<PAGE> 1
FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER: 0-22178
ARBOR HEALTH CARE COMPANY
(Exact name of registrant as specified in its charter)
DELAWARE 34-1469604
(State of incorporation) (IRS Employer
Identification No.)
1100 SHAWNEE ROAD, P. O. BOX 840, LIMA, OHIO 45802-0840
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (419) 227-3000
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
Shares of Registrant's Common Stock, $.03 par value, outstanding as of the close
of business on November 12, 1996 -- 6,898,255.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
Number
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<S> <C>
PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets ................................... 3
Consolidated Statements of Income .............................. 4
Consolidated Statements of Cash Flows........................... 5
Notes to Interim Consolidated Financial Statements.............. 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations................... 7
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings................................................9
Item 2. Changes in Securities...........................................10
Item 3. Defaults Upon Senior Securities.................................10
Item 4. Submission of Matters to a Vote of Security Holders.............10
Item 5. Other Information...............................................10
Item 6. Exhibits and Reports on Form 8-K................................10
</TABLE>
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PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ARBOR HEALTH CARE COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(IN THOUSANDS EXCEPT FOR SHARE DATA)
<TABLE>
<CAPTION>
DECEMBER 31 SEPTEMBER 30
1995 1996
---- ----
ASSETS (Note 1)
<S> <C> <C>
Current assets
Cash and cash equivalents .................................. $ 6,394 $ 3,201
Accounts receivable, less allowances of $1,285 and
$1,368, respectively ................................... 36,207 40,929
Other current assets ....................................... 5,765 7,382
Deferred income taxes ...................................... 1,320 1,364
-------- --------
Total current assets ........................................... 49,686 52,876
Property and equipment
Land and improvements ...................................... 19,966 23,595
Buildings and improvements ................................. 73,845 91,293
Equipment and furnishings .................................. 30,411 38,800
Leasehold improvements ..................................... 7,247 6,228
Construction in process .................................... 12,985 6,156
-------- --------
144,454 166,072
Less allowances for depreciation and amortization .......... 27,470 32,504
-------- --------
Total property and equipment ................................... 116,984 133,568
Other assets
Goodwill, less amortization of $281 and $748, respectively . 10,483 12,603
Deferred costs, less amortization of $3,242 and
$3,199, respectively ................................... 1,438 2,209
Sundry ..................................................... 192 190
-------- --------
Total other assets ............................................. 12,113 15,002
-------- --------
$178,783 $201,446
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Notes payable .............................................. $ 4,496 $ 1,669
Accounts payable ........................................... 15,889 12,113
Accrued payroll and related items .......................... 11,043 13,998
Other liabilities .......................................... 8,094 9,686
Current maturities of long-term obligations ................ 5,957 5,502
-------- --------
Total current liabilities ...................................... 45,479 42,968
Long-term obligations, less current maturities ................. 74,741 91,317
Deferred income taxes .......................................... 2,935 4,513
Stockholders' equity
Preferred stock, $.01 par value
Authorized - 2,000,000 shares
None issued or outstanding
Common stock, $.03 par value
Authorized -- 20,000,000 shares
Issued and outstanding -- 6,891,992 and 6,898,255 shares 207 207
Additional paid-in capital ................................. 30,135 30,199
Retained earnings .......................................... 25,286 32,242
-------- --------
Total stockholders' equity ..................................... 55,628 62,648
-------- --------
$178,783 $201,446
======== ========
</TABLE>
See accompanying notes
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ARBOR HEALTH CARE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In thousands except per share data)
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30 ENDED SEPTEMBER 30
------------------ ------------------
1995 1996 1995 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net revenues
Subacute care ................... $ 24,913 $ 29,165 $ 74,003 $ 82,971
Basic care ...................... 19,810 21,110 55,224 62,722
Pharmacy and other .............. 4,879 5,686 10,643 15,385
-------- -------- --------- ---------
Total net revenues ................ 49,602 55,961 139,870 161,078
Expenses
Operating ....................... 39,127 43,578 111,231 127,011
General corporate ............... 2,052 2,430 6,633 7,123
Operating lease rental .......... 1,111 1,157 3,162 3,410
Net Interest .................... 1,587 1,884 4,188 5,161
Depreciation and amortization ... 2,015 2,216 5,312 6,498
-------- -------- --------- ---------
Total expenses .................... 45,892 51,265 130,526 149,203
Other expense (income)
Loss on disposal of property .... 26 315 168 498
Interest and sundry ............. (48) (32) (208) (130)
-------- -------- --------- ---------
Total other expense (income) ...... (22) 283 (40) 368
-------- -------- --------- ---------
Income before income taxes ........ 3,732 4,413 9,384 11,507
Income taxes ...................... 1,433 1,723 3,622 4,551
-------- -------- --------- ---------
Net income ........................ $ 2,299 $ 2,690 $ 5,762 $ 6,956
======== ======== ========= =========
Net income per share .............. $ 0.33 $ 0.39 $ 0.84 $ 1.00
======== ======== ========= =========
Weighted average shares outstanding 6,922 6,954 6,871 6,970
======== ======== ========= =========
</TABLE>
See accompanying notes
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ARBOR HEALTH CARE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
Nine Months
Ended September 30
------------------
1995 1996
---- ----
<S> <C> <C>
Operating activities
Net income ................................................. $ 5,762 $ 6,956
Adjustments to reconcile net income to net cash
provided by operating activities
Provision for depreciation ............................. 4,633 5,432
Amortization ........................................... 878 1,304
Provision for deferred income taxes .................... (129) 1,534
Provision for losses on accounts receivable ............ 1,049 1,447
Loss on disposal of property ........................... 168 498
Changes in operating assets and liabilities
Accounts receivable .................................. 3,946 (5,770)
Other current assets ................................. (798) (1,328)
Deferred preopening costs ............................ (647) (850)
Accounts payable ..................................... 310 (3,960)
Accrued payroll and related items .................... 3,718 2,927
Other liabilities (income tax payments of $4,370,
and $4,766, respectively) .......................... 710 1,521
-------- --------
Net cash provided by operating activities ..................... 19,600 9,711
Investing activities
Expenditures for property and equipment .................... (15,623) (18,417)
Purchase of Arbors at Fairlawn ............................. (6,693) --
Purchase of The Druggist, Inc. (net of cash received) ...... (4,993) --
Purchase of Poly-Stat Businesses (net of cash received) ... -- (1,003)
Purchase of Arbors at Waterville ........................... -- (5,772)
Sundry and other (principally proceeds on sales of
property and equipment) .................................. (3) 38
-------- --------
Net cash used in investing activities ......................... (27,312) (25,154)
Financing activities
Net borrowings (repayments) under line of credit agreements
to finance development projects and acquisitions ......... 18,450 (5,214)
Net borrowings (repayments) of working capital
under line of credit agreements .......................... (1,577) (2,827)
Borrowings on long-term obligations ........................ 107 27,000
Repayments of long-term obligations ........................ (8,195) (6,014)
Deferred financing costs ................................... (63) (759)
Issuance of stock .......................................... 55 64
-------- --------
Net cash provided by financing activities ..................... 8,777 12,250
-------- --------
Net increase (decrease) in cash and cash equivalents .......... 1,065 (3,193)
Cash and cash equivalents at beginning of period .............. 5,555 6,394
-------- --------
Cash and cash equivalents at end of period .................... $ 6,620 $ 3,201
======== ========
</TABLE>
See accompanying notes
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ARBOR HEALTH CARE COMPANY AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
(UNAUDITED)
1. ORGANIZATION AND BASIS OF PRESENTATION
The consolidated balance sheet of Arbor Health Care Company and subsidiaries
(the "Company") at December 31, 1995 has been derived from the audited
consolidated financial statements at that date. The consolidated balance sheet
of the Company as of September 30, 1996, and the consolidated statements of
income and cash flows for the periods ended September 30, 1996 and 1995, have
been prepared by the Company, without audit, in accordance with the rules and
regulations of the Securities and Exchange Commission. In the opinion of
management, all adjustments, consisting only of normal recurring adjustments,
necessary to fairly present the financial position, results of operations and
cash flows at September 30, 1996 and for all periods presented have been made.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. These condensed consolidated financial
statements should be read in conjunction with the audited consolidated financial
statements and notes thereto included in the Company's Annual Report on Form
10-K for the year ended December 31, 1995. The results of operations and cash
flows for the periods ended September 30, 1996 and 1995 are not necessarily
indicative of the operating results or cash flows for the full year.
2. ACQUISITIONS
On September 19, 1996, the Company acquired Arbors at Waterville, a 100-bed
Center that it has operated under an operating lease agreement since 1989. The
Company financed a portion of the $5.8 million purchase with $4.6 million from
its acquisition/development lines of credit. Raymond James Financial, Inc.
("RJFI") owns two subsidiaries that are the controlling partners in a
partnership that is the general partner in a partnership that owned the center.
The general partner's interest in the leased center was 1%. Thomas A. James, a
Director of the Company, is an officer, director and major stockholder of RJFI.
The Company acquired all of the outstanding stock of Poly-Stat Supply
Corporation and Poly-Stat Computer Applications, Inc. effective June 30, 1996.
The Poly-Stat businesses provide enteral feeding, urological, ostomy,
tracheostomy, surgical dressing and oxygen supplies and Medicare billing
services to nursing homes. The purchase price of approximately $1.2 million for
the Poly-Stat businesses included approximately $1.0 million in cash and
approximately $0.2 million in promissory notes. In addition, a $1.0 million
contingent payment may be made if certain earnings targets are attained over the
next five years.
On May 31, 1995, the Company acquired substantially all of the assets of Arbors
at Fairlawn, a 150-bed nursing and assisted living facility, for approximately
$6.7 million in cash and assumed certain liabilities of $3.8 million for a total
purchase price of approximately $10.5 million. On June 30, 1995, the Company
acquired all of the outstanding stock of The Druggist, Inc. ("Druggist"), an
institutional pharmacy, for approximately $10.5 million in cash and notes, and
exchanged 49,937 shares of its Common Stock for all of the outstanding shares of
Alternacare Plus Enterprises, Inc. ("Alternacare"), a provider of medical and
enteral feeding supplies and Medicare billing services. Additional consideration
of up to $2.5 million may be required for the Druggist acquisition if certain
earnings targets are attained over the five year period subsequent to the
purchase.
These acquisitions except Alternacare have been treated as purchases for
accounting and financial reporting purposes. Results of operations of companies
purchased and the immaterial pooling of Alternacare are included from the dates
of acquisition.
3. LONG-TERM OBLIGATIONS
On February 15, 1996, the Company closed a $27.0 million financing package
($13.5 million at a fixed interest rate of 7.75% and $13.5 million at a variable
interest rate) for six Centers that was used to repay $24.2 million of debt. The
notes are collateralized by real estate, equipment and accounts receivable and
are payable in semi-annual installments and lump sums through February, 2003.
6
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
The Company was formed in 1985 and had an initial public offering of
its Common Stock in August 1993. As more fully described in the Annual Report on
Form 10-K for the year ended December 31, 1995, the Company provides subacute
and basic health care services to patients in centers ("Centers") located in
five states and operates three institutional pharmacies, one in Ohio and two in
Florida. The Company's growth strategy includes the development of new
facilities, the addition of new pharmacy contracts and selected acquisitions in
its primary markets. During 1995, the Company developed and opened two 120-bed
Centers, one in April and one in October, acquired a 150-bed Center on May 31,
1995 and on June 30, 1995 acquired an institutional pharmacy and a provider of
medical supplies and Medicare billing services. The Company opened a 79-bed
Center in April, 1996 and a 116-bed Center in August, 1996 and purchased two
businesses that provide medical supplies and Medicare billing services effective
June 30, 1996. The Company operated 3,458 beds in its 29 Centers at September
30, 1996. The Company's institutional pharmacies service 206 non-affiliated
facilities and 28 of the Company's Centers. Refer to Note 2 to the Interim
Consolidated Financial Statements. Ongoing efforts by third party payors to
contain health care costs by limiting reimbursement rates, increasing case
management review and negotiating reduced contract pricing affect the Company's
revenues and profitability. The Company has begun to implement a strategy to
lower costs and improve margins of its managed care business and is positioning
itself for proposed changes in Medicare reimbursement.
THREE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED TO THREE MONTHS ENDED SEPTEMBER
30, 1995
For the three months ended September 30, 1996 total net revenues of
$56.0 million increased $6.4 million, or 12.8%, from the three months ended
September 30, 1995. Approximately 85.1% of the revenue increase was derived from
internal growth and the balance from acquisitions made during 1995 and 1996.
Medicare rates, increased approximately 3%. Average insurance rates, which are a
blend of indemnity insurance and managed care rates, are approximately 19% lower
due to a higher proportion of revenue from managed care patients, whose rates
typically are lower than those for indemnity patients. However, as a result of
the increased census of managed care patients, insurance and managed care
revenue accounted for 13.5% of total revenues as compared to 12.9% last year.
Same Store (Centers and pharmacies in operation for 24 months or more as of the
period reported upon) revenues accounted for 6.5% of the total revenue increase.
Revenues from Start-Ups (Centers and pharmacies in operation for less than 24
months as of the period reported upon) provided approximately 78.6% of the total
revenue increase. Subacute care revenues (which accounted for 52.1% of total
revenues) increased $4.3 million due to the addition of new beds during the
period. Basic care revenues increased $1.3 million primarily from new beds added
during the period. Pharmacy and other revenues increased $0.8 million primarily
due to the June 30, 1996 acquisition.
