<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1997
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 May 9, 1997 -- 6,915,921.
1
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
Number
------
<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
Forward-Looking Statements.....................................................................10
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings..............................................................................11
Item 2. Changes in Securities..........................................................................11
Item 3. Defaults Upon Senior Securities................................................................11
Item 4. Submission of Matters to a Vote of Security Holders............................................11
Item 5. Other Information..............................................................................11
Item 6. Exhibits and Reports on Form 8-K...............................................................11
</TABLE>
2
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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 MARCH 31
1996 1997
----------- --------
ASSETS (Note 1)
<S> <C> <C>
Current assets
Cash and cash equivalents ............................................. $ 5,761 $ 4,885
Accounts receivable, less allowances of $1,948 and
$2,304, respectively .............................................. 44,019 48,498
Supply inventories .................................................... 2,963 3,141
Other current assets .................................................. 3,503 3,783
Deferred income taxes ................................................. 1,972 2,316
-------- --------
Total current assets ...................................................... 58,218 62,623
Property and equipment
Land and improvements ................................................. 25,337 25,351
Buildings and improvements ............................................ 95,017 95,608
Equipment and furnishings ............................................. 40,477 41,847
Leasehold improvements ................................................ 5,970 6,195
Construction in process ............................................... 2,599 4,374
-------- --------
169,400 173,375
Less allowances for depreciation and amortization ..................... 33,564 35,666
-------- --------
Total property and equipment .............................................. 135,836 137,709
Other assets
Goodwill, less amortization of $926 and $1,133, respectively .......... 13,034 15,418
Deferred costs, less amortization of $3,475 and
$2,911, respectively .............................................. 2,205 1,948
Sundry ................................................................ 181 341
-------- --------
Total other assets ........................................................ 15,420 17,707
-------- --------
$209,474 $218,039
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Notes payable ......................................................... $ 4,526 $ 5,071
Accounts payable ...................................................... 11,121 10,262
Accrued payroll and related items ..................................... 11,522 12,131
Other liabilities ..................................................... 13,465 15,968
Current maturities of long-term obligations ........................... 3,162 3,302
-------- --------
Total current liabilities ................................................. 43,796 46,734
Long-term obligations, less current maturities ............................ 94,643 97,032
Deferred income taxes ..................................................... 5,019 5,595
Stockholders' equity
Preferred stock, $.01 par value, Authorized - 2,000,000 shares
None issued or outstanding -- --
Series A Junior Participating Cumulative Preferred stock, $.01 par value,
Authorized - 10,000 shares, None issued or outstanding -- --
Common stock, $.03 par value, Authorized - 20,000,000 shares
Issued and outstanding -- 6,904,054 and 6,913,121 shares .......... 207 207
Additional paid-in capital ............................................ 30,300 30,435
Retained earnings ..................................................... 35,509 38,036
-------- --------
Total stockholders' equity ................................................ 66,016 68,678
-------- --------
$209,474 $218,039
======== ========
</TABLE>
See accompanying notes
3
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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 ENDED
MARCH 31
-------------------
1996 1997
-------- -------
<S> <C> <C>
Net revenues
Subacute care ....................................... $ 27,391 $31,118
Basic care .......................................... 20,396 21,241
Pharmacy and other .................................. 4,689 7,165
-------- -------
Total net revenues .................................... 52,476 59,524
Expenses
Operating ........................................... 41,681 46,553
General corporate ................................... 2,543 3,021
Operating lease rental .............................. 1,126 1,085
Interest ............................................ 1,620 2,015
Depreciation and amortization ....................... 2,115 2,593
-------- -------
Total expenses ........................................ 49,085 55,267
Other expense (income)
Loss on disposal of property ........................ 55 86
Interest and sundry ................................. (32) 28
-------- -------
Total other expense ................................... 23 114
-------- -------
Income before income taxes ............................ 3,368 4,143
Income taxes .......................................... 1,345 1,616
-------- -------
Net income ............................................ $ 2,023 $ 2,527
======== =======
Net income per share .................................. $ 0.29 $ 0.36
======== =======
Weighted average shares outstanding ................... 6,970 6,985
======== =======
</TABLE>
See accompanying notes
4
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ARBOR HEALTH CARE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
Three Months Ended
March 31
-------------------
1996 1997
-------- -------
<S> <C> <C>
Operating activities
Net income ................................................... $ 2,023 $ 2,527
Adjustments to reconcile net income to net cash
provided by operating activities
Provision for depreciation ............................... 1,785 2,160
Amortization ............................................. 389 490
Provision for deferred income taxes ...................... 238 232
Provision for losses on accounts receivable .............. 357 453
Loss on disposal of property ............................. 55 86
Changes in operating assets and liabilities
Accounts receivable .................................... (2,086) (4,389)
Supply inventories ..................................... (64) (177)
Other current assets ................................... (623) (642)
Deferred costs ......................................... (234) (9)
Accounts payable ....................................... (3,369) (885)
Accrued payroll and related items ...................... 9 535
Other liabilities (income tax payments of $73
and $728, respectively) .............................. 3,016 2,498
-------- -------
Net cash provided by operating activities ....................... 1,496 2,879
Investing activities
Expenditures for property and equipment ...................... (8,863) (3,326)
Cash paid to acquire businesses, net of cash received ........ -- (1,374)
Sundry and other ............................................. 29 (146)
-------- -------
Net cash used in investing activities ........................... (8,834) (4,846)
Financing activities
Net repayments under line of credit agreements
to finance development projects and acquisitions ........... (22,559) (2,580)
Net borrowings (repayments) of working capital
under line of credit agreements ............................ (423) 545
Borrowings on long-term obligations .......................... 27,000 4,000
Repayments of long-term obligations .......................... (662) (954)
Deferred financing costs ..................................... (715) (55)
Issuance of stock ............................................ 25 135
-------- -------
Net cash provided by financing activities ....................... 2,666 1,091
-------- -------
Net decrease in cash and cash equivalents ....................... (4,672) (876)
Cash and cash equivalents at beginning of period ................ 6,394 5,761
-------- -------
Cash and cash equivalents at end of period ...................... $ 1,722 $ 4,885
======== =======
</TABLE>
See accompanying notes
5
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ARBOR HEALTH CARE COMPANY AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 1997
(UNAUDITED)
1. ORGANIZATION AND BASIS OF PRESENTATION
The consolidated balance sheet of Arbor Health Care Company and subsidiaries
(the "Company") at December 31, 1996 has been derived from the audited
consolidated financial statements at that date. The consolidated balance sheet
of the Company as of March 31, 1997, and the consolidated statements of income
and cash flows for the periods ended March 31, 1997 and 1996, 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
March 31, 1997 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, 1996. The results of operations and cash flows for the period ended March
31, 1997 are not necessarily indicative of the operating results or cash flows
for the full year.
2. NEW ACCOUNTING PRONOUNCEMENT
The Financial Accounting Standards Board has issued Statement No. 128, Earnings
per Share, which is required to be adopted on December 31, 1997. At that time,
the Company will be required to change the method currently used to compute
earnings per share and to restate all prior periods. Under the new requirements
for calculating primary earnings per share, the dilutive effect of stock
options will be excluded. The impact of Statement 128 on the calculation of
earnings per share is not expected to be material.
3. ACQUISITIONS
Effective January 1, 1997, the Company acquired substantially all of the assets
and assumed certain liabilities of Adult Services Unlimited, Inc. ("ASUI") and
Health Poconos, Inc. ("HPI") for approximately $3.2 million, including $1.7
million in seller financing. ASUI and HPI are Comprehensive Outpatient
Rehabilitation Facilities that provide general, job-related injury and geriatric
rehabilitation to the northeastern Pennsylvania market.
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.
A director of the Company is an officer, director and major stockholder of RJFI.
Effective June 30, 1996, the Company acquired all of the outstanding stock of
Poly-Stat Supply Corporation and Poly-Stat Computer Applications, Inc. The
Poly-Stat businesses provide medical supplies and Medicare billing services to
nursing homes. The purchase price of approximately $1.2 million for the
Poly-Stat businesses included $1.0 million in cash and $0.2 million in
promissory notes. In addition, the Company must make a $1.0 million contingent
payment if certain earnings targets are attained through December 31, 2000.
These acquisitions have been treated as purchases for accounting and financial
reporting purposes. Results of operations of companies purchased are included
from the dates of acquisition.
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 first offered its Common Stock to
public investors in August, 1993. As more fully described in the Annual Report
on Form 10-K for the year ended December 31, 1996, the Company provides subacute
and basic health care services to patients at its licensed nursing centers
("Centers"), operates three institutional pharmacies and provides rehabilitative
services at two Comprehensive Outpatient Rehabilitation Facilities ("CORFs").
The Company's growth strategy includes the development of new Centers with
subacute units, identification and admission of appropriate high acuity
patients, and the pursuit of strategic acquisition opportunities in selected
markets. During 1996, the Company opened a 36-bed addition to an existing Center
in the first quarter, a 79-bed Center in April, a 116-bed Center in August and a
120-bed Center in late December. The Company acquired two businesses that
provide medical supplies and Medicare billing services and purchased a 100-bed
Center previously operated under a lease agreement effective June, 1996 and
September, 1996, respectively. Effective January 1, 1997, the Company acquired
two CORFs that provide general, job-related injury and geriatric rehabilitation
to the northeastern Pennsylvania market. As of March 31, 1997, the Company
operated 3,580 beds in its 30 Centers located in five states. The Company's
institutional pharmacies, located in Ohio and Florida, service 196
non-affiliated facilities and 29 of the Company's Centers. Prior to the
acquisition, the Company's two CORFs serviced over 1,300 patients with over
12,000 patient visits during 1996. Refer to Note 3 of 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. During
1996, the Company introduced a plan to improve operating margins, reduce
operating costs and increase referrals from managed care organizations.
