Trust agreed to waive
any defenses, offset or claims it may have as of the date of the
Forbearance Agreement against the Bank related to the outstanding
debt of the Trust to the Bank. The Forbearance Agreement
further required the Trust to market the Colorado Properties and
auction them by June 30, 1998, if by May 31, 1998, the Trust had
not sold or had had a binding contract on the Colorado Properties
on terms reasonably acceptable to the Trust and Bank. The
Forbearance Agreement also contained representations of the Trust
that, among other items, it is solvent and has no present
intention of filing or acquiescing in any bankruptcy or
insolvency proceeding. To the extent that the Trust would so
file or acquiesce, the Trust agreed not to contest any motion of
the Bank seeking relief from an automatic stay. Upon (i) a
breach or violation of any term covenant or condition of the
Forbearance Agreement or related documents, (ii) a material
breach or default under any of the other loan documents in
connection with the Trust indebtedness to the Bank, or (iii) any
representation or warranty or other statement contained in the
Forbearance Agreement or related documents, or any loan documents
in connection with Trust indebtedness to the Bank being false or
misleading in any material respect or omitting a material fact
necessary to make such representation, warranty or statement not
misleading, then the Bank could terminate its forbearance. On
July 31, 1998, the Forbearance Agreement expired.
The Trust also anticipates reviewing and evaluating other
properties for possible investment opportunities. However, the
Trust's efforts are limited by the resources available and the
Trust's ability to raise additional resources.
<PAGE>
EXHIBIT 10.95
AGREEMENT BETWEEN
HARBOR AMERICAN CAPITAL GROUP, L.P.
AND
HEALTHCARE INVESTORS OF AMERICA, INC.
THIS AGREEMENT, dated as of March 1, 1998, is entered into by
and between Harbor American Capital Group, L.P. (the "Advisor"),
and Healthcare Investors of America, Inc., a Maryland corporation
(the Trust).
RECITALS OF FACT:
----------------
The Trust is a corporation incorporated in and presently in good
standing in the State of Maryland;
The Trust is authorized to issue 10,000,000 shares of common
stock $.01 par value per share (the "Shares");
The Trust is operating under a registration statement filed with
the Securities and Exchange Commission under the Securities Act
of 1933, covering certain of its securities offered to the
public, and the Trust may hereafter sell additional securities or
otherwise raise additional capital;
The Trust qualifies as a real estate investment trust, as defined
in the Internal Revenue Code of 1986, as the same may be amended
or modified from time to time (which, together with any
regulations and rulings thereunder, is hereafter called the
"Code"), and to invest its funds in the investments permitted
under the terms of its Articles of Incorporation and Bylaws;
The Trust desires to avail itself of the experience, sources of
information, advice, assistance, and certain facilities available
to the Advisor and to have the Advisor undertake the duties and
responsibilities hereinafter set forth, on behalf of and subject
to the supervision of the Directors (the "Directors") of the
Trust, all as provided herein; and
The Advisor is willing to undertake to render such services,
subject to the supervision of the Directors, on the terms and
conditions hereinafter set forth:
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants herein contained, IT IS AGREED as follows:
1. Duties of Advisor. The Advisor undertakes to use its
-----------------
best efforts to present to the Trust (a) a continuing and
suitable investment program consistent with the investment
policies and objectives of the Trust and (b) investment
opportunities of a character consistent with such investment
programs as the Directors may adopt from time to time. In
performance of this undertaking, subject to the supervision of
the Directors, upon Articles of Incorporation and Bylaws of the
Trust, the Advisor shall:
(i) Furnish or obtain and supervise the
performance of the ministerial functions in connection
with the administration of the day-to-day operations of
the Trust;
(ii) Serve as the Trust's investment and financial
advisor and provide research, economic, and statistical
data in connection with the Trust's investments and
investment and financial policies;
(iii) On behalf of the Trust, investigate, select,
and conduct relations with consultants, investors,
builders, developers, borrowers, lenders, mortgagors,
brokers, and others;
(iv) Consult with the Directors and furnish the
Directors with advice and recommendations with respect
to the making, acquiring (by purchase, investment,
exchange or otherwise), leasing, holding and
disposition (through sale, exchange or otherwise) of
investments consistent with the policies of the Trust
and the provisions of the Articles of Incorporation and
Bylaws of the Trust;
(v) Obtain for the Directors such services as may
be required in acquiring and disposing of investments,
disbursing and collecting the funds of the Trust,
paying the debts and fulfilling the obligations of the
Trust and handling, prosecuting, and settling any
claims of the Trust, including foreclosing and
otherwise enforcing mortgages and other liens securing
investments;
(vi) Obtain for the Trust such services as may be
required for property management, property and mortgage
brokerage and servicing, and other activities relating
to the investment portfolio of the Trust;
(vii) Advise in connection with negotiations by
the Trust with investment banking firms, securities
brokers or dealers and other institutions or investors
for public or private sales of Shares or other
securities of the Trust, or in obtaining loans for the
Trust, but in no event in such a way that the Advisor
could be deemed to be acting as a broker dealer or
underwriter;
(viii) From time to time, or at any time requested
by the Directors, make reports to the Directors of its
performance of the foregoing services;
(ix) Cause to be made appraisal reports by
competent, independent appraisers who are members in
good standing of the American Institute of Real Estate
Appraisers (M.A.I.) or the Society of Real Estate
Appraisers (S.R.E.A.), on equity investments or
contemplated equity investments of the Trust and on
Real Property which is the security for Mortgage Loans
for the Trust;
(x) Do all things necessary to assure its ability
to render the services contemplated herein; and
(xi) Provide office space and office furnishings
and personnel necessary for the performance of the
foregoing services as Advisor, at the expense of the
Advisor.
2. No Partnership or Joint Venture.
-------------------------------
The Trust and the Advisor are not partners or joint venturers
with each other and nothing herein shall be construed so as to
make them such partners or joint venturers or impose any
liability as such on either of them.
3. Records.
-------
At all times, the Advisor shall keep proper books of account and
records relating to services performed hereunder, which books of
account and records shall be accessible for inspection by the
Trust at any time during ordinary business hours.
4. REIT Qualification.
------------------
Anything else in this agreement to the contrary notwithstanding,
the Advisor shall refrain from any action (including, without
limitation, furnishing or rendering services to tenants of
property or managing or operating Real Property) which, in its
sole judgment made in good faith or in the judgment of the
Directors of which the Advisor has written notice, would (a)
adversely affect the status of the Trust as a real estate
investment trust as defined and limited in Sections 856 - 860 of
the Internal Revenue Code; (b) violate any law, rule, regulation,
or statement of policy of any governmental body or agency having
jurisdiction over the Trust or over its securities; or (c)
otherwise not be permitted by the Articles of Incorporation or
Bylaws of the Trust.
5. Bank Accounts.
-------------
The Advisor may establish and maintain one or more bank accounts
in its own name and may collect and deposit into any such account
or accounts, and disburse from any such account or accounts, any
money on behalf of the Trust, under such terms and conditions as
the Directors may approve, provided that no funds in any such
account shall be commingled with funds of the Advisor; and the
Advisor shall from time to time render appropriate accounting of
such collections and payments to the Directors and to the
auditors of the Trust.
6. Bond.
----
The Advisor shall maintain a fidelity bond with a responsible
surety company in such amounts as may be required by the
Directors from time to time, covering the Advisor, its general
partners, all directors, officers, employees, and agents of the
Advisor and its general partners handling funds of the Trust and
any investment documents or records pertaining to investments of
the Trust. Such bond shall inure to the benefit of the Trust in
respect to losses of any such property from acts of such Advisor,
general partners, directors, officers, employees, and agents
through theft, embezzlement, fraud, negligence, error or omission
or otherwise, the premium for said bond to be at the expense of
the Trust.
7. Information Furnished Advisor.
-----------------------------
The Directors shall at all times keep the Advisor fully informed
with regard to the investment policy of the Trust, the
capitalization policy of the Trust and generally their then-
current intentions as to the future of the Trust. In
particular, the Directors shall notify the Advisor promptly of
their intention to sell or otherwise dispose of any of the
Trust's investments or to make any new investment. The Trust
shall furnish the Advisor with a certified copy of all financial
statements, a signed copy of each report prepared by independent
certified public accountants and such other information with
regard to the Trust's affairs as the Advisor may from time to
time reasonably request.
8. Consultation and Advice.
-----------------------
In addition to the services described above, the Advisor shall
consult with the Directors and shall, at the request of the
Directors or the officers of the Trust, furnish advice and
recommendations with respect to other aspects of the business and
affairs of the Trust. In general, the Advisor shall inform the
Directors of any factors which come to its attention which would
influence the policies of the Trust, except to the extent that
giving such information would involve a breach of fiduciary duty.
9. Definitions.
-----------
As used herein, the following terms shall have the meanings set
forth below:
(a) "Affiliate" shall mean, as to any person, any other
-----------
person who owns beneficially, directly, or indirectly, 1% or more
of the outstanding capital stock, shares, or equity interests of
such person or of any other person who controls, is controlled
by, or is under common control with, such person or is an
officer, director, employee, partner, or trustee (excluding
unaffiliated trustees or directors not otherwise affiliated with
the entity) of such person or of any other person who controls,
is controlled by, of is under common control with, such person.
The term "person" shall mean and include individuals,
corporations, limited partnerships general partnerships, joint
stock companies or associations, joint ventures, associations,
companies, trusts, banks, trust companies, land trusts, business
trusts, or other entities and governments and agencies and
political subdivisions thereof.
(c) "Appraised Value" shall mean the value of a Real
-----------------
Property according to an appraisal made by an independent
qualified appraiser who is a member in good standing of the
American Institute of Real Estate Appraisers (M.A.I.) or the
Society of Real Estate Appraisers (S.R.E.A).
(d) "Fiscal Year" shall mean any period for which an
-------------
income tax return is submitted to the Internal Revenue Service
and which is treated by the Internal Revenue Service as a
reporting period.
(e) "Mortgage Loans" shall mean notes, debentures,
----------------
bonds, and other evidences of indebtedness or obligations,
whether negotiable or non-negotiable, and which are secured or
collateralized by mortgages, including first, wraparound, and
junior mortgages.
(d) "Net Income" for any period shall mean total
------------
revenues of the Trust for such period computed on the basis of
its results of operations for such period, less the expenses
applicable to such period other than addition to reserves for
depreciation or bad debts or other similar non-cash reserves and,
for purposes of calculating Total Operating Expenses in
connection with the year-by-year adjustment contained in
"Compensation of the Advisor and its Affiliates-Advisory Fee",
excluding the gain or loss from the sale of the Trust's assets.
(e) "Real Property" shall mean and include land, rights
---------------
in land, leasehold interests (including but not limited to
interests of a lessor or lessee herein), and any buildings,
structures, improvements, fixtures, and equipment located on or
used in connection with land, leasehold interests, and rights in
land or interests therein.
(f) "Taxable Income" shall have the same meaning as set
----------------
forth in Section 857 of the Code.
(g) Total Operating Expenses" shall mean all operating,
-------------------------
general and administrative expenses of the Trust as determined
under generally accepted accounting principles except the
expenses of raising capital, interest payments, taxes, non-cash
expenditures (e.g. depreciation, amortization, bad debt reserve),
incentive fees and the costs related directly to asset
acquisition, operation, and disposition. The exclusion from
Total Operating Expenses for costs related directly to asset
acquisition, operation, and disposition is intended to allow
exclusion of expenses incurred on the individual property level
but not to allow the exclusion of operating, general and
administrative expenses incurred on the Trust level (including
Advisors' fees other than incentive fees).
(h) "Unaffiliated Director" shall mean a Director who is
-----------------------
not affiliated, directly or indirectly, with the Advisor,
business or professional relationship with, or serving as an
officer or director of, the Advisor or an affiliated business
entity of the Advisor. An Unaffiliated Director shall also mean
one who performs no other services for the Trust, except as
Director. An indirect relationship shall include circumstances
in which a member of the immediate family of a Director has one
of the foregoing relationships with the Advisor or the Trust for
which the Director serves as Director. An Unaffiliated Director
may also serve as an Unaffiliated Director of other independent
REITs sponsored by the Advisor.
All calculations made in accordance with this Section 9 shall be
based on statements (which may be unaudited, except as provided
herein) prepared on an accrual basis consistent with generally
accepted accounting principles, regardless of whether the Trust
may also prepare statements on a different basis.
10. Advisory Fee.
------------
On or before the fifteenth business day of each calendar month,
the Trust shall pay to the Advisor as compensation for the
services rendered to the Trust hereunder a fee at the rate of
five per cent (5%) of one-twelfth of the annual Net Income of the
Trust. See Paragraph 9, Definitions of "Net Income" and "Total
-----------
Operating Expenses". Until the Trust has developed a consistent
cash flow of Net Income to pay this Advisory Fee, a minimum fee
of $2,500 per month shall be paid.
11. Acquisition Fee.
---------------
For locating, leasing or purchasing real property for the Trust,
the Advisor or an Affiliate is to receive an Acquisition Fee
equal to the lesser of (i) up to 6% of the total purchase price,
inclusive of commissions, fees and expenses, if any paid to
nonaffiliated parties; or (ii) the compensation customarily
charged in arm's-length transactions by other rendering similar
property acquisition services as an ongoing public activity in
the same geographical location and for comparable property;
provided, however, that the amount of such fee to be retained by
the Advisor and its Affiliates shall not exceed 3% of the total
purchase price. The aggregate of each purchase price of each
property (including acquisition fees) may not exceed such
property's Appraised Value at acquisition.
12. Mortgage Placement Fee.
----------------------
For originating or purchasing mortgage loans for the Trust, the
Advisor or an Affiliate is to receive a Mortgage Placement Fee
which, when combined with any fee paid to a non-affiliated
mortgage broker, is to be on terms which are reasonable, fair,
and competitive with like services from unaffiliated mortgage
brokers for similar loans in the area where Mortgage Placement
Fee shall be no greater than 6%, measured annually on a
commutative basis, of the total amount of loan proceeds advanced
by the Trust measured annually on a cumulative basis for all
types of mortgage loans; provided, however the amount of such fee
to be retained by the Advisor and its Affiliates shall not exceed
3% of the total amount of all loan proceeds advanced by the
Trust. On or before the fifteenth business day of each calendar
month following the month in which the Advisor originates or
purchases a mortgage loan, the Directors shall pay to the Advisor
as compensation for services rendered the Mortgage Placement Fee
earned.
13. Mortgage Pool Brokerage Fee.
---------------------------
To the extent the Advisor arranges for the sale or pledge of
mortgage notes receivable of the Trust to a financial institution
for cash and/or credit, the Advisor shall be entitled to a
mortgage fee in an amount not to exceed compensation paid to an
independent mortgage broker for similar services in the locale.
14. Mortgage Servicing and Related Fees.
-----------------------------------
For servicing mortgage loans for the Trust, the Advisor and/or an
Affiliate is to receive a Mortgage Servicing Fee equal to 1/4 of
1% per annum on the loan portfolio (other participating mortgage
loans secured by health care related facilities) serviced by the
Advisor or an Affiliate. For participating mortgage loans
secured by health care related facilities, the mortgage servicing
fee shall be equal to 5% per annum of the interest received by
the Trust on the participating mortgage loans serviced by the
Advisor and an Affiliate, provided, however, if the interest
received by the Trust on the loan portfolio of such participating
mortgage loans is less than 10% per annum of the mortgage
servicing fee shall be .5% per annum of such loan portfolio, and
if the interest received by the Trust on such loan portfolio is
greater than 15% per annum, the mortgage servicing fee shall be
limited to .75% per annum of such loan portfolio. The Advisor or
an Affiliate shall be paid fees for other activities and
services, such as mortgage loan application fees, standby fees,
standby loan commitment fees (provided such fees, are split
equally with the Trust) mortgage broker fees for securing
additional, replacement, or permanent mortgage financing, on
terms and rates which are reasonable, fair and competitive with
like activities and services from unaffiliated parties.
15. Property Disposition Fees
-------------------------
Property disposition fees on sale of equity investment in real
properties initially purchased, foreclosed upon, or otherwise
acquired by the Trust shall be paid to the Advisor in an amount
equal to the lesser of (i) 6% of the contracted for sales price
of each property, inclusive of commissions, fees and expenses, if
any, paid to nonaffiliated parties; or (ii) the compensation
customarily charged in arm's-length transactions by others
rendering similar services as an ongoing public activity in the
same geographical location for comparable property.
16. Compensation for Additional Services.
------------------------------------
If, and to the extent that, the Trust shall request the Advisor
or any Affiliates or any director, officer, partner, or employee
of the Advisor or any Affiliates to render services for the Trust
other than those required to be rendered by the Advisor
hereunder, such additional services, if performed, will be
compensated separately on terms to be agreed upon between such
party and the Trust from time to time, provided that all of such
additional items of compensation shall be limited in amount and
type to those items of compensation expressly provided for in the
Trust's Registration Statement.
17. Statements.
----------
The Advisor shall furnish to the Trust not later than the tenth
day of each calendar month, beginning with the second calendar
month of the term of this Agreement, a statement showing the
computation of the fee, if any, payable in respect of the next
preceding calendar month under Sections 10, 11, 12, 13, 14, 15,
and 16 hereof. The final settlement of compensation for each
fiscal year shall be subject to adjustment in accordance with,
and upon completion of, the annual audit of the Trust's financial
statements; any payment by the Trust or repayment by the Advisor
which shall be indicated to be necessary in accordance therewith
shall be made promptly after the completion of such audit and
shall be reflected in the audit statements to be published by the
Trust.
18. Expenses of the Trust.
---------------------
(a) Except as expressly otherwise provided in this
Agreement, the Trust shall pay all its expenses not assumed by
the Advisor and, without limiting the generality of the
foregoing, it is specifically agreed that the following expenses
of the Trust shall be paid by the Trust and shall not be paid by
the Advisor:
(i) The cost of money borrowed by the Trust;
(ii) Taxes on income and taxes and assessments on
real property and all other taxes applicable to the
Trust;
(iii) Legal, auditing, accounting, underwriting,
brokerage, and other fees, and printing, engraving, and
other expenses and taxes incurred in connection with
the issuance, distribution, transfer, registration, and
stock exchange listing of the Trust's securities;
(iv) Fees and expenses paid to independent
contractors, mortgage services, consultants, managers,
and other agents employed by or on behalf of the Trust;
(v) Expenses directly connected with the purchase,
origination, ownership, and disposition of real properties,
real estate equity interests, mortgage loans, or other
property (including the costs of foreclosure, insurance,
legal, protective, brokerage, maintenance, repair, and
property improvement services) other than expenses with
respect thereto of employees of the Advisor or its
Affiliates except legal, internal auditing, foreclosure and
transfer agent services performed by employees of the
Advisor or its Affiliates;
(vi) Expenses of maintaining and managing real estate
equity interests and of originating, processing, and
servicing mortgage and other loans;
(vii) Expenses connected with payment of dividends,
interest, or distributions in cash or any other form made or
caused to be made by the Directors to Stockholders of the
Trust;
(viii) All expenses connected with communications to
Stockholders of the Trust and the other bookkeeping and
clerical work necessary in maintaining relations with
Stockholders, including the costs of printing and mailing
share certificates, and proxy solicitation materials and
reports, to Stockholders;
(ix) Transfer agent's, registrar's, and indenture
trustee's fees and charges; and
(x) The cost of any accounting, statistical,
bookkeeping, or computer equipment necessary for the
maintenance of the books and records of the Trust;
(xi) Reserves for depletion, depreciation and
amortization and losses and provisions for losses;
(xii) Insurance as required by the Directors (including
Directors' liability insurance);
(xiii) Expenses of organizing, revising, amending,
converting, modifying or terminating the Trust; and
(xiv) Other fees, including legal and auditing fees and
expenses.
If the Advisor or any Affiliates perform any of the forgoing
services, the Trust shall pay the Advisor or such Affiliate, as
applicable, for the performance of such services.
(b) The Trust shall also pay the fees and expenses of the
Unaffiliated Directors.
19. Expenses of the Advisor.
-----------------------
Without regard to the amount of compensation received hereunder
by the Advisor, the Advisor shall bear the following expenses:
(a) employment expenses including, but not limited to,
fees, salaries, wages, payroll taxes, travel expenses, and the
cost of employee benefit plans and temporary help of the
Advisor's personnel (including Directors, officers, and employees
of the Trust who are directors, officers, or employees of the
Advisor or its Affiliates).