Operating expenses for the three months ended September 30, 1996 of
$43.6 million increased $4.5 million, or 11.4%, over the comparable period in
1995. Operating costs increased at a slower pace than revenue. As a percent of
revenue, operating costs decreased to 77.9% from 78.9% for the comparable period
in 1995, due to lower operating costs at Same Store Centers and pharmacies. The
increased costs were due to Start-Up Centers and acquisitions made in 1995 and
1996. Center personnel compensation expenses of $20.2 million (which are
included in operating expenses) increased by $1.7 million, or 9.1%, over the
comparable period in 1995. Start-Up Centers accounted for a $2.2 million
increase in Center personnel compensation expenses, which was partially offset
by Same Store cost control efforts. The cost of providing additional
pharmaceuticals, therapies, and medical supplies increased operating expenses by
$1.8 million, while the net effect of other cost increases and decreases
reflected an overall net increase of $1.0 million primarily resulting from
Start-Up Centers.
General corporate expenses for the three months ended September 30,
1996 of $2.4 million increased $0.4 million, or 18.4%, from the comparable
period in 1995. This change was primarily caused by an increase in expenses
related to administrative personnel and professional services. As a percentage
of revenue, general corporate expenses increased to 4.3% from 4.1% in the
comparable period of the prior year.
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Ownership and leasing costs for the three months ended September 30,
1996 of $5.3 million increased $0.5 million, or 11.5%, over the three months
ended September 30, 1995. The increase in ownership costs is primarily due to
Start-Up Centers.
Net income increased by $0.4 million, or 17.0%, from the comparable
period in 1995, primarily as a result of the foregoing factors, notwithstanding
an increase in the effective income tax rate from 38.4% to 39.0%. The increase
in the tax rate was due to the discontinuance of the targeted jobs tax credit.
NINE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30,
1995
For the nine months ended September 30, 1996 total net revenues of
$161.1 million increased $21.2 million, or 15.2%, from the nine months ended
September 30, 1995. Approximately 62.5% of the revenue increase was derived from
internal growth and the balance from acquisitions made during 1995 and 1996.
Same Store revenue decreased approximately 0.1% from the comparable period in
1995. Medicare rates, which are cost based, declined approximately 4% as a
result of the Company's cost reduction efforts. Additionally, average insurance
rates, which are a blend of indemnity insurance and managed care rates, are
approximately 14.4% lower due to a higher proportion of revenue from managed
care patients, whose rates typically are lower than those for indemnity
patients. Revenues from Start-Ups provided approximately 63.0% of the total
revenue increase. Subacute care revenues (which accounted for 51.5% of total
revenues) increased $9.0 million due to the addition of new beds during the
year. Basic care revenues increased $7.5 million ($2.7 million from higher rates
and $4.8 million from new beds added during the year). Pharmacy and other
revenues increased $4.7 million due to the institutional pharmacies acquired in
1995 and 1996. Same Store subacute revenue declined $1.6 million from the
comparable period in 1995 (due to lower rates as discussed above). Same Store
growth provided $2.1 million of the basic care revenue increase (primarily due
to higher Medicaid rates). The remaining revenue growth came from Start-Up
Centers and the Center acquired in May, 1995.
Operating expenses for the nine months ended September 30, 1996 of
$127.0 million increased $15.8 million, or 14.2%, over the comparable period in
1995. Operating costs increased at a slower pace than revenue. As a percent of
revenue, operating costs decreased to 78.9% from 79.5% for the comparable period
in 1995, due to lower operating costs at Same Store Centers and pharmacies. The
increased costs were due to Start-Up Centers, the Center acquired in May, 1995,
and the institutional pharmacy acquired in June, 1995. Center personnel
compensation expenses of $59.3 million (which are included in operating
expenses) increased by $5.7 million, or 10.8%, over the comparable period in
1995. Start-Up Centers and the Center acquired in May, 1995 accounted for a $6.7
million increase in Center personnel compensation expenses, which was partially
offset by Same Store cost control efforts. The cost of providing additional
pharmaceuticals, therapies and medical supplies increased operating expenses by
$7.5 million, while the net effect of other cost increases and decreases
reflected an overall net increase of $2.6 million primarily resulting from
Start-Up Centers and the Center acquired in May, 1995.
General corporate expenses for the nine months ended September 30, 1996
of $7.1 million increased $0.5 million, or 7.4%, over the comparable period in
1995. As a percentage of revenue, general corporate expenses declined to 4.4%
from 4.7% in the comparable period of the prior year.
Ownership and leasing costs for the nine months ended September 30,
1996 of $15.1 million increased $2.4 million, or 19.0%, over the nine months
ended September 30, 1995. The increase in ownership costs is due primarily to
Start-Up Centers and the Center and institutional pharmacy acquired in 1995.
Net income increased by $1.2 million, or 20.7%, from the comparable
period in 1995, primarily as a result of the foregoing factors, notwithstanding
an increase in the effective income tax rate from 38.6% to 39.5%. The increase
in the tax rate was due to the discontinuance of the targeted jobs tax credit.
LIQUIDITY AND CAPITAL RESOURCES
The Company's growth during the last two years has been financed with
cash from operating and financing activities. The Company's cash from operating
activities was $9.7 million for the nine months ended September 30, 1996
compared to $19.6 million for the comparable period last year primarily due to
the build up of accounts receivable in Start-Up Centers and the timing of trade
accounts payable payments. Cash provided by financing activities was $12.3
million for the nine months ended September 30, 1996. Expenditures for investing
activities totaled $25.2 million, including development of Centers, the purchase
of a Center that had been operated by the Company since 1989 under an operating
lease, renovations to existing Centers, the Poly-Stat acquisition and the
purchase of a company airplane.
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At September 30, 1996, the Company had working capital of $9.9 million
compared to $4.2 million at December 31, 1995. Accounts receivable net of
allowances were $40.9 million at September 30, 1996 compared to $36.2 million at
December 31, 1995. The number of days of net revenues for the quarter in net
receivables increased to 67 at September 30, 1996 from 64 at December 31, 1995.
The Company has revolving credit facilities ("Credit Facilities") with
four banks that are renewable on an annual basis. These Credit Facilities
provide amounts for working capital, letters of credit and acquisition/
development financing of $4.6 million, $4.4 million and $48.6 million,
respectively. At September 30, 1996, $1.7 million of working capital had been
borrowed, $2.6 million of letters of credit were outstanding and $30.3 million
had been committed for acquisition and development purposes. The annual rates
charged by the banks vary. Interest rates on the working capital lines range
from London Interbank Offered Rates ("LIBOR") plus 1.5% to prime and on the
acquisition/development facilities from LIBOR plus 1.75% to prime. Annual fees
of 1.0% are charged to the Company by the banks issuing letters of credit under
these Credit Facilities. The Company has been successful in obtaining permanent
financing and refinancing existing debt while using its Credit Facilities as
interim sources of financing when appropriate.
Long-term obligations, including current maturities, which provide
funds for long-term financing of Centers and acquisitions, totaled approximately
$96.8 million at September 30, 1996. These obligations are for varying amounts
and for terms that expire at varying times over the next 17 years. Interest
rates on outstanding obligations ranged from 3.68% to 10.75% at September 30,
1996.
The Company has various ongoing needs for capital, including (i)
working capital for operations; (ii) capital expenditures for its Centers,
pharmacies or corporate office; and (iii) capital expenditures for the
development of new Centers and acquisitions. During the remainder of 1996 and in
1997, the Company expects to utilize approximately $20.0 million for completion
of a Center in Pensacola, Florida and the development of two to three additional
Centers; $3.9 million for Center renovations; and $10.7 million for other
capital expenditures. The Company expects the development costs for a typical
120-bed Center to be in a range of $6.0 to $7.5 million. Management believes
when all sources of capital are considered, including cash to be generated by
operating activities, credit facilities likely to be available, and other
financing activities to be undertaken, that sufficient capital resources will be
available to carry out anticipated undertakings during the next 12 to 24 months.
Federal budget discussions one year ago targeted the Medicare program
for savings in spending of approximately $10 billion. It is likely that similar
budget discussions will surface with the 105th Congress. Approximately 35% of
the Company's revenue is derived from Medicare. While any legislation of the
magnitude of last year's proposals could have a significant effect on the
Company, the Company will attempt to offset any cuts by making certain cost
reductions, changing patient mix and acuity, or increasing revenue from other
payor sources such as managed care. Until the ultimate form of any new
legislation is known, the Company will not be able to determine its financial
impact. In anticipation of such changes, the Company has begun to reduce costs
and to focus on increasing revenue from managed care payors. Additionally, the
House and Senate both have discussed changes to the welfare program, which
includes Medicaid. Approximately 32% of the Company's revenue is derived from
Medicaid. The Company can give no assurance that payments under the Medicaid
programs in the future will remain at a level comparable to the present level or
be sufficient to cover the costs allocable to such patients.
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings.
------------------
None
9
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Item 2. Changes in Securities.
----------------------
None
Item 3. Defaults Upon Senior Securities
-------------------------------
None
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
None
Item 5. Other Information
-----------------
None
Item 6. Exhibits and Reports on Form 8-K.
---------------------------------
(a) Exhibits
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
11.1 Statement Re Computation of Net Income Per Share.
27.1 Financial Data Schedule.
(b) Reports on Form 8-K
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ARBOR HEALTH CARE COMPANY
(Registrant)
Date 11/13/96 By: /s/ DENNIS R. SMITH
------------- -------------------------------------
Dennis R. Smith, Senior Vice President -
Finance and Chief Financial Officer
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PART II - OTHER INFORMATION
INDEX TO EXHIBITS
ITEM 6(A) EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
<S> <C>
3.1* Restated Certificate of Incorporation of the Company (incorporated by
reference to Exhibit 3.1 of the Company's Registration Statement on Form
S-3 (File No. 33-93470) filed June 14, 1995 under the Securities Act of
1933).
3.2* Restated bylaws of the Company (incorporated by reference to Exhibit 3.2 of
the Company's Registration Statement on Form S-3 (File No. 33-93470) filed
June 14, 1995 under the Securities Act of 1933).
4.1* Second Amended and Restated Revolving Credit and Term Loan Agreement dated
June 28, 1996 between the Company and KeyBank National Association, fka
Society National Bank (incorporated by reference to Exhibit 4.1 of the
Company's 10-Q for the quarter ended June 30, 1996).
4.2* Loan Agreement extension letter dated April 11, 1996 between the Company
and The Fifth Third Bank (incorporated by reference to Exhibit 4.2 of the
Company's 10-Q for the quarter ended June 30, 1996).
4.3* Promissory Note dated February 15, 1996 between the Company and Capital One
Funding Corporation (incorporated by reference to Exhibit 4.1 of the
Company's 10-Q for the quarter ended March 31, 1996).
4.4* Reimbursement Agreement dated February 12, 1996 between the Company and
Bank One, Kentucky, N.A. (incorporated by reference to Exhibit 4.2 of the
Company's 10-Q for the quarter ended March 31, 1996).
4.5* Open-End Mortgage and Security Agreement dated February 12, 1996 between
the Company and Bank One, Kentucky, N.A. (incorporated by reference to
Exhibit 4.3 of the Company's 10-Q for the quarter ended March 31, 1996).
4.6* Mortgage and Security Agreements (5) dated February 12, 1996 between the
Company and Bank One, Kentucky, N.A. (incorporated by reference to Exhibit
4.4 of the Company's 10-Q for the quarter ended March 31, 1996).
4.7* Assignments of Leases and Rents (6) dated February 12, 1996 between the
Company and Bank One, Kentucky, N.A. (incorporated by reference to Exhibit
4.5 of the Company's 10-Q for the quarter ended March 31, 1996).
4.8* Guaranty Agreement dated February 12, 1996 between the Company and Bank
One, Kentucky, N.A. (incorporated by reference to Exhibit 4.6 of the
Company's 10-Q for the quarter ended March 31, 1996).
4.9* Contingent Guaranty Agreement dated February 12, 1996 between the
Company and Bank One, Kentucky, N.A. (incorporated by reference to
Exhibit 4.7 of the Company's 10-Q for the quarter ended March 31, 1996).
4.10* Working Capital Line of Credit extension letter dated March 31, 1996
between the Company and Society National Bank (incorporated by reference
to Exhibit 4.8 of the Company's 10-Q for the quarter ended March 31, 1996).
4.11* Letter of Credit extension letter dated March 31, 1996 between the Company
and Society National Bank (incorporated by reference to Exhibit 4.9 of the
Company's 10-Q for the quarter ended March 31, 1996).
4.12* Acquisition and Development Revolving Credit Facility extension letter
dated March 31, 1996 between the Company and Society National Bank
(incorporated by reference to Exhibit 4.10 of the Company's 10-Q for the
quarter ended March 31, 1996).
</TABLE>
11
<PAGE> 12
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
<S> <C>
4.13* Second Amendment to Amended and Restated Revolving Credit and Term Loan
Agreement dated February 9, 1996 between the Company and Society National
Bank (incorporated by reference to Exhibit 4.11 of the Company's 10-Q for
the quarter ended March 31, 1996).
4.14* Amendment to Amended and Restated Loan Agreement dated February 1, 1996
between the Company and Bank One, Lima, N.A. (incorporated by reference to
Exhibit 4.12 of the Company's 10-Q for the quarter ended March 31, 1996).
4.15* Acquisition and Development Revolving Credit Facility extension letter
dated March 31, 1996 between the Company and Society National Bank
(incorporated by reference to Exhibit 4.1 of the Company's 10-K for the
year ended December 31, 1995).
4.16* Working Capital Line of Credit extension letter dated December 21, 1995
between the Company and Society National Bank (incorporated by reference to
Exhibit 4.2 of the Company's 10-K for the year ended December 31, 1995).
4.17* Letter of Credit extension letter dated December 21, 1995 between the
Company and Society National Bank (incorporated by reference to Exhibit 4.3
of the Company's 10-K for the year ended December 31, 1995).