RESULTS OF OPERATIONS
The following tables set forth elements of net revenue for the periods
presented:
<TABLE>
<CAPTION>
Three Months Ended
March 31
----------------------------------------------
1996 1997
-------------- -------------
<S> <C> <C>
Services Provided as Percentage of
Total Net Revenue:
Subacute Care (1) 52.2% 52.3%
Basic Care 38.9 35.7
Pharmacy and Other (2) 8.9 12.0
-------------- -------------
Total 100.0% 100.0%
============== =============
Payor Type as Percentage of
Total Net Revenue:
Private (3) 32.7% 36.2%
Medicare 36.9 33.4
Medicaid 30.4 30.4
-------------- -------------
Total 100.0% 100.0%
============== =============
Payor Type as Percentage of
Subacute Care Net Revenue:
Private (3) 23.9% 28.7%
Medicare 66.7 59.7
Medicaid 9.4 11.6
-------------- -------------
Total 100.0% 100.0%
============== =============
</TABLE>
7
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<TABLE>
<CAPTION>
Three Months Ended
March 31
----------------------------------------------
1996 1997
-------------- -------------
<S> <C> <C>
Payor Type as Percentage of
Basic Care Net Revenue:
Private (3) 43.0% 42.1%
Medicaid 57.0 57.9
-------------- -------------
Total 100.0% 100.0%
============== =============
Payor Type as Percentage of
Pharmacy and Other Net Revenue:
Private (3) 39.8% 50.9%
Medicare 22.9 18.2
Medicaid 37.3 30.9
-------------- -------------
Total 100.0% 100.0%
============== =============
</TABLE>
The following tables set forth certain operating data for the periods
presented:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31
----------------------------------------------
1996 1997
-------------- -------------
<S> <C> <C>
Number of Licensed Beds (end of quarter):
Subacute Care 964 1,234
Basic Care 2,299 2,346
-------------- -------------
Total 3,263 3,580
============== =============
Average Number of Licensed Beds:
Subacute Care 990 1,230
Basic Care 2,267 2,350
-------------- -------------
Total 3,257 3,580
============== =============
Average Occupancy (4):
Subacute Care 82.0% 81.3%
Basic Care 92.6 94.5
Total Occupancy 89.4 90.0
Subacute Census Mix Percentage:
Private (3) 20.2% 27.7%
Medicare 69.6 60.0
Medicaid 10.2 12.3
-------------- -------------
Total 100.0% 100.0%
============== =============
- ------------------------------------
<FN>
(1) Subacute care revenue includes all room and board, nursing, therapies
and medical supplies provided to patients in the Company's subacute
units and pharmacy charges for all Arbor patients.
(2) Pharmacy and other revenues includes institutional pharmacy sales made
to non-related facilities and their residents and outpatient
rehabilitation clinic revenue.
(3) Private includes reimbursement and patient days applicable to
individuals, HMOs, PPOs, indemnity insurers and other charge-based
sources.
(4) Represents total billed patient days divided by total available days.
</TABLE>
8
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THREE MONTHS ENDED MARCH 31, 1997 COMPARED TO THREE MONTHS ENDED MARCH 31, 1996
Total net revenues increased $7.0 million, or 13.4%. Internal growth
generated 81.2% of the increase and the balance came from the 1996 and 1997
acquisitions. Total occupancy increased to 90.0% in the current period from
89.4% in the comparable period of the prior year due to improved occupancy in
both Mature Centers (Centers in operation for 24 months or more as of the
period reported upon) and Start-Up Centers (developed Centers which have been
in operation for less than 24 months as of the period reported upon). Revenues
from Start-Up Centers provided 98.1% of the internal growth. Subacute care
revenues increased $3.7 million, or 13.6%, due to more beds ($5.9 million),
partially offset by lower average rates ($2.2 million). The decrease in
subacute rates was principally due to two factors: 1) Managed care and
indemnity insurance patients now account for 22.5% of all subacute patients
compared to 15.9% for the three months ended March 31, 1996. Additionally,
managed care patients now makeup a significantly higher portion of this payor
group. Managed care patients have lower per diem rates than traditional
indemnity insurance patients; therefore, the average managed care and
insurance rates for subacute services have decreased. 2) In anticipation of
Medicare prospective payment the Company has implemented certain measures
designed to reduce costs. Lowering operating costs in Mature Centers, as
discussed below, reduced Medicare rates from the comparable period in 1996, as
Medicare revenues are based upon Center specific costs. Basic care revenues
increased $.8 million, or 4.1%, due to more beds and improved occupancy, 94.5%
in the current period compared to 92.6% for the quarter ended March 31, 1996.
Pharmacy and other specialty service revenues increased $2.5 million, or
52.8%, due to the 1996 and 1997 acquisitions ($1.3 million) and new pharmacy
contracts and increased sales volume ($1.2 million).
Operating expenses increased $4.9 million, or 11.7%. The increase was
due to the operations of five Start-Up Centers, as compared to two in the
quarter ended March 31, 1996, and the 1996 and 1997 acquisitions. Operating
costs in Mature Centers decreased 4.7% from the comparable period in 1996 as a
result of the Company's ongoing efforts to reduce costs, standardize staffing
models and convert therapy programs from contract providers to in-house
programs. Compensation expenses for Center staff of $21.2 million, which are
included in operating expenses, increased by $1.5 million, or 7.6%. Start-Up
Centers accounted for $1.7 million of the increased compensation expenses. As
a result of the continued implementation of standardized staffing models in
the Mature Centers, compensation expenses decreased by $.2 million. The cost
of providing therapies, pharmaceuticals and medical supplies increased
operating expenses by $2.4 million primarily due to Start-Up Centers and the
1996 and 1997 acquisitions. All other costs increased $1.0 million, primarily
attributable to Start-Up Centers. As a percent of revenue, operating costs
decreased to 78.2% in the current period from 79.4% in the comparable period
in the prior year, primarily due to the ongoing implementation of the
Company's plan to control and reduce costs in all Centers as discussed above.
General corporate expenses increased $.5 million, or 18.8%. The
increase is due to additional administrative costs incurred to support the
growth of the Company's operations.
Ownership costs increased $.8 million, or 17.1%. The increase in
ownership costs was attributable to the Start-Up Centers and the 1997
acquisitions.
Net income increased by $.5 million, or 24.9%, primarily as a result
of the foregoing factors.
LIQUIDITY AND CAPITAL RESOURCES
The Company's growth during the last two years has been financed with
cash from operating and financing activities. Cash from operating activities
primarily has been provided by net income from operations. Non-cash expense
items, included in net income, and increases in other current liabilities have
offset increased accounts receivable associated with Start-Up Centers and
acquisitions. Additionally, in the comparable period in 1996, repayments of
accounts payable also accounted for the use of operating cash. Net borrowings
on long-term obligations have been the source of cash during the quarters
ended March 31, 1997 and 1996. Expenditures for investing activities primarily
have been for the development of new Centers and renovations to existing
Centers. Additionally in 1997, expenditures were made for the acquisition of
two CORFs.
At March 31, 1997, the Company had working capital of $15.9 million
compared to $14.4 million at December 31, 1996. An increase in accounts
receivable accounted for the majority of the working capital increase. Accounts
receivable net of allowances were $48.5 million at March 31, 1997 compared to
$44.0 million at December 31, 1996. The number of days of net revenues for the
quarter in net receivables increased to 73 days at March 31, 1997 compared to 70
days at December 31, 1996 due in part to Start-Up Centers and the 1997
acquisitions.
The Company has revolving credit facilities ("Credit Facilities") with
three banks that are renewable annually. These Credit Facilities provide working
capital, letters of credit, and acquisition and development financing of $6.0
million, $4.4 million and $43.3 million, respectively. As of March 31, 1997,
$3.1 million of working capital had been borrowed, $2.7 million of letters of
credit were outstanding, and $34.7 million of acquisition and development lines
had been committed. 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
9
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and on the acquisition/development facilities from LIBOR plus 1.75% to LIBOR
plus 2.00%. Annual fees of 1.0% to 1.5% are charged by the banks issuing letters
of credit under these facilities.
Long term obligations, including current maturities, which provide
funds for financing centers and acquisitions, totaled approximately $100.3
million at March 31, 1997. These obligations are for varying amounts and for
terms that expire at varying times over the next 20 years. Interest rates on
outstanding obligations ranged from 3.49% to 10.75% at March 31, 1997. The
Company has been successful in obtaining permanent financing but uses its Credit
Facilities as interim sources of financing when appropriate.
The Company has various ongoing needs for capital, including (i)
working capital for operations; (ii) capital expenditures for its Centers or
other facilities; and (iii) capital expenditures for the development of new
Centers and potential acquisitions. During the remainder of 1997, the Company
expects to utilize approximately $17.9 million for the development of four
Centers in Florida and an addition to an existing Center; $2.4 million for
Center renovations; and $6.8 million for other routine capital expenditures. The
Company expects to open two or three Centers per year during 1997 and 1998 at a
cost of $6.0 to $7.5 million per 120-bed Center. 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.