(b) rent, telephone, utilities, and office furnishings and
other office expenses of the Advisor (except those relating to a
separate office, if any, maintained by the Trust);
(c) such other items generally falling under the category
of the Advisor's overhead directly related to performance of its
functions hereunder for the benefit of the Trust; and
(d) travel and other expenses of directors, officers, or
employees of the Advisor and its Affiliates and of Directors,
officers, or employees of the Trust who are employees of the
Advisor or its Affiliates, and miscellaneous administrative
expenses relating to performance of the Advisor's functions
hereunder.
20. Other Activities of Advisor.
---------------------------
Nothing herein contained shall prevent the Advisor, its members
or any of their officers, directors, or employees or any of their
Affiliates from engaging in other business activities related to
real estate or mortgage investments or from acting as advisor to
any other person or entity even those having investment policies
similar to the Trust (including another real estate investment
trust), and the Advisor, its members and their officers,
directors or employees and any of their Affiliates shall be free
from any obligation to present to the Trust any particular
investment opportunity which comes to the Advisor or such
persons, regardless of whether such opportunity is within the
Trust's investment policies.
21. Term; Termination of Agreement.
------------------------------
This Agreement shall continue in force for a period of one year
from the date hereof, and thereafter it may be renewed from year
to year subject to the approval of a majority of the Unaffiliated
Directors of the Trust. Notice of renewal shall be given in
writing by the Directors to the Advisor not less than 60 days
before the expiration of this Agreement or of any extension
thereof.
Notwithstanding any other provision to the contrary, this
Agreement may be terminated for any reason at any time without
penalty by (i) the Advisor on 120 days' written notice, or (ii) a
majority of the Directors (including a majority of the Directors
who are not Affiliates of the Advisor or any of its Affiliates)
on 60 days' written notice to the Advisor or (iii) holders of a
majority of the outstanding Shares of the Trust, on 60 days'
written notice to the Advisor.
22. Amendments.
----------
This Agreement shall not be changed, modified, terminated, or
discharged in whole or in part except by an instrument in writing
signed by both parties hereto, or their respective successors or
assigns, or otherwise as provided herein.
23. Assignment.
----------
The Trust may terminate this Agreement in the event of its
assignment by the Advisor except an assignment to a corporation
or other person which controls, is controlled by, or is under
common control with the Advisor, or to a corporation,
association, trust, or other successor organization which may
take over the property and carry on the affairs of the Advisor.
Such an assignment or any other assignment of this Agreement by
the Advisor shall bind the assignee hereunder in the same manner
as the Advisor is bound hereunder. This Agreement shall not be
assigned by the Trust without the consent of the Advisor, except
in the case of assignment by the Trust to a corporation,
association, trust, or other organization which is a successor to
the Trust. Such successor shall be bound hereunder and by the
terms of said assignment in the same manner as the Trust is bound
hereunder. Notwithstanding any provisions contained herein, the
Advisor may subcontract some or all of its services hereunder
with affiliated and nonaffiliated persons and entities without
the prior consent of the Trust.
24. Default, Bankruptcy, Etc.
-------------------------
At the sole option of the Directors, this Agreement shall be and
become terminated immediately upon written notice of termination
from the Directors to the Advisor if any of the following events
shall occur:
(a) If the Advisor shall violate any provision of this
Agreement and after notice of such violation shall not cure such
default within 30 days; or
(b) If the Advisor or its Managing Member shall be adjudged
bankrupt or insolvent by a court of competent jurisdiction, or an
order shall be made by a court of competent jurisdiction for the
appointment of a receiver, liquidator, or trustee of the Advisor
or its Managing Member or of all or substantially all of its
property by reason of the foregoing, or approving any petition
filed against the Advisor or its Managing Member for its
reorganization, and such adjudication or order shall remain in
force or unstayed for a period of 45 days; or
(c) If the Advisor or its Managing Member shall institute
proceedings for voluntary bankruptcy or shall file a petition
seeking reorganization under the federal bankruptcy laws, or for
relief under any law for the relief of debtors, or shall consent
to the appointment of a receiver of itself or of all or
substantially all of its property, or shall make a general
assignment for the benefit of its creditors, or shall admit in
writing its inability to pay its debts generally, as they become
due.
The Advisor agrees that if any of the events specified in
subsections (b) and (c) of this Section 24 shall occur, it will
give written notice thereof to the Directors within 7 days after
the occurrence of such event.
25. Action Upon Termination.
-----------------------
From and after the effective date of termination of this
Agreement, pursuant to Sections 22, 24, or 25 hereof, the Advisor
shall not be entitled to compensation occurring to the date of
termination. The Advisor shall forthwith upon such termination:
(a) Pay over to the Trust all monies collected and held for
the account of the Trust pursuant to this Agreement, after
deducting any accrued compensation and reimbursement for its
expenses to which it is then entitled;
(b) Deliver to the Directors a full accounting, including a
statement showing all payments collected by it and a statement of
all monies held by it, covering the period following the date of
the last accounting furnished to the Directors; and
(c) Deliver to the Directors all property and documents of
the Trust then in the custody of the Advisor.
26. Subcontract.
-----------
Notwithstanding any provisions to the contrary contained herein,
the Advisor may subcontract some or all of its duties hereunder
with the prior written consent of the Trust.
27. Miscellaneous.
-------------
The Advisor assumes no responsibility under this Agreement other
than to render the services called for hereunder in good faith,
and shall not be responsible for any action of the Directors in
following or declining to follow any advice or recommendations of
the Advisor. Neither the Advisor, its members, their directors,
officers, nor employees shall be liable to the Trust, the
Directors, the holders of securities of the Trust, or to any
successor or assign of the Trust except by reason of acts
constituting bad faith, willfull misfeasance, gross negligence,
or reckless disregard of their duties. This Agreement may be
simultaneously executed in several counterparts, each of which
when so executed shall be deemed to be an original, and such
original counterparts together shall constitute one and the same
instrument, which shall be sufficiently evidenced by any such
original counterpart.
28. Notices.
-------
Any notice, report, or other communication required or permitted
to be given hereunder shall be in writing unless some other
method of giving such notice, report, or other communication is
accepted by the party to whom it is given, and shall be given by
being delivered at the following addresses of the parties hereto:
The Directors and/or The Trust:
Healthcare Investors of America, Inc.
2990 N. Swan Rd., Suite 228
Tucson, AZ 85712
The Advisor:
Harbor American Capital Group, L.P.
2990 N. Swan Rd., Suite 228
Tucson, AZ 85712
Either party may at any time give notice in writing to the other
party of a change of its address for the purpose of this Section
28.
29. Headings.
--------
The section headings hereof have been inserted for convenience of
reference only and shall not be construed to affect the meaning,
construction or effect of this Agreement.
30. Governing Law.
-------------
The provisions of this Agreement shall be construed and
interpreted in accordance with the laws of the State of Maryland
as at the time in effect.
IN WITNESS WHEREOF, Healthcare Investors of America, Inc., by an
officer, and Harbor American Capital Group, L.P., by its General
Partner, in each case thereunto duly authorized, have signed
these presents all as of the day and year first above written.
HEALTHCARE INVESTORS OF AMERICA, INC.
By: /s/ Thomas M. Clarke
------------------------------------
President
HARBOR AMERICAN CAPITAL GROUP, L.P.
By: Heritage Advisory Corporation,
General Partner
By: /s/ James R. Sellers
------------------------------
James R. Sellers, President
<PAGE>
EXHIBIT 10.96
FORBEARANCE AGREEMENT
---------------------
THIS FORBEARANCE AGREEMENT ("Agreement") is made and
entered into effective as of April 30, 1998, by and between
[i] HEALTHCARE INVESTORS OF AMERICA, INC., a Maryland corporation
("HCIA"), and [ii] PNC BANK, NATIONAL ASSOCIATION, a national
banking association that is successor by merger to PNC Bank,
Kentucky, Inc., a Kentucky banking corporation ("PNCKY").
RECITALS
--------
A. HCIA is indebted to Lender for the principal of
and accrued and unpaid interest on each of the two promissory
notes as follows: [i] Promissory Note (Renewal and Increase)
dated as of May 4, 1990, made by HCIA (formerly known as Harbor
American Health Care Trust, Inc.) to the order of Lender (as
successor by merger to PNCKY, formerly known as Citizens Fidelity
Bank and Trust Company) in face principal amount of $3,900,000
(including any and all amendments thereto, the "1990 Note"), and
[ii] Promissory Note (Renewal and Increase) dated as of September
20, 1992, made by HCIA (formerly known as Harbor American Health
Care Trust, Inc.) to the order of Lender (as successor by merger
to PNCKY, formerly known as Citizens Fidelity Bank and Trust
Company) in face principal amount of $2,002,542.48 (including any
and all amendments thereto, the "1992 Note").
B. The indebtedness evidenced by the 1990 Note (the
"1990 Loan") is secured by, among other things, a first mortgage
("First Mortgage") granted by HCIA to Lender encumbering the
Bayshore Nursing Home in Dade County, Florida owned by HCIA, and
the indebtedness evidenced by the 1992 Note (the "1992 Loan") is
secured by, among other things, a second mortgage ("Second
Mortgage") granted by HCIA in favor of Lender encumbering the
Bayshore Nursing Home, together with first mortgages ("Colorado
Mortgages") encumbering properties ("Colorado Properties") owned
by HCIA located in Longmont, Colorado (the "Longmont Property")
and Greeley, Colorado (the "Greeley Property") formerly operated
as homes for mentally retarded and developmentally disabled
persons.
C. Both the 1990 Loan and the 1992 Loan
(collectively, the "Loans") matured on June 20, 1997, and Lender
demanded immediate payment in full of the Loans in a letter from
Lender to HCIA dated as of August 15, 1997 (the "August 15
Letter").
D. HCIA has requested that Lender enter into this
Agreement in order to provide HCIA time to complete the sale of
the Colorado Properties, with the proceeds of such sales to be
applied to reduce the 1992 Loan and then, if applicable, the 1990
Loan, and that in such connection Lender agree to forbear from
exercising its remedies during the period (the "Forbearance
Period") from the date of this Agreement until July 31, 1998 (the
"Termination Date"), and Lender has agreed to do so conditioned
upon the agreement of HCIA to increase the amount of the 1992
Loan secured by the Second Mortgage from $1,000,000 to
$1,681,170.45, and otherwise subject to and in accordance with
the provisions of this Agreement.
NOW, THEREFORE, in consideration of the above recitals,
and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be
legally bound, it is hereby agreed as follows:
1. Incorporation of Recitals. The Recitals to this
Agreement
-------------------------
are hereby incorporated by reference as fully set forth at this
point and HCIA and Lender acknowledge those Recitals to be true
and correct.
2. Certain Acknowledgments and Agreements by HCIA for
--------------------------------------------------
Lender's Benefit. HCIA acknowledges and agrees as follows:
- ----------------
A. Each of the Loans matured on June 20, 1997, and
are due and payable in full.
B. The amounts of principal of, interest on and late
charges due in connection with the Loans (the principal of,
interest on and late charges due in connection with the Loans at
any particular time are referred to collectively hereinafter as
the "Indebtedness") as of April 17, 1998 are as follows:
Principal Interest
--------- --------
1990 Loan $3,086,561.64 $25,262.21
1992 Loan $1,681,170.45 $12,421.98
C. During the Forbearance Period, interest shall
continue to accrue at the respective rates provided in the Notes
(including after giving effect to any provisions contained in
either of the Notes for an increase in the rate of interest
applicable to the respective Loans following a default
thereunder, except for failure to pay the Loans on the June 20,
1997 maturity date of each) and be payable and, as applicable,
principal shall be payable, on the same corresponding dates of
each month as such interest and principal were payable prior to
the maturity date of each of the Notes, and late charges shall
continue to be payable with respect to each of the Loans if and
as applicable in accordance with the provisions of each of the
Notes.
D. HCIA has no defense, offset or counterclaim to the
payment of the Loans and to the other obligations of HCIA under
the 1990 Note, the 1992 Note, the First Mortgage, the Second
Mortgage, the Colorado Mortgages, or any other documents entered
into by HCIA to secure or otherwise with respect to the Loans
(collectively, the "Loan Documents"), and to the extent that any
such defenses, offsets or claims exist as of the date of this
Agreement, they are waived and released in consideration of
Lender's entering into this Agreement.
E. Each of this Agreement and the other documents
delivered in connection herewith (collectively, the "Forbearance
Documents") and the Loan Documents entered into by HCIA is valid
and enforceable against HCIA in accordance with the terms
thereof.
F. HCIA agrees to enter into such modifications of
the Second Mortgage and such other documentation as Lender
requests in order to increase the amount secured by the lien of
the Second Mortgage from $1,000,000 to $1,681,170.45 and, without
limitation of the foregoing, HCIA agrees to pay directly, or at
the option of Lender, to reimburse Lender for the payment of,
promptly upon request of Lender and, at the option of Lender, as
a condition to the closing of the transactions contemplated by
this Agreement (the "Closing"), all documentary stamps and
similar taxes payable with respect to that increase.
3. Agreement of HCIA to sell Longmont Property and Greeley
-------------------------------------------------------
Property. HCIA agrees that, from and after the date of this
- --------
Agreement until the Colorado Properties are sold by HCIA, HCIA
shall diligently market the Longmont Property and Greeley
Property (collectively, the "Colorado Properties") and shall
auction the Colorado Properties without reserve on or before June
30, 1998, if the same have not been sold, or a binding of
contract of sale for each on terms acceptable to Lender and HCIA
entered into, on or before May 31, 1998 for prices that are
reasonably acceptable to HCIA and Lender. All proceeds from the
sales shall be applied to reduce, first, the 1992 Loan and then,
if any proceeds are remaining, the 1990 Loan. Promptly following
the conveyance of each of the Colorado Properties, respectively,
and receipt by Lender of the sales proceeds for application to
the Loans as aforesaid, Lender shall release and terminate of
record the lien of the applicable Colorado Mortgage, even if the
proceeds from the sale are not sufficient to repay in full the
1992 Loan.
4. Forbearance by Lender. Conditioned upon no material
---------------------
breach (other than the failure to repay each of the Loans on
their respective maturity dates of June 20, 1997) occurring under
any of the provisions of any of the Loan Documents or this
Agreement or the other Forbearance Documents, Lender agrees not
to initiate a collection action against HCIA, or to file a
foreclosure action with respect to either the Bayshore Nursing
Home or any of the Colorado Properties or any of the other
properties and assets of HCIA constituting security for any of
the Loans (collectively, the "Collateral"), or to exercise the
other remedies available to Lender under the Loan Documents, at
law and in equity, to collect the Indebtedness during the
Forbearance Period.
5. Conditions to Effectiveness. This Agreement shall not
be
---------------------------
effective against Lender unless and until a counterpart of this
Agreement executed and delivered by HCIA has been received by
Lender and each of the following conditions are satisfied:
A. Lender shall have determined that taxes assessed
against the Bayshore Nursing Home and the Colorado Properties for
which payment is due and payable at the time of execution and
delivery of this Agreement have been paid in full.
B. Without limitation of Section 2.F and 5.A above,
Lender shall have received such assurances as Lender in good
faith requires, which may include an endorsement to the existing
loan policy of title insurance that insures the lien of the First
Mortgage, that no mechanics liens or other matters are of record
affecting the Bayshore Nursing Home, the Colorado Properties or
any of the other Collateral that are not permitted by the Loan
Documents.
C. HCIA shall have executed and delivered to Lender
the documentation required by Lender in order to increase the
amount secured by the lien of the Second Mortgage from $1,000,000
to $1,681,170.45 and HCIA shall have paid or Lender shall have
received reimbursement for the documentary stamps and similar
taxes payable with respect to that increase as provided in
Section 2.F above.
D. HCIA shall have paid to Lender all fees and
expenses, including but not limited to fees and expenses of legal
counsel to Lender and costs of title searches and title premiums,
incurred by Lender in connection with the negotiation,
preparation, execution, delivery and performance of this
Agreement, the Second Amendment, and the other Forbearance
Documents.
E. Lender shall have received a copy, certified by
the corporate Secretary of HCIA as accurate and complete and in
effect as of the Closing, of resolutions of the Board of
Directors of HCIA authorizing the execution, delivery and
performance of the Forbearance Documents and, if requested by
Lender, an opinion of counsel for HCIA acceptable to Lender and
addressed to Lender confirming the due authorization, execution
and delivery by HCIA of the Forbearance Documents to which it is
a party and such other matters as Lender reasonably requests.
6. Defaults and Remedies. The occurrence of any one or
more
---------------------
of the following shall constitute a default under this Agreement:
A. If any representation or warranty or other
statement of fact by HCIA contained in this Agreement or in any
writing, certificate, report or statement at any time furnished
to Lender by HCIA or any of its representatives pursuant to or in
connection with this Agreement or any other Forbearance Document
or Loan Document or in connection with the Indebtedness or Loans
shall be false or misleading in any material respect or shall
omit a material fact necessary to make such representation,
warranty or statement not misleading; or
B. Any breach or violation by HCIA of any term,
covenant or condition contained in this Agreement or any other
Forbearance Document; or
C. The occurrence of any material breach or default
(other than the failure to repay each of the Loans on their
respective maturity dates of June 20, 1997) under any of the
other Loan Documents.
7. Termination; Remedies. Following the occurrence of any
---------------------
default under this Agreement, and in any event upon and at any
time after the Termination Date, Lender may, at its option, at
any time, immediately terminate its obligation to forbear as
described in Section 4 of this Agreement without notice or
demand, and pursue any and all other remedies available to Lender
under this Agreement, the other Forbearance Documents and Loan
Documents, at law or in equity. If not sooner terminated,
Lender's obligation to forbear in exercising its remedies shall
terminate automatically and without notice to or action by any
party on the Termination Date. No receipt and retention by
Lender of any payment from or for the account of HCIA or
application by Lender of any payment to any of the Loans after
the Termination Date shall operate to reinstate the Forbearance
Period or otherwise waive or impair any rights or remedies of
Lender under this Agreement or the other Forbearance Documents or
the Loan Documents.
8. Bankruptcy of any of HCIA. To induce Lender to execute
-------------------------
this Agreement, HCIA represents that: [i] it is solvent and has
no present intention to file or acquiesce in any bankruptcy or
insolvency proceeding at any time hereafter, [ii] the forbearance
allowed by this Agreement is sufficient for HCIA to sell the
Colorado Properties and reorganize its financial affairs success-
fully if such reorganization is reasonably possible, and if HCIA
is unable to do so prior to the Termination Date, HCIA
acknowledges that it will not have any equity in any of the
Colorado Properties or the other Collateral in excess of the
outstanding Indebtedness as of the Termination Date, or any
further realistic opportunity to successfully reorganize its
financial affairs in bankruptcy, and [iii] any bankruptcy filing
or acquiescence therein by HCIA after the Termination Date would
be, as to Lender, in bad faith and solely for the purpose of
delaying Lender in the enforcement of its rights. Accordingly,
in consideration of the mutual covenants contained in this
Agreement and for other good and valuable consideration,
including the forbearance of Lender from exercising its rights
and remedies otherwise available to it under the Loan Documents,
HCIA hereby agrees that in the event HCIA shall [w] file with any
bankruptcy court of competent jurisdiction or be the subject of
any petition under Title 11 of the U.S. Code as amended
("Bankruptcy Code"), [x] file or be the subject of any petition
seeking any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under
any present or future federal or state act or law relating to
bankruptcy, insolvency or other relief for debtors, [y] have
sought or consented to or acquiesced in the appointment of any
trustee, receiver, conservator or liquidator, or [z] be the
subject of any order, judgment or decree entered by any court of
competent jurisdiction approving a petition filed against HCIA
for any reorganization, arrangement, composition, readjustment,
liquidation, dissolution, or similar relief under any present or
future federal or state act or law relating to bankruptcy,
insolvency or relief for debtors, Lender shall thereupon, subject
to court approval, be entitled, and HCIA hereby agrees not to
contest, any motion by Lender for relief from any automatic stay
imposed by Section 362 of the Bankruptcy Code, or otherwise, on
or against the exercise of the rights and remedies otherwise
available to Lender as provided in the Loan Documents, this
Agreement or as otherwise provided by law or in equity, and HCIA
hereby irrevocably waives its rights to object to such relief.
9. No Waiver of Remedies. Lender expressly reserves any
and
---------------------
all rights and remedies available to it under this Agreement, the
other Forbearance Documents and the Loan Documents, at law or in
equity in the event of any default by HCIA under this Agreement.