4.18* Second Amended and Restated Demand Promissory Note dated December 28, 1995
between the Company and Society National Bank (incorporated by reference to
Exhibit 4.4 of the Company's 10-K for the year ended December 31, 1995).
4.19* Amended and Restated Revolving Credit and Term Loan Agreement dated June
1, 1995 between the Company and Society National Bank (incorporated by
reference to Exhibit 4.5 of the Company's 10-K for the year ended December
31, 1995).
4.20* Amendment to Loan Agreement dated September 14, 1995 between the Company
and The Provident Bank (incorporated by reference to Exhibit 4.1 of the
Company's 10-Q for the quarter ended September 30, 1995).
4.21* Acquisition and Development Revolving Credit Facility extension letter
dated August 31, 1995 between the Company and Society National Bank
(incorporated by reference to Exhibit 4.2 of the Company's 10-Q for the
quarter ended September 30, 1995).
4.22* Working Capital Line of Credit extension letter dated August 31, 1995
between the Company and Society National Bank (incorporated by reference to
Exhibit 4.3 of the Company's 10-Q for the quarter ended September 30,
1995).
4.23* Letter of Credit extension letter dated August 31, 1995 between the
Company and Society National Bank (incorporated by reference to Exhibit 4.4
of the Company's 10-Q for the quarter ended September 30, 1995).
4.24* Loan Agreement dated August 1, 1995 between the Company and The Provident
Bank (incorporated by reference to Exhibit 4.5 of the Company's 10-Q for
the quarter ended September 30, 1995).
4.25* Amended and Restated Loan Agreement dated August 1, 1995 between the
Company and Bank One, Lima, NA (incorporated by reference to Exhibit 4.6 of
the Company's 10-Q for the quarter ended September 30, 1995).
</TABLE>
12
<PAGE> 13
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
<S> <C>
4.26* Amendment to Amended and Restated Revolving Credit and Term Loan Agreement
dated June 30, 1995 between the Company and Society National Bank
(incorporated by reference to Exhibit 4.1 of the Company's 10-Q for the
quarter ended June 30, 1995).
4.27* Amendment to Loan Agreement dated June 30, 1995 between the Company and
The Provident Bank (incorporated by reference to Exhibit 4.2 of the
Company's 10-Q for the quarter ended June 30, 1995).
4.28* Amendment to Loan Agreement dated June 29, 1995 between the Company and
Bank One (incorporated by reference to Exhibit 4.3 of the Company's 10- Q
for the quarter ended June 30, 1995).
4.29* Amendment to Loan Agreement dated June 30, 1995 between the Company and
The Fifth Third Bank (incorporated by reference to Exhibit 4.4 of the
Company's 10-Q for the quarter ended June 30, 1995).
4.30* Acquisition and Development Revolving Credit Facility extension letter
dated June 1, 1995 between the Company and Society National Bank
(incorporated by reference to Exhibit 4.5 of the Company's 10-Q for the
quarter ended June 30, 1995).
4.31* Working Capital Line of Credit extension letter dated June 1, 1995 between
the Company and Society National Bank (incorporated by reference to Exhibit
4.6 of the Company's 10-Q for the quarter ended June 30, 1995).
4.32* Letter of Credit extension letter dated June 1, 1995 between the Company
and Society National Bank (incorporated by reference to Exhibit 4.7 of the
Company's 10-Q for the quarter ended June 30, 1995).
4.33* Loan Agreement amendment dated May 31, 1995 between the Company and Bank
One (incorporated by reference to Exhibit 4.8 of the Company's 10-Q for the
quarter ended June 30, 1995).
4.34* Loan Agreement extension letter dated May 29, 1995 between the Company and
The Provident Bank (incorporated by reference to Exhibit 4.9 of the
Company's 10-Q for the quarter ended June 30, 1995).
4.35* Loan Agreement extension letter dated March 22, 1995 between the Company
and The Provident Bank (incorporated by reference to Exhibit 4.1 of the
Company's 10-Q for the quarter ended March 31, 1995).
4.36* Line of Credit for Letters of Credit Agreement dated November 10, 1994
between the Company and Society National Bank (incorporated by reference to
Exhibit 4.1 of the Company's 10-K for the year ended December 31, 1994).
4.37* Loan Agreement extension letter dated September 16, 1994 between the
Company and The Provident Bank (incorporated by reference to Exhibit 4.1 of
the Company's 10-Q for the quarter ended September 30, 1994).
4.38* Acquisition and Development Revolving Credit Facility extension letter
dated August 31, 1994 between the Company and Society National Bank
(incorporated by reference to Exhibit 4.2 of the Company's 10-Q for the
quarter ended September 30, 1994).
4.39* Working Capital Line of Credit extension letter dated August 31, 1994
between the Company and Society National Bank (incorporated by reference to
Exhibit 4.3 of the Company's 10-Q for the quarter ended September 30,
1994).
4.40* Letter of Credit extension letter dated August 31, 1994 between the
Company and Society National Bank (incorporated by reference to Exhibit 4.4
of the Company's 10-Q for the quarter ended September 30, 1994).
4.41* Loan Agreement amendment dated September 15, 1994 between the Company and
Bank One (incorporated by reference to Exhibit 4.5 of the Company's 10-Q
for the quarter ended September 30, 1994).
</TABLE>
13
<PAGE> 14
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
<S> <C>
4.42* Revolving Credit and Term Loan Agreement dated April 11, 1994 between the
Company and The Fifth Third Bank (incorporated by reference to Exhibit 4.1
of the Company's 10-Q for the quarter ended June 30, 1994).
4.43* Loan Agreement extension letter dated May 25, 1994 between the Company and
The Provident Bank (incorporated by reference to Exhibit 4.2 of the
Company's 10-Q for the quarter ended June 30, 1994).
4.44* Acquisition and Development Revolving Credit Facility extension letter
dated May 18, 1994 between the Company and Society National Bank
(incorporated by reference to Exhibit 4.3 of the Company's 10-Q for the
quarter ended June 30, 1994).
4.45* Acquisition and Development Revolving Credit Facility extension letter
dated July 31, 1994 between the Company and Society National Bank
(incorporated by reference to Exhibit 4.4 of the Company's 10-Q for the
quarter ended June 30, 1994).
4.46* Working Capital Line of Credit extension letter dated May 16, 1994 between
the Company and Society National Bank (incorporated by reference to Exhibit
4.5 of the Company's 10-Q for the quarter ended June 30, 1994).
4.47* Working Capital Line of Credit extension letter dated July 31, 1994
between the Company and Society National Bank (incorporated by reference to
Exhibit 4.6 of the Company's 10-Q for the quarter ended June 30, 1994).
4.48* Letter of Credit extension dated May 18, 1994 between the Company and
Society National Bank (incorporated by reference to Exhibit 4.7 of the
Company's 10-Q for the quarter ended June 30, 1994).
4.49* Letter of Credit extension letter dated July 31, 1994 between the Company
and Society National Bank (incorporated by reference to Exhibit 4.8 of the
Company's 10-Q for the quarter ended June 30, 1994).
4.50* Loan Agreement dated December 21, 1993 between the Company and Bank One,
Lima, NA (incorporated by reference to Exhibit 4.1 of the Company's 10- K
for the year ended December 31, 1993).
4.51* Revolving Credit and Term Loan Agreement dated August 11, 1993 between the
Company and The Provident Bank (incorporated by reference to Exhibit 4.1 of
the Company's 10-Q for the quarter ended September 30, 1993).
4.52* Revolving Credit and Term Loan Agreement dated September 30, 1993 between
the Company and Society Bank & Trust (incorporated by reference to Exhibit
4.2 of the Company's 10-Q for the quarter ended September 30, 1993).
4.53* Stockholders Agreement dated April 9, 1985 among Arbor Holdings, Inc. and
Stockholders and the First Amendment thereto (incorporated by reference to
Exhibit 4.1 of the Company's Registration Statement on Form S-1 (File No.
33-65080) filed June 25, 1993 under the Securities Act of 1933).
4.54* Series B Preferred Stock Purchase Agreement dated November 3, 1986
(incorporated by reference to Exhibit 4.2 of the Company's Registration
Statement on Form S-1 (File No. 33-65080) filed June 25, 1993 under the
Securities Act of 1933).
4.55* Revolving Credit and Term Loan Agreement dated June 30, 1992 between the
Company and Society Bank & Trust (incorporated by reference to Exhibit 4.3
of the Company's Registration Statement on Form S-1 (File No. 33-65080)
filed June 25, 1993 under the Securities Act of 1933).
4.56* Line of Credit Agreement dated June 22, 1993 between the Company and
Society Bank & Trust (incorporated by reference to Exhibit 4.4 of the
Company's Registration Statement on Form S-1 (File No. 33-65080) filed June
25, 1993 under the Securities Act of 1933).
</TABLE>
14
<PAGE> 15
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
<S> <C>
4.57* Loan Agreement between the Company and The Provident Bank dated September
9, 1992 (incorporated by reference to Exhibit 4.5 of the Company's
Registration Statement on Form S-1 (File No. 33-65080) filed June 25, 1993
under the Securities Act of 1933).
4.58* Loan Agreement between the Company and Bank One, Lima, NA dated December
7, 1992 (incorporated by reference to Exhibit 4.6 of the Company's
Registration Statement on Form S-1 (File No. 33-65080) filed June 25, 1933
under the Securities Act of 1933).
4.59* Commitment Letter dated May 28, 1993 from Bank One, Lima, NA, accepted by
the Company June 7, 1993 (incorporated by reference to Exhibit 4.7 of the
Company's Registration Statement on Form S-1 (File No. 33-65080) filed June
25, 1993 under the Securities Act of 1933).
4.60* Mortgage and Security Agreement between the Company and Southtrust Bank of
Alabama, National Association, dated September 29, 1992 (incorporated by
reference to Exhibit 4.8 of the Company's Registration Statement on Form
S-1 (File No. 33-65080) filed June 25, 1993 under the Securities Act of
1933).
4.61* Commitment Letter dated as of May 30, 1993, from Society Bank & Trust for
revolving credit facility, accepted by the Company June 22, 1993
(incorporated by reference to Exhibit 4.9 of the Company's Registration
Statement on Form S-1 (File No. 33-65080) filed July 9, 1993 under the
Securities Act of 1933).
4.62* Commitment Letter dated as of July 1, 1993, from The Provident Bank,
informing the Company of reaffirmation of line of credit (incorporated by
reference to Exhibit 4.10 of the Company's Registration Statement on Form
S-1 (File No. 33-65080) filed July 9, 1993 under the Securities Act of
1933). (The Company is not filing any instrument with respect to long-term
debt that does not exceed 10 percent of the total assets of the Company,
and the Company agrees to furnish a copy of any such instrument to the
Commission upon request).
10.1 Purchase and Sale Agreement dated September 19, 1996 between the Company
and Cumberland Healthcare, L.P. I-C.
10.2* Share Purchase Agreement dated June 30, 1996 between the Company and
Robert Q. Baker, sole shareholder of Poly-Stat Supply
Corporation(incorporated by reference to Exhibit 10.1 of the Company's 10-Q
for the quarter ended June 30, 1996).
10.3* Share Purchase Agreement dated June 30, 1996 between the Company and
Robert Q. Baker and Richard E. Moon, shareholders of Poly-Stat Computer
Applications, Inc (incorporated by reference to Exhibit 10.2 of the
Company's 10-Q for the quarter ended June 30, 1996).
10.4* Second Amendment to Lease Agreement dated March 18, 1996 between the
Company and V & V Properties (incorporated by reference to Exhibit 10.1 of
the Company's 10-Q for the quarter ended March 31, 1996).
10.5*+ Arbor Health Care Company 1996 Stock Option Plan for Non-Employee
Directors (incorporated by reference to the Company's Proxy Statement dated
April 8, 1996).
10.6*+ Description of 1995 Bonus Plans for Named Executive Officers
(incorporated by reference to Exhibit 10.1 of the Company's 10-k for the
year ended December 31, 1995).
10.7* Asset Purchase Agreement dated April 28, 1995 between the Company and
Fairlawn Associates Limited Partnership (incorporated by reference to
Exhibit 10.1 of the Company's 10-Q for the quarter ended June 30, 1995).
</TABLE>
15
<PAGE> 16
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
<S> <C>
10.8* Amendment to Asset Purchase Agreement dated June 1, 1995 between the
Company and Fairlawn Associates Limited Partnership (incorporated by
reference to Exhibit 10.2 of the Company's 10-Q for the quarter ended June
30, 1995).
10.9* Agreement of Merger dated June 30, 1995 between the Company, Green Tree
Pharmacy, Inc., Allan K. Vrable and The Druggist, Inc. (incorporated by
reference to Exhibit 10.3 of the Company's 10-Q for the quarter ended June
30, 1995).
10.10* Addendum to Agreement of Merger dated June 30, 1995 between the Company,
Green Tree Pharmacy, Inc., Allan K. Vrable and The Druggist, Inc.
(incorporated by reference to Exhibit 10.4 of the Company's 10-Q for the
quarter ended June 30, 1995).
10.11* Share Purchase Agreement dated June 30, 1995 between the Company and
Allan K. Vrable, sole shareholder of Alternacare Plus Enterprises, Inc.
(incorporated by reference to Exhibit 10.5 of the Company's 10-Q for the
quarter ended June 30, 1995).
10.12* Employment Agreement dated June 30, 1995 between the Company and Allan K.
Vrable (incorporated by reference to Exhibit 10.6 of the Company's 10-Q for
the quarter ended June 30, 1995).
10.13*+ Arbor Health Care Company 1995 Stock Option Plan (incorporated by
reference to the Company's Proxy Statement dated April 24, 1995).