FORWARD-LOOKING STATEMENTS
Certain oral statements made by management from time to time and
certain statements contained herein that are not historical facts are
"forward-looking statements" within the meaning of Section 21E of the Securities
Exchange Act of 1934 and because such statements involve risks and
uncertainties, actual results may differ materially from those expressed or
implied by such forward-looking statements. Forward-looking statements,
including those in "Management's Discussion and Analysis of Financial Condition
and Results of Operations" are statements regarding the intent, belief or
current expectations, estimates or projections of the Company, its Directors or
its Officers about the Company and the industry in which it operates, and
assumptions made by management, and include among other items, (i) the Company's
strategies regarding growth, including its intention to develop additional
Centers and to make acquisitions of Centers, pharmacies and other related
businesses; (ii) the Company's ability to continue to control costs and to meet
its liquidity and other financing needs; (iii) the Company's ability to respond
to changes in regulations; and (iv) the Company's ability to earn additional
revenues from managed care organizations and other payors and its implementation
of a business strategy in furtherance of achieving such additional revenues.
Although the Company believes that its expectations are based on reasonable
assumptions, it can give no assurance that the anticipated results will occur.
Important factors that could cause the actual results to differ
materially from those in the forward-looking statements include, among other
items, (i) conditions in the capital markets, including the interest rate
environment and the availability of capital; (ii) changes in or failure to
comply with government regulations; (iii) changes in the competitive marketplace
that could affect the Company's revenue and/or cost bases, such as increased
competition, lack of qualified nursing, management or other personnel and
increased labor costs; and (iv) enactment of health care reform measures by
Congress and/or state legislatures, particularly in Ohio or Florida where most
of the Company's Centers are located.
Recent federal budget discussions have targeted the Medicare program
for reductions in spending growth of approximately $10.7 billion for skilled
nursing facilities over the next five years, primarily through the
implementation of a Medicare prospective payment for skilled and subacute
services program. Currently, the Company derives approximately 33% of its
revenues from Medicare. Additionally, the Congressional Budget Office has
revised economic projections which include Medicaid cuts of $17 billion, much of
which is believed to be cuts in payments to disproportionate-share hospitals.
Currently, the Company derives approximately 30% of its revenues from Medicaid.
Until the ultimate form of any new legislation is known, the Company will not be
able to determine the exact nature of the financial impact these proposals may
have. The Company can give no assurance that payments under such programs in the
future will remain at a level comparable to the present level or be sufficient
to cover the costs allocable to serving its Medicare and Medicaid patients.
Concern about the potential effects of the proposed reform measures has
contributed to the volatility of prices of securities of companies in health
care and related industries, including the Company, and may similarly affect the
price of the Company's securities in the future. See "Item 1. Business-Sources
of Revenue" and "-Government Regulation-Government Reimbursement Programs"
included in the Company's Annual Report on Form 10-K for the year ended December
31, 1996.
10
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PART II -- OTHER INFORMATION
Item 1. Legal Proceedings.
------------------
None
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
<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 Third Amendment to Amended and Restated Loan Agreement dated
March 28, 1997 between the Company and Bank One, Lima, NA.
4.2 Revolving Credit Note dated March 28, 1997 between the Company
and Bank One, Lima, NA.
4.3 Time Note dated March 10, 1997 between the Company and Capital
Bank, NA.
4.4 Term Loan Agreement dated January 15, 1997 between the Company
and Capital Bank, NA.
4.5 Open End Mortgage dated January 15, 1997 between the Company
and Capital Bank, NA.
4.6 Second Amendment to Amended and Restated Loan Agreement dated
December 30, 1996 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, 1996).
4.7 Loan Agreement dated August 9, 1996 between the Company and
The Provident Bank (incorporated by reference to Exhibit 4.2
of the Company's 10-K for the year ended December 31, 1996).
4.8 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).
4.9 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).
4.10 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).
</TABLE>
11
<PAGE> 12
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
<S> <C>
4.11 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).
4.12 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).
4.13 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).
4.14 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).
4.15 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).
4.16 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).
4.17 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).
4.18 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).
4.19 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).
4.20 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).
4.21 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).
4.22 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).
4.23 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).
4.24 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).
4.25 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).
4.26 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).
</TABLE>
12
<PAGE> 13
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
<S> <C>
4.27 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).
4.28 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).
4.29 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).
4.30 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).
4.31 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).
4.32 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).
4.33 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).
4.34 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).
4.35 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).
4.36 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).
4.37 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).
4.38 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).
4.39 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).
4.40 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).
4.41 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).
4.42 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).
4.43 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).
4.44 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).
4.45 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).
4.46 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).
4.47 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).
</TABLE>
13
<PAGE> 14
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
<S> <C>
4.48 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).
4.49 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).
4.50 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).
4.51 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).
4.52 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).
4.53 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).
4.54 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).
4.55 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).
4.56 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).
4.57 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).
4.58 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).
4.59 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).
4.60 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).
4.61 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).
4.62 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).
4.63 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).
4.64 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).
4.65 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).
4.66 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).
</TABLE>
14
<PAGE> 15
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
<S> <C>
4.67 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 Share Purchase Agreement dated December 16, 1996 between the
Company and Diane S. Bartoli, sole shareholder of Adult
Services Unlimited, Inc. and Health Poconos, Inc.
(incorporated by reference to Exhibit 10.1 of the Company's
10-K for the year ended December 31, 1996).
10.2+ Key Executive Termination Payment Plan dated June 1, 1996
(incorporated by reference to Exhibit 10.2 of the Company's
10-K for the year ended December 31, 1996)
10.3+ Description of 1996 Bonus Plans for Named Executive Officers
(incorporated by reference to Exhibit 10.3 of the Company's
10-K for the year ended December 31, 1996).
10.4 Purchase and Sale Agreement dated September 19, 1996 between
the Company and Cumberland Healthcare, L.P. I-C. (incorporated
by reference to Exhibit 10.1 of the Company's 10-Q for the
quarter ended September 30, 1996).
10.5 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).
10.6 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).
10.7 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).
10.8+ 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).
10.9+ 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).
10.10 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).
10.11 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).
10.12 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).
10.13 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).
10.14 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).
10.15+ 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).
10.16+ Arbor Health Care Company 1995 Stock Option Plan (incorporated
by reference to the Company's Proxy Statement dated April 24,
1995)
10.17 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).
10.18 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).
</TABLE>
15
<PAGE> 16
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
<S> <C>
10.19 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).
10.20 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).
10.21 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).
10.22 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).
10.23 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).
10.24 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 10.3 of the
Company's Registration Statement on Form S-1 (File No.
33-65080) filed June 25, 1993 under the Securities Act of
1933).
10.25 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).
10.26 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).
10.27 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).
10.28 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).
10.29 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).
10.30 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).
10.31 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).
10.32 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).
10.33+ 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).
10.34 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).
</TABLE>
16
<PAGE> 17
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
<S> <C>
10.35 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).
10.36+ 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).
10.37 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).
10.38+ 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>
+Executive management contract or compensatory plan or arrangement.
</TABLE>
(b) Reports on Form 8-K
Report on Form 8-K dated January 6, 1997 announcing
the acquisitions of two Comprehensive Outpatient
Rehabilitation Facilities, Adult Services Unlimited,
Inc. and Health Poconos, Inc.
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 5/14/97 By: /s/ DENNIS R. SMITH
----------------- ---------------------
Dennis R. Smith, Senior Vice President -
Finance and Chief Financial Officer
17
<PAGE> 18
INDEX TO 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 Third Amendment to Amended and Restated Loan Agreement dated
March 28, 1997 between the Company and Bank One, Lima, NA.
4.2 Revolving Credit Note dated March 28, 1997 between the Company
and Bank One, Lima, NA.
4.3 Time Note dated March 10, 1997 between the Company and Capital
Bank, NA.
4.4 Term Loan Agreement dated January 15, 1997 between the Company
and Capital Bank, NA.
4.5 Open End Mortgage dated January 15, 1997 between the Company
and Capital Bank, NA.
4.6* Second Amendment to Amended and Restated Loan Agreement dated
December 30, 1996 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, 1996).
4.7* Loan Agreement dated August 9, 1996 between the Company and
The Provident Bank (incorporated by reference to Exhibit 4.2
of the Company's 10-K for the year ended December 31, 1996).
4.8* 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).
4.9* 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).
4.10* 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).
4.11* 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).
4.12* 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).
4.13* 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).
4.14* 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).
4.15* 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).
4.16* 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).
4.17* 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).
4.18* 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).
</TABLE>
18
<PAGE> 19
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
<S> <C>
4.19* 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).
4.20* 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).
4.21* 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).
4.22* 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).
4.23* 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).
4.24* 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).
4.25* 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).
4.26* 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).
4.27* 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).
4.28* 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).
4.29* 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).
4.30* 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).
4.31* 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).
4.32* 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).
4.33* 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).
4.34* 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).
4.35* 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).
4.36* 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).
4.37* 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).
4.38* 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).
</TABLE>
19
<PAGE> 20
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
<S> <C>
4.39* 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).
4.40* 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).
4.41* 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).
4.42* 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).
4.43* 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).
4.44* 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).
4.45* 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).
4.46* 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).
4.47* 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).
4.48* 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).
4.49* 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).
4.50* 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).
4.51* 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).
4.52* 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).
4.53* 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).
4.54* 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).