No failure by Lender to exercise, or delay by Lender in
exercising, any right, power or privilege hereunder shall
preclude any other or further exercise thereof, or the exercise
of any other right, power or privilege. The rights and remedies
provided in this Agreement, the other Forbearance Documents and
the other Loan Documents (which, upon the effectiveness of this
Agreement, shall be deemed to include the Forbearance Documents
and each reference hereinafter to the Loan Documents shall be
deemed to include the Forbearance Documents) are cumulative and
not exclusive of each other and of any right or remedy provided
by law or in equity.
Except for any notice required under applicable law to
be given in another manner, all notices, requests and demands
made pursuant to this Agreement or any of the other Loan
Documents shall be sufficiently given if in writing (at the
addresses and phone numbers set forth below, unless the recipient
at least two Business Days prior to the giving of such notice
shall have advised the sender, in a notice given in accordance
with this Section, of a different address and/or phone number, in
which case the notice shall be addressed to such different
address and/or number) by any of the following means: (a)
personal service (including service by overnight courier
service); (b) electronic communication, whether by telex,
telegram or telecopy (if confirmed in writing sent by personal
service or registered or certified, first class mail, postage
prepaid, return receipt requested); or (c) registered or
certified, first class mail, postage prepaid, return receipt
requested. Any notice, demand or request sent pursuant to either
subsection (a) or (b) hereof shall not be effective until
actually received at the address (or facsimile number) specified
(and, in the case of an electronic communication under (b) that
is not received between 9:00 a.m. and 5:00 p.m. at the location
of the recipient on a Business Day, such communication shall be
deemed received at 9:00 a.m. on the next Business Day), but
notices given under (c) above shall be deemed given two (2) days
following deposit in the United States mails. Any party to this
Agreement may change its address for notices by a notice to the
other given in a manner permitted under this Section. For
purposes of this Section, "Business Day" means any day other
------------
than a Saturday, Sunday, or any other day on which national or
state chartered banks located in Louisville, Kentucky are
authorized to be closed.
If to HCIA: Healthcare Investors of America, Inc.
c/o Heritage Advisory Corp.
2990 N. Swan Road, Suite 228
Tucson, Arizona 85712
Attn: Mr. James R. Sellers
(520) 326-2000 - Phone
(520) 326-7375 - Fax
cc:
-------------------------
-------------------------
-------------------------
Attn:
--------------------
- Phone
-----------------
- Fax
-----------------
If to Lender: PNC Bank, National Association
Citizens Plaza
500 W. Jefferson Street
Louisville, Kentucky 40296
Attn: Mr. Lawrence E. Reynolds and
Legal Department
(502) 581-2171 - Phone
(502) 581-4817 - Fax
Any provisions of any of the Loan Documents specifying
requirements for notices between HCIA and Lender are agreed to be
superseded and replaced by the provisions of this Section.
10. Construction. This Agreement has been entered into by
------------
HCIA and Lender following consultation with and advice from
counsel to each of them, respectively, and shall not be construed
against any party to it because of the fact that any particular
draft or all drafts hereof were prepared by one party or its
counsel rather than another. HCIA and Lender acknowledge and
agree that this Agreement is not an executory contract that may
be assumed or assigned upon the filing of a bankruptcy or
insolvency proceeding by or against HCIA.
11. Entire Agreement. HCIA and Lender acknowledge that
there
----------------
are no other agreements or representations, either oral or
written, express or implied, not embodied in this Agreement and
the other Loan Documents, all of which taken together constitute
a complete integration of all prior and contemporaneous
agreements and understandings of each of HCIA and Lender, and the
provisions of the Loan Documents are hereby ratified and
confirmed.
12. No Claims. HCIA represents and warrants to Lender, and
---------
agrees that there are no known claims or causes of action of any
kind, character or nature whatsoever, fixed or contingent, which
HCIA may have or claim to have against Lender arising out of or
connected with any act of commission or omission of Lender
existing or occurring on or prior to the date of this Agreement,
including, without limitation, any claims, liabilities or obliga-
tions arising with the respect to any of the Loans. To the
extent there are any such claims, causes of action, suits, debts,
liens, obligations, liabilities, demands, losses, costs and
expenses, they are hereby waived and released pursuant to
paragraph 16 immediately following.
13. Release. HCIA hereby releases, acquits, and forever
-------
discharges Lender, and each and every past and present
subsidiary, affiliate, stockholder, officer, director, agent,
servant, employee, representative and attorney of Lender, of and
from any and all claims, liabilities, demands, losses, costs,
fees and expenses (including attorneys' fees), actions and causes
of action of any kind, character or nature whatsoever, known or
unknown, fixed or contingent, liquidated or unliquidated whether
accruing or arising at any time prior to the date of this
Agreement and/or which HCIA currently may have or claim to have
or which may hereafter arise that result from, arise out of or
are connected with any of the Loans or any of the Loan Documents
including this Agreement. The provisions of this Section shall
be binding upon HCIA and shall inure to the benefit of Lender,
and their respective agents, attorneys, heirs, representatives
and assigns.
14. Other Stipulations. Except as provided in Sections 12
------------------
and 13 of this Agreement, this Agreement is intended to benefit and
shall be deemed to benefit only the parties to it and their
respective successors and assigns, and no other person or entity.
This Agreement may not be modified in any respect except in
writing signed by the party or parties charged with such
modification, and shall be governed in all respects by the laws
of the Commonwealth of Kentucky. HCIA agrees to reimburse Lender
for all expenses incurred by Lender in connection with the
negotiation, preparation, execution, delivery and performance of
this Agreement including, without limitation, for filing and
recording fees, any title insurance premiums and fees, and
reasonable fees and expenses of legal counsel to Lender. This
Agreement may be executed in counterparts, and all counterparts
shall constitute one (1) original.
IN WITNESS WHEREOF, this Agreement has been executed by
each of the parties to it on the dates set forth in the notarial
certificates below, but shall be deemed effective as of the date
first set forth above.
"Borrower"
HEALTHCARE INVESTORS OF AMERICA,
a Maryland corporation
By: /s/ F. Dale Markham
--------------------------------
F. Dale Markham, President
"Lender"
PNC BANK, NATIONAL ASSOCIATION,
a national banking association
By: /s/ Lawrence E. Reynolds
-------------------------------
Lawrence E. Reynolds,
Vice President
STATE OF )
----------------
) SS
COUNTY OF )
---------------
The foregoing instrument was acknowledged before me
this day of , 1998, by F. Dale Markham, as
--- --------------
President of Healthcare Investors of America, Inc., a Maryland
corporation, on behalf of the corporation.
My Commission Expires:
--------------------------------
-----------------------------------
Notary Public
COMMONWEALTH OF KENTUCKY )
) SS
COUNTY OF )
----------------
The foregoing instrument was acknowledged before me
this day of , 1998, by Lawrence E. Reynolds,
---- --------------
as Vice President of PNC Bank, National Association, a national
banking association, on behalf the association.
My Commission Expires:
--------------------------------
-----------------------------------
Notary Public
<PAGE>
EXHIBIT 10.97
THIS FORM HAS IMPORTANT LEGAL CONSEQUENCES AND THE PARTIES SHOULD
CONSULT LEGAL AND TAX OR OTHER COUNSEL BEFORE SIGNING.
COMMERCIAL
CONTRACT TO BUY AND SELL REAL ESTATE
[SELLER OR PRIVATE THIRD-PARTY]
June 17, 1998
1. PARTIES AND PROPERTY.
William E. Harper buyer(s) [Buyer] agrees to buy, and the
undersigned seller(s) [Seller], agrees to sell, on the terms and
conditions set forth in this contract, the following described
real estate in the County of Weld, Colorado, to wit:
See attached legal description for parcel #1
known as No. 5425 Weld County Road 32, Longmont, Colorado,
together with all interest of Seller in vacated streets and
alleys adjacent thereto, all easements and other appurtenances
thereto, all improvements thereon and all attached fixtures
thereon except as herein excluded (collectively the Property).
2. INCLUSIONS/EXCLUSIONS. The purchase price includes the
following items (a) if attached to the Property on the date of
this contract: lighting, heating, plumbing, ventilating, and air
conditioning fixtures, TV antennas, water softeners,
smoke/fire/burglar alarms, security devices, inside telephone
wiring and connecting blocks/jacks, plants, mirrors, floor
coverings, intercom systems, built-in kitchen appliances,
sprinkler systems and controls; (b) if on the Property whether
attached or not on the date of this contract; storm windows,
storm doors, window and porch shades, awnings, blinds, screens,
curtain rods, drapery rods, all keys and (c)
n/a
The above-described included items (Inclusions) are to be
conveyed to Buyer by Seller by bill of sale at the closing, free
and clear of all taxes, liens and encumbrances, except as
provided in Section 12. The following attached fixtures are
excluded from this sale:
None
3. PURCHASE PRICE AND TERMS. The purchase price shall be
$162,500.00, payable in U.S. dollars by Buyer as follows:
(Complete the applicable terms below).
(a) Earnest Money
$5,000.00 in the form of Check, as earnest money deposit and part
payment of the purchase price, payable to and held by Prudential
LTM, Realtors, broker, in its trust account on behalf of both
Seller and Buyer. Broker is authorized to deliver the earnest
money deposit to the closing agent, if any, at or before closing.
The balance of $157,500.00 (purchase price less earnest money)
shall be paid as follows:
(b) Cash at Closing
$57,500.00, plus closing costs, to be paid by Buyer at closing in
funds which comply with all applicable Colorado laws, which
include cash, electronic transfer funds, certified check, savings
and loan teller's check, and cashier's check (Good Funds).
Subject to the provisions of Section 4, if the existing loan
balance at the time of closing shall be different from the loan
balance in Section 3, the adjustment shall be made in Good Funds
at closing or paid as follows:
n/a
- -----------------------------------------------------------------
- -----------------------------------------------------------------
(c) New Loan [OMITTED-INAPPLICABLE]
(d) Assumption [OMITTED-INAPPLICABLE]
(e) Seller or Private Third-Party Financing.
$100,000.00 by Buyer executing a promissory note payable to:
Healthcare Investors of America, Inc. on the note form as
indicated:
(Check one box only.)
[ ] (UCCC - No Default Rate) NTD 82-3-95 [ ] NTD 81-11-83
[ ] n/a
secured by a (1st, 2nd, etc.) 1st deed of trust encumbering
the Property, using the form as indicated: (Check one box
only.)
[X] Strict Due-on-Sale (TD72-7-96) [ ] Creditworthy
(TD73-7-96) [ ] Assumable-Not due on sale (TD74-7-96)
[ ] n/a
The promissory note shall be amortized on the basis of n/a
-----
years, payable at $985.00/mo Interest only per month including
principal and interest at the rate of 9.5% per annum. Payments
shall commence September 01, 1998 and shall be due on the 1st day
of each succeeding month. If not sooner paid, the balance of
principal and accrued interest shall be due and payable 2 years
from date of note after closing. Payments [ ] shall [X] shall
not be increased by 1/12 of estimated annual real estate taxes,
and [ ] shall [X] shall not be increased by 1/12 of estimated
annual property insurance premium.
The loan shall also contain the following terms as
indicated: If any payment is not received within 5 calendar days
after its due date, a late charge of 5% of such monthly payment
shall be due. Interest on lender disbursements under the deed of
trust shall be 15% per annum. Default interest rate shall be 15%
per annum.
Buyer may prepay without a penalty except
n/a
- -----------------------------------------------------------------
- -----------------------------------------------------------------
4. FINANCING CONDITIONS AND OBLIGATIONS
(a) Loan Application(s). [OMITTED-INAPPLICABLE]
(b) Loan Approval. [OMITTED-INAPPLICABLE]
(c) Existing Loan Review. [OMITTED-INAPPLICABLE]
(d) Assumption Balance. [OMITTED-INAPPLICABLE]
(e) Credit Information. If Buyer is to pay all or part of
the purchase price by executing a promissory note in favor of
Seller or if an existing loan is not to be released at closing,
this contract is conditional upon Seller's approval of Buyer's
financial ability and creditworthiness, which approval shall be
at Seller's sole and absolute discretion. In such case: (1)
Buyer shall supply to Seller on or before June 26, 1998, at
Buyer's expense, information and documents concerning Buyer's
financial, employment and credit condition; (2) Buyer consents
that Seller may verify Buyer's financial ability and
creditworthiness; (3) any such information and documents received
by Seller shall be held by Seller in confidence, and not released
to others except to protect Seller's interest in this
transaction; (4) if Seller does not provide written notice of
Seller's disapproval to Buyer on or before July 01, 1998, then
Seller waives this condition. If Seller does provide written
notice of disapproval to Buyer on or before said date, this
contract shall terminate.
5. APPRAISAL PROVISION. (Check one box only.) This
Section 5 [ ] shall [X] shall not apply.
If this Section 5 applies, as indicated above, Buyer shall have
the sole option and election to terminate this contract if the
purchase price exceeds the Property's valuation determined by an
appraiser engaged by n/a . The contract shall terminate by
--------
the Buyer causing the Seller to receive written notice of
termination and a copy of such appraisal or written notice from
Lender which confirms the Property's valuation is less than the
purchase price, on or before (Appraisal deadline). If Seller
does not receive such written notice of termination on or before
the appraisal deadline, Buyer waives any right to terminate under
this section.
6. COST OF APPRAISAL. Cost of any appraisal to be
obtained after the date of this contract shall be timely paid by
n/a .
- ---------
7. NOT ASSIGNABLE. This contract shall be assignable by
Buyer without Seller's prior written consent. Except as so
restricted, this contract shall inure to the benefit of and be
binding upon the heirs, personal representatives, successors and
assigns of the parties.
8. EVIDENCE OF TITLE. Seller shall furnish to Buyer, at
Seller's expense, either a current commitment for owner's title
insurance policy in an amount equal to the purchase price or at
Seller's choice, an abstract of title certified to a current
date, on or before June 26, 1998 (Title Deadline). If a title
insurance commitment is furnished, Buyer may require of Seller
that copies of instruments (or abstracts of instruments) listed
in the schedule of exceptions (Exceptions) in the title insurance
commitment also be furnished to Buyer at Seller's expense. This
requirement shall pertain only to instruments shown of record in
the office of the clerk and recorder of the designated county or
counties. The title insurance commitment, together with any
copies or abstracts of instruments furnished pursuant to this
Section 8, constitute the title documents (Title Documents).
Buyer, or Buyer's designee, must request Seller, in writing, to
furnish copies or abstracts of instruments listed in the schedule
of exceptions no later than seven (7) calendar days after Title
Deadline. If Seller furnishes a title insurance commitment,
Seller will pay the premium at closing and have the title
insurance policy delivered to Buyer as soon as practicable after
closing.
9. TITLE.
(a) Title Review. Buyer shall have the right to inspect
the Title Documents or abstract. Written notice by Buyer of
unmerchantability of title or of any other unsatisfactory title
condition shown by the Title Documents or abstract shall be
signed by or on behalf of Buyer and given to Seller on or before
seven (7) calendar days after Title Deadline, or within five (5)
calendar days after receipt by Buyer of any Title Document(s) or
endorsement(s) adding new Exception(s) to the title commitment
together with a copy of the Title Document adding new
Exception(s) to title. If Seller does not receive Buyer's notice
by the date(s) specified above, Buyer accepts the condition of
title as disclosed by the Title Documents as satisfactory.
(b) Matters Not Shown by the Public Records. Seller shall
deliver to Buyer, on or before the Title Deadline set forth in
Section 8, true copies of all lease(s) and survey(s) in Seller's
possession pertaining to the Property and shall disclose to Buyer
all easements, liens or other title matters not shown by the
public records of which Seller has actual knowledge. Buyer shall
have the right to inspect the Property to determine if any third
party(s) has any right in the Property not shown by the public
records (such as an unrecorded easement, unrecorded lease, or
boundary line discrepancy). Written notice of any unsatisfactory
condition(s) disclosed by Seller or revealed by such inspection
shall be signed by or on behalf of Buyer and given to Seller on
or before July 06, 1998. If Seller does not receive Buyer's
notice by said date, Buyer accepts title subject to such rights,
if any, of third parties of which Buyer has actual knowledge.
(c) Special Taxing Districts. SPECIAL TAXING DISTRICTS MAY
BE SUBJECT TO GENERAL OBLIGATION INDEBTEDNESS THAT IS PAID BY
REVENUES PRODUCED FROM ANNUAL TAX LEVIES ON THE TAXABLE PROPERTY
WITHIN SUCH DISTRICTS. PROPERTY OWNERS IN SUCH DISTRICTS MAY BE
PLACED AT RISK FOR INCREASED MILL LEVIES AND EXCESSIVE TAX
BURDENS TO SUPPORT THE SERVICING OF SUCH DEBT WHERE CIRCUMSTANCES
ARISE RESULTING IN THE INABILITY OF SUCH A DISTRICT TO DISCHARGE
SUCH INDEBTEDNESS WITHOUT SUCH AN INCREASE IN MILL LEVIES. BUYER
SHOULD INVESTIGATE THE DEBT FINANCING REQUIREMENTS OF THE
AUTHORIZED GENERAL OBLIGATION INDEBTEDNESS OF SUCH DISTRICTS,
EXISTING MILL LEVIES OF SUCH DISTRICT SERVICING SUCH INDEBTEDNESS
AND THE POTENTIAL FOR AN INCREASE IN SUCH MILL LEVIES.
In the event the Property is located within a special taxing
district and Buyer desires to terminate this contract as a
result, if written notice is given to Seller on or before the
date set forth in subsection 9(b), this contract shall then
terminate. If Seller does not receive Buyer's notice by the date
specified above, Buyer accepts the effect of the Property's
inclusion in such special taxing district(s) and waives the right
to so terminate.
(d) Right to Cure. If Seller receives notice of
unmerchantability of title or any other unsatisfactory title
condition(s) as provided in subsection (a) or (b) above, Seller
shall use reasonable effort to correct said unsatisfactory title
condition(s) prior to the date of closing. If Seller fails to
correct said unsatisfactory title condition(s) on or before the
date of closing, this contract shall then terminate; provided,
however, Buyer may, by written notice received by Seller, on or
before closing, waive objection to said unsatisfactory title
condition(s).
10. INSPECTION. Buyer or any designee, shall have the
right to have inspection(s) of the physical condition of the
Property and Inclusions, at Buyer's expense. If written notice
of any unsatisfactory condition, signed by or on behalf of Buyer,
is not received by Seller on or before July 10, 1998 (Objection
Deadline), the physical condition of the Property and Inclusions
shall be deemed to be satisfactory to Buyer. If such notice is
received by Seller as set forth above, and if Buyer and Seller
have not agreed, in writing, to a settlement thereof on or before
July 15, 1998 (Resolution Deadline), this contract shall
terminate three calendar days following the Resolution Deadline;
unless, within the three calendar days, Seller receives written
notice from Buyer waiving objection to any unsatisfactory
condition. Buyer is responsible for and shall pay for any damage
which occurs to the Property and Inclusions as a result of such
inspection.
11. DATE OF CLOSING. The date of closing shall be July 24,
1998, or by mutual agreement at an earlier date. The hour and
place of closing shall be designated by Prudential LTM Realtors.
12. TRANSFER OF TITLE. Subject to tender or payment at
closing as required herein and compliance by Buyer with the other
terms and provisions hereof, Seller shall execute and deliver a
good and sufficient General Warranty deed to Buyer, on closing,
conveying the Property free and clear of all taxes except the
general taxes for the year of closing, and except special
assessment for road improvements which is scheduled to be paid in
full by the year 2001.
Title shall be conveyed free and clear of all liens for special
improvements installed as of the date of Buyer's signature
hereon, whether assessed or not; except (i) distribution utility
easements (including cable TV), (ii) those matters reflected by
the Title Documents accepted by Buyer in accordance with
subsection 9(a), (iii) those rights, if any, of third parties in
the Property not shown by the public records in accordance with
subsection 9(b), (iv) inclusion of the Property within any
special taxing district, (v) subject to building and zoning
regulations.
13. PAYMENTS OF ENCUMBRANCES. Any encumbrance required to
be paid shall be paid at or before closing from the proceeds of
this transaction or from any other source.
14. CLOSING COSTS, DOCUMENTS AND SERVICES. Buyer and
Seller shall pay in Good Funds, their respective closing costs
and all other items required to be paid at closing, except as
otherwise provided herein. Buyer and Seller shall sign and
complete all customary or required documents at or before
closing. Fees for real estate closing services shall not exceed
$150.00 and shall be paid at closing by split equally between
Buyer and Seller. The local transfer tax of n/a % of the
---------
purchase price shall be paid at closing by n/a . Any sales
----------
and use tax that may accrue because of this transaction shall be
paid when due by n/a .