10.14* Share Purchase Agreement dated June 30, 1994 between the Company and the
Stockholders of Bay Geriatric Pharmacy, Inc. and Home Care Pharmacy, Inc.
of Florida (incorporated by reference to Exhibit 10.1 of the Company's 10-K
for the year ended December 31, 1994).
10.15* Lease Agreement between Highland Oaks Associates, LTD., and Bay Geriatric
Pharmacy, dated May 23, 1991 (incorporated by reference to Exhibit 10.2 of
the Company's 10-K for the year ended December 31, 1994).
10.16* Lease Agreement between FGHP Properties, Limited Partnership and Home
Care Pharmacy, Inc. of Florida, dated March 24, 1993 (incorporated by
reference to Exhibit 10.3 of the Company's 10-K for the year ended December
31, 1994).
10.17* First Amendment to lease between the Company and Semi Cane Investments,
Inc., as Successor in Interest to Great Western Bank dated June 17, 1994
(incorporated by reference to Exhibit 10.4 of the Company's 10-K for the
year ended December 31, 1994).
10.18* First Amendment to Lease Agreement dated March 11, 1994 between the
Company and V & V Properties (incorporated by reference to Exhibit 10.5 of
the Company's 10-K for the year ended December 31, 1994).
10.19* Management Agreement between the Company and Fairlawn Nursing Home and
Assisted Living, Inc. dated June 9, 1986, and amendments thereto dated June
13, 1986, October 1, 1990, and January 1, 1993 (incorporated by reference
to Exhibit 10.1 of the Company's Registration Statement on Form S-1 (File
No. 33-65080) filed June 25, 1993 under the Securities Act of 1933).
10.20* Lease Agreement between the Company and V & V Properties, dated June 2,
1988 (incorporated by reference to Exhibit 10.2 of the Company's
Registration Statement on Form S-1 (File No. 33-65080) filed June 25, 1993
under the Securities Act of 1933).
10.21* Operating Lease between the Company and Health Care Property Investors,
Inc., dated January 31, 1986, as amended September 11, 1991 (incorporated
by reference to Exhibit 10.3 of the Company's Registration Statement on
Form S-1 (File No. 33-65080) filed June 25, 1993 under the Securities Act
of 1933).
</TABLE>
16
<PAGE> 17
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
<S> <C>
10.22* Business Property Lease between the Company and Office World, Inc. dated
July 1, 1992 (incorporated by reference to Exhibit 10.4 of the Company's
Registration Statement on Form S-1 (File No. 33-65080) filed June 25, 1993
under the Securities Act of 1933).
10.23* Lease Agreement between the Company and Great Western Bank, dated July 1,
1992 (incorporated by reference to Exhibit 10.5 of the Company's
Registration Statement on Form S-1 (File No. 33-65080) filed June 25, 1993
under the Securities Act of 1933).
10.24* Operating Lease between the Company and Health Care Property Investors,
Inc., dated January 31, 1986, as amended September 11, 1991 (incorporated
by reference to Exhibit 10.6 of the Company's Registration Statement on
Form S-1 (File No. 33-65080) filed June 25, 1993 under the Securities Act
of 1933).
10.25* Office Lease between the Company and NFI MetroCenter II Associates dated
November 15, 1992 (incorporated by reference to Exhibit 10.7 of the
Company's Registration Statement on Form S-1 (File No. 33-65080) filed June
25, 1993 under the Securities Act of 1933).
10.26* Lease Agreement between the Company and Marie Antoinette Partners, dated
April 2, 1986 (incorporated by reference to Exhibit 10.8 of the Company's
Registration Statement on Form S-1 (File No. 33-65080) filed June 25, 1993
under the Securities Act of 1933).
10.27* Facility Lease by and between the Company and Cumberland Healthcare,
L.P., I-C, dated February 1, 1989, as amended November 15, 1991
(incorporated by reference to Exhibit 10.9 of the Company's Registration
Statement on Form S-1 (File No. 33-65080) filed June 25, 1993 under the
Securities Act of 1933).
10.28* Lease and Security Agreement between BIP SUB I, INC. and Arbors East,
Inc. dated April 1, 1991 (incorporated by reference to Exhibit 10.10 of the
Company's Registration Statement on Form S-1 (File No. 33-65080) filed June
25, 1993 under the Securities Act of 1933).
10.29* Operating Lease between the Company and Health Care Properties Investors,
Inc. dated December 30, 1986 and Addendum dated March 23, 1987
(incorporated by reference to Exhibit 10.11 of the Company's Registration
Statement on Form S-1 (File No. 33-65080) filed June 25, 1993 under the
Securities Act of 1933).
10.30*+ First Amended and Restated Incentive Stock Option Plan dated November
26, 1991 (incorporated by reference to Exhibit 10.12 of the Company's
Registration Statement on Form S-1 (File No. 33-65080) filed June 25, 1993
under the Securities Act of 1933).
10.31* Management Agreement dated September 28, 1989 between the Company and The
Druggist, Inc., as amended June 30, 1991 (incorporated by reference to
Exhibit 10.14 of the Company's Registration Statement on Form S-1 (File No.
33-65080) filed June 25, 1993 under the Securities Act of 1933).
10.32* Assignment and Assumption of Management Agreement dated January 4, 1989
among the Company, Fairlawn Nursing Home and Assisted Living, Inc., and
Fairlawn Associates Limited Partnership, relating to Management Agreement
previously filed as Exhibit 10.1 of the Company's Registration Statement on
Form S-1 filed on June 25, 1993 (File No. 33-65080) and incorporated by
reference herein (incorporated by reference to Exhibit 10.16 of the
Company's Registration Statement on Form S-1 (File No. 33-65080) filed July
9, 1993 under the Securities Act of 1933).
</TABLE>
17
<PAGE> 18
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
<S> <C>
10.33*+ Certificate of Amendment dated July 7, 1993, to First Amended and
Restated Incentive Stock Option Plan previously filed as Exhibit 10.12 of
the Company's Registration Statement on Form S-1 (File No. 33-65080) and
incorporated by reference herein (incorporated by reference to Exhibit
10.17 of the Company's Registration Statement on Form S-1 (File No.
33-65080) filed July 9, 1993 under the Securities Act of 1933).
10.34* Land Lease Agreement between the Company and the Chesapeake and Potomac
Telephone Company of West Virginia dated June 24, 1993 (incorporated by
reference to Exhibit 10.18 of the Company's Registration Statement on Form
S-1 (File No. 33-65080) filed July 29, 1993 under the Securities Act of
1933).
10.35*+ Form of Indemnification Agreement between the Company and its Directors
and Executive Officers (incorporated by reference to Exhibit 10.19 of the
Company's Registration Statement on Form S-1 (File No. 33-65080) filed July
29, 1993 under the Securities Act of 1933).
11.1 Statement Re Computation of Net Income Per Share.
27.1 Financial Data Schedule.
<FN>
*Previously filed.
+Executive management contract or compensatory plan or arrangement.
</TABLE>
18
<PAGE> 1
Exhibit 10.1
PURCHASE AND SALE AGREEMENT
----------------------------
THIS PURCHASE AND SALE AGREEMENT is made and entered into this 19th day
of September, 1996, by and between CUMBERLAND HEALTHCARE, L.P. I-C, a Delaware
limited partnership doing business in Ohio as CUMBERLAND HEALTHCARE, LIMITED
PARTNERSHIP, I-C ("Seller") and ARBOR HEALTH CARE COMPANY, a Delaware
corporation ("Purchaser").
W I T N E S S E T H, That:
--------------------------
WHEREAS, Purchaser leases a certain nursing home facility from Seller
pursuant to a Lease (hereafter defined) which contains an option to purchase the
leased property; and
WHEREAS, Purchaser desires to purchase the Nursing Home (hereafter
defined) and Seller desires to sell the Nursing Home to Purchaser; and
WHEREAS, the parties desire to provide for said purchase and sale on
the terms and conditions hereinafter set forth;
NOW, THEREFORE, for and in consideration of the foregoing premises, the
mutual covenants and agreements set forth herein, and other good and valuable
consideration, all of which each party respectively agrees constitutes
sufficient consideration received at or before the execution hereof, the parties
hereto do hereby agree as follows:
1. DEFINITIONS AND MEANINGS. In addition to any other terms whose
definitions are fixed and defined by this Agreement, each of the following
defined terms, when used in this Agreement with an initial capital letter, shall
have the meaning ascribed thereto by this Section:
"Agreement" means this Purchase and Sale Agreement, together
with all exhibits attached hereto.
"Calculation of Percentage Rent" is defined in the Lease (as
hereinafter defined).
"Closing" means the consummation of the purchase and sale
contemplated by this Agreement by the deliveries required under Section
7 hereof.
"Closing Date" means the time and date, established under
Subsection 7.1 hereof, when the purchase and sale contemplated by this
Agreement is to be consummated, as such date may be extended by mutual
agreement of the parties or pursuant to the provisions of this
Agreement.
"Earnest Money" means the amount deposited by Purchaser as
provided in Section 4 hereof and earnings thereon.
"Employee Benefits" is defined in the Lease.
<PAGE> 2
"Escrow Agent" means Lawyers Title Insurance Corporation.
"Execution Date" means the date on which this Agreement is
duly executed by Purchaser and first delivered to and received by
Seller; and such date shall be inserted in the preamble on the first
page of this Agreement.
"Impositions" is defined in the Lease.
"Lease" means that certain Facility Lease (Hillcrest Facility)
entered into by and between Seller, as lessor therein, and Purchaser,
as lessee therein, dated as of February 1, 1989, as amended by that
certain First Amendment to the Facility Lease (Hillcrest Facility),
dated November 15, 1991, effective as of January 1, 1991.
"Legal Requirements" is defined in the Lease.
"Minimum Rent" is defined in the Lease.
"Nursing Home" means that certain nursing home facility and
the land upon which the facility is located described on Exhibit "A"
attached hereto and incorporated herein by reference.
"Officer's Certificate" is defined in the Lease.
"Percentage Rent" is defined in the Lease.
"Permitted Exceptions" means (i) those encumbrances which
Purchaser, as lessee of the Nursing Home, has created or agreed
pursuant to the terms of the Lease to pay or discharge, (ii) the items
shown on Exhibit "B" attached hereto, (iii) any other encumbrances
permitted to be imposed on the Nursing Home under the provisions of
Section 36.1 of the Lease which are assumable at no cost to Purchaser
or to which Purchaser may take subject without cost to Purchaser, (iv)
taxes for any year subsequent to 1988, and (v) any Title Objections to
which Purchaser fails to object prior to the thirty (30) day review
period provided in Subsection 5.1 hereof or which Purchaser waives
pursuant to Section 5 hereof.
"Pre-Tax Income" is defined in the Lease.
"Project Expenses" is defined in the Lease.
"Purchase Price" means the amount which Purchaser shall pay to
consummate the purchase and sale of the Nursing Home set forth in
Subsection 3.1 hereof.
"Rent" is defined in the Lease.
- 2 -
<PAGE> 3
"Title Objection" and "Title Objections" mean any deeds to
secure debt, mortgages, liens, financing statements, security
interests, easements, leases, restrictive covenants, agreements,
options, claims, clouds, encroachments, rights, taxes, assessments,
mechanics' or materialmen's liens (inchoate or perfected), liens for
federal or state income, estate or inheritance taxes and other
encumbrances of any nature whatsoever, whether existing of record or
otherwise, together with any and all matters of any kind or
description, including, without limitation, matters of survey and any
litigation or other proceedings affecting Seller and which affects
title to the Nursing Home, or the right, power and authority of Seller
to convey to Purchaser fee simple, good and marketable and insurable
title to the Nursing Home, in accordance with the terms of this
Agreement.
2. SALE AND PURCHASE. Seller agrees to sell the Nursing
Home to Purchaser on the terms and conditions contained in this
Agreement, and Purchaser agrees to purchase the Nursing Home from
Seller on the terms and conditions contained in this Agreement.
3. PURCHASE PRICE.
3.1 AMOUNT OF PURCHASE PRICE. The Purchase Price for
the Nursing Home shall be Five Million Seven Hundred Fifty Thousand
Dollars ($5,750,000), subject to any adjustments provided for herein.
3.2 PAYMENT OF PURCHASE PRICE. Purchaser shall pay the
balance of the Purchase Price to Seller in cash at Closing, by federal
funds wire transfer to Seller's bank in accordance with instructions
given by Seller.
4. EARNEST MONEY.
4.1 AMOUNT OF EARNEST MONEY. Purchaser will deposit the sum of
Five Thousand Dollars ($5,000) with Escrow Agent as Earnest Money
pursuant to an escrow agreement in the form attached hereto as Exhibit
"C", or such other form as is reasonably acceptable to Purchaser,
Seller and Escrow Agent (the "Escrow Agreement"). Escrow Agent shall
tender the Earnest Money to Seller on the Closing Date and the Earnest
Money shall be applied and credited in reduction of the Purchase Price.
If Purchaser validly exercises any right or option under this Agreement
to rescind, cancel or terminate this Agreement or Seller terminates
this Agreement pursuant to Subsection 12.2, the Earnest Money shall be
immediately paid over and refunded to Purchaser, whereupon this
Agreement shall be of no further force or effect, and the parties
hereto shall have no further rights, duties or obligations hereunder,
except as otherwise expressly provided herein. Escrow Agent shall
invest the Earnest Money and disburse the same in accordance with the
terms, conditions and provisions of the Escrow Agreement.