4.55* 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).
4.56* 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).
4.57* 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).
4.58* 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).
</TABLE>
20
<PAGE> 21
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
<S> <C>
4.59* 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).
4.60* 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).
4.61* 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).
4.62* 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).
4.63* 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).
4.64* 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).
4.65* 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).
4.66* 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).
4.67* 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* Share Purchase Agreement dated December 16, 1996 between the
Company and Diane S. Bartoli, sole shareholder of Adult
Services Unlimited, Inc. and Health Poconos, Inc.
(incorporated by reference to Exhibit 10.1 of the Company's
10-K for the year ended December 31, 1996).
10.2*+ Key Executive Termination Payment Plan dated June 1, 1996
(incorporated by reference to Exhibit 10.2 of the Company's
10-K for the year ended December 31, 1996).
10.3*+ Description of 1996 Bonus Plans for Named Executive Officers
(incorporated by reference to Exhibit 10.3 of the Company's
10-K for the year ended December 31, 1996).
10.4* Purchase and Sale Agreement dated September 19, 1996 between
the Company and Cumberland Healthcare, L.P. I-C. (incorporated
by reference to Exhibit 10.1 of the Company's 10-Q for the
quarter ended September 30, 1996).
10.5* 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).
10.6* 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).
10.7* 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).
10.8*+ 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).
</TABLE>
21
<PAGE> 22
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
<S> <C>
10.9*+ 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).
10.10* 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).
10.11* 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).
10.12* 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).
10.13* 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).
10.14* 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).
10.15*+ 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).
10.16*+ Arbor Health Care Company 1995 Stock Option Plan (incorporated
by reference to the Company's Proxy Statement dated April 24,
1995).
10.17* 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).
10.18* 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).
10.19* 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).
10.20* 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).
10.21* 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).
10.22* 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).
10.23* 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).
10.24* 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 10.3 of the
Company's Registration Statement on Form S-1 (File No.
33-65080) filed June 25, 1993 under the Securities Act of
1933).
10.25* 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).
10.26* 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).
</TABLE>
22
<PAGE> 23
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
<S> <C>
10.27* 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).
10.28* 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).
10.29* 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).
10.30* 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).
10.31* 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).
10.32* 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).
10.33*+ 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).
10.34* 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).
10.35* 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).
10.36*+ 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).
10.37* 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).
10.38*+ 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 Earnings Per Share.
27.1 Financial Data Schedule.
<FN>
*Previously filed.
+Executive management contract or compensatory plan or arrangement.
</TABLE>
23
<PAGE> 1
Exhibit 4.1
THIRD AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT
------------------------------------------------------
THIS THIRD AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT ("Third Amendment")
is made and entered into as of March 28, 1997 by and between Arbor Health Care
Company, a corporation organized and existing under the laws of the State of
Delaware, located at 1100 Shawnee Road, Lima, Ohio 45805 ("Company"), and Bank
One, Lima, NA, 121 West High Street, Lima, Ohio 45802, ("Bank One").
WITNESSETH:
-----------
WHEREAS, Company and Bank One entered into an Amended and Restated Loan
Agreement dated August 1, 1995, as amended by that certain Amendment to
Amended and Restated Loan Agreement dated as of February 1, 1996, and as further
amended by that certain Second Amendment to Amended and Restated Loan and
Security Agreement dated as of December 30, 1996 (the "Agreement") pursuant to
which Company obtained loans from Bank One up to the maximum amount of Fourteen
Million Dollars ($14,000,000.00); and
WHEREAS, Company and Bank have agreed to amend the Agreement in order to change,
among other things, the amount of the Revolving Credit Loan, upon the terms and
conditions hereinafter set forth;
NOW, THEREFORE, the parties agree as follows:
A. The first sentence of Section 1.1 of the Agreement is hereby deleted and
replaced by the following:
For the period through July 1, 1998 Bank One hereby agrees to lend
Company up to the maximum aggregate amount of Fifteen Million Dollars
($15,000,000.00) (the "Credit Commitment").
B. Section 1.1, 1. of the Agreement is hereby deleted and replaced by the
following:
A Revolving Credit Loan in the maximum amount of Two Million Dollars
($2,000,000.00), which amount shall be reduced by Three Hundred Twenty
Five Thousand Dollars ($325,000.00), the obligation of Bank One now
existing under letters of credit referred to in Section 1.2.2;
C. The first sentence of Section 1.2.1 of the Agreement is hereby deleted and
replaced by the following:
Company shall execute and deliver to Bank One a promissory note in the
form of Exhibit "A-3" attached hereto (hereinafter referred to as the
"Revolving Credit Note").
<PAGE> 2
D. Section 1.2.2 of the Agreement is hereby deleted and replaced by the
following:
The proceeds of the Revolving Credit Note shall be used only to fund
Company's working capital needs and to allow Company to obtain letters
of credit, which letters of credit may be limited, in the sole
discretion of Bank One, to the aggregate outstanding amount of One
Million Dollars ($1,000,000.00), and which shall have expiration
date(s) of not later than the maturity date of the Revolving Credit
Note, of which Three Hundred Twenty Five Thousand Dollars ($325,000.00)
is now outstanding in the form of letters of credit dated October 25,
1996 and September 30, 1996 in which SouthTrust Bank Alabama, N.A. is
the beneficiary, which expire no later than October 25, 1997 and
September 30, 1997, respectively. The credit commitment referenced in
Section 1.1, as it relates to the Revolving Credit Loan, shall be
reduced by the amount of any other letter(s) of credit which are issued
hereunder.
E. In Section 8.1, the definition of "Revolving Credit Note" is hereby deleted
and replaced with the following:
"Revolving Credit Note" shall mean the note in the form of Exhibit
"A-3" attached hereto executed by Company and delivered to Bank One
pursuant to Section 1.2.1 hereof.
F. Company shall execute and deliver to Bank One an Amended and Restated
Revolving Credit Note in the form and substance of Exhibit "A-3".
G. This Third Amendment is a revision only and not a novation, and except as
specifically modified by the terms and conditions of this Third Amendment, all
of the terms and conditions of the Agreement remain in full force and effect.
THE PARTIES HAVE HEREUNTO SET THEIR HANDS and caused this Third Amendment to be
duly executed by their respective duly-authorized officers on the day and year
set forth below.
BANK ONE, LIMA, NA ARBOR HEALTH CARE COMPANY
By: /s/ Jeff Dudderar By: /s/ W. W. Wondolowski
------------------------------ ----------------------
Its: Vice President Its: VP and Treasurer
------------------------------ ----------------------
Date: March 28, 1997 Date: March 28, 1997
------------------------------ ----------------------
<PAGE> 3
EXHIBIT "A-3"
REVOLVING CREDIT NOTE
$2,000,000.00 Lima, Ohio March ___, 1997
On or before July 1, 1998, for value received, the undersigned promises to pay
to the order of Bank One, Lima, NA (hereinafter called "Bank One") the sum of
Two Million Dollars ($2,000,000.00) or such lesser portion thereof as may from
time to time be disbursed to, or for the benefit of the undersigned, with
interest (computed on the basis of the actual number of days elapsed divided by
a year of 360 days) before maturity on the balance from time to time remaining
unpaid at the rate or rates provided for in that certain Amended and Restated
Loan Agreement dated ________________, 1995 (the "Loan Agreement"). Both
principal and interest are payable in lawful money of the United States at the
Main Office of Bank One, 121 West High Street, Lima, OH 45802.
This promissory note evidences a borrowing under and is entitled to the benefits
of the Loan Agreement. The principal may become due or may be declared forthwith
due and payable in the manner and upon the terms and conditions and with the
effect provided in said Loan Agreement.
THE UNDERSIGNED, TO THE EXTENT PERMITTED BY LAW, WAIVES ANY RIGHT TO HAVE A JURY
PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR
OTHERWISE, BETWEEN BANK ONE AND THE UNDERSIGNED ARISING OUT OF, IN CONNECTION
WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THE
UNDERSIGNED AND BANK ONE IN CONNECTION WITH THIS PROMISSORY NOTE, THE LOAN
AGREEMENT, OR ANY OTHER AGREEMENT OR DOCUMENT EXECUTED OR DELIVERED IN
CONNECTION HEREWITH OR THE TRANSACTIONS RELATED HERETO. THIS WAIVER SHALL NOT IN
ANY WAY AFFECT, WAIVE, LIMIT, AMEND OR MODIFY BANK ONE'S ABILITY TO PURSUE
REMEDIES PURSUANT TO ANY CONFESSION OF JUDGMENT OR COGNOVIT PROVISION CONTAINED
IN THIS PROMISSORY NOTE OR ANY OTHER DOCUMENT RELATED HERETO.
The undersigned authorize(s) any attorney-at-law to appear for the undersigned
in an action on this promissory note, at any time after the same becomes due, as
herein provided, in any court of record in or of the State of Ohio, or
elsewhere, to waive the issuing and service of process against the undersigned,
and to confess judgment in favor of the legal holder of this promissory note
against the undersigned, for the amount that may be due, with interest at the
rate therein mentioned and cost of suit, and to waive and release all errors in
said proceedings and judgment, and all petitions in error, and right of appeal
from the judgment rendered.
<PAGE> 4
- ------------------------------------------------------------------------------
WARNING - BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT
TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU
WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT
FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR
RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT,
OR ANY OTHER CAUSE.