---------
15. PRORATIONS. General taxes for the year of closing, based on
the taxes for the calendar year immediately preceding closing,
rents, water and sewer charges, owner's association dues, and
interest on continuing loan(s), if any, and road assessment shall
be prorated to date of closing.
16. POSSESSION. Possession of the Property shall be delivered
to Buyer as follows:
Date of delivery of deed.
subject to the following lease(s) or tenancy(s):
None
If Seller, after closing, fails to deliver possession on the date
herein specified, Seller shall be subject to eviction and shall
be additionally liable to Buyer for payment of $100.00 per day
from the date of agreed possession until possession is delivered.
17. CONDITION OF AND DAMAGE TO PROPERTY. Except as otherwise
provided in this contract, the Property and Inclusions shall be
delivered in the condition existing as of the date of this
contract, ordinary wear and tear excepted. In the event the
Property shall be damaged by fire or other casualty prior to time
of closing, in an amount of not more than ten percent of the
total purchase price, Seller shall be obligated to repair the
same before the date of closing. In the event such damage is not
repaired within said time or if the damages exceed such sum, this
contract may be terminated at the option of Buyer. Should Buyer
elect to carry out this contract despite such damage, Buyer shall
be entitled to credit for all the insurance proceeds resulting
from such damage to the Property and Inclusions, not exceeding,
however, the total purchase price. Should any Inclusion(s) or
service(s) fail or be damaged between the date of this contract
and the date of closing or the date of possession, whichever
shall be earlier, then Seller shall be liable for the repair or
replacement of such Inclusion(s) or service(s) with a unit of
similar size, age and quality, or an equivalent credit, less any
insurance proceeds received by Buyer covering such repair or
replacement.
18. TIME OF ESSENCE/REMEDIES. Time is of the essence hereof.
If any note or check received as earnest money hereunder or any
other payment due hereunder is not paid, honored or tendered when
due, or if any other obligation hereunder is not performed or
waived as herein provided, there shall be the following remedies:
(a) IF BUYER IS IN DEFAULT: (Check one box only.)
[ ] (1) SPECIFIC PERFORMANCE. Seller may elect to treat this
contract as cancelled, in which case all payments and things of
value received hereunder shall be forfeited and retained on
behalf of Seller, and Seller may recover such damages as may be
proper, or Seller may elect to treat this contract as being in
full force and effect and Seller shall have the right to specific
performance or damages, or both.
[X] (2) LIQUIDATED DAMAGES. All payments and things of value
received hereunder shall be forfeited by Buyer and retained on
behalf of Seller and both parties shall thereafter be released
from all obligations hereunder. It is agreed that such payments
and things of value are LIQUIDATED DAMAGES and (except as
provided in subsection (c)) are SELLER'S SOLE AND ONLY REMEDY for
Buyer's failure to perform the obligations of this contract.
Seller expressly waives the remedies of specific performance and
additional damages.
(b) IF SELLER IS IN DEFAULT: Buyer may elect to treat this
contract as cancelled, in which case all payments and things of
value received hereunder shall be returned and Buyer may recover
such damages as may be proper, or Buyer may elect to treat this
contract as being in full force and effect and Buyer shall have
the right to specific performance or damages, or both.
(c) COSTS AND EXPENSES. Anything to the contrary herein
notwithstanding, in the event of any arbitration or litigation
arising out of this contract, the arbitrator or court shall award
to the prevailing party all reasonable costs and expenses,
including attorney fees.
19. EARNEST MONEY DISPUTE. Notwithstanding any termination of
this contract, Buyer and Seller agree that, in the event of any
controversy regarding the earnest money and things of value held
by broker or closing agent, unless mutual written instructions
are received by the holder of the earnest money and things of
value, broker or closing agent shall not be required to take any
action but may await any proceeding, or at broker's or closing
agent's option and sole discretion, may interplead all parties
and deposit any moneys or things of value into a court of
competent jurisdiction and shall recover court costs and
reasonable attorney fees.
20. ALTERNATIVE DISPUTE RESOLUTION; MEDIATION. If a dispute
arises between the parties relating to this contract, and is not
resolved, the parties and broker(s) involved in such dispute
(Disputants) shall first proceed in good faith to submit the
matter to mediation. The Disputants will jointly appoint an
acceptable mediator and will share equally in the cost of such
mediation. In the event the entire dispute is not resolved
within thirty (30) calendar days from the date written notice
requesting mediation is sent by one Disputant to the other(s),
the mediation, unless otherwise agreed, shall terminate. This
section shall not alter any date in this contract, unless
otherwise agreed.
21. ADDITIONAL PROVISIONS: (The language of these additional
provisions has not been approved by the Colorado Real Estate
Commission).
A. Paragraph 10 shall also include Buyer's approval and
satisfaction regarding the license agreement with Public Service
and any environmental reports regarding subject property.
B. The Seller carry back note shall also be secured by
Parcel #2 which Buyer is also purchasing from Seller. This
contract is conditional on the simultaneous sale of Parcel #2 to
Buyer.
C. Seller shall provide to Buyer, at Seller's earliest
convenience, all reports, studies, and any other information
regarding the Property in Seller's possession.
22. RECOMMENDATION OF LEGAL COUNSEL. By signing this document,
Buyer and Seller acknowledge that the Selling Company or the
Listing Company has advised that this document has important
legal consequences and has recommended the examination of title
and consultation with legal and tax or other counsel before
signing this contract.
23. TERMINATION. In the event this contract is terminated, all
payments and things of value received hereunder shall be returned
and the parties shall be relieved of all obligations hereunder,
subject to Section 19.
24. SELLING COMPANY BROKER RELATIONSHIP. The selling broker,
Select Real Estate Metro Brokers and its salespersons have been
engaged as Buyer's Agent. Selling Company has previously
disclosed in writing to the Buyer that different relationships
are available which include buyer agency, seller agency,
subagency, or transaction-broker.
25. NOTICE TO BUYER. Any notice to Buyer shall be effective
when received by Buyer, or, if this box is checked [ ] when
received by
26. NOTICE TO SELLER. Any notice to Seller shall be effective
when received by Seller or Listing Company.
27. MODIFICATION OF THIS CONTRACT. No subsequent modification
of any of the terms of this contract shall be valid, binding upon
the parties, or enforceable unless made in writing and signed by
the parties.
28. ENTIRE AGREEMENT. This contract constitutes the entire
contract between the parties relating to the subject hereof, and
any prior agreements pertaining thereto, whether oral or written,
have been merged and integrated into this contract.
29. NOTICE OF ACCEPTANCE: COUNTERPARTS. This proposal shall
expire unless accepted in writing by Buyer and Seller, as
evidenced by their signatures below, and the offering party
receives notice of such acceptance on or before June 19, 1998,
(Acceptance Deadline). If accepted, this document shall become a
contract between Seller and Buyer. A copy of this document may
be executed by each party, separately, and when each party has
executed a copy thereof, such copies taken together shall be
deemed to be a full and complete contract between the parties.
BUYER: /s/ William E. Harper DATE: June 17, 1998
------------------------------------ ----------------
William E. Harper
6237 Nottinghill Gate, Boulder, CO 80301
Healthcare Investors of America, Inc.
2990 N. Swan Road, Suite 228, Tucson, AZ 85712
SELLER: /s/ James R. Sellers DATE: June 17, 1998
----------------------------------- ----------------
By: James R. Sellers
=================================================================
The undersigned Broker(s) acknowledges receipt of the
earnest money deposit specified in Section 3, and Selling Company
confirms its Broker Relationship as set forth in Section 24.
Listing Company
Prudential LTM, Realtors
275 South Main Street Suite 100
Longmont, Colorado 80501
Phone: (303) 772-2222, Fax: (303) 772-1377
By: /s/ Ken Kanemoto June 17, 1998
-----------------------------------------
Signature KEN KANEMOTO, CCIM Date
Selling Company
Select Real Estate Metro Brokers
By: /s/ Joe Pollard June 17, 1998
----------------------------------------
Signature Date
Address: 2220 Meadow Street, Longmont, CO 80501
Phone: 678-7915
Fax: n/a
NOTE: CLOSING INSTRUCTIONS SHOULD BE SIGNED AT THE TIME THIS
CONTRACT IS SIGNED
<PAGE>
PARCEL 1:
- --------
A tract of land located in the SW1/4 of Section 13, in Township 3
North, Range 68 West of the 6th P.M., County of Weld, State of
Colorado, being more particularly described as follows:
Beginning at a point on the South line of the said SW1/4 of
Section 13 from which the South Quarter corner of said Section 13
bears East, a distance of 513.20 feet;
thence North, at a right angle to the said South line, a distance
of 30.00 feet to the True Point of Beginning;
thence West parallel to the said South line of the said SW1/4 a
distance of 1013.35 feet;
thence North, a distance of 327.11 feet;
thence East, parallel to the said South line, a distance of
430.04 feet;
thence South 63 degrees 00 minutes East, a distance of 232.90
feet;
thence North 78 degrees 00 minutes East, a distance of 340.40
feet;
thence North, a distance of 64.10 feet;
thence North 88 degrees 00 minutes East, a distance of 42.79
feet;
thence South, a distance of 357.78 feet, more or less, to the
True Point of Beginning.
<PAGE>
THIS FORM HAS IMPORTANT LEGAL CONSEQUENCES AND THE PARTIES SHOULD
CONSULT LEGAL AND TAX OR OTHER COUNSEL BEFORE SIGNING
AGREEMENT TO AMEND/EXTEND CONTRACT
July 11, 1998
RE: Contract dated June 19, 1998 between
William E. Harper
(Buyer) and,
Healthcare Investors of America, Inc.
(Seller),
relating to the sale and purchase of the following described real
estate in the County of Weld, Colorado;
See attached legal description for parcel #1 and #2.
known as No. 5425 Weld County Road 32, Longmont CO n/a (Property)
Buyer and Seller hereby agree to amend the aforesaid contract as
follows:
1. The date for closing and delivery of deed is changed to
n/a, 19n/a.
2. The date for furnishing commitment for title insurance
policy or abstract of title is changed to n/a, 1998.
3. The date for delivering possession of Property is
change to n/a, 19n/a.
4. The date for approval of new loan is changed to n/a,
19n/a.
5. The date for lender's consent to loan assumption or
transfer of Property is changed to n/a, 19n/a.
6. Other dates set forth in said contract shall be changed
as follows: n/a.
7. Additional amendments: (The language of these
additional amendments has not been approved by the Colorado Real
Estate Commission).
Reference paragraph 10 (Resolution of Buyer's Objections):
A. Seller agrees to cooperate with Buyer in regards to the
transfer of the License Agreement with PSCO.
B. Seller agrees to release any files and information
Seller has regarding the sewage treatment facility to Buyer at
closing.
C. Seller agrees to remove the remaining trash from the
Property.
D. Seller agrees to notify the neighbor to the west, Wagy,
to remove any property he owns, including horses, from the
subject property.
E. Seller agrees to cooperate with any plans the Buyer may
have regarding the change of use or change of zoning for subject
property.
Upon the above items being done, Buyer accepts the condition
of the property and confirms his intent to close on or before
July 24, 1998.
All other terms and conditions of said contract shall remain
the same.
Healthcare Investors of America, Inc.
SELLER /s/ James R. Sellers DATE July 11, 1998
---------------------------------------- ---------------
By: James R. Sellers
BUYER /s/ William E. Harper DATE July 11, 1998
----------------------------------------- ---------------
William E. Harper
<PAGE>
EXHIBIT 10.98
THIS FORM HAS IMPORTANT LEGAL CONSEQUENCES AND THE PARTIES SHOULD
CONSULT LEGAL AND TAX OR OTHER COUNSEL BEFORE SIGNING.
COMMERCIAL
CONTRACT TO BUY AND SELL REAL ESTATE
[SELLER OR PRIVATE THIRD-PARTY]
June 17, 1998
1. PARTIES AND PROPERTY.
William E. Harper buyer(s) [Buyer] agrees to buy, and the
undersigned seller(s) [Seller], agrees to sell, on the terms and
conditions set forth in this contract, the following described
real estate in the County of Weld, Colorado, to wit:
See attached legal description for parcel #1
known as No. 5425 Weld County Road 32, Longmont, Colorado,
together with all interest of Seller in vacated streets and
alleys adjacent thereto, all easements and other appurtenances
thereto, all improvements thereon and all attached fixtures
thereon except as herein excluded (collectively the Property).
2. INCLUSIONS/EXCLUSIONS. The purchase price includes the
following items (a) if attached to the Property on the date of
this contract: lighting, heating, plumbing, ventilating, and air
conditioning fixtures, TV antennas, water softeners,
smoke/fire/burglar alarms, security devices, inside telephone
wiring and connecting blocks/jacks, plants, mirrors, floor
coverings, intercom systems, built-in kitchen appliances,
sprinkler systems and controls; (b) if on the Property whether
attached or not on the date of this contract; storm windows,
storm doors, window and porch shades, awnings, blinds, screens,
curtain rods, drapery rods, all keys and (c)
n/a
The above-described included items (Inclusions) are to be
conveyed to Buyer by Seller by bill of sale at the closing, free
and clear of all taxes, liens and encumbrances, except as
provided in Section 12. The following attached fixtures are
excluded from this sale:
None
3. PURCHASE PRICE AND TERMS. The purchase price shall be
$100,000.00, payable in U.S. dollars by Buyer as follows:
(Complete the applicable terms below).
(a) Earnest Money
$5,000.00 in the form of Check, as earnest money deposit and part
payment of the purchase price, payable to and held by Prudential
LTM, Realtors, broker, in its trust account on behalf of both
Seller and Buyer. Broker is authorized to deliver the earnest
money deposit to the closing agent, if any, at or before closing.
The balance of $157,500.00 (purchase price less earnest money)
shall be paid as follows:
(b) Cash at Closing
$57,500.00, plus closing costs, to be paid by Buyer at closing in
funds which comply with all applicable Colorado laws, which
include cash, electronic transfer funds, certified check, savings
and loan teller's check, and cashier's check (Good Funds).
Subject to the provisions of Section 4, if the existing loan
balance at the time of closing shall be different from the loan
balance in Section 3, the adjustment shall be made in Good Funds
at closing or paid as follows:
n/a
- -----------------------------------------------------------------
- -----------------------------------------------------------------
(c) New Loan [OMITTED-INAPPLICABLE]
(d) Assumption [OMITTED-INAPPLICABLE]
(e) Seller or Private Third-Party Financing.
$100,000.00 by Buyer executing a promissory note payable to:
Healthcare Investors of America, Inc. on the note form as
indicated:
(Check one box only.)
[ ] (UCCC - No Default Rate) NTD 82-3-95 [ ] NTD 81-11-83
[ ] n/a
secured by a (1st, 2nd, etc.) 1st deed of trust encumbering
the Property, using the form as indicated: (Check one box
only.)
[X] Strict Due-on-Sale (TD72-7-96) [ ] Creditworthy
(TD73-7-96) [ ] Assumable-Not due on sale (TD74-7-96)
[ ] n/a
The promissory note shall be amortized on the basis of n/a
-----
years, payable at $985.00/mo Interest only per month including
principal and interest at the rate of 9.5% per annum. Payments
shall commence September 01, 1998 and shall be due on the 1st day
of each succeeding month. If not sooner paid, the balance of
principal and accrued interest shall be due and payable 2 years
from date of note after closing. Payments [ ] shall [X] shall
not be increased by 1/12 of estimated annual real estate taxes,
and [ ] shall [X] shall not be increased by 1/12 of estimated
annual property insurance premium.
The loan shall also contain the following terms as
indicated: If any payment is not received within 5 calendar days
after its due date, a late charge of 5% of such monthly payment
shall be due. Interest on lender disbursements under the deed of
trust shall be 15% per annum. Default interest rate shall be 15%
per annum.
Buyer may prepay without a penalty except
n/a
- -----------------------------------------------------------------
- -----------------------------------------------------------------
4. FINANCING CONDITIONS AND OBLIGATIONS
(a) Loan Application(s). [OMITTED-INAPPLICABLE]
(b) Loan Approval. [OMITTED-INAPPLICABLE]
(c) Existing Loan Review. [OMITTED-INAPPLICABLE]
(d) Assumption Balance. [OMITTED-INAPPLICABLE]
(e) Credit Information. If Buyer is to pay all or part of
the purchase price by executing a promissory note in favor of
Seller or if an existing loan is not to be released at closing,
this contract is conditional upon Seller's approval of Buyer's
financial ability and creditworthiness, which approval shall be
at Seller's sole and absolute discretion. In such case: (1)
Buyer shall supply to Seller on or before June 26, 1998, at
Buyer's expense, information and documents concerning Buyer's
financial, employment and credit condition; (2) Buyer consents
that Seller may verify Buyer's financial ability and
creditworthiness; (3) any such information and documents received
by Seller shall be held by Seller in confidence, and not released
to others except to protect Seller's interest in this
transaction; (4) if Seller does not provide written notice of
Seller's disapproval to Buyer on or before July 01, 1998, then
Seller waives this condition. If Seller does provide written
notice of disapproval to Buyer on or before said date, this
contract shall terminate.
5. APPRAISAL PROVISION. (Check one box only.) This
Section 5 [ ] shall [X] shall not apply.
If this Section 5 applies, as indicated above, Buyer shall have
the sole option and election to terminate this contract if the
purchase price exceeds the Property's valuation determined by an
appraiser engaged by n/a . The contract shall terminate by
--------
the Buyer causing the Seller to receive written notice of
termination and a copy of such appraisal or written notice from
Lender which confirms the Property's valuation is less than the
purchase price, on or before (Appraisal deadline). If Seller
does not receive such written notice of termination on or before
the appraisal deadline, Buyer waives any right to terminate under
this section.
6. COST OF APPRAISAL. Cost of any appraisal to be
obtained after the date of this contract shall be timely paid by
n/a .
- ---------
7. NOT ASSIGNABLE. This contract shall be assignable by
Buyer without Seller's prior written consent. Except as so
restricted, this contract shall inure to the benefit of and be
binding upon the heirs, personal representatives, successors and
assigns of the parties.
8. EVIDENCE OF TITLE. Seller shall furnish to Buyer, at
Seller's expense, either a current commitment for owner's title
insurance policy in an amount equal to the purchase price or at
Seller's choice, an abstract of title certified to a current
date, on or before June 26, 1998 (Title Deadline). If a title
insurance commitment is furnished, Buyer may require of Seller
that copies of instruments (or abstracts of instruments) listed
in the schedule of exceptions (Exceptions) in the title insurance
commitment also be furnished to Buyer at Seller's expense. This
requirement shall pertain only to instruments shown of record in
the office of the clerk and recorder of the designated county or
counties. The title insurance commitment, together with any
copies or abstracts of instruments furnished pursuant to this
Section 8, constitute the title documents (Title Documents).
Buyer, or Buyer's designee, must request Seller, in writing, to
furnish copies or abstracts of instruments listed in the schedule
of exceptions no later than seven (7) calendar days after Title
Deadline. If Seller furnishes a title insurance commitment,
Seller will pay the premium at closing and have the title
insurance policy delivered to Buyer as soon as practicable after
closing.
9. TITLE.
(a) Title Review. Buyer shall have the right to inspect
the Title Documents or abstract. Written notice by Buyer of
unmerchantability of title or of any other unsatisfactory title
condition shown by the Title Documents or abstract shall be
signed by or on behalf of Buyer and given to Seller on or before
seven (7) calendar days after Title Deadline, or within five (5)
calendar days after receipt by Buyer of any Title Document(s) or
endorsement(s) adding new Exception(s) to the title commitment
together with a copy of the Title Document adding new
Exception(s) to title. If Seller does not receive Buyer's notice
by the date(s) specified above, Buyer accepts the condition of
title as disclosed by the Title Documents as satisfactory.
(b) Matters Not Shown by the Public Records. Seller shall
deliver to Buyer, on or before the Title Deadline set forth in
Section 8, true copies of all lease(s) and survey(s) in Seller's
possession pertaining to the Property and shall disclose to Buyer
all easements, liens or other title matters not shown by the
public records of which Seller has actual knowledge. Buyer shall
have the right to inspect the Property to determine if any third
party(s) has any right in the Property not shown by the public
records (such as an unrecorded easement, unrecorded lease, or
boundary line discrepancy). Written notice of any unsatisfactory
condition(s) disclosed by Seller or revealed by such inspection
shall be signed by or on behalf of Buyer and given to Seller on
or before July 06, 1998. If Seller does not receive Buyer's
notice by said date, Buyer accepts title subject to such rights,
if any, of third parties of which Buyer has actual knowledge.