- 3 -
<PAGE> 4
5. TITLE EXAMINATION AND OBJECTIONS.
5.1 TITLE EXAMINATION. Within twenty (20) days of the Execution Date,
Purchaser shall have Seller's title to the Nursing Home examined and a
commitment to insure Purchaser's title thereto issued by Escrow Agent (the
"Title Commitment") and, if desired, shall have the Nursing Home accurately
surveyed and inspected, and Purchaser shall thereupon give written notice to
Seller of any Title Objections which are unacceptable to Purchaser. If, prior to
the twentieth (20th) day after the Execution Date, Purchaser fails to give any
such notice with respect to any Title Objections, then Purchaser shall be deemed
to have waived such Title Objections and shall take title subject to all matters
of record as of the twentieth (20th) day after the Execution Date. If Purchaser
notifies Seller of Title Objections under this Section, Seller may, within five
(5) business days of such notice, notify Purchaser that it will terminate this
Agreement, whereupon the Earnest Money shall be immediately paid over and
refunded to Purchaser and this Agreement shall be of no further force or effect,
and the parties hereto shall have no further rights, duties or obligations
hereunder, except as otherwise expressly provided herein.
5.2 FAILURE TO CORRECT TITLE OBJECTIONS. IN the event Seller has not
terminated this Agreement pursuant to Subsection 5.1, and fails to satisfy or
correct any Title Objection of which it was notified pursuant to Subsection 5.1,
on or before the Closing Date, then the Closing Date shall be extended for a
period not to exceed forty-five (45) days to allow Seller to cure such Title
Objection; provided, however, that in no event shall Seller be required to
expend more than Ten Thousand Dollars ($10,000) to satisfy or correct Title
Objections. In the event the cost to satisfy or correct Title Objections is
expected to exceed Ten Thousand Dollars ($10,000), Seller shall, on or before
the Closing Date, have the right to terminate this Agreement, whereupon the
Earnest Money, to the extent paid, shall be immediately paid over and refunded
to Purchaser and this Agreement shall be of no further force and effect, and the
parties hereto shall have no further rights, duties or obligations hereunder.
6. COVENANTS, REPRESENTATIONS AND WARRANTIES.
6.1 As an inducement to Purchaser to enter into this Agreement and to
purchase the Nursing Home, Seller covenants, represents and warrants to
Purchaser, as follows:
6.1.1 TITLE AND AUTHORITY. Seller has fee simple title to the
Nursing Home and has the right, power and authority to enter into this
Agreement and the right, power and authority to convey the Nursing Home
in accordance with the terms and conditions of this Agreement subject
to state law governing change of control of nursing homes, including
licensure, certificate of need and other laws governing ownership and
transfer of healthcare facilities.
6.1.2 LITIGATION. To the best of the knowledge of the officers
of RJ Health Properties, Inc. (the Managing General Partner of the
General Partner of Seller), Seller has received no notice of, and there
is not, any action, suit or proceeding
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<PAGE> 5
pending or threatened in writing against, by or affecting Seller's
right to transfer the Nursing Home or the title of the Nursing Home.
6.1.3 NURSING HOME CONVEYED "AS IS". Purchaser has operated
the Nursing Home as manager and lessee for a number of years and is
more familiar with the physical condition of the Nursing Home and its
operations than is Seller. Furthermore, under the terms of the Lease,
Purchaser is responsible for maintenance of the Nursing Home and
licensure compliance. Therefore:
EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS SUBSECTION 6.1,
IT IS UNDERSTOOD AND AGREED THAT SELLER DISCLAIMS ALL WARRANTIES OR
REPRESENTATIONS OF ANY KIND OR CHARACTER, EXPRESS OR IMPLIED, WITH RESPECT TO
THE NURSING HOME, INCLUDING, BUT NOT LIMITED TO, WARRANTIES OR REPRESENTATIONS
AS TO MATTERS OF TITLE (OTHER THAN SELLER'S WARRANTY OF TITLE SET FORTH IN THE
LIMITED WARRANTY DEED TO BE DELIVERED AT CLOSING), ZONING, TAX CONSEQUENCES,
PHYSICAL OR ENVIRONMENTAL CONDITIONS, AVAILABILITY OF ACCESS, INGRESS OR EGRESS,
PROPERTY VALUE, OPERATING HISTORY, GOVERNMENTAL APPROVALS, GOVERNMENTAL
REGULATIONS OR ANY OTHER MATTER OR THING RELATING TO OR AFFECTING THE NURSING
HOME. EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS SUBSECTION
6.1, PURCHASER AGREES THAT WITH RESPECT TO THE NURSING HOME, PURCHASER HAS NOT
RELIED UPON AND WILL NOT RELY UPON, EITHER DIRECTLY OR INDIRECTLY, ANY
REPRESENTATION OR WARRANTY OF SELLER OR SELLER'S AGENTS OR EMPLOYEES. PURCHASER
REPRESENTS THAT IT IS A KNOWLEDGEABLE BUYER OF NURSING HOMES AND THAT IT IS
RELYING SOLELY ON ITS OWN EXPERTISE AND EXPERIENCE WITH THE NURSING HOME AND
THAT OF PURCHASER'S CONSULTANTS, AND ITS OWN KNOWLEDGE, INSPECTIONS AND
INVESTIGATIONS OF THE NURSING HOME, INCLUDING, BUT NOT LIMITED TO, THE
OPERATING, PHYSICAL AND ENVIRONMENTAL CONDITIONS THEREOF, AND SHALL RELY UPON
SAME, AND, UPON CLOSING, ASSUME THE RISK OF ALL ADVERSE MATTERS, INCLUDING, BUT
NOT LIMITED TO, ADVERSE OPERATING, PHYSICAL, LICENSURE AND ENVIRONMENTAL
CONDITIONS. PURCHASER SHALL HAVE THE RESPONSIBILITY AND RISK OF OBTAINING
LICENSES, PERMITS, CONSENTS AND APPROVALS OF ALL QUASI GOVERNMENTAL AND
GOVERNMENTAL ENTITIES (OTHER THAN SELLER'S APPROVAL OF ITS SOLICITATION OF ITS
LIMITED PARTNERS), WHICH ARE NECESSARY OR DESIRABLE TO CONSUMMATE THE SALE AND
TRANSFERS CONTEMPLATED BY THIS AGREEMENT AND PURCHASER'S INTENDED OPERATIONS
AFTER CLOSING.
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<PAGE> 6
EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS SUBSECTION 6.1,
PURCHASER ACKNOWLEDGES AND AGREES THAT UPON CLOSING, SELLER SHALL SELL AND
CONVEY TO PURCHASER AND PURCHASER SHALL ACCEPT THE NURSING HOME "AS IS, WHERE
IS," WITH ALL FAULTS, AND THERE ARE NO ORAL AGREEMENTS, WARRANTIES OR
REPRESENTATIONS COLLATERAL TO OR AFFECTING THE NURSING HOME BY SELLER OR ANY
THIRD PARTY. THE TERMS AND CONDITIONS OF THIS SUBSECTION 6.1 SHALL EXPRESSLY
SURVIVE THE CLOSING AND NOT MERGE THEREIN.
6.2 As an inducement to Seller to enter into this Agreement and to sell
the Nursing Home, Purchaser covenants, represents and warrants to Seller as
follows:
6.2.1 That Purchaser, as lessee under the Lease, has properly
computed and reported to Seller all amounts due to Seller under the
Lease and has fully paid to Seller all Rent, including all Percentage
Rent, due under the Lease for all fiscal years of the Lease which ended
prior to the date hereof.
6.2.2 Within thirty (30) days of the date hereof Purchaser
shall deliver an Officer's Certificate as required by Section 3.2 of
the Lease setting forth Pre-Tax Income and the Calculation of
Percentage Rent for each fiscal year ended prior to the date hereof
which certificate must confirm the representation and warranty in
Paragraph 6.2.1 hereof or be accompanied by a payment of any Percentage
Rent disclosed as due by the Officer's Certificate.
7. THE CLOSING.
7.1 CLOSING DATE. The Closing shall be held on or before September 30,
1996 (subject to being extended as provided in Subsection 5.2 hereof), at the
offices of Roberts, Isaf & Summers, Suite 1100, 500 Northpark Town Center, 1100
Abernathy Road, N.E., Atlanta, Georgia 30328 (or such earlier date and time
designated by Purchaser by written notice delivered to Seller not less than five
(5) business days prior to the Closing Date). Notwithstanding the above,
Purchaser shall use its best efforts to close the transaction contemplated
hereby on or before September 20, 1996.
7.2 DELIVERIES AT CLOSING. On the Closing Date, the Closing shall occur
as follows, subject to satisfaction of all of the terms and conditions of this
Agreement:
(a) Seller shall convey the Nursing Home to Purchaser free and
clear of liens, claims and encumbrances other than the Permitted
Exceptions, by a limited warranty deed duly executed, witnessed and
notarized and in recordable form.
(b) Seller shall deliver to Purchaser a limited warranty of
title bill of sale conveying to Purchaser all appliances, furnishings,
equipment and other personal
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<PAGE> 7
property owned by Seller and located at and used in connection with the
operation of the Nursing Home.
(c) Concurrently with Seller's deliveries at the Closing,
Purchaser shall pay to Seller the Purchase Price as provided in
Subsection 3.2 hereof.
(d) Purchaser shall deliver to Seller an opinion of
Purchaser's counsel, in form and substance acceptable to Seller, as to
the due execution, binding effect and enforceability of the Assumption
Agreement (as hereinafter defined), the Mutual Release (as hereinafter
defined) and this Agreement.
(e) Seller shall deliver to Purchaser an opinion of Seller's
counsel in form and substance acceptable to Purchaser as to the due
authorization, execution, binding effect and enforceability of this
Agreement. Counsel's opinion as to authorization shall not have as an
exception securities laws applicable to the vote of Seller's limited
partners.
(f) Concurrently with Seller's deliveries at Closing,
Purchaser and Seller shall execute and deliver an Assignment and
Assumption Agreement in the form attached hereto as Exhibit "D" (the
"Assumption Agreement") pursuant to which Purchaser will assume the
matters described therein.
(g) Concurrently with Closing, Purchaser and Seller shall
execute and deliver the Mutual Release and Lease Termination Agreement
in the form attached hereto as Exhibit "E" (the "Mutual Release").
(h) Purchaser shall deliver to Seller the Officer's
Certificates, required by Section 3.2 of the Lease, for the Ending Pro
Rated Period, as defined by the Lease, and pay all Percentage Rent due
under the Lease.
(i) In addition to all documents, instruments and agreements
expressly provided for herein, Purchaser and Seller shall execute
and/or provide such other documents as may be reasonably required by
counsel for either party to effectuate the purposes of this Agreement.
7.3 CLOSING COSTS. At the Closing, Purchaser shall pay (i) all
recording and filing fees for all recordable instruments executed and delivered
by the parties at the Closing pursuant to the terms hereof, (ii) the transfer
tax due with respect to the limited warranty deed by which the Nursing Home is
conveyed to Purchaser, (iii) any title examination fees or charges incurred by
Purchaser, (iv) all premiums for any owner's or lender's title insurance policy
or policies obtained by Purchaser, (v) the cost of any survey obtained by
Purchaser and fees and expenses of any surveyor which Purchaser retains, (vi)
the cost of any environmental assessments obtained by Purchaser, (vii) the fees
and expenses of Seller's and Purchaser's attorneys, and (viii) any other costs
and expenses incurred in connection with the Closing.
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<PAGE> 8
7.4 PRORATIONS.
7.4.1 Because Purchaser, as lessee under the Lease, has the
obligation to pay all operating expenses and taxes on and with respect
to the Nursing Home, there will be no proration of, and Purchaser shall
assume and pay, all (i) state, city and/or county ad valorem taxes due
with respect to the Nursing Home; (ii) all expenses and utility charges
in respect of the Nursing Home for all time periods through the day
prior to Closing; and (iii) salaries, taxes, fringe benefits and
accrued vacation and sick leave and similar items accrued with respect
to employees of the Nursing Home through the day prior to Closing.
7.4.2 Seller is entitled to receive and retain all Rent due
under the Lease. Therefore, Rent will be prorated through the day of
Closing based on Pre-Tax Income as of the day of Closing. Prorations
will reflect actual paid rents and a pro rata portion of any accrued
but unpaid Minimum Rent, Percentage Rent and additional charges through
the Closing Date. Seller and Purchaser agree to adjust the proration
required by this paragraph based on actual operations of the Nursing
Home.
7.4.3 If any mistakes in any adjustments or prorations, or if
any omissions in respect thereto, are discovered by either Purchaser or
Seller subsequent to the date of Closing, Purchaser and Seller agree to
adjust such items between themselves. Such prorations and payments
shall be determined and made by Seller and Purchaser, in good faith, as
soon as practicable after Closing, but in any event within forty-five
(45) days after Closing.
8. CASUALTY AND CONDEMNATION. Because Purchaser is currently lessee of
the Nursing Home, all risk of loss of, or damage to, or destruction of, the
Nursing Home (whether by fire, flood, tornado or other casualty, or by the
exercise of the power of eminent domain, or otherwise) shall be borne by
Purchaser and Seller pursuant to the terms of the Lease. However, this Agreement
shall not terminate, and Purchaser shall not be released from its obligations
hereunder unless under the terms of the Lease Purchaser has a right to terminate
the Lease as a result of such casualty and destruction.
9. NO BROKERS. Seller and Purchaser warrant and represent that there
are and will be no brokers' or intermediaries' commissions or fees payable as a
consequence of the sale and purchase of the Nursing Home and shall and do hereby
indemnify, defend, and hold harmless each of the other from and against the
claims, demands, actions, and judgments (including, without limitation,
attorneys' fees and expenses incurred in defending any claims or in enforcing
this indemnity) of any and all brokers, agents, and other intermediaries
alleging a commission, fee or other payment to be owing by reason of any
dealings, negotiations or communications with the indemnifying party in
connection with this Agreement or the sale and purchase of the Nursing Home.