- ------------------------------------------------------------------------------
ARBOR HEALTH CARE COMPANY
By:
-------------------------------
Its:
-------------------------------
<PAGE> 1
Exhibit 4.2
REVOLVING CREDIT NOTE
$2,000,000.00 Lima, Ohio March 28, 1997
On or before July 1, 1998, for value received, the undersigned promises to pay
to the order of Bank One, Lima, NA (hereinafter called "Bank One") the sum of
Two Million Dollars ($2,000,000.00) or such lesser portion thereof as may from
time to time be disbursed to, or for the benefit of the undersigned, with
interest (computed on the basis of the actual number of days elapsed divided by
a year of 360 days) before maturity on the balance from time to time remaining
unpaid at the rate or rates provided for in that certain Amended and Restated
Loan Agreement dated August 1, 1995 (the "Loan Agreement"). Both principal and
interest are payable in lawful money of the United States at the Main Office of
Bank One, 121 West High Street, Lima, OH 45802.
This promissory note evidences a borrowing under and is entitled to the benefits
of the Loan Agreement. The principal may become due or may be declared forthwith
due and payable in the manner and upon the terms and conditions and with the
effect provided in said Loan Agreement.
THE UNDERSIGNED, TO THE EXTENT PERMITTED BY LAW, WAIVES ANY RIGHT TO HAVE A JURY
PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR
OTHERWISE, BETWEEN BANK ONE AND THE UNDERSIGNED ARISING OUT OF, IN CONNECTION
WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THE
UNDERSIGNED AND BANK ONE IN CONNECTION WITH THIS PROMISSORY NOTE, THE LOAN
AGREEMENT, OR ANY OTHER AGREEMENT OR DOCUMENT EXECUTED OR DELIVERED IN
CONNECTION HEREWITH OR THE TRANSACTIONS RELATED HERETO. THIS WAIVER SHALL NOT IN
ANY WAY AFFECT, WAIVE, LIMIT, AMEND OR MODIFY BANK ONE'S ABILITY TO PURSUE
REMEDIES PURSUANT TO ANY CONFESSION OF JUDGMENT OR COGNOVIT PROVISION CONTAINED
IN THIS PROMISSORY NOTE OR ANY OTHER DOCUMENT RELATED HERETO.
The undersigned authorize(s) any attorney-at-law to appear for the undersigned
in an action on this promissory note, at any time after the same becomes due, as
herein provided, in any court of record in or of the State of Ohio, or
elsewhere, to waive the issuing and service of process against the undersigned,
and to confess judgment in favor of the legal holder of this promissory note
against the undersigned, for the amount that may be due, with interest at the
rate therein mentioned and cost of suit, and to waive and release all errors in
said proceedings and judgment, and all petitions in error, and right of appeal
from the judgment rendered.
Page 1 of 2
<PAGE> 2
- ------------------------------------------------------------------------------
WARNING - BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT
TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU
WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT
FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR
RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT,
OR ANY OTHER CAUSE.
- ------------------------------------------------------------------------------
ARBOR HEALTH CARE COMPANY
By: /s/ W. W. Wondolowski
------------------------------
Its: VP and Treasurer
------------------------------
Page 2 of 2
<PAGE> 1
Exhibit 4.3
TIME NOTE
---------
$2,000,000.00 March 10, 1997
- ------------- Sylvania, Ohio
FOR VALUE RECEIVED, the undersigned, ARBOR HEALTH CARE COMPANY
(the "Maker"), unconditionally promises to pay to the order of Capital Bank,
N.A., a national banking association (the "Bank"), at 5520 Monroe Street,
Sylvania, Ohio 43560, the principal sum of TWO MILLION AND 00/100 DOLLARS
($2,000,000.00) plus interest on the unpaid principal balance thereof at the
fixed rate of six and one-half percent (6-1/2%) per annum.
The outstanding principal balance due hereunder and all accrued
and unpaid interest shall be fully due and payable on or before April 9, 1997.
All payments shall be credited first to interest accrued but
unpaid and then to the payment and reduction of principal. Late payments will be
charged a fee of 10% of the payment amount.
Time is of the essence in the payment of this Note.
Interest shall be calculated by means of the 365/360 day method.
Maker shall make all payments on this Note at the principal
offices of Bank or at such other place as the holder hereof may designate.
Maker may prepay all or part of this Note at any time without
penalty, provided, that the amount so prepaid shall be applied to the payment of
principal provided for herein of the most remote maturity, and provided further
that if any such prepayment is made from the proceeds of, or in contemplation
of, a borrowing, or borrowings, from any lender other than Bank, Maker shall pay
a premium equal to two percent (2%) of the principal amount so prepaid.
In the event the Maker fails to make any payment when due, Bank at
its election may declare the entire amount of principal and interest remaining
unpaid hereunder together with any and all other obligations or liabilities of
Maker to Bank immediately due and payable without presentment, demand, protest
or notice upon default and may proceed against any and all security and may
enforce any and all of its remedies at law or equity. In such event, the entire
principal balance and accrued interest then owing shall bear interest at a rate
which is the greater of sixteen percent (16%) or four percent (4%) above the
prime interest rate in effect from time to time at Bank until fully paid,
provided, however, that in no event shall the amount of interest paid hereunder
exceed the maximum rate of interest permitted by law. Maker agrees to pay all
costs of collection hereof, including reasonable attorney's fees.
This Note shall be construed under the laws of the State of Ohio.
Any event of default under the terms of any other note, loan
agreement or security agreement executed by Maker in favor of Bank shall be an
event of default under this Note.
Bank's acceptance of one or more late or partial payments shall
not be a course of dealing upon which the Maker may rely on future occasions or
a waiver of Bank's right to prompt full payment when due under this Note. Bank's
forbearance from exercising any right or remedy under this Note shall not be a
waiver of such rights and remedies. Bank's forbearance from exercising any right
or remedy under this Note on any one or more occasions shall not be a course of
dealing or waiver on which the Maker may rely on any future occasions. Bank's
exercise of any rights or remedies or a part of a right or remedy on one or more
occasions shall not preclude Bank from exercising the right or remedy at any
other time. Bank's rights and remedies under this Note and the law and equity
are cumulative to, but independent of, each other.
Maker represents and warrants that the loan evidenced by this Note
is for business purposes and not primarily for personal, family, household or
agricultural purposes.
1
<PAGE> 2
MAKER ACKNOWLEDGES THAT, AS TO ANY AND ALL DISPUTES THAT MAY ARISE
BETWEEN THE MAKER AND THE BANK, THE COMMERCIAL NATURE OF THE TRANSACTION OUT OF
WHICH THIS NOTE ARISES WOULD MAKE ANY SUCH DISPUTE UNSUITABLE FOR TRIAL BY JURY.
ACCORDINGLY, MAKER HEREBY IRREVOCABLY WAIVES ANY RIGHT TO TRIAL BY JURY AS TO
ANY AND ALL DISPUTES THAT MAY ARISE RELATING TO THIS NOTE OR TO ANY OF THE OTHER
INSTRUMENTS OR COLLATERAL DOCUMENTS EXECUTED IN CONNECTION HEREWITH.
Maker acknowledges the right to have the terms and conditions of
this Note reviewed by an attorney for the Maker, and said terms and conditions
were explained to the appropriate officers/representatives of the Maker who
hereby acknowledge that they fully understand the terms hereof.
With full knowledge of all constitutional rights under the
Constitutions of the State of Ohio and the United States of America, the Maker
hereby irrevocably authorizes any attorney at law, including without limitation,
any attorney representing the Bank, to appear on the Maker's behalf in any court
of record in the State of Ohio, or in any other state or territory of the United
States, or in any court of the United States, after this Note becomes due and
payable; to waive the issuing and service of process and all other
constitutional rights to due process of law; to confess judgment against the
Maker in favor of the Bank for the amount then appearing due together with the
costs of suit; to release all errors; and to waive all rights of appeal and
stays of execution. The Maker hereby consents to the confessing attorney
receiving a legal fee from the Bank or any other holder of this Note. The Maker
voluntarily and knowingly irrevocably waives (i) any conflict of interest with
respect to the attorney confessing judgment against the Maker, and (ii) all
rights to notice and hearing prior to judgment being so confessed against the
Maker.
WARNING - BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE
AND COURT TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST
YOU WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO
COLLECT FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR,
WHETHER FOR RETURNED GOODS, FAULTY GOODS, FAILURE ON ITS PART TO COMPLY WITH
THIS AGREEMENT, OR ANY OTHER CAUSE.
MAKER: ARBOR HEALTH CARE COMPANY
BY: /s/ W. W. Wondolowski
--------------------------------------
William W. Wondolowski, Vice President
and Treasurer
2
<PAGE> 1
Exhibit 4.4
TERM LOAN AGREEMENT
This Agreement, dated the 15th day of January, 1997, between Arbor
Health Care Company, a corporation (hereinafter called the "Borrower"),
organized in the State of Delaware, and Capital Bank, N.A., a national banking
association (hereinafter called the "Bank").
WITNESSETH
WHEREAS, Borrower has requested a credit accommodation from Bank, as more
particularly described herein; and
WHEREAS, Bank has agreed to the request so made by Borrower, upon the terms and
conditions set forth in this Agreement;
NOW, THEREFORE, the parties hereto, in consideration of the premises and
intending to be legally bound, do hereby agree as follows:
SECTION 1. PURPOSE
The proceeds of this loan shall be used for business purposes only, and
specifically for refinancing the Arbors at Sylvania, 7120 Port Sylvania Drive,
Toledo, Ohio 43617.