(c) Special Taxing Districts. SPECIAL TAXING DISTRICTS MAY
BE SUBJECT TO GENERAL OBLIGATION INDEBTEDNESS THAT IS PAID BY
REVENUES PRODUCED FROM ANNUAL TAX LEVIES ON THE TAXABLE PROPERTY
WITHIN SUCH DISTRICTS. PROPERTY OWNERS IN SUCH DISTRICTS MAY BE
PLACED AT RISK FOR INCREASED MILL LEVIES AND EXCESSIVE TAX
BURDENS TO SUPPORT THE SERVICING OF SUCH DEBT WHERE CIRCUMSTANCES
ARISE RESULTING IN THE INABILITY OF SUCH A DISTRICT TO DISCHARGE
SUCH INDEBTEDNESS WITHOUT SUCH AN INCREASE IN MILL LEVIES. BUYER
SHOULD INVESTIGATE THE DEBT FINANCING REQUIREMENTS OF THE
AUTHORIZED GENERAL OBLIGATION INDEBTEDNESS OF SUCH DISTRICTS,
EXISTING MILL LEVIES OF SUCH DISTRICT SERVICING SUCH INDEBTEDNESS
AND THE POTENTIAL FOR AN INCREASE IN SUCH MILL LEVIES.
In the event the Property is located within a special taxing
district and Buyer desires to terminate this contract as a
result, if written notice is given to Seller on or before the
date set forth in subsection 9(b), this contract shall then
terminate. If Seller does not receive Buyer's notice by the date
specified above, Buyer accepts the effect of the Property's
inclusion in such special taxing district(s) and waives the right
to so terminate.
(d) Right to Cure. If Seller receives notice of
unmerchantability of title or any other unsatisfactory title
condition(s) as provided in subsection (a) or (b) above, Seller
shall use reasonable effort to correct said unsatisfactory title
condition(s) prior to the date of closing. If Seller fails to
correct said unsatisfactory title condition(s) on or before the
date of closing, this contract shall then terminate; provided,
however, Buyer may, by written notice received by Seller, on or
before closing, waive objection to said unsatisfactory title
condition(s).
10. INSPECTION. Buyer or any designee, shall have the
right to have inspection(s) of the physical condition of the
Property and Inclusions, at Buyer's expense. If written notice
of any unsatisfactory condition, signed by or on behalf of Buyer,
is not received by Seller on or before July 10, 1998 (Objection
Deadline), the physical condition of the Property and Inclusions
shall be deemed to be satisfactory to Buyer. If such notice is
received by Seller as set forth above, and if Buyer and Seller
have not agreed, in writing, to a settlement thereof on or before
July 15, 1998 (Resolution Deadline), this contract shall
terminate three calendar days following the Resolution Deadline;
unless, within the three calendar days, Seller receives written
notice from Buyer waiving objection to any unsatisfactory
condition. Buyer is responsible for and shall pay for any damage
which occurs to the Property and Inclusions as a result of such
inspection.
11. DATE OF CLOSING. The date of closing shall be July 24,
1998, or by mutual agreement at an earlier date. The hour and
place of closing shall be designated by Prudential LTM Realtors.
12. TRANSFER OF TITLE. Subject to tender or payment at
closing as required herein and compliance by Buyer with the other
terms and provisions hereof, Seller shall execute and deliver a
good and sufficient General Warranty deed to Buyer, on closing,
conveying the Property free and clear of all taxes except the
general taxes for the year of closing, and except special
assessment for road improvements which is scheduled to be paid in
full by the year 2001.
Title shall be conveyed free and clear of all liens for special
improvements installed as of the date of Buyer's signature
hereon, whether assessed or not; except (i) distribution utility
easements (including cable TV), (ii) those matters reflected by
the Title Documents accepted by Buyer in accordance with
subsection 9(a), (iii) those rights, if any, of third parties in
the Property not shown by the public records in accordance with
subsection 9(b), (iv) inclusion of the Property within any
special taxing district, (v) subject to building and zoning
regulations.
13. PAYMENTS OF ENCUMBRANCES. Any encumbrance required to
be paid shall be paid at or before closing from the proceeds of
this transaction or from any other source.
14. CLOSING COSTS, DOCUMENTS AND SERVICES. Buyer and
Seller shall pay in Good Funds, their respective closing costs
and all other items required to be paid at closing, except as
otherwise provided herein. Buyer and Seller shall sign and
complete all customary or required documents at or before
closing. Fees for real estate closing services shall not exceed
$150.00 and shall be paid at closing by split equally between
Buyer and Seller. The local transfer tax of n/a % of the
---------
purchase price shall be paid at closing by n/a . Any sales
----------
and use tax that may accrue because of this transaction shall be
paid when due by n/a .
---------
15. PRORATIONS. General taxes for the year of closing, based on
the taxes for the calendar year immediately preceding closing,
rents, water and sewer charges, owner's association dues, and
interest on continuing loan(s), if any, and road assessment shall
be prorated to date of closing.
16. POSSESSION. Possession of the Property shall be delivered
to Buyer as follows:
Date of delivery of deed.
subject to the following lease(s) or tenancy(s):
None
If Seller, after closing, fails to deliver possession on the date
herein specified, Seller shall be subject to eviction and shall
be additionally liable to Buyer for payment of $100.00 per day
from the date of agreed possession until possession is delivered.
17. CONDITION OF AND DAMAGE TO PROPERTY. Except as otherwise
provided in this contract, the Property and Inclusions shall be
delivered in the condition existing as of the date of this
contract, ordinary wear and tear excepted. In the event the
Property shall be damaged by fire or other casualty prior to time
of closing, in an amount of not more than ten percent of the
total purchase price, Seller shall be obligated to repair the
same before the date of closing. In the event such damage is not
repaired within said time or if the damages exceed such sum, this
contract may be terminated at the option of Buyer. Should Buyer
elect to carry out this contract despite such damage, Buyer shall
be entitled to credit for all the insurance proceeds resulting
from such damage to the Property and Inclusions, not exceeding,
however, the total purchase price. Should any Inclusion(s) or
service(s) fail or be damaged between the date of this contract
and the date of closing or the date of possession, whichever
shall be earlier, then Seller shall be liable for the repair or
replacement of such Inclusion(s) or service(s) with a unit of
similar size, age and quality, or an equivalent credit, less any
insurance proceeds received by Buyer covering such repair or
replacement.
18. TIME OF ESSENCE/REMEDIES. Time is of the essence hereof.
If any note or check received as earnest money hereunder or any
other payment due hereunder is not paid, honored or tendered when
due, or if any other obligation hereunder is not performed or
waived as herein provided, there shall be the following remedies:
(a) IF BUYER IS IN DEFAULT: (Check one box only.)
[ ] (1) SPECIFIC PERFORMANCE. Seller may elect to treat this
contract as cancelled, in which case all payments and things of
value received hereunder shall be forfeited and retained on
behalf of Seller, and Seller may recover such damages as may be
proper, or Seller may elect to treat this contract as being in
full force and effect and Seller shall have the right to specific
performance or damages, or both.
[X] (2) LIQUIDATED DAMAGES. All payments and things of value
received hereunder shall be forfeited by Buyer and retained on
behalf of Seller and both parties shall thereafter be released
from all obligations hereunder. It is agreed that such payments
and things of value are LIQUIDATED DAMAGES and (except as
provided in subsection (c)) are SELLER'S SOLE AND ONLY REMEDY for
Buyer's failure to perform the obligations of this contract.
Seller expressly waives the remedies of specific performance and
additional damages.
(b) IF SELLER IS IN DEFAULT: Buyer may elect to treat this
contract as cancelled, in which case all payments and things of
value received hereunder shall be returned and Buyer may recover
such damages as may be proper, or Buyer may elect to treat this
contract as being in full force and effect and Buyer shall have
the right to specific performance or damages, or both.
(c) COSTS AND EXPENSES. Anything to the contrary herein
notwithstanding, in the event of any arbitration or litigation
arising out of this contract, the arbitrator or court shall award
to the prevailing party all reasonable costs and expenses,
including attorney fees.
19. EARNEST MONEY DISPUTE. Notwithstanding any termination of
this contract, Buyer and Seller agree that, in the event of any
controversy regarding the earnest money and things of value held
by broker or closing agent, unless mutual written instructions
are received by the holder of the earnest money and things of
value, broker or closing agent shall not be required to take any
action but may await any proceeding, or at broker's or closing
agent's option and sole discretion, may interplead all parties
and deposit any moneys or things of value into a court of
competent jurisdiction and shall recover court costs and
reasonable attorney fees.
20. ALTERNATIVE DISPUTE RESOLUTION; MEDIATION. If a dispute
arises between the parties relating to this contract, and is not
resolved, the parties and broker(s) involved in such dispute
(Disputants) shall first proceed in good faith to submit the
matter to mediation. The Disputants will jointly appoint an
acceptable mediator and will share equally in the cost of such
mediation. In the event the entire dispute is not resolved
within thirty (30) calendar days from the date written notice
requesting mediation is sent by one Disputant to the other(s),
the mediation, unless otherwise agreed, shall terminate. This
section shall not alter any date in this contract, unless
otherwise agreed.
21. ADDITIONAL PROVISIONS: (The language of these additional
provisions has not been approved by the Colorado Real Estate
Commission).
A. Paragraph 10 shall also include Buyer's approval and
satisfaction regarding the license agreement with Public Service
and any environmental reports regarding subject property.
B. The Seller carry back note shall also be secured by
Parcel #2 which Buyer is also purchasing from Seller. This
contract is conditional on the simultaneous sale of Parcel #2 to
Buyer.
C. Seller shall provide to Buyer, at Seller's earliest
convenience, all reports, studies, and any other information
regarding the Property in Seller's possession.
22. RECOMMENDATION OF LEGAL COUNSEL. By signing this document,
Buyer and Seller acknowledge that the Selling Company or the
Listing Company has advised that this document has important
legal consequences and has recommended the examination of title
and consultation with legal and tax or other counsel before
signing this contract.
23. TERMINATION. In the event this contract is terminated, all
payments and things of value received hereunder shall be returned
and the parties shall be relieved of all obligations hereunder,
subject to Section 19.
24. SELLING COMPANY BROKER RELATIONSHIP. The selling broker,
Select Real Estate Metro Brokers and its salespersons have been
engaged as Buyer's Agent. Selling Company has previously
disclosed in writing to the Buyer that different relationships
are available which include buyer agency, seller agency,
subagency, or transaction-broker.
25. NOTICE TO BUYER. Any notice to Buyer shall be effective
when received by Buyer, or, if this box is checked [ ] when
received by
26. NOTICE TO SELLER. Any notice to Seller shall be effective
when received by Seller or Listing Company.
27. MODIFICATION OF THIS CONTRACT. No subsequent modification
of any of the terms of this contract shall be valid, binding upon
the parties, or enforceable unless made in writing and signed by
the parties.
28. ENTIRE AGREEMENT. This contract constitutes the entire
contract between the parties relating to the subject hereof, and
any prior agreements pertaining thereto, whether oral or written,
have been merged and integrated into this contract.
29. NOTICE OF ACCEPTANCE: COUNTERPARTS. This proposal shall
expire unless accepted in writing by Buyer and Seller, as
evidenced by their signatures below, and the offering party
receives notice of such acceptance on or before June 19, 1998,
(Acceptance Deadline). If accepted, this document shall become a
contract between Seller and Buyer. A copy of this document may
be executed by each party, separately, and when each party has
executed a copy thereof, such copies taken together shall be
deemed to be a full and complete contract between the parties.
BUYER: /s/ William E. Harper DATE: June 17, 1998
------------------------------------ ----------------
William E. Harper
6237 Nottinghill Gate, Boulder, CO 80301
Healthcare Investors of America, Inc.
2990 N. Swan Road, Suite 228, Tucson, AZ 85712
SELLER: /s/ James R. Sellers DATE: June 17, 1998
----------------------------------- ----------------
By: James R. Sellers
=================================================================
The undersigned Broker(s) acknowledges receipt of the
earnest money deposit specified in Section 3, and Selling Company
confirms its Broker Relationship as set forth in Section 24.
Listing Company
Prudential LTM, Realtors
275 South Main Street Suite 100
Longmont, Colorado 80501
Phone: (303) 772-2222, Fax: (303) 772-1377
By: /s/ Ken Kanemoto June 17, 1998
-----------------------------------------
Signature KEN KANEMOTO, CCIM Date
Selling Company
Select Real Estate Metro Brokers
By: /s/ Joe Pollard June 17, 1998
----------------------------------------
Signature Date
Address: 2220 Meadow Street, Longmont, CO 80501
Phone: 678-7915
Fax: n/a
NOTE: CLOSING INSTRUCTIONS SHOULD BE SIGNED AT THE TIME THIS
CONTRACT IS SIGNED
<PAGE>
PARCEL 1:
- --------
A tract of land located in the SW1/4 of Section 13, in Township 3
North, Range 68 West of the 6th P.M., County of Weld, State of
Colorado, being more particularly described as follows:
Beginning at a point on the South line of the said SW1/4 of
Section 13 from which the South Quarter corner of said Section 13
bears East, a distance of 513.20 feet;
thence North, at a right angle to the said South line, a distance
of 30.00 feet to the True Point of Beginning;
thence West parallel to the said South line of the said SW1/4 a
distance of 1013.35 feet;
thence North, a distance of 327.11 feet;
thence East, parallel to the said South line, a distance of
430.04 feet;
thence South 63 degrees 00 minutes East, a distance of 232.90
feet;
thence North 78 degrees 00 minutes East, a distance of 340.40
feet;
thence North, a distance of 64.10 feet;
thence North 88 degrees 00 minutes East, a distance of 42.79
feet;
thence South, a distance of 357.78 feet, more or less, to the
True Point of Beginning.
<PAGE>
EXHIBIT 10.99
ESCROW NO.: 8043891
PAGE 1
IF THIS FORM IS USED IN A CONSUMER CREDIT TRANSACTION, CONSULT
LEGAL COUNSEL.
THIS IS A LEGAL INSTRUMENT. IF NOT UNDERSTOOD, LEGAL, TAX OR
OTHER COUNSEL SHOULD BE CONSULTED BEFORE SIGNING.
PROMISSORY NOTE
U.S. $100,000.00 Longmont, Colorado 80504
July 24, 1998
1. FOR VALUE RECEIVED, the undersigned (Borrower)
promise(s) to pay Healthcare Investors of America, Inc., a
Maryland Corporation
or order, (Note Holder) the principal sum of ONE HUNDRED THOUSAND
AND 00/100 U.S. Dollars, with interest on the unpaid principal
balance from July 24, 1998, until paid, at the rate of 9.5
percent per annum. Principal and interest shall be payable at
2990 North Swan Road, Suite 228, Tucson, Arizona 85712, or such
other place as the Note Holder may designate, in 24 payments of
792.00 Interest Only Dollars (U.S. 792.00 Interest Only), due on
the 1st day of each Month, beginning September 1, 1998. Such
payments shall continue until the entire indebtedness evidenced
by this Note is fully paid; provided, however, if not sooner
paid, the entire principal amount outstanding and accrued
interest thereon, shall be due and payable on July 24, 2000.
2. Borrower shall pay to the Note Holder a late charge of
5% of any payment not received by the Note Holder within 15 days
after the payment is due.
3. Payments received for application to this Note shall be
applied first to the payment of late charges, if any, second to
the payment of accrued interest at the rate specified below, if
any, third, to accrued interest first specified above, and the
balance applied in reduction of the principal amount hereof.
4. If any payment required by this Note is not paid when
due, or if any default under any Deed of Trust securing this Note
occurs, the entire principal amount outstanding and accrued
interest thereon shall at once become due and payable at the
option of the Note Holder (Acceleration); and the indebtedness
shall bear interest at the rate of 15 percent per annum from the
date of default. The Note Holder shall be entitled to collect
all reasonable costs and expense of collection and/or suit,
including, but not limited to reasonable attorneys' fees.
5. Borrower may prepay the principal amount outstanding
under this Note, in whole or in part, at any time without penalty
except n/a.
Any partial prepayment shall be applied against the principal
amount outstanding and shall not postpone the due date of any
subsequent payments or change the amount of such payments.
6. Borrower and all other makers, sureties, guarantors,
and endorsers hereby waive presentment, notice of dishonor and
protest, and they hereby agree to any extensions of time of
payment and partial payments before, at, or after maturity. This
Note shall be the joint and several obligation of Borrower and
all other makers, sureties, guarantors and endorsers, and their
successors and assigns.
7. Any notice to Borrower provided for in this Note shall
be in writing and shall be given and be effective upon (1)
delivery to Borrower (2) mailing such notice by first-class U.S.
mail, addressed to Borrower at the Borrower's address stated
below, or to such other address as Borrower may designate by
notice to the Note Holder. Any notice to the Note Holder shall
be in writing and shall be given and be effective upon (1)
delivery to the Note Holder or (2) mailing such notice by first-
class U.S. mail, to the Note Holder at the address stated in the
first paragraph of this Note, or to such other address as Note
Holder may designate by notice to Borrower.
8. The indebtedness evidenced by this Note is secured by a
Deed of Trust dated July 24, 1998, and until released said Deed
of Trust contains additional rights of the Note Holder. Such
rights may cause Acceleration of the indebtedness evidenced by
this Note. Reference is made to said Deed of Trust for such
additional terms. Such deed of trust grants rights in the
property identified as follows:
PARCEL 1:
--------
A tract of land located in the SW1/4 of Section 13, in
Township 3 North, Range 68 West of the 6th P.M., County
of Weld, State of Colorado, being more particularly
described as follows:
Beginning at a point on the South line of the said
SW1/4 of Section 13 from which the South Quarter corner
of said Section 13 bears East, a distance of 513.20
feet; thence North, at a right angle to the said South
line, a distance of 30.00 feet to the True Point of
Beginning; thence West parallel to the said South line
of the said SW1/4 a distance of 1013.35 feet; thence
North, a distance of 327.11 feet; thence East, parallel
to the said South line, a distance of 430.04 feet;
thence South 63 degrees 00 minutes East, a distance of
232.90 feet; thence North 78 degrees 00 minutes East, a
distance of 340.40 feet; thence North, a distance of
64.10 feet; thence North 88 degrees 00 minutes East, a
distance of 42.79 feet; thence South, a distance of
357.78 feet, more or less, to the True Point of
Beginning.
See Exhibit "A" for Additional Parcel.
Property address: 5425 Weld County Road 32, Longmont, Colorado
80504
(CAUTION: SIGN ORIGINAL NOTE ONLY/RETAIN COPY)
/s/ William E. Harper
-----------------------------------
William E. Harper
Borrower's address: 6237 Nottinghill Gate
Boulder, Colorado 80301
KEEP THIS NOTE IN A SAFE PLACE. THE ORIGINAL OF THIS NOTE MUST
BE EXHIBITED TO THE PUBLIC TRUSTEE IN ORDER TO RELEASE A DEED OF
TRUST SECURING THIS NOTE.
PAY TO THE ORDER OF PNC BANK, NATIONAL
ASSOCIATION, a National banking association,
successor by merger to PNC BANK, KENTUCKY,
INC., a Kentucky banking corporation formerly
known as Citizens Fidelity Bank and Trust
Company
/s/ F. Dale Markham
---------------------------------------
F. Dale Markham, President
Healthcare Investors of America, Inc.
a Maryland Corporation
<PAGE>
"EXHIBIT A"
LEGAL DESCRIPTION
PARCEL II:
- ---------
A tract of land located in the SW1/4 of Section 13, Township 3
North, Range 68 West of the 6th P.M., County of Weld, State of
Colorado, being more particularly described as:
Beginning on the South line of the said SW1/4 of Section 13; from
which the South Quarter corner of Section 13 bears East, a
distance of 166.20 feet;
thence North, at a right angle to the said South line, a distance
of 30.00 feet to the True Point of Beginning; thence, continuing
North, a distance of 459.90 feet;
thence South 68 degrees 00 minutes West, a distance of 263.00
feet;
thence South 88 degrees 00 minutes West, a distance of 103.21
feet;
thence South, a distance of 357.78 feet;
thence East, a distance of 347.00 feet, more or less to the True
Point of Beginning.
EXCEPTING THEREFROM that portion as conveyed to The Callahan
Reservoir and Irrigation Company by Deed dated December 30, 1937
and recorded February 4, 1938 in Book 1021 at Page 600, as
Reception No. 782723.