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<PAGE> 9
10. DEFENSE OF CLAIMS/INDEMNIFICATIONS.
10.1 ACCESS TO NURSING HOME RECORDS. Subsequent to the Closing, Purchaser
shall allow Seller and its agents and representatives reasonable access during
regular business hours to the books and records and supporting material of the
Nursing Home relating to any period prior to the Closing Date to the extent
reasonably necessary to enable Seller to investigate and defend Claims (defined
in Subsection 10.2), file or defend cost reports and tax returns and to perform
similar investigations and data gathering functions. Purchaser agrees to
maintain such books, records and other material comprising patient records and
records of patient funds to the extent required by law.
10.2 INDEMNIFICATION BY PURCHASER. If the Closing occurs, but not
otherwise, Purchaser shall indemnify and hold Seller harmless and promptly
defend Seller from and against any and all losses, damages, costs, expenses,
liabilities, obligations and claims of any kind (including, without limitation,
reasonable attorney fees and other legal costs and out-of-pocket expenses)
("Claim" or "Claims") which Seller may at any time suffer or incur, or become
subject to, as a result of or in connection with:
(a) any breach or inaccuracy of any of the representations and
warranties or covenants of Purchaser made by Purchaser in or pursuant to
this Agreement, or in any instrument, certificate or affidavit delivered by
Purchaser in accordance with the provisions of any Section hereof;
(b) any failure by Purchaser to carry out, perform, satisfy and
discharge any of its covenants, agreements, undertakings, liabilities or
obligations under this Agreement or under any of the documents and
materials delivered by Purchaser pursuant to this Agreement;
(c) (i) the operation of the Nursing Home beginning on February 1,
1989, including claims for refunds of any overpayments allegedly made by
third party payor programs or other liability under third party payor
programs or by any patients, or other such Claims, or Claims by vendors,
employees, etc., (ii) any accident, injury to or death of persons or loss
of or damage to property occurring on or about the Nursing Home since
February 1, 1989, (iii) any use, misuse, non-use, condition, maintenance or
repair, including violations of Legal Requirements since February 1, 1989,
(iv) all liabilities and obligations of Seller, if any, to employees of the
Nursing Home, including Employee Benefits, (v) all other liabilities and
obligations of Seller for Project Expenses, Impositions and Legal
Requirements, (vi) liens, claims, contracts and other agreements authorized
by, approved or contracted for by Purchaser in its own name as lessee or in
the name of Seller as owner of the Nursing Home, and (vii) any other
matters for which Purchaser has indemnified Seller pursuant to Article 23
of the Lease; or
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<PAGE> 10
(d) any suit, action or other proceeding brought by any governmental
authority or person to the extent arising out of, or to the extent in any
way related to, any of the matters referred to in Paragraphs 10.2(a),
10.2(b) or 10.2(c) of this Agreement.
10.3 INDEMNITY BY SELLER. If the Closing occurs, but not otherwise, Seller
shall indemnify and hold Purchaser harmless and promptly defend from and
against, and reimburse Purchaser for, any and all Claims which Purchaser may at
any time suffer or incur, or become subject to, as a result of or in connection
with:
(a) any breach or inaccuracy of any representations, warranties or
covenants of Seller made by Seller in or pursuant to this Agreement, or in
any instrument, certificate or affidavit delivered by Seller in accordance
with the provisions of any Section hereof;
(b) any failure by Seller to carry out, perform, satisfy and discharge
any of its covenants, agreements, undertakings, liabilities or obligations
under this Agreement or under any of the documents and materials delivered
by Seller pursuant to this Agreement;
(c) any matters for which Seller has indemnified Purchaser pursuant to
Article 23 of the Lease; or
(d) any suit, action or other proceeding brought by any governmental
authority or person arising out of, or in any way related to, any of the
matters referred to in Paragraphs 10.3(a) or 10.3(b) of this Agreement.
10.4 NOTIFICATION OF CLAIMS.
10.4.1 If the Closing occurs, but not otherwise, a party entitled to
be indemnified pursuant to Subsections 10.2 or 10.3 hereof (the
"Indemnified Party") shall notify the party liable for such indemnification
(the "Indemnifying Party") in writing of any Claim or demand which the
Indemnified Party has determined has given or could give rise to a right of
indemnification under this Agreement. Subject to the Indemnifying Party's
right to defend in good faith third party Claims as hereinafter provided,
the Indemnifying Party shall satisfy its obligations under this Section 10
within thirty (30) days after the receipt of written notice thereof from
the Indemnified Party.
10.4.2 If the Indemnified Party shall notify the Indemnifying Party of
any Claim or demand pursuant to Paragraph 10.4.1, and if such Claim or
demand relates to a Claim or demand asserted by a third party against the
Indemnified Party which the Indemnifying Party acknowledges is a Claim or
demand for which it must indemnify or hold harmless the Indemnified Party
under Subsections 10.2 or 10.3
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<PAGE> 11
hereof, the Indemnifying Party shall have the right to employ counsel
reasonably acceptable to the Indemnified Party to defend any such Claim or
demand asserted against the Indemnified Party. The Indemnified Party shall
cooperate in the defense of any such Claim or demand. The Indemnifying
Party shall notify the Indemnified Party in writing, within thirty (30)
days after the date of the notice of Claim given by the Indemnified Party
to the Indemnifying Party under Paragraph 10.4.1 of its election to defend
in good faith any such third party Claim or demand. The Indemnified Party
shall not settle or compromise such Claim or demand: (i) so long as the
Indemnifying Party is defending in good faith any such Claim or demand
asserted by a third party against the Indemnified Party or (ii) without
prior notice to the Indemnifying Party and the failure of the Indemnifying
Party to take appropriate steps to continue a good faith defense of the
Indemnified Party. The Indemnified Party shall make available to the
Indemnifying Party or its agents all records and other materials in the
Indemnified Party's possession reasonably required for use in contesting
any third party Claim or demand. Whether or not the Indemnifying Party
elects to defend any such Claim or demand, the Indemnified Party shall have
no obligations to do so.
10.5 SURVIVAL. The provisions of this Section 10 shall survive Closing.
11. DEFAULT/FAILURE TO CLOSE.
11.1 SELLER'S DEFAULT. If the sale and purchase of the Nursing Home
contemplated by this Agreement is not consummated on account of Seller's default
hereunder, Purchaser may (i) seek a refund of the Earnest Money, to the extent
paid, or (ii) seek specific performance of this Agreement. Anything to the
contrary notwithstanding, none of Seller's partners, general or limited, shall
have any personal liability to Purchaser for such breach or default beyond their
interest in Seller.
11.2 PURCHASER'S DEFAULT. If the sale and purchase of the Nursing Home
contemplated by this Agreement is not consummated because of Purchaser's
default, failure or refusal to perform hereunder, Seller shall be entitled, as
its sole and exclusive remedy hereunder, as full and complete liquidated damages
for such default of Purchaser, to payment of the Earnest Money, the parties
hereto acknowledging that it is impossible to estimate more precisely the
damages which might be suffered by Seller upon Purchaser's default. Seller's
receipt of the Earnest Money is intended not as a penalty, but as full
liquidated damages. The right to retain such sums as full liquidated damages is
Seller's sole and exclusive remedy in the event of default hereunder by
Purchaser, and Seller hereby waives and releases any right to (and hereby
covenants that it shall not) sue Purchaser: (i) for specific performance of this
Agreement, or (ii) to recover actual damages in excess of such sums. Purchaser
hereby waives and releases any right to (and hereby covenants that it shall not)
sue Seller to seek or claim a refund of such sums (or any part thereof) on the
grounds that such amount is unreasonable in amount and exceeds Seller's actual
damages or that the retention of such sums by Seller constitutes a penalty and
not agreed upon and reasonable liquidated damages.
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<PAGE> 12
12. CONDITIONS PRECEDENT.
12.1 PURCHASER'S CONDITIONS.
12.1.1 The representations and warranties of Seller set forth in
Section 6 of this Agreement must be true and correct as of the Closing
with the same effect as though made at that time, and Seller must have
performed all obligations and complied with all covenants contained in
this Agreement to be performed or complied with by it prior to or at
Closing.
12.1.2 Purchaser shall have entered into, effective as of the
Closing Date, a driveway and parking lot lease (the "Driveway Lease")
for an initial term of at least five (5) years with at least three (3)
options to extend for five (5) years each with The France Stone
Company ("Lessor") on substantially similar terms and conditions as
are currently in effect in and pursuant to that certain Driveway and
Parking Lot Lease by and between Lessor and Seller, dated March 27,
1989, and recorded in Deed Record 89-531D06, Lucas County, Ohio
Records, as the same has been amended and extended to date (the
"Existing Lease"). Purchaser shall use its best efforts to negotiate
in good faith and to accept and enter into the Driveway Lease as set
forth above if same is on reasonable terms and is comparable to the
Existing Lease.
12.2 SELLER'S CONDITION. The representations and warranties of
Purchaser contained in this Agreement must be true and correct as of the
Closing with the same effect as though made at that time, and Purchaser
must have performed all obligations and complied with all covenants
contained in this Agreement to be performed or complied with by it prior to
or at Closing.
13. TIME OF ESSENCE. Time is of the essence hereof.
14. GOVERNING LAW. This Agreement shall be construed, interpreted and
enforced in accordance with the laws of Ohio.
15. NOTICES. Any notices, requests or other communications required or
permitted to be given hereunder shall be in writing and shall be delivered by
hand or over night courier service (by a national courier service such as
Federal Express which maintains a record of receipt and delivery), confirmed
facsimile or mailed by United States registered or certified mail, return
receipt requested, postage prepaid and addressed to each party at its address as
set forth below:
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<PAGE> 13
To Seller: Cumberland Healthcare, L.P. I-C
c/o RJ Health Properties, Inc.
880 Carillon Parkway
St. Petersburg, Florida 33716
Attention: Fred E. Whaley, President
Facsimile No.: (813) 573-8058
With a copy to: Roberts, Isaf & Summers
Suite 1100, 500 Northpark Town Center
1100 Abernathy Road, N.E.
Atlanta, Georgia 30328
Attention: Fred T. Isaf, Esquire
Facsimile No.: (770) 393-1741
To Purchaser: Arbor Health Care Company
1100 Shawnee Road
Lima, Ohio 45805
Attention: Brad Roush, Esquire
Facsimile No.: (419) 221-3366
Any such notice, request or other communication shall be considered
given or delivered, as the case may be, on the date of hand, courier or
facsimile delivery or on the third (3rd) day following deposit in the United
States mail as provided above. Rejection or other refusal to accept or inability
to deliver because of changed address of which no notice was given shall be
deemed to be receipt of the notice, request or other communication. By giving at
least five (5) days prior written notice thereof, any party may from time to
time at any time change its mailing address hereunder.
16. ENTIRE AGREEMENT; MODIFICATION. This Agreement supersedes all prior
discussions and agreements between Seller and Purchaser with respect to the sale
of the Nursing Home and contains the sole and entire understanding between
Seller and Purchaser with respect to the sale of Nursing Home; provided,
however, that, except as set forth in Subsection 11.3 hereof, this Agreement
does not alter, modify or amend the Lease. All promises, inducements, offers,
letters of intent, solicitations, agreements, commitments, representations and
warranties heretofore made between such parties are merged into this Agreement.
This Agreement shall not be modified or amended in any respect except by a
written instrument executed by or on behalf of each of the parties to this
Agreement.
17. CAPTIONS. All captions, heading, Section, Subsection,
Paragraph and Subparagraph numbers and letters and other reference numbers or
letters are solely for the purpose of facilitating reference to this Agreement
and shall not supplement, limit or otherwise vary in any respect to the text of
this Agreement.
18. SURVIVAL. All of the agreements, covenants and warranties made in
Sections 7, 10 and 11 shall survive Closing and are and will be continuous and
continuing. Other representations,
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<PAGE> 14
warranties and covenants contained herein shall survive Closing and the
transfer of title of the Property to Purchaser as contemplated hereunder for a
period of two (2) years from the date of Closing.
19. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall constitute an original and all of which
together shall constitute one and the same instrument. Furthermore, this
Agreement may be executed by facsimile with original signatures following by
mail.
20. ASSIGNMENT. This Agreement and the rights, duties, interests and
obligations of Purchaser hereunder may not be assigned by Purchaser without
consent of Seller.
21. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective heirs,
successors and permitted assigns.
22. DATE FOR PERFORMANCE. If the time period by which any right, option
or election provided under this Agreement must be exercised, or by which any act
required hereunder must be performed, or by which the Closing must be held,
expires on a Saturday, Sunday or legal or bank holiday, then such time period
shall be automatically extended through the close of business on the next
regularly scheduled business day.
23. FURTHER ASSURANCES. Each party hereto agrees to make best efforts
to cause the conditions to their obligations herein set forth to be satisfied at
or prior to the Closing Date. Each of the parties hereto agrees to execute and
deliver any and all further agreements, documents or instruments necessary to
effectuate this Agreement and the transactions referred to herein or
contemplated hereby or reasonably requested by the other party to perfect or
evidence their rights hereunder. All parties will use their best efforts to
effect an orderly transfer of ownership of the Nursing Home to Purchaser and to
complete the transactions contemplated by this Agreement as promptly as
practicable. Each party will promptly notify the other party of any information
delivered to or obtained by such party which would prevent the consummation of
the transactions contemplated by this Agreement or which would indicate a breach
of the representations or warranties of any of the parties to this Agreement.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
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<PAGE> 15
IN WITNESS WHEREOF, the parties hereto have duly signed, sealed, and
delivered this Agreement.