SECTION 2. THE LOAN
Bank agrees to lend, and Borrower agrees to borrow, the sum of Four
Million and 00/100 Dollars ($4,000,000.00) on the terms and conditions set forth
in this Agreement. This loan shall be evidenced by a Note of Borrower of even
date in the form annexed as Exhibit "A" and any extensions and/or renewals
thereof.
SECTION 3. COLLATERAL
Borrower will secure the payment of the Note by granting to Bank a
security interest in, a lien upon or other form of security in the following
described Collateral, by the execution of document(s), in form prescribed by
Bank, of even date herewith, unless otherwise indicated:
3.1 UCC ITEMS. Security Agreement(s) of even date herewith covering:
(a) EQUIPMENT. All of Borrower's Equipment located at 7120
Port Sylvania Drive, Toledo, Ohio 43617, now owned or
hereafter acquired, as described in the Security
Agreement(s).
3.2 REAL PROPERTY.
(a) A real estate mortgage of even date herewith between
Borrower and Bank covering the real estate described
therein.
SECTION 4. REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants that:
4.1 Borrower is a corporation duly organized under the laws of the
State of Delaware and doing business in the State of Ohio.
4.2 The undersigned representative is fully authorized to act on behalf
of Borrower; and this Loan Agreement, the Note and other document(s) have been
authorized by necessary entity action, and do not violate any law or agreement
to which Borrower is a party.
4.3 The financial statements dated September 30, 1996 provided to Bank
are true and accurate, and there have been no material changes in the financial
condition of Borrower since the date of those statements.
4.4 Except as disclosed in the financial statements, Borrower's assets
are not encumbered or subject to any liens of a material nature.
4.5 No litigation which if determined adversely to Borrower, would have
a material adverse effect on the business operations or financial condition of
Borrower, is pending or threatened against Borrower or any of its properties,
except as disclosed in the financial statements.
1
<PAGE> 2
SECTION 5. PREPAYMENT OF NOTE
If Borrower prepays the Note prior to January 15, 2002, Borrower shall
pay Bank a premium equal to two percent (2%) of the principal amount so prepaid.
If Borrower prepays the Note prior to January 15, 2007, but after January 15,
2002, Borrower shall pay Bank a premium equal to one percent (1%) of the
principal amount so prepaid. After January 15, 2007, Borrower may pay the Note
without penalty. In any event, any and all prepayments shall be applied to the
payment of principal therein of the most remote maturity.
Notwithstanding the above, no prepayment penalty will apply to monies
paid to Bank as a result of loss or damage to some or all of the Collateral or
monies paid to Bank as a result of transfer of some or all the Collateral by
eminent domain.
SECTION 6. COVENANTS OF THE BORROWER
Borrower agrees that, so long as the Note shall be outstanding, unless
Bank shall otherwise consent in writing:
6.1 Borrower shall pay all material charges, taxes, assessments, and
claims in a timely manner so that they will not become or result in a lien
against Borrower's assets, except any charges or liabilities which are being
contested in good faith by appropriate legal proceedings.
6.2 Borrower shall maintain and keep in force insurance of the types
and in amounts customarily carried in lines of business similar to Borrower's,
including but not limited to fire, public liability, property damage and
worker's compensation, carried with companies and in amounts satisfactory to
Bank; and Borrower shall deliver to Bank from time to time at Bank's request
evidence of insurance acceptable to Bank. A completed ACORD 27 Form shall
constitute evidence of insurance. Under no circumstances shall an ACORD 25-S
Form constitute acceptable evidence of insurance.
6.3 Borrower shall maintain its financial records in accordance with
generally accepted accounting principles (GAAP), and allow Bank to review the
records at any reasonable time.
6.4 Borrower shall furnish to Bank:
(a) Within one hundred twenty (120) days after the close of
each fiscal year, audited financial statements prepared
in accordance with GAAP and audited by independent
outside accountants satisfactory to Bank.
(b) Within forty five (45) days after the close of each
quarter, a copy of Borrower's financial statements
certified by an officer of Borrower.
(c) Such other information as may from time to time be
reasonably requested by Bank, including but not limited
to financial information on the Arbors at Sylvania.
6.5 Borrower shall promptly notify Bank of (i) any material change in
Borrower's financial condition; (ii) any change in its name; or (iii) any
litigation which if determined adversely to Borrower, would have a material
adverse effect on the business operations or financial condition of Borrower,
against Borrower.
6.6 Borrower will not violate any laws or regulations if noncompliance
will materially and adversely affect the business operations or financial
condition of Borrower.
6.7 Borrower shall not without written consent of the bank:
(a) Permit its net worth to be less than $30,000,000.
(b) Permit the ratio of its total debt to its net worth to
exceed 4.5 to 1.
(c) Permit the ratio of its current assets to current
liabilities to be less than 1 to 1.
(d) For any 12 month period ending at the end of each
quarter, permit the ratio of the sum of its net income
plus federal and state taxes accrued or paid plus
interest expense plus non-cash expenses to its interest
expense for the period to be less than 1.1 to 1.
2
<PAGE> 3
(e) For any 12 month period ending at the end of each
quarter, permit the ratio of its net income plus
non-cash expenses or allowances less any dividends paid
by the Borrower to the sum of its current portion of
long term debt for the period to be less than 1.15 to
1.
(f) Merge or consolidate with any other corporation or any
other business entity unless the Borrower is the
surviving entity of the merger or consolidation, and
the merger or consolidation does not result in the
violation of a representation, warranty or covenant
hereunder.
(g) Liquidate, sell, lease, transfer or otherwise dispose
of all or a substantial portion of its assets. All
proceeds from any sale, lease or transfer of the
Collateral shall be remitted by Borrower to Bank.
SECTION 7. DEFAULT
The entire principal balance and all interest shall, at the option of
Bank, become immediately due and payable in accordance with the terms of the
Note, if:
a) Borrower fails to make any payments on the Note when
due, provided such default shall continue for a period
of ten (10) days after written notice of such default;
b) Borrower defaults in the observance or performance of
any representation, warranty, covenant or term of this
Agreement or any other agreement with Bank provided
such default shall continue for a period of thirty (30)
days after written notice of such default.
c) Proceedings under the Bankruptcy Laws are filed by or
against Borrower and such proceedings are not dismissed
within sixty (60) days of the filing date.
SECTION 8. MISCELLANEOUS
8.1 Neither the failure nor any delay on the part of Bank to exercise
any right or privilege hereunder shall operate as a waiver thereof; nor shall
any single or partial exercise of any such right or privilege preclude any other
or further exercise thereof or the exercise of any other right or privilege.
8.2 This Agreement shall be binding upon Borrower, its successors and
assigns, and shall be binding upon the Bank and shall inure to the benefit of
Bank and its respective successors and assigns.
8.3 Borrower will reimburse Bank for all costs, expenses and reasonable
attorney's fees expended or incurred by Bank in preparation of and in perfecting
security interests and lien positions under this Agreement, and in enforcing
this Agreement, or in collecting any sums which become due Bank on the Note or
in realization of the Collateral.
8.4 This Agreement shall be construed in accordance with and governed
by the laws of the State of Ohio.
8.5 All notices required by this Agreement shall be addressed as:
Capital Bank, N.A. Arbor Health Care Company
Attn: Commercial Loan Dept. Attn: Vice President & Treasurer
5520 Monroe Street 1100 Shawnee Road
Sylvania, Ohio 43560 Box 840
Lima, Ohio 45802-0840
8.6 All representations, warranties, and agreements herein contained
shall survive the making of the loan and the issuance of the Note.
8.7 In the case that one or more of the provisions contained in this
Agreement, the Note, and other loan documents shall for any reason be held to be
invalid, illegal, or unenforceable in any respect, the invalidity, illegality,
or unenforceability of such provisions shall not affect any other provisions of
this Agreement, the Note, and other loan documents, and such shall be construed
as though the invalid, illegal, or unenforceable provision had never been
contained therein.
8.8 BORROWER ACKNOWLEDGES THAT, AS TO ANY AND ALL DISPUTES THAT MAY
ARISE BETWEEN THE BORROWER AND THE BANK, THE COMMERCIAL NATURE OF THE
TRANSACTION OUT OF WHICH THIS AGREEMENT ARISES WOULD MAKE ANY SUCH DISPUTE
UNSUITABLE FOR TRIAL BY JURY. ACCORDINGLY, BORROWER HEREBY
3
<PAGE> 4
IRREVOCABLY WAIVES ANY RIGHT TO TRIAL BY JURY AS TO ANY AND ALL DISPUTES THAT
MAY ARISE RELATING TO THIS AGREEMENT OR TO ANY OF THE OTHER INSTRUMENTS OR
COLLATERAL DOCUMENTS EXECUTED IN CONNECTION HEREWITH.
8.9 Borrower acknowledges the right to have the terms and conditions of
this Agreement reviewed by an attorney for the Borrower, and said terms and
conditions were explained to the appropriate officers/representatives of the
Borrower who hereby acknowledge that they fully understand the terms hereof.