<PAGE>
EXHIBIT 10.100
IF THIS FORM IS USED IN A CONSUMER CREDIT TRANSACTION, CONSULT
LEGAL COUNSEL.
THIS IS A LEGAL INSTRUMENT. IF NOT UNDERSTOOD, LEGAL, TAX OR
OTHER COUNSEL SHOULD BE CONSULTED BEFORE SIGNING.
PROMISSORY NOTE
U.S.$82,500.00 Longmont, Colorado
July 24, 1998
1. FOR VALUE RECEIVED, the undersigned (Borrower) promise(s) to
pay Healthcare Investors of America, Inc., a Maryland Corporation
or order, (Note Holder) the principal sum of EIGHTY TWO THOUSAND
FIVE HUNDRED AND 00/100 U.S. Dollars, with interest on the unpaid
principal balance from July 24, 1998, until paid, at the rate of
9.5 percent per annum. Principal and interest shall be payable
at 2990 North Swan Road, Suite 228, Tucson, Az 85712, or such
other place as the Note Holder may designate, in 24 payments of
653.00 Interest Only Dollars (U.S. 653.00 Interest Only), due on
the 1st day of each Month, beginning September 1, 1998. Such
payments shall continue until the entire indebtedness evidenced
by this Note is fully paid; provided, however, if not sooner
paid, the entire principal amount outstanding and accrued
interest thereon, shall be due and payable on July 24, 2000.
2. Borrower shall pay to the Note Holder a late charge of 5% of
any payment not received by the Note Holder within 15 days after
the payment is due.
3. Payments received for application to this Note shall be
applied first to the payment of late charges, if any, second to
the payment of accrued interest at the rate specified below, if
any, third, to accrued interest first specified above, and the
balance applied in reduction of the principal amount hereof.
4. If any payment required by this Note is not paid when due,
or if any default under any Deed of Trust securing this Note
occurs, the entire principal amount outstanding and accrued
interest thereon shall at once become due and payable at the
option of the Note Holder (Acceleration); and the indebtedness
shall bear interest at the rate of 15 percent per annum from the
date of default. The Note Holder shall be entitled to collect
all reasonable costs and expense of collection and/or suit,
including, but not limited to reasonable attorneys' fees.
5. Borrower may prepay the principal amount outstanding under
this Note, in whole or in part, at any time without penalty
except n/a.
Any partial prepayment shall be applied against the principal
amount outstanding and shall not postpone the due date of any
subsequent payments or change the amount of such payments.
6. Borrower and all other makers, sureties, guarantors, and
endorsers hereby waive presentment, notice of dishonor and
protest, and they hereby agree to any extensions of time of
payment and partial payments before, at, or after maturity. This
Note shall be the joint and several obligation of Borrower and
all other makers, sureties, guarantors and endorsers, and their
successors and assigns.
7. Any notice to Borrower provided for in this Note shall be in
writing and shall be given and be effective upon (1) delivery to
Borrower (2) mailing such notice by first-class U.S. Mail,
addressed to Borrower at the Borrower's address stated below, or
to such other address as Borrower may designate by notice to the
Note Holder. Any notice to the Note Holder shall be in writing
and shall be given and be effective upon (1) delivery to Note
Holder or (2) mailing such notice by first-class U.S. mail, to
the Note Holder at the address stated in the first paragraph of
this Note, or to such other address as Note Holder may designate
by notice to Borrower.
8. The indebtedness evidenced by this Note is secured by a Deed
of Trust dated July 24, 1998, and until released said Deed of
Trust contains additional rights of the Note Holder. Such rights
may cause Acceleration of the indebtedness evidenced by this
Note. Reference is made to said Deed of Trust for such
additional terms. Such deed of trust grants rights in the
property identified as follows:
PARCEL II:
- ---------
A tract of land located in the SW1/4 of Section 13, Township 3
North, Range 68 West of the 6th P.M., County of Weld, State of
Colorado, being more particularly described as: Beginning on the
South line of the said SW1/4 of Section 13; from which the South
quarter corner of Section 13 bears East, a distance of 166.20
feet;
thence North, at a right angle to the said South line, a distance
of 30.00 feet to the True Point of Beginning;
thence, continuing North, a distance of 459.90 feet; thence South
68 degrees 00 minutes West, a distance of 263.00 feet; thence
South 88 degrees 00 minutes West, a distance of 103.21 feet;
thence South, a distance of 357.78 feet;
thence East, a distance of 347.00 feet, more or less to the True
Point of Beginning.
EXCEPTING THEREFROM that portion as conveyed to The Callahan
Reservoir and Irrigation Company by Deed dated December 30, 1937
and recorded February 4, 1938 in Book 1021 at Page 600, as
Reception No. 782723.
See Exhibit "A" for Additional Parcel.
Property address: 5425 Weld County Road 32, Longmont, Colorado
(CAUTION: SIGN ORIGINAL NOTE ONLY/RETAIN COPY)
/s/ William E. Harper
-----------------------------------
William E. Harper
Borrower's address: 6237 Nottinghill Gate
Boulder, Colorado 80301
KEEP THIS NOTE IN A SAFE PLACE. THE ORIGINAL OF THIS NOTE MUST
BE EXHIBITED TO THE PUBLIC TRUSTEE IN ORDER TO RELEASE A DEED OF
TRUST SECURING THIS NOTE
PAY TO THE ORDER OF PNC BANK, NATIONAL
ASSOCIATION, a National banking association,
successor by merger to PNC BANK, KENTUCKY,
INC., a Kentucky banking corporation formerly
known as Citizens Fidelity Bank and Trust
Company
/s/ F. Dale Markham
----------------------------------------
F. Dale Markham, President
Healthcare Investors of America, Inc.
a Maryland Corporation
<PAGE>
"EXHIBIT A"
LEGAL DESCRIPTION
PARCEL 1:
- --------
A tract of land located in the SW1/4 of Section 13, in Township 3
North, Range 68 West of the 6th P.M., County of Weld, State of
Colorado, being more particularly described as follows:
Beginning at a point on the South line of the said SW1/4 of
Section 13 from which the South Quarter corner of said Section 13
bears East, a distance of 513.20 feet;
thence North, at a right angle to the said South line, a distance
of 30.00 feet to the True Point of Beginning; thence West
parallel to the said South line of the said SW1/4 a distance of
1013.35 feet;
thence North, a distance of 327.11 feet; thence East, parallel
to the said South line, a distance of 430.04 feet;
thence South 63 degrees 00 minutes East, a distance of 232.90
feet; thence North 78 degrees 00 minutes East, a distance of
340.40 feet; thence North, a distance of 64.10 feet; thence
North 88 degrees 00 minutes East, a distance of 42.79 feet;
thence South, a distance of 357.78 feet, more or less, to the
True Point of Beginning.
<PAGE>
EXHIBIT 10.101
DEED OF TRUST
(Due on Transfer - Strict)
THIS DEED OF TRUST is made this 24th day of July, 1998,
between William E. Harper (Borrower), whose address is 6237
Nottinghill Gate, Boulder, Colorado 80301; and the Public Trustee
of the County in which the Property (see paragraph 1) is situated
(Trustee); for the benefit of Healthcare Investors of America,
Inc., a Maryland Corporation (Lender), whose address is 2990
North Swan Road, Suite 228, Tucson, Arizona 85712.
Borrower and Lender covenant and agree as follows:
1. Property in Trust. Borrower, in consideration of the
indebtedness herein recited and the trust herein created, hereby
grants and conveys to Trustee in trust, with power of sale, the
following described property located in the County of Weld, State
of Colorado:
SEE EXHIBIT "A" ATTACHED HERETO AND MADE PART HEREOF
which has the address of 5425 Weld County Road 32, Longmont,
Colorado 80504 (Property Address) together with all its
appurtenances (Property).
2. Note; Other Obligations Secured. This Deed of Trust is
given to secure to Lender:
A. the repayment of the indebtedness evidenced by
Borrower's notes (Note) dated July 24, 1998, in the principal sum
of $82,500.00 U.S. Dollars, with interest on the unpaid principal
balance from July 24, 1998, until paid, at the rate of 9.5
percent per annum, with principal and interest payable at 2990
North Swan Road, Suite 228, Tucson, Arizona 85712 or such other
place as the Lender may designate, in 24 payments of 653.00
Interest Only Dollars (U.S. $653.00 Interest Only) due on the 1st
day of each Month beginning September 1, 1998; such payments to
continue until the entire indebtedness evidenced by said Note is
fully paid; however, if not sooner paid, the entire principal
amount outstanding and accrued interest thereon, shall be due and
payable on July 24, 2000; and Borrower is to pay to Lender a late
charge of 5% of any payment not received by the Lender within 15
days after payment is due; and Borrower has the right to prepay
the principal amount outstanding under said Note, in whole or in
part, at any time without penalty except n/a
B. the payment of all other sums, with interest
thereon at 15% per annum, disbursed by Lender in accordance with
this Deed of Trust to protect the security of this Deed of Trust;
and
C. the performance of the covenants and agreements of
Borrower herein contained.
3. Title. Borrower covenants that Borrower owns and has
the right to grant and covey the Property, and warrants title to
the same, subject to general real estate taxes for the current
year, easements of record or in existence, and recorded
declarations, restrictions, reservations and covenants, if any,
as of this date and except
4. Payment of Principal and Interest. Borrower shall
promptly pay when due the principal of and interest on the
indebtedness evidenced by the Note, and late charges as provided
in the Note and shall perform all of Borrower's other covenants
contained in the Note.
5. Application of Payments. All payments received by
Lender under the terms hereof shall be applied by Lender first in
payment of amounts due pursuant to paragraph 23 (Escrow Funds for
Taxes and Insurance), then to amounts disbursed by Lender
pursuant to paragraph 9 (Protection of Lender's Security), and
the balance in accordance with the terms and conditions of the
Note.
6. Prior Mortgages and Deeds of Trust; Charges; Liens.
Borrower shall perform all of Borrower's obligations under any
prior deed of trust and any other prior liens. Borrower shall
pay all taxes, assessments and other charges, fines and
impositions attributable to the property which may have or attain
a priority over this Deed of Trust, and leasehold payments or
ground rents, if any, in the manner set out in paragraph 23
(Escrow Funds for Taxes and Insurance) or, if not required to be
paid in such manner, by Borrower making payment when due,
directly to the payee thereof. Despite the foregoing, Borrower
shall not be required to make payments otherwise required by this
paragraph if Borrower, after notice to Lender, shall in good
faith contest such obligation by, or defend enforcement of such
obligation in, legal proceedings which operate to prevent the
enforcement of the obligation or forfeiture of the Property or
any part thereof, only upon Borrower making all such contested
payments and other payments as ordered by the court to the
registry of the court in which such proceedings are filed.
7. Property Insurance. Borrower shall keep the
improvements now existing or hereafter erected on the Property
insured against loss by fire or hazards including within the term
"extended coverage" in an amount at least equal to the lesser of
(1) the insurable value of the Property or (2) an amount
sufficient to pay the sums secured by this Deed of Trust as well
as any prior encumbrances on the Property. All of the foregoing
shall be known as "Property Insurance".
The insurance carrier providing the insurance shall be
qualified to write Property Insurance in Colorado and shall be
chosen by Borrower subject to Lender's right to reject the chosen
carrier for reasonable cause. All insurance policies and
renewals thereof shall include a standard mortgage clause in
favor of Lender, and shall provide that the insurance carrier
shall notify Lender at least ten (10) days before cancellation,
termination or any material change of coverage. Insurance
policies shall be furnished to Lender at or before closing.
Lender shall have the right to hold the policies and renewals
thereof.
In the event of loss, Borrower shall give prompt notice to
the insurance carrier and Lender. Lender may make proof of loss
if not made promptly by Borrower.
Insurance proceeds shall be applied to restoration or repair
of the Property damaged, provided such restoration or repair is
economically feasible and the security of this Deed of Trust is
not thereby impaired. If such restoration or repair is not
economically feasible or if the security of this Deed of Trust
would be impaired, the insurance proceeds shall be applied to the
sums secured by this Deed of Trust, with the excess, if any, paid
to Borrower. If the Property is abandoned by Borrower, or if
Borrower fails to respond to Lender within 30 days from the date
notice is given in accordance with paragraph 16 (Notice) by
Lender to Borrower that the insurance carrier offers to settle a
claim for insurance benefits, Lender is authorized to collect and
apply the insurance proceeds, at Lender's option, either to,
restoration or repair of the Property or to the sums secured by
this Deed of Trust.
Any such application of proceeds to principal shall not
extend or postpone the due date of the installments referred to
in paragraphs 4 (Payment of Principal and Interest) and 23
(Escrow Funds for Taxes and Insurance) or change the amount of
such installments. Notwithstanding anything herein to the
contrary, if under paragraph 18 (Acceleration; Foreclosure; Other
Remedies) the Property is acquired by Lender, all right, title
and interest of Borrower in any to any insurance policies and in
and to the proceeds thereof resulting from damage to the Property
prior to the sale or acquisition shall pass to Lender to the
extent of the sums secured by this Deed of Trust immediately
prior to such sale or acquisition.
All of the rights of Borrower and Lender hereunder with
respect to insurance carriers, insurance policies and insurance
proceeds are subject to the rights of any holder of a prior deed
of trust with respect to said insurance carriers, policies and
proceeds.
8. Preservation and Maintenance of Property. Borrower
shall keep the Property in good repair and shall not commit waste
or permit impairment or deterioration of the Property and shall
comply with the provisions of any lease in this Deed of Trust is
on a leasehold. Borrower shall perform all of Borrower's
obligations under any declarations, covenants, bylaws, rules, or
other documents governing the use, ownership or occupancy of the
Property.
9. Protection of Lender's Security. Except when Borrower
has exercised Borrower's rights under paragraph 6 above, if the
Borrower fails to perform the covenants and agreements contained
in this Deed of Trust, or if a default occurs in a prior lien, or
if any action or proceeding is commenced which materially affects
Lender's interest in the Property, then Lender, at Lender's
option, with notice to Borrower if required by law, may make such
appearances, disburse such sums and take such action as is
necessary to protect Lender's interest, including, but not
limited to, disbursement of reasonable attorney's fees and entry
upon the Property to make repairs. Borrower hereby assigns to
Lender any right Borrower may have reason of any prior
encumbrance on the Property or by law or otherwise to cure any
default under said prior encumbrance.
Any amounts disbursed by Lender pursuant to this paragraph
9, with interest thereon, shall become additional indebtedness of
Borrower secured by this Deed of Trust. Such amounts shall be
payable upon notice from Lender to Borrower requesting payment
thereof, and Lender may bring suit to collect any amounts so
disbursed plus interest specified in paragraph 28 (Note; Other
Obligations Secured). Nothing contained in this paragraph 9
shall require Lender to incur any expense or take any action
hereunder.
10. Inspection. Lender may make or cause to be made
reasonable entries upon and inspection of the Property, provided
that Lender shall give Borrower notice prior to any such
inspection specifying reasonable cause therefore related to
Lender's interest in the Property.
11. Condemnation. The proceeds of any award or claim for
damages, direct or consequential, in connection with any
condemnation or other taking of the Property, or part thereof, or
for conveyance in lieu of condemnation, are hereby assigned and
shall be paid to Lender as herein provided. However, all of the
rights of Borrower and Lender hereunder with respect to such
proceeds are subject to the rights of any holder of a prior deed
of trust.
In event of a total taking of the Property, the proceeds
shall be applied to the sums secured by this Deed of Trust, with
the excess, if any, paid to Borrower. In the event of a partial
taking of the Property, the proceeds remaining after taking out
any part of the award due any prior lien holder (net award) shall
be divided between Lender and Borrower, in the same ratio as the
amount of the sums secured by this Deed of Trust immediately
prior to the date of taking bears to Borrower's equity in the
Property immediately prior to the date of taking. Borrower's
equity in the Property means the fair market value of the
Property less the amount of sums secured by both this Deed of
Trust and all prior liens (except taxes) that are to receive any
of the award, all at the value immediately prior to the date of
taking.
If the property is abandoned by Borrower, or if, after
notice by Lender to Borrower that the condemnor offers to make an
award or settle a claim for damages. Borrower fails to respond
to Lender within 30 days after the date such notice is given,
Lender is authorized to collect and apply the proceeds, at
Lender's option, either to restoration or repair of the Property
or to the sums secured by this Deed of Trust.
Any such application of proceeds to principal shall not
extend or postpone the due date of the installments referred to
in paragraphs 4 (Payment of Principal and Interest) and 23
(Escrow Funds for Taxes and Insurance) nor change the amount of
such installments.
12. Borrower Not Released. Extension of the time for
payment or modification of amortization of the sums secured by
this Deed of Trust granted by Lender to any successor in interest
of Borrower shall not operate to release, in any manner, the
liability of the original Borrower, nor Borrower's successors in
interest, from the original terms of this Deed of Trust. Lender
shall not be required to commence proceedings against such
successor or refuse to extend time for payment or otherwise
modify amortization of the sums secured by this Deed of Trust by
reason of any demand made by the original Borrower nor Borrower's
successors in interest.
13. Forbearance by Lender Not a Waiver. Any forbearance by
Lender in exercising any right or remedy hereunder, or otherwise
afforded by law, shall not be a waiver or preclude the exercise
of any such right or remedy.
14. Remedies Cumulative. Each remedy provided in the Note
and this Deed of Trust is distinct from and cumulative to all
other rights or remedies under the Note and this Deed of Trust or
afforded by law or equity, and may be exercised concurrently,
independently or successively.
15. Successors and Assigns Bound; Joint and Several
Liability; Captions. The covenants and agreements herein
contained shall bind, and the rights hereunder shall inure to,
the respective successors and assigns of Lender and Borrower,
subject to the provisions of paragraph 24 (Transfer of the
Property; Assumption). All covenants and agreements of Borrower
shall be joint and several. The captions and headings of the
paragraphs of this Deed of Trust are for convenience only and are
not to be used to interpret or define the provisions hereof.
16. Notice. Except for any notice required by law to be
given in another manner, (a) any notice to Borrower provided for
in this Deed of Trust shall be in writing and shall be given and
be effective upon (1) delivery to Borrower or (2) mailing such
notice by first-class U.S. mail, addressed to Borrower at
Borrower's address stated herein or at such other address as
Borrower may designate by notice to Lender as provided herein,
and (b) any notice to Lender shall be in writing and shall be
given and be effective upon (1) delivery to Lender or (2) mailing
such notice by first-class U.S. mail, to Lender's address stated
herein or to such other address as Lender may designate by notice
to Borrower as provided herein. Any notice provided for in this
Deed of Trust shall be deemed to have been given to Borrower or
Lender when given in any manner designated herein.
17. Governing Law; Severability. The Note and this Deed of
Trust shall be governed by the law of Colorado. In the event
that any provision or clause of this Deed of Trust or the Note
conflicts with the law, such conflict shall not affect other
provisions of this Deed of Trust or the Note which can be given
effect without the conflicting provision, and to this end the
provisions of the Deed of Trust and Note are declared to be
severable.
18. Acceleration; Foreclosure; Other Remedies. Except as
provided in paragraph 24 (Transfer of the Property; Assumption),
upon Borrower's breach of any covenant or agreement of Borrower
in this Deed of Trust, or upon any default in a prior lien upon
the Property, (unless Borrower has exercised Borrower's rights
under paragraph 6 above), at Lender's option, all of the sums
secured by this Deed of Trust shall be immediately due and
payable (Acceleration). To exercises this option, Lender may
invoke the power of sale and any other remedies permitted by law.
Lender shall be entitled to collect all reasonable costs and
expenses incurred in pursuing the remedies provided in this Deed
of Trust, including, but not limited to, reasonable attorney's
fees.
If Lender invokes the power of sale, Lender shall give
written notice to Trustee of such election. Trustee shall give
such notice to Borrower of Borrower's rights as is provided by
law. Trustee shall record a copy of such notice as required by
law. Trustee shall advertise the time and place of the sale of
the Property, for not less than four weeks in a newspaper of
general circulation in each county in which the Property is
situated, and shall mail copies of such notice of sale to
Borrower and other persons as prescribed by law. After the lapse
of such time as may be required by law, Trustee, without demand
on Borrower, shall sell the Property at public auction to the
highest bidder for cash at the time and place (which may be on
the Property or any part thereof as permitted by law) in one or
more parcels as Trustee may think best and in such order as
Trustee may determine. Lender or Lender's designee may purchase
the Property at any sale. It shall not be obligatory upon the
purchaser at any such sale to see the application of the purchase
money.