SELLER:
CUMBERLAND HEALTHCARE, L.P. I-C, a Delaware
limited partnership doing business in Ohio as
CUMBERLAND HEALTHCARE, LIMITED PARTNERSHIP, I-C
By: Medical Investments Partners, a Florida
General Partnership, Its General Partner
By: RJ Health Properties, Inc.,
Managing General Partner of
Medical Investments Partners
By:
-------------------------
Fred E. Whaley, President
[Corporate Seal]
PURCHASER:
ARBOR HEALTH CARE COMPANY, a Delaware corporation
By:
----------------------------------------------
Name: Pier C. Borra
----------------------------------------------
Its: President
----------------------------------------------
[Corporate Seal]
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<PAGE> 16
EXHIBIT "A"
-----------
THE NURSING HOME
----------------
1. Common Name of Facility and City Location:
-----------------------------------------
The Arbors at Waterville, formerly known as Hillcrest Care Center,
564 South River Road, Waterville, Ohio 43566
2. A legal description of the Nursing Home appears on the following page(s).
A - 1
<PAGE> 17
EXHIBIT "B"
1. Taxes for all years subsequent to 1988.
2. All zoning laws, ordinances and regulations, municipal and county, and
all governmental regulations of the use and occupancy of the Nursing
Home.
3. Such state of facts or conditions as would be disclosed from a
competent surveyor's accurate survey of the Nursing Home.
B - 1
<PAGE> 18
EXHIBIT "C"
-----------
EARNEST MONEY ESCROW AGREEMENT
LTIC ESCROW No. E1458
This is an ESCROW AGREEMENT, made the day and year written below, by
and between: LAWYERS TITLE INSURANCE CORPORATION ("Escrow Agent"), and ARBOR
HEALTH CARE COMPANY, a Delaware corporation ("Buyer"), and CUMBERLAND
HEALTHCARE, L.P. I-C, a Delaware limited partnership doing business in Ohio as
CUMBERLAND HEALTHCARE, LIMITED PARTNERSHIP, I-C ("Seller").
Whereas Buyer and Seller are parties under a certain contract for the
sale of certain real property known as Arbors at Waterville, Waterville, Ohio;
and Whereas Buyer and Seller have requested Lawyers Title Insurance Corporation
to act as Escrow Agent to hold the earnest money agreed to therein (hereafter
"Deposit"), in accordance with the terms and provisions of this Earnest Money
Escrow Agreement.
Now, therefore, in consideration of the promises and undertakings
herein made, and the proposed issuance of a title insurance policy (or policies)
by Escrow Agent, it is agreed that:
1. Buyer and Seller hereby appoint Lawyers Title Insurance Corporation as
Escrow Agent, hereunder; and the Deposit is hereby delivered to Escrow
Agent, who by signing below acknowledges its receipt, in the form of a
check, dated , and payable to Escrow Agent, or wire transfer, in
the amount of $5,000.00; such receipt is made subject to Conditions of
Escrow incorporated herein and attached hereto. The Escrow Agent shall
receive a fee in accordance with the Company's Schedule of Fees which
will be for serving as Escrow Agent under this agreement, which fee
shall be deducted from the Deposit when return of the Deposit is
requested.
2. Escrow Agent SHALL HOLD THE DEPOSIT UNTIL WRITTEN RELEASE DISBURSEMENT
INSTRUCTIONS ARE RECEIVED FROM BUYER AND SELLER.
3. Escrow Agent is hereby authorized to and directed to invest the Deposit
in the name of Buyer by Lawyers Title Insurance Corporation as Escrow
Agent as follows:
a. Deposits will be invested in an FDIC Money Market Account at
the discretion of Lawyers Title Insurance Corporation upon
receipt of Lawyers Title's Investment of Escrow Funds form,
unless otherwise requested.
C - 1
<PAGE> 19
b. Other types of investment will be considered upon written
request directed to the Company and subject to possible
additional fees payable to the Escrow Agent as negotiated.
c. If no investment is requested, please check here .
----------
4. Interest shall be payable at the time the Deposit is disbursed in
accordance with the terms of the Escrow Agreement and written
release/disbursement instructions.
5. All investments will be made in the regular course of business. To be
entitled to same day investment (assuming good funds are provided), the
Deposit must be received by noon; otherwise, such funds will be
deposited on the next business day.
6. Escrow Agent shall have NO OBLIGATION TO INVEST the Deposit unless and
until a satisfactory federal tax identification number is provided the
Escrow Agent, in writing or in the space below:
FEDERAL TAX I.D. NO. 34-1469604
---------------------
7. The investment shall be subject to the rules, regulations, policies
and procedures of said Depository.
Agreed to this day of , 19 .
--- ------------------ -------------
BUYER: Arbor Health Care Company
-------------------------------
Address: 1100 Shawnee Road
-------------------------------
Lima, Ohio 45805
-------------------------------
LAWYERS TITLE INSURANCE
CORPORATION
By:
SELLER: Cumberland Healthcare, L.P. I-C
-------------------------------
c/o RJ Health Properties, Inc.
Address: 880 Carillon Parkway
-------------------------------
St. Petersburg, FL 33716
-------------------------------
C - 2
<PAGE> 20
INVESTMENT OF ESCROW FUNDS
Date:
-----------------
Escrow File No.: E 1458
-----------------
To: Lawyers Title Insurance Corporation
Subject to all of the terms of this instruction and the terms of the
above captioned escrow agreement, you are authorized and directed to open and
account in the customer name of Arbor Health Care Co., by Lawyers Title
Insurance Corporation as Escrow Agent, in the amount of $ 5,000.00.
This account shall be opened at (bank)_______________ in a (investment
type)________________ . (If a depository institution preference has not been
stated by the customer, Lawyers Title Insurance Corporation will designate the
depository.)
The investment shall be for a term beginning on ________________, and
ending on_____________ . This investment, with any accrued interest, will not be
renewed upon maturity unless other written instructions are received and
authorized by the parties to this agreement.
Interest or other income from this investment shall accrue for the
account of the parties to be divided pursuant to the agreement of the parties at
the close of escrow.
All interest will accrue to and be reported to the Internal Revenue
Service for the account of:
Name: Arbor Health Care Company
------------------------------------------------------------
Address: 1100 Shawnee Rd., Lima, OH 45806
------------------------------------------------------------
Phone: (419) 227-3000
------------------------------------------------------------
Tax ID or Social Security No: 34-1469604
-------------------------------------
Upon the depository's request, we will execute the appropriate Internal
Revenue Service Documentation for the giving of taxpayer identification
information relating to this account. We authorize Lawyers Title Insurance
Corporation to execute that documentation upon our inability or refusal to do
so.
Lawyers Title Insurance Corporation shall not be responsible for any
penalties, or loss of principal or interest or any delays in the withdrawal of
the funds which may be imposed by the Depositor as a result
C - 3
<PAGE> 21
of the making or redeeming of the investment pursuant to our instructions, nor
shall Lawyers Title Insurance Corporation be liable for any loss or impairment
of funds while those funds are in the course of collection or while those funds
are on deposit in a financial institution if such a loss or impairment results
from the failure, insolvency or suspension of the financial institution.
The funds deposited herewith are not to be invested unless all parties
to this escrow have agreed to this instruction in writing.
BUYER: Arbor Health Care Company
------------------------------------------
SELLER: Cumberland Healthcare, Ltd. Partnership
------------------------------------------
Accepted:
Lawyers Title Insurance Corporation
By:
----------------------
C - 4
<PAGE> 22
CONDITIONS OF ESCROW
--------------------
Escrow Agent accepts this undertaking subject to these Conditions of Escrow:
1. The Deposit may be processed for collection in the normal course of
business by Escrow Agent, who may commingle funds received by it with
escrow funds of others in its regular escrow account at Wachovia Bank
of GA (hereafter the "Depository"). Escrow Agent shall not be
accountable for any incidental benefit which may be attributable to
the funds so deposited.
2. Escrow Agent shall not be liable for any loss caused by the failure,
suspension, bankruptcy or dissolution of the Depository;
3. Escrow Agent shall not be liable for loss or damage resulting from:
a. any good faith act or forbearance of Escrow Agent;
b. any default, error, action or omission of any party other
than Escrow Agent;
c. any defect in the title to any property unless such loss is
covered under a policy of title insurance issued by Escrow
Agent;
d. the expiration of any time limit or other delay which is not
solely caused by the failure of Escrow Agent to proceed in
its ordinary course of business, and in no event where such
time limit is not disclosed in writing to Escrow Agent;
e. the lack of authenticity of any writing delivered to Escrow
Agent or of any signature thereto, or the lack of authority
of the signatory to such writing;
f. Escrow Agent's compliance with all attachments, writs,
orders, judgments or other legal process issued out of any
court;
g. Escrow Agent's assertion or failure to assert any cause of
action or defense in any judicial or administrative
proceeding; or
h. any loss or damage which arises after the Deposit has been
disbursed in accordance with the terms of this Agreement.
4. Escrow Agent shall be fully indemnified by the parties hereto for all
its expenses, costs and reasonable attorney's fees incurred in
connection with any interpleader action which Escrow Agent may file,
in its sole discretion, to resolve any dispute as to the Depositor; or
which may be filed against Escrow Agent. Such costs, expenses or
attorney's fees, as well as the fees of Escrow Agent described below,
may be deducted from the Deposit.
5. If Escrow Agent is made a party to any judicial, non-judicial or
administrative action, hearing or process based on acts of any of the
other parties hereto and not on the malfeasance and/or negligence of
Escrow Agent in performing its duties hereunder, the expenses, costs
and reasonable attorney's fees incurred by Escrow Agent in responding
to such action, hearing or process may be deducted from the funds held
hereunder, and the party/parties whose alleged acts are a basis for
such proceedings shall indemnify, save and hold Escrow Agent harmless
from said expenses, costs and fees so incurred.
6. The Company's fee for acting as Escrow Agent is shown on its Schedule
of Escrow Services and Fees which is available upon request. These
fees, which may be paid in advance or will be deducted from the
account upon disbursement, are the joint and several obligation of
each party to any agreement, sales contract or other writing forming
the basis for this escrow undertaking.
C - 1
<PAGE> 23
ESCROW SERVICES AND CHARGES
---------------------------
If, and only if, title insurance is obtained or is to be obtained from
Lawyers Title Insurance Corporation (LTIC) to insure a real estate transaction,
LTIC is prepared to act as Escrow Agent to hold, invest and disburse Earnest
Money, settlement funds, construction loan disbursements, tenant improvement
loan disbursements, indemnity funds and other such funds or documents on behalf
of the parties to the transaction.
When LTIC is to serve as Escrow Agent, an escrow agreement (which may
be included within a sales and purchase or loan agreement) must be approved and
executed by all parties. The agreement must contain complete and explicit
instructions as to the duties and obligations of the escrow agent and it must
include the LTIC escrow "terms and conditions" set forth on the "Reverse Side"
of the escrow agreement.
In instances where LTIC is required by agreement to invest escrowed
funds, the parties must agree in writing to the type and location of the
investment. The named beneficiary of any interest earned must provide its Tax ID
number before funds can be invested. Only "good funds" can be invested;
therefore, checks or drafts must clear before being invested.
Charges and fees for escrow services which are to be provided by LTIC
are, in general, as follows (charges and fees may vary based on the complexity
of duties, obligations and investment services provided by the escrow agent):
1. There is a $150.00 minimum charge to establish and set-up
each escrow.
2. If funds are escrowed and multiple disbursements are to be
made, there is an additional $50.00 charge for each
disbursement after the first.
3. If funds are to be invested by LTIC in an investment
available through LTIC as approved by the parties, an
additional investment charge of $100.00 per investment
account will be made. Additional deposits can be made in an
existing investment account for $50.00 per deposit.
Any and all charges may be paid in advance or deducted from the escrow
funds, if any, upon disbursement.
<PAGE> 24
EXHIBIT "D"
-----------
ASSIGNMENT
AND
ASSUMPTION AGREEMENT
This Assignment, made this 20th day of SEPTEMBER, 1996, by and between
CUMBERLAND HEALTHCARE, L.P. I-C, a Delaware limited partnership doing business
in Ohio as CUMBERLAND HEALTHCARE, LIMITED PARTNERSHIP, I-C, hereinafter referred
to as "Seller", and ARBOR HEALTH CARE COMPANY, a Delaware corporation,
hereinafter referred to as "Purchaser",
W I T N E S S E T H:
--------------------
WHEREAS, Seller and Purchaser entered into that certain Purchase and
Sale Agreement dated September 19, 1996 (the "Contract"), for the sale of that
certain nursing home located in Waterville, Ohio and known as The Arbors at
Waterville (the "Nursing Home"), which Contract provides for the sale, transfer
and assignment by Seller of certain contracts and liabilities to Purchaser and
the assumption thereof by Purchaser;
NOW, THEREFORE, in consideration of the foregoing premises, the
consideration set forth in the above referenced Contract and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged:
1. Seller does hereby grant, bargain, sell, assign, transfer and convey
unto Purchaser, its successors and assigns, all of Seller's right,
title and interest in and to all of the unwritten leases and rental
arrangements for space at the Nursing Home (the "Assumed Leases").
Purchaser accepts the assignment of all of the Assumed Leases, and
Purchaser does hereby assume and undertake to abide by the same
according to their respective terms and conditions.
D - 1
<PAGE> 25
2. Seller does hereby grant, bargain, sell, assign, transfer and convey
unto Purchaser, its successors and assigns, all of Seller's right,
title and interest in and to all service contracts and other
agreements, if any, affecting the Nursing Home (the "Assumed
Contracts").
Purchaser accepts assignment of the Assumed Contracts, and Purchaser
does hereby assume and undertake to abide by the same according to
their respective terms and conditions and to indemnify and hold
Seller harmless against any claims or losses under such contracts
and agreements.