CAPITAL BANK, N.A. ARBOR HEALTH CARE COMPANY
By: /s/ David A. Reed By: /s/ W. W. Wondolowski
---------------------------------- ------------------------------
David A. Reed, Vice President William W. Wondolowski, Vice
President and Treasurer
4
<PAGE> 5
TERM NOTE
---------
$4,000,000.00 January 15, 1997
- ------------- Sylvania, Ohio
FOR VALUE RECEIVED, the undersigned, ARBOR HEALTH CARE COMPANY
(the "Maker"), unconditionally promises to pay to the order of Capital Bank,
N.A., a national banking association (the "Bank"), at 5520 Monroe Street,
Sylvania, Ohio 43560, the principal sum of FOUR MILLION AND 00/100 DOLLARS
($4,000,000.00) plus interest on the unpaid principal balance thereof at the
rate of eight and ten hundredths percent (8.10%) per annum through January 14,
2002, at which time said interest rate shall be subject to change in accordance
with the attached Exhibit "A".
Commencing on the 15th day of February, 1997, and continuing on
the same day of each month thereafter, Maker shall make sixty (60) monthly
payments of principal and interest in the amount of Thirty Three Thousand Nine
Hundred Eighty Eight and 00/100 Dollars ($33,988.00) each through January 15,
2002, at which time the monthly payment amount shall be subject to change in
accordance with Exhibit "A" of this Note. The outstanding principal balance due
hereunder and all accrued and unpaid interest shall be fully due and payable on
or before January 15, 2017.
All payments shall be credited first to interest accrued but
unpaid and then to the payment and reduction of principal. Late payments will be
charged a fee of 10% of the payment amount.
Time is of the essence in the payment of this Note.
Interest shall be calculated by means of the 365/360 day method.
Maker shall make all payments on this Note at the principal
offices of Bank or at such other place as the holder hereof may designate.
If Maker prepays the Note prior to January 15, 2002, Maker shall
pay Bank a premium equal to two percent (2%) of the principal amount so prepaid.
If Maker prepays the Note prior to January 15, 2007, but after January 15, 2002,
Maker shall pay Bank a premium equal to one percent (1%) of the principal amount
so prepaid. After January 15, 2007, Maker may pay the Note without penalty. In
any event, any and all prepayments shall be applied to the payment of principal
therein of the most remote maturity.
As security for payment of this Note, Maker has granted Bank, by
separate instrument of even date herewith, a security interest in all equipment
located at 7120 Port Sylvania Drive, Toledo, Ohio 43617, whether now owned or
hereafter acquired, and all proceeds of the foregoing, all as further described
in the aforesaid security agreement.
As security for payment of this Note, Maker has granted Bank, by
separate instrument of even date herewith, a mortgage lien on the property on
Exhibit "B" of this Note:
This Note is issued under and entitled to the benefits of the
provisions of a Loan Agreement between Maker and Bank of even date herewith,
incorporated hereunder by reference.
In the event the Maker fails to make any payment within ten (10)
days after written notice of payment default, Bank at its election may declare
the entire amount of principal and interest remaining unpaid hereunder together
with any and all other obligations or liabilities of Maker to Bank immediately
due and payable without presentment, demand, protest or notice upon default and
may proceed against any and all security and may enforce any and all of its
remedies at law or equity. In such event, the entire principal balance and
accrued interest then owing shall bear interest at a rate of four percent (4%)
above the prime interest rate in effect from time to time at Bank until fully
paid, provided, however, that in no event shall the amount of interest paid
hereunder exceed the maximum rate of interest permitted by law. Maker agrees to
pay all costs of collection hereof, including reasonable attorney's fees.
This Note shall be construed under the laws of the State of Ohio.
Any event of default under the terms of any other note, loan
agreement or security agreement executed by Maker in favor of Bank shall be an
event of default under this Note.
<PAGE> 6
Bank's acceptance of one or more late or partial payments shall
not be a course of dealing upon which the Maker may rely on future occasions or
a waiver of Bank's right to prompt full payment when due under this Note. Bank's
forbearance from exercising any right or remedy under this Note shall not be a
waiver of such rights and remedies. Bank's forbearance from exercising any right
or remedy under this Note on any one or more occasions shall not be a course of
dealing or waiver on which the Maker may rely on any future occasions. Bank's
exercise of any rights or remedies or a part of a right or remedy on one or more
occasions shall not preclude Bank from exercising the right or remedy at any
other time. Bank's rights and remedies under this Note and the law and equity
are cumulative to, but independent of, each other.
Maker represents and warrants that the loan evidenced by this Note
is for business purposes and not primarily for personal, family, household or
agricultural purposes.
MAKER ACKNOWLEDGES THAT, AS TO ANY AND ALL DISPUTES THAT MAY ARISE
BETWEEN THE MAKER AND THE BANK, THE COMMERCIAL NATURE OF THE TRANSACTION OUT OF
WHICH THIS NOTE ARISES WOULD MAKE ANY SUCH DISPUTE UNSUITABLE FOR TRIAL BY JURY.
ACCORDINGLY, MAKER HEREBY IRREVOCABLY WAIVES ANY RIGHT TO TRIAL BY JURY AS TO
ANY AND ALL DISPUTES THAT MAY ARISE RELATING TO THIS NOTE OR TO ANY OF THE OTHER
INSTRUMENTS OR COLLATERAL DOCUMENTS EXECUTED IN CONNECTION HEREWITH.
Maker acknowledges the right to have the terms and conditions of
this Note reviewed by an attorney for the Maker, and said terms and conditions
were explained to the appropriate officers/representatives of the Maker who
hereby acknowledge that they fully understand the terms hereof.
With full knowledge of all constitutional rights under the
Constitutions of the State of Ohio and the United States of America, the Maker
hereby irrevocably authorizes any attorney at law, including without limitation,
any attorney representing the Bank, to appear on the Maker's behalf in any court
of record in the State of Ohio, or in any other state or territory of the United
States, or in any court of the United States, after this Note becomes due and
payable; to waive the issuing and service of process and all other
constitutional rights to due process of law; to confess judgment against the
Maker in favor of the Bank for the amount then appearing due together with the
costs of suit; to release all errors; and to waive all rights of appeal and
stays of execution. The Maker hereby consents to the confessing attorney
receiving a legal fee from the Bank or any other holder of this Note. The Maker
voluntarily and knowingly irrevocably waives (i) any conflict of interest with
respect to the attorney confessing judgment against the Maker, and (ii) all
rights to notice and hearing prior to judgment being so confessed against the
Maker.
WARNING - BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE
AND COURT TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST
YOU WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO
COLLECT FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR,
WHETHER FOR RETURNED GOODS, FAULTY GOODS, FAILURE ON ITS PART TO COMPLY WITH
THIS AGREEMENT, OR ANY OTHER CAUSE.
MAKER: ARBOR HEALTH CARE COMPANY
BY: /s/ W. W. Wondolowski
--------------------------------------
William W. Wondolowski, Vice President
and Treasurer
2
<PAGE> 7
EXHIBIT "A"
-----------
INTEREST RATE AND MONTHLY PAYMENT CHANGES
(A) CHANGE DATES
The interest rate charged may change on the 15th day of January, 2002, and on
that day every 60th month thereafter. Each date on which the interest rate could
change is called a "Change Date".
(B) THE INDEX
Beginning with the first Change Date, the interest rate will be based on an
Index. The "Index" is the weekly average yield on United States Treasury
securities adjusted to a constant maturity of 5 years, as made available by the
Federal Reserve Board. The most recent Index figure available as of the date 45
days before each Change Date is called the "Current Index".
If the Index is no longer available, the Bank will choose a new index that is
based upon comparable information. The Bank will give notice of this choice.
(C) CALCULATION OF CHANGES
Before each Change Date, the Bank will calculate the new interest rate by adding
two and ten hundredths percentage points (2.10%) to the Current Index. The Bank
will then round the result of this addition to the nearest one-eighth of one
percentage point (0.125%). This rounded amount will be the new interest rate
until the next Change Date.
The Bank will then determine the amount of the monthly payment that would be
sufficient to repay the unpaid principal balance owing at the Change Date in
full on the maturity date at the new interest rate in substantially equal
payments. The result of this calculation will be the new amount of the monthly
payments.
(D) EFFECTIVE DATE OF CHANGES
The new interest rate will become effective on each Change Date. The new amount
of the monthly payment will become due on the first payment due date after each
Change Date.
(E) NOTICE OF CHANGES
The Bank will deliver or mail to Maker a notice of any changes in the interest
rate and monthly payment before the effective date of any change.
<PAGE> 8
EXHIBIT "B"
A parcel of land being Lot 18 in the Replat of Lots 4 and 5 Port Sylvania Plat
Two as recorded in Volume 133, Pages 80-82, Lucas County Record of Plats,
located in Sylvania Township, Lucas County, Ohio, and being more particularly
described as follows:
Commencing at the Southeast corner of the Southwest 1/4 of Section 21, Town 9
South, Range 6 East; thence Northerly along the East line of the Southwest 1/4
of said Section 21, having an assumed bearing of North 4(degree) 18' 40" East, a
distance of 555.68 feet to the Southeast corner of said Lot 18 (said corner also
being the true Point of Beginning); thence Westerly along the South line of said
Lot 18 (said line also being the Northerly right-of-way line of Port Sylvania
Drive), having a bearing of North 85(degree) 33' 03" West, a distance of 305.90
feet to a point (said point also being the Southeast corner of Lot 3 in Port
Sylvania Plat One); thence Northerly along the East line of said Lot 3, having a
bearing of North 4(degree) 26' 57" East, a distance of 420.00 feet to a point
(said point also being the Northeast corner of said Lot 3); thence Westerly
along the North line of said Lot 3, having a bearing of North 85(degree) 33' 03"
West, a distance of 320.00 feet to a point (said point also being the Northwest
corner of said Lot 3); thence Northerly along the West line of said Lot 18 (said
line also being the Easterly right-of-way line of Meijer Drive), having a
bearing of North 4(degree) 26' 57" East, a distance of 50.00 feet to the
Northwest corner of said Lot 18; thence Easterly along the North line of said
Lot 18, having a bearing of South 85(degree) 33' 03" East, a distance of 624.77
feet to the Northeast corner of said Lot 18; thence Southerly along the East
line of said Lot 18 (said line also being East line of the Southwest 1/4 of said
Section 21), having a bearing of South 4(degree) 18' 40" West, a distance of
470.00 feet to the true point of beginning. Subject to legal highways.