Trustee shall apply the proceeds of the sale in the
following order: (a) to all reasonable costs and expenses of the
sale, including, but not limited to, reasonable Trustee's and
attorney's fees and costs of title evidence; (b) to all sums
secured by this Deed of Trust; and (c) the excess, if any, to the
person or persons legally entitled thereto.
19. Borrower's Right to Cure Default. Whenever foreclosure
is commenced for nonpayment of any sums due hereunder, the owners
of the Property or parties liable hereon shall be entitled to
cure said defaults by paying all delinquent principal and
interest payments due as of the date of cure, costs, expenses,
late charges, attorney's fees and other fees all in the manner
provided by law. Upon such payment, this Deed of Trust and the
obligations secured hereby shall remain in full force and effect
as though no Acceleration had occurred, and the foreclosure
proceedings shall be discontinued.
20. Assignment of Rents; Appointment of Receiver; Lender in
Possession. As additional security hereunder, Borrower hereby
assigns to Lender the rents of the Property; however, Borrower
shall, prior to Acceleration under paragraph 18 (Acceleration;
Foreclosure; Other Remedies) or abandonment of the Property, have
the right to collect and retain such rents as they become due and
payable.
Lender or the holder of the Trustee's certificate of
purchase shall be entitled to a receiver for the Property after
Acceleration under paragraph 18 (Acceleration; Foreclosure; Other
Remedies), and shall also be so entitled during the time covered
by foreclosure proceedings and the period of redemption, if any;
and shall be entitled thereto as a matter of right without regard
to the solvency or insolvency of Borrower or of the then owner of
the Property, and without regard to the value thereof. Such
receiver may be appointed by any Court of competent jurisdiction
upon ex parte application and without notice -- notice being
hereby expressly waived.
Upon Acceleration under paragraph 18 (Acceleration;
Foreclosure; Other Remedies) or abandonment of the Property,
Lender, in person, by agent or by judicially-appointed receiver,
shall be entitled to enter upon, take possession of and manage
the Property and to collect the rents of the Property including
those past due. All rents collected by Lender or the receiver
shall be applied, first, to payment of the costs of preservation
and management of the Property, second, to payments due upon
prior liens, and then to the sums secured by this Deed of Trust.
Lender and the receiver shall be liable to account only for those
rents actually received.
21. Release. Upon payment of all sums secured by this Deed
of Trust, Lender shall cause Trustee to release this Deed of
Trust and shall produce for Trustee the Note. Borrower shall pay
all costs of recordation and shall pay the statutory Trustee's
fees. If Lender shall not produce the Note as aforesaid, then
Lender, upon notice in accordance with paragraph 16 (Notice) from
Borrower to Lender, shall obtain, at Lender's expense, and file
any lost instrument bond required by Trustee or pay the cost
thereof to effect the release of this Deed of Trust.
22. Waiver of Exemptions. Borrower hereby waives all right
of homestead and any other exemption in the Property under state
or federal law presently existing or hereafter enacted.
23. Escrow Funds for Taxes and Insurance. This paragraph
23 is not applicable if Funds as defined below are being paid
pursuant to a prior encumbrance. Subject to applicable law,
Borrower shall pay to Lender, on each day installments of
principal and interest are payable under the Note, until the Note
is paid in full, a sum (herein referred to as "Funds") equal to
n/a of the yearly taxes and assessments which may attain priority
over this Deed of Trust, plus n/a of yearly premium installments
for Property Insurance, all as reasonably estimated initially and
from time to time by Lender on the basis of assessments and bills
and reasonable estimated thereof, taking into account any excess
Funds not used or shortages.
The principal of the funds shall be held in a separate
account by the Lender in trust for the benefit of the Borrower
and deposited in an institution the deposits or accounts of which
are insured or guaranteed by a federal or state agency. Lender
shall apply the Funds to pay said taxes, assessments and
insurance premiums. Lender may not charge for so holding and
applying the Funds, analyzing said account or verifying and
compiling said assessments and bills. Lender shall not be
required to pay Borrower any interest or earnings on the Funds.
Lender shall give to Borrower, without charge, an annual
accounting of the Funds showing credits and debits to the Funds
and the purpose for which each debit to the Funds was made. The
Funds are pledged as additional security for the sums secured by
this Deed of Trust.
If the amount of the Funds held by Lender shall not be
sufficient to pay taxes, assessments and insurance premiums as
they fall due, Borrower shall pay to Lender any amount necessary
to make up the deficiency within 30 days from the date notice is
given in accordance with paragraph 16 (Notice) by Lender to
Borrower requesting payment thereof.
Upon payment in full of all sums secured by this Deed of
Trust, Lender shall simultaneously refund to Borrower any Funds
held by Lender. If under paragraph 18 (Acceleration;
Foreclosure; Other Remedies) the Property is sold or the Property
is otherwise acquired by Lender, Lender shall apply, no later
than immediately prior to the sale of the Property or its
acquisition by Lender, whichever occurs first, any Funds held by
Lender at the time of application as a credit against the sums
secured by this Deed of Trust.
24. Transfer of the Property; Assumption. The following
events shall be referred to herein as a "Transfer": (i) a
transfer or conveyance of title (or any portion thereof, legal or
equitable) of the Property (or any part thereof or interest
therein), (ii) the execution of a contract or agreement creating
a right to title (or any portion thereof, legal or equitable) in
the Property (or any part thereof or interest therein), (iii) or
an agreement granting a possessory right in the Property (or any
portion thereof), in excess of three (3) years, (iv) a sale or
transfer of, or the execution of a contract or agreement creating
a right to acquire or receive, more than fifty percent (50%) of
the controlling interest or more than fifty percent (50%) of the
beneficial interest in the Borrower, (v) the reorganization,
liquidation or dissolution of the Borrower. Not to be included
as a Transfer are (i) the creation of a lien or encumbrance
subordinate to this Deed of Trust, (ii) the creation of a
purchase money security interest for household appliances, or
(iii) a transfer by devise, descent or by operation of the law
upon the death of a join tenant. At the election of Lender, in
the event of each and every Transfer:
(a) All sums secured by this Deed of Trust shall
become immediately due and payable (Acceleration).
(b) If a Transfer occurs and should Lender not
exercise Lender's option pursuant to this paragraph 24 to
Accelerate, Transferee shall be deemed to have assumed all of the
obligations of Borrower under this Deed of Trust including all
sums secured hereby whether or not the instrument evidencing such
conveyance, contract or grant expressly so provides. This
covenant shall run with the Property and remain in full force and
effect until said sums are paid in full. The Lender may without
notice to the Borrower deal with Transferee in the same manner as
with the Borrower with reference to said sums including the
payment or credit to Transferee of undisbursed reserve Funds on
payment in full of said sums, without in any way altering or
discharging the Borrower's liability hereunder for the
obligations hereby secured.
(c) Should Lender not elect to Accelerate upon the
occurrence of such Transfer then, subject to (b) above, the mere
fact of a lapse of time or the acceptance of payment subsequent
to any of such events, whether or not Lender had actual or
constructive notice of such Transfer, shall not be deemed a
waiver of Lender's right to make such election nor shall Lender
be estopped therefrom by virtue thereof. The issuance on behalf
of the Lender of a routine statement showing the status of the
loan, whether or not Lender had actual or constructive notice of
such Transfer, shall not be a waiver or estoppel of Lender's said
rights.
25. Borrower's Copy. Borrower acknowledges receipt of a
copy of the Note and of this Deed of Trust.
EXECUTED BY BORROWER
/s/ William E. Harper
-----------------------------------
William E. Harper
STATE OF COLORADO )
) ss. The forgoing instrument was
County of Weld ) acknowledged before me this
24th day of July, 1998
by William E. Harper
Witness my hand and official seal.
My commission expires /s/ Kelly L. Belden
August 9, 1999 -----------------------------
1113 Tenth Avenue
No. TD 72-11-83 Greeley, Colorado 80631
26. *Borrower agrees to operate and maintain the wastewater
treatment system (the System) located on a portion of the
Property in accordance iwht applicable law, including but not
limited to the regulations of the Colorado Department of Health,
Water Quality Control Division (the Dividion). Borrower further
agrees to submit timely all Discharge Monitoring Reports to the
Division with copies of any such Reports to be delivered to
Lender no later than the 15th calendar day of each month when
each such Report is due. Borrower agrees to pay timely any fines
imposed with respect to the System and to undertake at all times
to maintain the permit related to the System. Failure to comply
with this paragraph will result in the rights made available to
lender under paragraph 18 hereof.
<PAGE>
"EXHIBIT A"
LEGAL DESCRIPTION
PARCEL 1:
--------
A tract of land located in the SW1/4 of Section 13, in
Township 3 North, Range 68 West of the 6th P.M., County
of Weld, State of Colorado, being more particularly
described as follows:
Beginning at a point on the South line of the said
SW1/4 of Section 13 from which the South Quarter corner
of said Section 13 bears East, a distance of 513.20
feet; thence North, at a right angle to the said South
line, a distance of 30.00 feet to the True Point of
Beginning; thence West parallel to the said South line
of the said SW1/4 a distance of 1013.35 feet; thence
North, a distance of 327.11 feet; thence East, parallel
to the said South line, a distance of 430.04 feet;
thence South 63 degrees 00 minutes East, a distance of
232.90 feet; thence North 78 degrees 00 minutes East, a
distance of 340.40 feet; thence North, a distance of
64.10 feet; thence North 88 degrees 00 minutes East, a
distance of 42.79 feet; thence South, a distance of
357.78 feet, more or less, to the True Point of
Beginning.
PARCEL II:
---------
A tract of land located in the SW1/4 of Section 13,
Township 3 North, Range 68 West of the 6th P.M., County
of Weld, State of Colorado, being more particularly
described as:
Beginning on the South line of the said SW1/4 of
Section 13; from which the South quarter corner of
Section 13 bears East, a distance of 166.20 feet;
thence North, at a right angle to the said South line,
a distance of 30.00 feet to the True Point of
Beginning; thence, continuing North, a distance of
459.90 feet; thence South 68 degrees 00 minutes West, a
distance of 263.00 feet; thence South 88 degrees 00
minutes West, a distance of 103.21 feet; thence South,
a distance of 357.78 feet; thence East, a distance of
347.00 feet, more or less to the True Point of
Beginning.
EXCEPTING THEREFROM that portion as conveyed to The
Callahan Reservoir and Irrigation Company by Deed dated
December 30, 1937 and recorded February 4, 1938 in Book
1021 at Page 600, as Reception No. 782723.
<PAGE>
THIS INSTRUMENT PREPARED BY:
- ----------------------------
/s/ Arthur A. Rouse
- ----------------------------
Arthur A. Rouse
WYATT, TARRANT & COMBS
2700 Citizens Plaza
Louisville, Kentucky 40202
(502) 562-7508
COLLATERAL ASSIGNMENT OF PROMISSORY NOTES
-----------------------------------------
AND DEEDS OF TRUST
------------------
THIS COLLATERAL ASSIGNMENT OF PROMISSORY NOTES AND DEEDS
OF TRUST (the "Assignment") is executed by the parties to it
actually on the respective dates indicated in the notarial
certificates affixed below, but is made and delivered effective
as of July 24, 1998, by and between [i] HEALTHCARE INVESTORS OF
AMERICA, INC., a Maryland corporation having its principal office
at 2990 North Swan Road, Suite 228, Tucson, Arizona 85712
("Borrower"), and [ii] PNC BANK, NATIONAL ASSOCIATION, a national
banking association ("Lender") having an address of 500 West
Jefferson Street, Louisville, Jefferson County, Kentucky 40202,
that is successor by merger to PNC BANK, KENTUCKY, INC., a
Kentucky banking corporation formerly known as Citizens Fidelity
Bank and Trust Company ("PNCKY").
RECITALS
A. Borrower is indebted to Lender for the principal
of and accrued and unpaid interest on and any other sums due
under each of the two promissory notes as follows (collectively,
the "PNC Notes"): [i] Promissory Note (Renewal and Increase)
dated as of May 4, 1990, made by Borrower (formerly known as
Harbor American Health Care Trust, Inc.) to the order of Lender
(as successor by merger to PNCKY, formerly known as Citizens
Fidelity Bank and Trust Company) in face principal amount of
$3,900,000 (including any and all extensions, renewals and
amendments thereto, and substitutions and replacements therefor,
the "1990 Note"), and [ii] Promissory Note (Renewal and Increase)
dated as of September 20, 1992, made by Borrower in face
principal amount of $2,002,542.48 (including any and all
extensions, renewals and amendments thereto, and substitutions
and replacements therefor, the "1992 Note").
B. Borrower is the payee and holder of two promissory
notes (collectively, the "Harper Notes"), each secured by a Deed
of Trust (collectively, the "Deeds of Trust"), as follows: [i]
Promissory Note dated as of July 24, 1998 made by WILLIAM E.
HARPER, whose address is 6237 Nottinghill Gate, Boulder, Colorado
80301 ("Mr. Harper"), to the order of Borrower in face principal
amount of $100,000, secured by a Deed of Trust dated as of July
24, 1998 granted by Mr. Harper to the Public Trustee of Weld
County, Colorado, recorded July , 1998, in the public records
---
of Weld County, Colorado at Reception No. , Book ,
----- ------
Page , and [ii] Promissory Note dated as of July 24, 1998
------
made by Mr. Harper to the order of Borrower in the face principal
amount of $82,500, secured by a Deed of Trust dated as of July 24
granted by Mr. Harper to the Public Trustee of Weld County,
Colorado, recorded July , 1998, in the public records of Weld
---
County, Colorado at Reception No. , Book , Page
------- ------
.
- ------
C. Lender has required Borrower to collaterally
assign the Harper Notes and Deeds of Trust to Lender as security
for the payment of PNC Notes, and in conjunction with the
execution and delivery of this Assignment Borrower is endorsing
each of the Harper Notes to the order of Lender and delivering
possession of the Notes and Deeds of Trust to Lender.
NOW, THEREFORE, in consideration of the premises, and for
other valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, and intending to be legally bound,
it is hereby agreed as follows:
1. Borrower hereby collaterally assigns to Lender all of
the right, title and interest of Borrower in and to the Harper
Notes and the Deeds of Trust (collectively, the "Collateral"), as
security for the payment in full on their respective due date(s)
of all the indebtedness evidenced by each of the PNC Notes and
all of the other obligations of Borrower under any and all
security documents and other documents delivered by Borrower to
secure or otherwise pertaining to either of the PNC Notes (such
indebtedness and obligations are referred to collectively
hereinafter as the "Obligations"), and Lender is hereby vested
with all of the rights and remedies of Borrower under and with
respect to the Harper Notes, the Deeds of Trust and the
Collateral just as though Lender originally were the obligee
under the Notes and the beneficiary under the Deeds of Trust.
2. Borrower represents and warrants that it is the true
and lawful holder and owner of the entire interest of the obligee
under each of the Harper Notes and the Deeds of Trust, that the
same are not subject to any offsets or defenses to all of the
rights and remedies thereunder of the holder of each of the
Harper Notes and the beneficiary under each of the Deeds of
Trust; that this Assignment does not conflict with or constitute
a breach under any of the organizational documents governing
Borrower or any agreements to which Borrower is a party or by
which Borrower is bound; that this Assignment constitutes a
legal, valid and binding obligation upon Borrower, enforceable in
accordance with the terms thereof ; that the outstanding
principal amount of each of the Harper Notes as of the date of
this Assignment is $100,000 and $82,500, respectively; and that
Mr. Harper is not indebted to Borrower as of the date of this
Assignment except for the indebtedness evidenced by the Notes.
3. Except for payments of interest under each of the
Harper Notes as the same becomes due, which, prior to any default
under any of the PNC Notes or other Obligations, may be paid to
Borrower directly and disposed of by Borrower as Borrower
determines, all payments of principal and interest and any other
sums due under any the Harper Notes shall be remitted to Lender
rather than to Borrower and Lender shall be permitted, at the
sole and exclusive option of Lender, either to retain the same as
cash collateral for the Obligations or to apply the same to
payment of the indebtedness evidenced by the PNC Notes and the
other Obligations in such order as Lender elects. Any payments
in respect of the Harper Notes received by Borrower and not
permitted under this Section shall be and constitute a trust fund
held by Borrower for the benefit of Lender, and Borrower shall
immediately, without demand, remit each such payment to Lender
for disposition as provided above.
4. Borrower shall not incur any indebtedness to Mr.
Harper. Borrower shall advise Lender immediately upon Borrower
becoming aware of any default in the payment of either of the
Harper Notes or performance of the obligations of the grantor
under either of the Deeds of Trust, and Borrower shall not waive
any such default without first obtaining on each occasion thereof
the express prior written consent of Lender (any purported waiver
without such written consent being void and of no effect).
Borrower shall provide Lender, promptly upon request of Lender,
with notice of the amount of indebtedness outstanding under each
of the Harper Notes, and copies of checks or other evidence of
all payments made under each of the Harper Notes.
5. Borrower shall maintain and preserve the Collateral
and, without limitation of the foregoing, the enforceability of
all of the provisions of the Harper Notes and the Deeds of Trust
and shall defend the same against the claims and demands of all
persons and entities. Without limiting the generality of the
foregoing, Borrower shall not forgive or compromise or permit the
discharge (except by the payment in money thereof) of any of the
indebtedness evidenced by either of the Harper Notes, nor consent
to any amendment or modification of either of the Harper Notes or
the Deeds of Trust, without first obtaining upon each occasion
thereof the express written consent of Lender (any such purported
forgiveness, compromise, discharge or amendment without such
consent being void and of no effect). Borrower shall not permit
any material part of the Collateral to levied upon under any
legal process.
6. Borrower hereby irrevocably appoints Lender as the
attorney in fact of Borrower to do all acts and things which
Lender may deem necessary or appropriate to perfect and continue
perfected and enforceable the security interests in the
Collateral granted pursuant to this Assignment, and to protect
the rights and enforce all remedies granted to Borrower pursuant
to the Harper Notes and the Deeds of Trust, including, but not in
any way limited to, the execution, filing and recording of UCC-1
and other financing statements covering the Collateral and the
bringing of actions to collect either or both of the Harper Notes
and to foreclose upon the property granted pursuant to the Deeds
of Trust, or either of them, in Borrower's name, as Borrower's
attorney in fact, wherever and whenever Lender deems appropriate.
All fees and taxes required for or in connection with any such
filings, and all costs of enforcement of either of the Harper
Notes or the Deeds of Trust incurred by Lender, shall be paid for
by Borrower immediately upon demand of Lender and if paid by
Lender, Borrower shall provide reimbursement therefor, with
interest thereon at the highest rate in effect prior to a
default, under the PNC Notes.
7. Any default by Borrower under this Assignment shall
constitute a default under the PNC Notes entitling Lender to
declare all of the obligations thereunder to be immediately due
and payable in full, without demand or notice of any kind, and
Lender shall have all the rights and remedies in and against the
Harper Notes, the Deeds of Trust and otherwise as provided under
applicable law and in equity.
8. Borrower acknowledges and agrees that Lender shall be
under no obligation whatsoever to monitor the compliance by Mr.
Harper with the provisions of the Harper Notes or the Deeds of
Trust or to enforce any rights or remedies thereunder unless and
until Lender elects to do so. Borrower agrees that the whole or
any part of the Collateral may be exchanged, compromised or
surrendered by Lender from time to time and that the provisions
of the Harper Notes and the Deeds of Trust may be modified,
amended or waived on one or more occasions and that Borrower
shall remain bound hereunder and under the PNC Notes and the
other Obligations notwithstanding any such actions or omissions
by Lender. The ability of Lender to pursue its remedies under
this Assignment shall be direct and immediate and not conditional
or contingent upon the pursuit of any remedies against Borrower
or any other person or entity or against any or all of the other
security or liens available to the Lender for the payment of the
Obligations, and Borrower hereby waives any claim to marshaling
of assets.
9. This Assignment constitutes the final, complete and
exclusive agreement of the parties to it with regard to its
subject matter and supercedes all prior written and oral
agreements pertaining to it, may be executed in any number of
counterparts, each of which shall be an original and all of which
taken together shall constitute one and the same Assignment, and
may not be modified or amended except pursuant to a written
agreement signed by the party charged with such amendment.
IN WITNESS WHEREOF, this Assignment has been executed by
the parties to it on the dates indicated in the notarial certifi-
cates below but delivered effective as of the date first above
written.