3. Seller does hereby grant, bargain, sell, assign, transfer and convey
unto Purchaser, its successors and assigns, all of Seller's right,
title and interest in and to the following:
(a) all licenses, permits and authorizations relating to the
Nursing Home of which Seller is the beneficiary, but only to
the extent that the same are assignable by law and contract;
and
(b) all rights of Seller to the use of the name "The Arbors at
Waterville".
TO HAVE AND TO HOLD the same unto Purchaser, its successors and
assigns, from and after the date hereof. This Assignment is made without
warranty of any kind or nature and without recourse to Seller.
[SIGNATURES CONTAINED ON FOLLOWING PAGE]
D - 2
<PAGE> 26
IN WITNESS WHEREOF, Seller and Purchaser have executed this instrument
on the day and date first above written.
SELLER:
CUMBERLAND HEALTHCARE, L.P. I-C, a Delaware
limited partnership doing business in Ohio as
CUMBERLAND HEALTHCARE, LIMITED PARTNERSHIP, I-C
By: Medical Investments Partners, a Florida
General Partnership, Its General Partner
By: RJ Health Properties, Inc.,
Managing General Partner of
Medical Investments Partners
By:
-------------------------
Fred E. Whaley, President
[Corporate Seal]
PURCHASER:
ARBOR HEALTH CARE COMPANY, a Delaware corporation
By:
----------------------------------------------
Name: Brad C. Roush
----------------------------------------------
Its: Secretary
----------------------------------------------
[Corporate Seal]
D - 3
<PAGE> 27
EXHIBIT "E"
-----------
MUTUAL RELEASE AND LEASE TERMINATION AGREEMENT
THIS MUTUAL RELEASE AND LEASE TERMINATION AGREEMENT (the
"Agreement") is made and entered into as of the 20th day of September, 1996, by
and between CUMBERLAND HEALTHCARE, L.P. I-C, a Delaware limited partnership
doing business in Ohio as CUMBERLAND HEALTHCARE, LIMITED PARTNERSHIP, I-C
("Cumberland"), and ARBOR HEALTH CARE COMPANY, a Delaware corporation ("Arbor").
Background Statement
--------------------
Arbor and Cumberland are parties to that certain Facility Lease
(Hillcrest Facility), dated as of February 1, 1989, as amended by that certain
First Amendment to the Facility Lease (Hillcrest Facility), dated November 15,
1991, effective as of January 1, 1991 (collectively, the "Lease").
On SEPTEMBER 19, 1996, Arbor and Cumberland entered into a Purchase and
Sale Agreement (the "Sale Agreement") for the purpose of Cumberland's sale to
Arbor of the Nursing Home which is the subject of the Lease (the "Nursing
Home"). Simultaneously herewith, Arbor and Cumberland closed the transactions
contemplated by the Sale Agreement. At the Closing, Arbor and Cumberland
executed and delivered certain documents, certificates and agreements as
required by Subsection 7.2 of the Sale Agreement (the "Closing Documents").
NOW, THEREFORE, for and in consideration of the transactions
contemplated by the sale, the mutual covenants and agreements contained herein,
and other good and valuable consideration, the receipt, adequacy and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:
1.
Releases
--------
1.1 Cumberland, on behalf of itself and its successors and assigns,
shall and does hereby irrevocably and completely release, acquit and forever
discharge Arbor and its officers, directors, shareholders and employees (and
their respective successors and assigns), from any and all claims, actions,
cause or causes of action, damages, demands, costs, expenses, attorneys' fees,
compensation, suits (in law or in equity), debts, contracts, agreements,
promises, obligations and liabilities, of any nature, known or unknown, fixed or
contingent (collectively "Claims"), which Cumberland ever had, now has or which
Cumberland or its heirs, legal representatives, successors or assigns can, shall
or may have for, upon or by reason of any matter, cause or thing whatsoever from
the beginning of the world to (and including) the date of this Agreement arising
out of or in any way relating to the Lease and/or the Nursing Home, EXCLUDING
HOWEVER, any Claims arising out of, pursuant to or relating to the Sale
Agreement (including specifically Article 10 thereof which includes an indemnity
with respect to certain matters pertaining to the Lease and Nursing Home) and/or
the Closing Documents.
E - 1
<PAGE> 28
1.2 Arbor, on behalf of itself and its successors and assigns, shall
and does hereby irrevocably and completely release, acquit and forever discharge
Cumberland, its general partners and its partners (and each of them) and their
respective officers, directors, shareholders, employees, trustees,
beneficiaries, fiduciaries and parent and subsidiary corporations (direct and
indirect) (and their respective successors and assigns), from any and all
claims, actions, cause or causes of action, damages, demands, costs, expenses,
attorneys' fees, compensation, suits (in law or in equity), debts, contracts,
agreements, promises, obligations and liabilities, of any nature, known or
unknown, fixed or contingent ("Claims"), which Arbor ever had, now has or which
Arbor or its successors or assigns can, shall or may have for, upon or by reason
of any matter, cause or thing whatsoever from the beginning of the world to (and
including) the date of this Agreement arising out of or in any way relating to
the Lease and/or the Nursing Home, EXCLUDING HOWEVER any Claim arising out of,
or pursuant to, or relating to the Sale Agreement and/or the Closing Documents.
2.
Termination of Lease
--------------------
2.1 Cumberland and Arbor hereby agree that the Lease is hereby
terminated.
3.
Scope of Releases
-----------------
3.1 All references to officers, directors, shareholders, employees,
trustees, beneficiaries and fiduciaries in Section 1 shall be deemed to include,
without limitation, former officers, directors, shareholders, employees,
trustees, beneficiaries and fiduciaries. With respect to Cumberland, the scope
of the above releases shall also extend to the partners (including former
partners) of Cumberland.
3.2 Specifically and expressly exempt from the scope of the above
releases are (i) the rights, duties, liabilities and obligations of the parties
hereto under this Agreement, (ii) the rights, duties, liabilities and
obligations of the parties hereto under the Sale Agreement, and (iii) the
rights, duties, liabilities and obligations of the parties under the Closing
Documents.
3.3 Each of the parties hereto represents to the other party that it
has not transferred, assigned or conveyed any claim or cause of action
referenced in Section 1 and that it shall not in the future transfer, assign or
convey any such claims or causes of action and that all such claims and causes
of action are free and clear of any liens or other encumbrances.
4.
Compromise Not An Admission
---------------------------
4.1 This Agreement is being entered into for the purpose of avoiding
the burden and inconvenience and expense of disputes and potential litigation
between the parties hereto and shall
E - 2
<PAGE> 29
not be construed as or be deemed to be an admission or concession by any party
as to the merits of any claim or defense, or of any wrongdoing, liability or
culpability in any way. Without limiting the generality of the foregoing, the
Background Statement contained herein is provided for the limited purpose of
defining terms used herein and shall not be construed as or be deemed to be an
admission of any fact or circumstance. This Agreement shall not be admissible in
evidence or used in any way in any suit, arbitration or other legal proceeding
between the parties hereto (or any of them), except in a suit, arbitration or
other legal proceeding to enforce the terms of this Agreement (by way of claim,
counterclaim, crossclaim, third party claim or defense).
5.
Miscellaneous
-------------
5.1 This Agreement, the Sale Agreement and the Closing Documents
contain the entire agreement and understanding concerning the subject matter
hereof between the parties hereto and there are no representations, inducements,
promises, agreements, arrangements or undertakings, oral or written, between the
parties hereto with respect to the subject matter hereof other than those set
forth herein. This Agreement may not be modified or amended, except by a writing
executed by all of the parties hereto.
5.2 Failure by any party to enforce any right granted by this Agreement
shall not constitute a waiver of such right. A waiver of any provision of this
Agreement shall not constitute a waiver of any other provision. No waiver shall
be effective unless it is in writing executed by the waiving party.
5.3 This Agreement shall inure to the benefit of, and be binding upon,
the parties hereto and their respective heirs, legal representatives, successors
and assigns.
5.4 All captions, headings, section and subsection numbers and letters
and other reference numbers or letters are solely for the purpose of
facilitating reference to this Agreement and shall not supplement, limit or
otherwise vary in any respect the text of this Agreement. All references to
sections or subsections shall be deemed to refer to the appropriate section or
subsection of this Agreement. Unless otherwise specified in this Agreement, the
terms "herein", "hereof", "hereunder", and other terms of like or similar
import, shall be deemed to refer to this Agreement as a whole, and not to any
particular section or subsection hereof. The word "including" shall mean
including without limitation.
5.5 Words of any gender used in this Agreement shall be held and
construed to include any other gender, and words of a singular number shall be
held to include the plural, and vice versa, unless the context requires
otherwise.
5.6 Each of the parties hereto has participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties hereto and no presumption or burden
E - 3
<PAGE> 30
of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any of the provisions of this Agreement.
5.7 Each party to this Agreement represents and has been counseled
independently by its attorney concerning the meaning and legal effect of the
terms of this Agreement. After such counseling, each party represents that it
fully understands this Agreement and its terms, and, with this full
understanding, voluntarily enters into this Agreement as evidenced by its
signature below. Each of the parties hereto hereby further acknowledges and
agrees (i) that the releases and covenants not to sue set forth in this
Agreement are being voluntarily and knowingly given by each of the parties
hereto without fraud, duress, undue influence or coercion of any kind exerted by
any of the other parties or any other person or entity, (ii) that the decision
of each of the parties to provide the releases and covenants not to sue set
forth herein were made after consultation by each of the parties with their own
legal counsel and, except as expressly set forth herein, was not in any way
induced or based upon any representations of other parties concerning the value
of the consideration given, the existence or non-existence of any fact, or any
other matter whatsoever, and (iii) that each party hereto hereby assumes the
risk of any and all mistakes involved in providing the other parties with the
releases and covenants not to sue set forth in this Agreement. THE PARTIES TO
THIS AGREEMENT ACKNOWLEDGE AND AGREE THAT THIS AGREEMENT IS IRREVOCABLE, BINDING
AND FINAL.
5.8 This Agreement shall be governed by and construed in
accordance with the laws of the State of Ohio.
6.
Post-Closing Obligations
------------------------
6.1 In accordance with Paragraph 7.4.3 of the Sale Agreement,
Cumberland and Arbor hereby agree to re-prorate Rent (as defined in the Lease
and the Sale Agreement) on or before October 20, 1996, and, in addition, agree
to simultaneously pay the fees of Cumberland's attorneys (Roberts, Isaf &
Summers of Atlanta, Georgia) in the amount of Ten Thousand Dollars ($10,000).
6.2 Upon a final accounting of all Rent as set forth above,
Cumberland agrees to terminate or cause the termination of any letter(s) of
credit issued in favor of Cumberland pursuant to the provisions of Article 21
of the Lease and existing as of the date of such final proration.
6.3 Upon the execution by Arbor of the Driveway Lease (as described
and defined in Paragraph 12.1.2 of the Sale Agreement), Cumberland shall enter
into a termination of the Existing Lease (as described and defined in Paragraph
12.1.2 of the Sale Agreement).
[SIGNATURES CONTAINED ON FOLLOWING PAGE]
E - 4
<PAGE> 31
IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized representatives to execute this Agreement under seal as of the day
and year first above written.
SELLER:
CUMBERLAND HEALTHCARE, L.P. I-C, a Delaware
limited partnership doing business in Ohio as
CUMBERLAND HEALTHCARE, LIMITED PARTNERSHIP, I-C
By: Medical Investments Partners, a Florida
General Partnership, Its General Partner
By: RJ Health Properties, Inc.,
Managing General Partner of
Medical Investments Partners
By:
-------------------------
Fred E. Whaley, President
[Corporate Seal]
PURCHASER:
ARBOR HEALTH CARE COMPANY, a Delaware corporation
By:
-------------------------------------------
Name: Pier C. Borra
-------------------------------------------
Its: President
-------------------------------------------
[Corporate Seal]
E - 5
<PAGE> 1
Exhibit 11.1
ARBOR HEALTH CARE COMPANY AND SUBSIDIARIES
STATEMENT RE COMPUTATION OF NET INCOME PER SHARE
(In thousands except per share data)
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30 Ended September 30
------------------ ------------------
1995 1996 1995 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net income (1) ............................ $2,299 $2,690 $5,762 $6,956
====== ====== ====== ======
Weighted average shares outstanding
Common Stock ...................... 6,887 6,897 6,835 6,895
Common Stock equivalents based upon
the treasury stock method . 35 57 36 75
------ ------ ------ ------
Total (2) ................................. 6,922 6,954 6,871 6,970
====== ====== ====== ======
Net income per share (1)/(2) .............. $ 0.33 $ 0.39 $ 0.84 $ 1.00
====== ====== ====== ======
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ARBOR HEALTH
CARE COMPANY AND SUBSIDIARIES' CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED
STATEMENTS OF INCOME AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 3,201
<SECURITIES> 0
<RECEIVABLES> 42,297
<ALLOWANCES> 1,368
<INVENTORY> 0
<CURRENT-ASSETS> 52,876
<PP&E> 166,072
<DEPRECIATION> 32,504
<TOTAL-ASSETS> 201,446
<CURRENT-LIABILITIES> 42,968
<BONDS> 91,317
<COMMON> 207
0
0
<OTHER-SE> 62,441
<TOTAL-LIABILITY-AND-EQUITY> 201,446
<SALES> 0
<TOTAL-REVENUES> 161,078
<CGS> 0
<TOTAL-COSTS> 125,564
<OTHER-EXPENSES> 17,399
<LOSS-PROVISION> 1,447
<INTEREST-EXPENSE> 5,161
<INCOME-PRETAX> 11,507
<INCOME-TAX> 4,551
<INCOME-CONTINUING> 6,956
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,956
<EPS-PRIMARY> 1.00
<EPS-DILUTED> 1.00
</TABLE>