"Borrower"
Healthcare Investors of America, Inc., a
Maryland corporation
By: /s/ F. Dale Markham
-------------------------------
F. Dale Markham, President
"Lender"
PNC Bank, National Association,
a national banking association
By: /s/ Lawrence E. Reynolds
-------------------------------
Lawrence E. Reynolds,
Vice President
STATE OF )
--------------
):SS
COUNTY OF )
-------------
The foregoing Assignment was acknowledged before me this
day of July, 1998, by F. Dale Markham, as President of
- -----
Healthcare Investors of America, Inc., a Maryland corporation, on
behalf of the corporation.
Witness my hand and official seal.
My commission expires:
---------------------------------
---------------------------------
Notary Public
STATE OF KENTUCKY )
):SS
COUNTY OF JEFFERSON )
The foregoing Assignment was acknowledged before me this
day of July, 1998, by Lawrence E. Reynolds, as Vice
- -----
President of PNC Bank, National Association that is successor by
merger to PNC Bank, Kentucky, Inc., a Kentucky banking corpora-
tion, on behalf of the association.
Witness my hand and official seal.
My commission expires:
---------------------------------
----------------------------------
Notary Public
<PAGE>
The printed portions of this form have been approved by
the Colorado Real Estate Commission. (CBS 5B-9-95)
THIS FORM HAS IMPORTANT LEGAL CONSEQUENCES AND THE PARTIES SHOULD
CONSULT LEGAL AND TAX OR OTHER COUNSEL BEFORE SIGNING.
COMMERCIAL
CONTRACT TO BUY AND SELL REAL ESTATE
(FINANCING SECTIONS OMITTED)
August 6, 1998
--------------
1. PARTIES AND PROPERTY. Continuum Health Partnership
Inc. and/or assigns, buyer(s) [Buyer], (as joint tenants/tenants
in common) agrees to buy, and the undersigned seller(s) [Seller],
agrees to sell, on the terms and conditions set forth in this
contract, the following described real estate in the County of
Weld, Colorado, to wit:
1819 Birch Avenue, Greeley, CO
Legal to be attached and made a part of this Contract
known as No. 1819 Birch Avenue, Greeley, CO 80631, together with
all interest of Seller in vacated streets and alleys adjacent
thereto, all easements and other appurtenances thereto, all
improvements thereon and all attached fixtures thereon, except as
herein excluded (collectively the Property).
2. INCLUSIONS/EXCLUSIONS. The purchase price includes the
following items (a) if attached to the Property on the date of
this contract: lighting, heating, plumbing, ventilating, and air
conditioning fixtures, TV antennas, water softeners,
smoke/fire/burglar alarms, security devices, inside telephone
wiring and connecting blocks/jacks, plants, mirrors, floor
coverings, intercom systems, built-in kitchen appliances,
sprinkler systems and controls; (b) if on the Property whether
attached or not on the date of this contract: storm windows,
storm doors, window and porch shades, awnings, blinds, screens,
curtain rods, drapery rods, all keys and (c) all personal
property located on premises. The above-described included items
(Inclusions) are to be conveyed to Buyer by Seller by bill of
sale at the closing, free and clear of all taxes, liens and
encumbrances, except as provided in Section 12. The following
attached fixtures are excluded from this sale: NONE.
3. PURCHASE PRICE AND TERMS. The purchase price shall be
$250,000, payable in U.S. dollars by Buyer as follows:
(a) ERNEST MONEY. $15,000 in the form of check, as earnest
money deposit and part payment of the purchase price, payable to
and held by Transnation Title & Insurance Co., broker, in its
trust account on behalf of both Seller and Buyer. Broker is
authorized to deliver the earnest money deposit to the closing
agent, if any, at or before Closing.
The balance of $235,000 (purchase price less earnest money)
shall be paid as follows:
(b) CASH AT CLOSING. $235,000, plus closing costs, to be
paid by Buyer at closing in funds which comply with all
applicable Colorado laws, which include cash, electronic transfer
funds, certified check, savings and loan teller's check, and
cashier's check (Good Funds). Subject to the provisions of
Section 4, if the existing loan balance at the time of closing
shall be different from the loan balance in Section 3, the
adjustment shall be made in Good Funds at closing or paid as
follows: NONE 1/2 of Escrow Cost.
4. FINANCING CONDITIONS AND OBLIGATIONS. Cash at Closing.
FINANCING TERMS, CONDITIONS AND OBLIGATIONS, PERTAINING TO
SECTIONS 3 AND 4, ARE ATTACHED BY REAL ESTATE COMMISSION APPROVED
ADDENDUM AS FOLLOWS: (check as applicable)
[ ] New Loan
[ ] Assumption
[ ] Seller or Private Third-Party Financing
5. APPRAISAL PROVISION. (Check only one box.) This
Section 5 [ ] shall [X] shall not apply.
Page 1 of 4
<PAGE>
6. COST OF APPRAISAL. Cost of any appraisal to be
obtained after the date of this contract shall be timely paid by
N/A.
7. NOT ASSIGNABLE. This contract shall not be assignable
by Buyer without Seller's prior written consent. Except as so
restricted, this contract shall inure to the benefit of and be
binding upon the heirs, personal representatives, successors and
assigns of the parties.
8. EVIDENCE OF TITLE. Seller shall furnish to Buyer, at
Seller's expense, either a current commitment for owner's title
insurance policy in an amount equal to the purchase price or at
Seller's choice, an abstract of title certified to a current
date, on or before August 6, 1998 (Title Deadline). If a title
insurance commitment is furnished, Buyer may require of Seller
that copies of instruments (or abstracts of instruments) listed
in the schedule of exceptions (Exceptions) in the title insurance
commitment also be furnished to Buyer at Seller's expense. This
requirement shall pertain only to instruments shown of record in
the office of the clerk and recorder of the designated county or
counties. The title insurance commitment, together with any
copies or abstracts of instruments furnished pursuant to this
Section 8, constitute the title documents (Title Documents).
Buyer, or Buyer's designee, must request Seller, in writing, to
furnish copies or abstracts of instruments listed in the schedule
of exceptions no later than 0 calendar days after Title Deadline.
If Seller furnishes a title insurance commitment, Seller will pay
the premium at closing and have the title insurance policy
delivered to Buyer as soon as practicable after closing.
9. TITLE.
(a) TITLE REVIEW. Buyer shall have the right to inspect
the Title Documents or abstract. Written notice by Buyer of
unmerchantability of title or of any other unsatisfactory title
condition shown by the Title Documents or abstract shall be
signed by or on behalf of Buyer and given to Seller on or before
0 calendar days after Title Deadline, or within five (5) calendar
days after receipt by Buyer of any Title Document(s) or
endorsement(s) adding new Exception(s) to the title commitment
together with a copy of the Title Document adding new
Exception(s) to title. If Seller does not receive Buyer's notice
by the date(s) specified above, Buyer accepts the condition of
title as disclosed by the Title Documents as satisfactory.
(b) MATTERS NOT SHOWN BY THE PUBLIC RECORDS. Seller shall
deliver to Buyer, on or before the Title Deadline set forth in
Section 8, true copies of all lease(s) and survey(s) in Seller's
possession pertaining to the Property and shall disclose to Buyer
all easements, liens or other title matters not shown by the
public records of which Seller has actual knowledge. Buyer shall
have the right to inspect the Property to determine if any third
party(s) has any right in the Property not shown by the public
records (such as an unrecorded easement, unrecorded lease, or
boundary line discrepancy). Written notice of any unsatisfactory
condition(s) disclosed by Seller or revealed by such inspection
shall be signed by or on behalf of Buyer and given to Seller on
or before NONE. If Seller does not receive Buyer's notice by
said date, Buyer accepts title subject to such rights, if any, of
third parties of which Buyer has actual knowledge.
(c) SPECIAL TAXING DISTRICTS. SPECIAL TAXING DISTRICTS MAY
BE SUBJECT TO GENERAL OBLIGATION INDEBTEDNESS THAT IS PAID BY
REVENUES PRODUCED FROM ANNUAL TAX LEVIES ON THE TAXABLE PROPERTY
WITHIN SUCH DISTRICTS. PROPERTY OWNERS IN SUCH DISTRICTS MAY BE
PLACED AT RISK FOR INCREASED MILL LEVIES AND EXCESSIVE TAX
BURDENS TO SUPPORT THE SERVICING OF SUCH DEBT WHERE CIRCUMSTANCES
ARISE RESULTING IN THE INABILITY OF SUCH A DISTRICT TO DISCHARGE
SUCH INDEBTEDNESS WITHOUT SUCH AN INCREASE IN MILL LEVIES. BUYER
SHOULD INVESTIGATE THE DEBT FINANCING REQUIREMENTS OF THE
AUTHORIZED GENERAL OBLIGATION INDEBTEDNESS OF SUCH DISTRICTS,
EXISTING MILL LEVIES OF SUCH DISTRICT SERVICING SUCH
INDEBTEDNESS, AND THE POTENTIAL FOR AN INCREASE IN SUCH MILL
LEVIES.
In the event the Property is located within a special taxing
district and Buyer desires to terminate this contract as a
result, if written notice is given to Seller on or before the
date set forth in subsection 9(b), this contract shall then
terminate. If Seller does not receive Buyer's notice by the date
specified above, Buyer accepts the effect of the Property's
inclusion in such special taxing district(s) and waives the right
to so terminate.
(d) RIGHT TO CURE. If Seller receives notice of
unmerchantability of title or any other unsatisfactory title
condition(s) as provided in subsection (a) or (b) above, Seller
shall use reasonable effect to correct said unsatisfactory title
condition(s) prior to the date of closing. If Seller fails to
correct said unsatisfactory title condition(s) on or before the
date of closing, this contract shall then terminate; provided,
however, Buyer may, by written notice received by Seller, on or
before closing, waive objection to said unsatisfactory title
condition(s).
10. INSPECTION. Buyer or any designee, shall have the
right to have inspection(s) of the physical condition of the
Property and Inclusions, at Buyer's expense. If written notice
of any unsatisfactory condition, signed by or on behalf of Buyer,
is not received by Seller on or before NONE (Objection Deadline),
the physical condition of the Property and Inclusions shall be
deemed to be satisfactory to Buyer. If such notice is received
by Seller as set forth above, and if Buyer and Seller have not
agreed, in writing, to a settlement thereof on or before
, 19 (Resolution Deadline), this contract
- -------------------- ----
shall terminate three calendar days following the Resolution
Deadline; unless, within the three calendar days, Seller receives
written notice from Buyer waiving objection to any unsatisfactory
condition. Buyer is responsible for and shall pay for any damage
which occurs to the Property and Inclusions as a result of such
inspection.
11. DATE OF CLOSING. The date of closing shall be August
24, 1998, or by mutual agreement at an earlier date. The hour
and place of closing shall be as designated by Title Co.
12. TRANSFER OF TITLE. Subject to tender or payment at
closing as required herein and compliance by Buyer with the other
terms and provisions hereof, Seller shall execute and deliver a
good and sufficient General Warranty deed to Buyer, on closing,
conveying the Property free and clear of all taxes except the
general taxes for the year of closing, and except prorated at
close of escrow. Title shall be conveyed free and clear of all
liens for special improvements installed as of the date of
Buyer's signature hereon, whether assessed or not; except (i)
distribution utility easements (including cable TV), (ii) those
matters reflected by the Title Documents accepted by Buyer in
accordance with subsection 9(a), (iii) those rights, if any, of
third parties in the Property not shown by the public records in
accordance with subsection 9(b), (iv) inclusion of the Property
within any special taxing district, and (v) subject to building
and zoning regulations.
13. PAYMENT OF ENCUMBRANCES. Any encumbrance required to
be paid shall be paid at or before closing from the proceeds of
this transaction or from any other source.
14. CLOSING COSTS, DOCUMENTS AND SERVICES. Buyer and
Seller shall pay, in Good Funds, their respective closing costs
and all other items required to be paid at closing, except as
otherwise provided herein. Buyer and Seller shall sign and
complete all customary or required documents at or before
closing. Fees for real estate closing services shall not exceed
$1,000 and shall be paid at closing by Buyer 1/2--Seller 1/2.
The local transfer tax of 0% of the purchase price shall be paid
at closing by Buyer. Any sales and use tax that may accrue
because of this transaction shall be paid when due by Buyer.
15. PRORATIONS. General taxes for the year of closing,
based on the taxes for the calendar year immediately preceding
closing, rents, water and sewer charges, owner's association
dues, and interest on continuing loan(s), if any, and
- ----------------------------------------------------------------
shall be prorated to date of closing.
Page 2 of 4
<PAGE>
16. POSSESSION. Possession of the Property shall be
delivered to Buyer as follows:
DATE OF CLOSING AND DELIVERY OF DEED
, subject to the following lease(s) or tenancy(s): NONE
If Seller, at closing, fails to deliver possession on the date
herein specified, Seller shall be subject to eviction and shall
be additionally liable to Buyer for payment of $100.00 per day
from the date of agreed possession until possession is delivered.
17. CONDITION OF AND DAMAGE TO PROPERTY. Except as
otherwise provided in this contract, the Property and Inclusions
shall be delivered in the condition existing as of the date of
this contract, ordinary wear and tear excepted. In the event the
Property shall be damaged by fire or other casualty prior to time
of closing, in an amount of not more than ten percent of the
total purchase price, Seller shall be obligated to repair the
same before the date of closing. In the event such damage is not
repaired within said time or if the damages exceed such sum, this
contract may be terminated at the option of Buyer. Should Buyer
elect to carry out this contract despite such damage, Buyer shall
be entitled to credit for all the insurance proceeds resulting
from such damage to the Property and Inclusions, not exceeding,
however, the total purchase price. Should any Inclusion(s) or
service(s) fail or be damaged between the date of this contract
and the date of closing or the date of possession, whichever
shall be earlier, then Seller shall be liable for the repair or
replacement of such Inclusion(s) or service(s) with a unit of
similar size, age and quality, or an equivalent credit, less any
insurance proceeds received by Buyer covering such repair or
replacement.
18. TIME OF ESSENCE/REMEDIES. Time is of the essence
hereof. If any note or check received as earnest money hereunder
or any other payment due hereunder is not paid, honored or
tendered when due, or if any other obligation hereunder is not
performed or waived as herein provided, there shall be the
following remedies:
(a) IF BUYER IS IN DEFAULT:
(Check one box only.)
[ ] (1) SPECIFIC PERFORMANCE.
Seller may elect to treat this contract as cancelled,
in which case all payments and things of value received
hereunder shall be forfeited and retained on behalf of
Seller, and Seller may recover such damages as may be
proper, or Seller may elect to treat this contract as
being in full force and effect and Seller shall have
the right to specific performance or damages, or both.
[X] (2) LIQUIDATED DAMAGES.
All payments and things of value received hereunder
shall be forfeited by Buyer and retained on behalf of
Seller and both parties shall thereafter be released
from all obligations hereunder. It is agreed that such
payments and things of value are LIQUIDATED DAMAGES and
(except as provided in subsection (c)) are SELLER'S
SOLE AND ONLY REMEDY for Buyer's failure to perform the
obligations of this contract. Seller expressly waives
the remedies of specific performance and additional
damages.
(b) IF SELLER IS IN DEFAULT: Buyer may elect to treat this
contract as cancelled, in which case all payments and things of
value hereunder shall be returned and Buyer may recover such
damages as may be proper, or Buyer may elect to treat this
contract as being in full force and effect and Buyer shall have
the right to specific performance or damages, or both.
(c) COSTS AND EXPENSES. Anything to the contrary herein
notwithstanding, in the event of any arbitration or litigation
arising out of this contract, the arbitrator or court shall award
to the prevailing party all reasonable costs and expenses,
including attorney fees.
19. EARNEST MONEY DISPUTE. Notwithstanding any termination
of this contract, Buyer and Seller agree that, in the event of
any controversy regarding the earnest money and thins of value
held by broker or closing agent, unless mutual written
instructions are received by the holder of the earnest money and
things of value, broker or closing agent shall not be required to
take any action but may await any proceeding, or at broker's or
closing agent's option and sole discretion, may interplead all
parties and deposit any moneys or things of value into a court of
competent jurisdiction and shall recover court costs and
reasonable attorney fees.
20. ALTERNATIVE DISPUTE RESOLUTION: MEDIATION. If a
dispute arises relating to this contract, and is not resolved,
the parties and broker(s) involved in such dispute (Disputants)
shall first proceed in good faith to submit the matter to
mediation. The Disputants will jointly appoint an acceptable
mediator and will share equally in the cost of such mediation.
In the event the entire dispute is not resolved within thirty
(30) calendar days from the date written notice requesting
mediation is sent by one Disputant to the other(s), the
mediation, unless otherwise agreed, shall terminate. This
section shall not alter any date in this contract, unless
otherwise agreed.
21. ADDITIONAL PROVISIONS: NONE.
Page 3 of 4
<PAGE>
22. RECOMMENDATION OF LEGAL COUNSEL. By signing this
document, Buyer and Seller acknowledge that the Selling Company
or the Listing Company has advised that this document has
important legal consequences and has recommended the examination
of title and consultation with legal and tax or other counsel
before signing this contract.
23. TERMINATION. In the event this contract is terminated,
all payments and things of value received hereunder shall be
returned and the parties shall be relieved of all obligations
hereunder, subject to Section 19.
24. SELLING COMPANY BROKER RELATIONSHIP. The selling
broker, by separate agreement, and its salespersons have been
engaged as Selling Company has previously disclosed in writing to
the Buyer that different relationships are available which
include buyer agency, seller agency, subagency, or transaction-
broker.
25. NOTICE TO BUYER. Any notice to Buyer shall be
effective when received by Buyer, or if this box is checked [ ]
when received by Selling Company.
26. NOTICE TO SELLER. Any notice to Seller shall be
effective when received by Seller or Listing Company.
27. MODIFICATION OF THIS CONTRACT. No subsequent
modification of any of the terms of this contract shall be valid,
binding upon the parties, or enforceable unless made in writing
and signed by the parties.
28. ENTIRE AGREEMENT. This contract constitutes the entire
contract between the parties relating to the subject hereof, and
any prior agreements pertaining thereto, whether or al or
written, have been merged and integrated into this contract.
29. NOTICE OF ACCEPTANCE; COUNTERPARTS. This proposal
shall expire unless accepted in writing, by Buyer and Seller, as
evidenced by their signatures below, and the offering party
receives notice of such acceptance on or before August 6, 1998
(Acceptance Deadline). If accepted, this document shall become a
contract between Seller and Buyer. A copy of this document may
be executed by each party, separately, and when each party has
executed a copy thereof, such copies taken together shall be
deemed to be a full and complete contract between the parties.
CONTINUUM HEALTH PARTNERSHIP, INC.
By:
---------------------------------
James W. Parker, Secretary,
Treasurer and Chief Financial Officer
Date of Buyer's signature , 19
--------------------------- ------
Buyer's Address 5401 West Tenth St., Suite 100B, Greeley, CO
80631
HEALTHCARE INVESTORS OF AMERICA, INC.
By: /s/ F. Dale Markham
----------------------------------
F. Dale Markham, President
Date of Seller's Signature: August 6, 1998
Seller's Address 2990 N. Swan Road, Suite 228, Tucson, AZ 85712
=================================================================
The undersigned Broker(s) acknowledges receipt of the earnest
money deposit specified in Section 3, and Selling Company
confirms its Broker Relationship as set forth in Section 24.
Selling Company
Lockhart Action & Realty Co., Inc. as Broker of Record
By: , 19
-------------------------------- ---------------- -----
Signature
Listing Company
--------------------------------------------------
Name and Address
By: , 19
-------------------------------- ---------------- -----
Signature
Page 4 of 4
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
inclusion of our report dated April 28, 1997 covering the
financial statements for the year ended December 31, 1996 in
the Form 10-KSB for Healthcare Investors of America, Inc. for
the year ended December 31, 1997. It should be noted that
we have not audited any financial statements of the company
subsequent to December 31, 1996 or performed any audit
procedures subsequent to the date of our report.
August 11, 1998 ARTHUR ANDERSEN LLP
Nashville, Tennessee
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
inclusion of our report dated July 10, 1998, except for Note 7,
for which the date is August 6, 1998, covering the financial
statements for the year ended December 31, 1997 in the
Form 10-KSB for Healthcare Investors of America, Inc. for
the year ended December 31, 1997.
LAVOIE, CLARK, CHARVOZ & MAY, P.C.
Tucson, Arizona
August 12, 1998
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<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 89,965
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<RECEIVABLES> 29,267
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