<PAGE> 1
Exhibit 4.5
OPEN END MORTGAGE
-----------------
TOTAL INDEBTEDNESS AT ANY TIME NOT TO EXCEED FOUR MILLION AND 00/100 DOLLARS
($4,000,000.00).
KNOW ALL MEN BY THESE PRESENTS: That Arbor Health Care Company, a Delaware
corporation aka Arbor Health Care Co. (hereinafter referred to as "Grantor"), in
consideration of $1.00 and other valuable consideration received to Grantor's
satisfaction from Capital Bank, N.A. ("Grantee"), whose address is 5520 Monroe
Street, Sylvania, Ohio 43560 and in consideration of any and all loan
indebtedness, including but not limited to a certain Promissory Note executed
and delivered to Grantee by Grantor, on even date herewith in the amount of
$4,000,000.00, any renewal, extension or replacement of loan indebtedness,
including future advances and costs and fees pursuant thereto made by Grantee to
Grantor to be secured hereby ("Loan Indebtedness"), does bargain, sell, and
convey, with mortgage covenants, to the Grantee, its successors and assigns, the
following described real estate, located in Lucas County, Ohio:
See attached Exhibit "A"
which has the common address of 7120 Port Sylvania Drive, Toledo, Ohio 43617
("Property Address"), together with all the improvements now or hereafter
directed or affixed on the property and all easements, rights, appurtenances,
rents, royalties, mineral, oil, and gas rights, and profits, water rights and
stock, and all fixtures now or hereafter a part of the property, (including all
heating, plumbing, lighting, watering and screening fixtures, awnings, storm
windows and doors, and equipment necessary for the use of the property or the
business conducted on the property). All replacements and additions are also
covered by this mortgage. (All of the foregoing is hereinafter referred to as
the "Property").
Grantor and Grantee agree that this mortgage shall be an "Open End
Mortgage" subject to Section 5301.232 of the Ohio Revised Code, the maximum
amount of Loan Indebtedness on which shall not exceed $4,000,000.00, exclusive
of interest and unpaid balances for advances made to pay taxes, assessments,
insurance premiums, or costs incurred for the protection of the Property.
All of the estate, title and interest of the Grantor, either in law or
in equity, of in, and to the property is subject to all legal highways and
restrictions of record.
This mortgage granting an interest in the Property shall be considered a
security interest containing the covenants for a security agreement on real
property.
Grantor has given this interest to have and to hold to Grantee, its
successors and assigns forever. Grantor covenants to Grantee that the Grantor,
at the time of the execution of this mortgage, is well seized of the property,
in good and indefeasible estate of fee simple, and has good right to bargain and
encumber the same and that the same is free and clear from all other
encumbrances whatsoever and that Grantor warrants and defends same with the
appurtenances to the Grantee, its successors and assigns against all lawful
claims and demand whatsoever, now existing or hereafter arising.
Grantor covenants and agrees as follows:
1. PAYMENT OF PRINCIPAL AND INTEREST, PREPAYMENT, LATE AND OTHER NOTE
CHARGES. Grantor shall promptly pay when due all outstanding principal and
interest on the Loan Indebtedness along with any prepayment, late, or other
charges due under any of the indebtedness. Further, Grantor shall promptly
insure performance of all the covenants, agreements, promises, and conditions
contained in the Loan Indebtedness, mortgage, and any other document evidencing
the agreement hereunder.
2. MAINTENANCE OF THE PROPERTY. The Grantor shall abstain from and not
permit commission of waste in or about the Property, shall not move or demolish,
or alter the structural character of any building existing on the Property
without the prior written consent of the Grantee, and shall maintain the
Property in good condition and repair. The Grantee shall have the right to enter
on the Property, at a reasonable hour, to inspect the condition and repair
thereof. Grantee shall have the right, but not the duty, to inspect the interior
of any building on the Property or improvement thereof.
<PAGE> 2
2.1 HAZARDOUS SUBSTANCES. The terms "hazardous waste", "hazardous
substance", "disposal", "release", and "threatened release", as used in this
Mortgage, shall have the same meanings as set forth in the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended, 42
U.S.C. Section 9601, et seq. ("CERCLA"), the Superfund Amendments and
Reauthorization Act of 1986, Pub. L. No.99-499 ("SARA"), the Hazardous Materials
Transportation Act, 49 U.S.C. Section 1801, et seq., the Resource Conservation
and Recovery Act, 42 U.S.C. Section 6901, et seq., or other applicable state or
Federal laws, rules, or regulations adopted pursuant to any of the foregoing.
The terms "hazardous waste" and "hazardous substance" shall also include,
without limitation, petroleum and petroleum by-products or any fraction thereof
and asbestos. Grantor represents and warrants to Grantee that except for medical
waste handled and/or disposed of in the ordinary course of business: (a) During
the period of Grantor's ownership of the Property, there has been no use,
generation, manufacture, storage, treatment, disposal, release or threatened
release of any hazardous waste or substance by any person on, under, about or
from the Property; (b) Grantor has no knowledge of, or reason to believe that
there has been, except as previously disclosed to and acknowledged by Grantee in
writing, (i) any use, generation, manufacture, storage, treatment, disposal,
release, or threatened release of any hazardous waste or substance on, under,
about or from the Property by any prior owners or occupants of the Property or
(ii) any actual or threatened litigation or claims of any kind by any person
relating to such matters; and (c) Except as previously disclosed to and
acknowledged by Grantee in writing, (i) neither Grantor nor any tenant,
contractor, agent or other authorized user of the Property shall use, generate,
manufacture, store, treat, dispose of, or release any hazardous waste or
substance on, under, about or from the Property and (ii) any such activity shall
be conducted in compliance with all applicable federal, state, and local laws,
regulations and ordinances, including without limitation those laws,
regulations, and ordinances described above. Grantor authorizes Grantee and its
agents to enter upon the Property to make such inspections and tests, at
Grantor's expense, as Grantee may deem appropriate to determine compliance of
the Property with this section of the Mortgage. Any inspections or tests made by
Grantee shall be for Grantee's purposes only and shall not be construed to
create any responsibility or liability on the part of Grantee to Grantor or to
any other person. The representations and warranties contained herein are based
on Grantor's due diligence in investigating the Property for hazardous waste and
hazardous substances. Grantor hereby (a) releases and waives any future claims
against Grantee for indemnity or contribution in the event Grantor becomes
liable for cleanup or other costs under any such laws, and (b) agrees to
indemnify and hold harmless Grantee against any and all claims, losses,
liabilities, damages, penalties, and expenses which Grantee may directly or
indirectly sustain or suffer resulting from a breach of this section of the
Mortgage or as a consequence of any use, generation, manufacture, storage,
disposal, release or threatened release occurring prior to Grantor's ownership
or interest in the Property, whether or not the same was or should have been
known to Grantor. The provisions of this section of the Mortgage, including the
obligation to indemnify, shall survive the payment of the Indebtedness and the
satisfaction and reconveyance of the lien of this Mortgage and shall not be
affected by Grantee's acquisition of any interest in the Property, whether by
foreclosure or otherwise.
3. INSURANCE. The Grantor shall procure and deliver to the Grantee
during the pendency of this mortgage a policy or policies insuring the Property,
including all buildings and improvements now existing and thereafter arising,
which shall be maintained for the benefit of the Grantee until the mortgage is
fully satisfied and released. Those policies shall contain provisions for loss
or damage by fire, lightning, windstorm, hail, explosion, riot, civil commotion,
aircraft, vehicles, smoke, and other such hazards and contingencies as Grantee
may designate. This shall include, but not be limited to flood insurance if the
Property is located within a special flood hazard area. All policies shall be in
form and amount as are acceptable to Grantee and shall contain clauses
identifying Grantee as a loss payee and identifying the interest of the Grantee
in the Property. Grantor shall promptly pay when due any premiums on any
insurance policy and shall deliver to Grantee evidence of insurance acceptable
to Grantee. A completed ACORD 27 Form shall constitute evidence of insurance.
Under no circumstances shall an ACORD 25-S Form constitute acceptable evidence
of insurance. A paid receipt for the policy and any renewal thereof shall be
required from the issuing company or agent. In the event of loss or damage, the
Grantor agrees to give prompt notice to the Grantee and to insure that the
Grantee is fully informed of all discussions with the insurance provider. All
proceeds of insurance in the event of loss or damage shall be made jointly
payable to the Grantor and Grantee and all funds shall be utilized by the
Grantor to restore the Property. However, should the loss or damage exceed fifty
percent (50%) of the value of the Property, Grantee shall have the right to
elect not to restore the Property and instead have the proceeds applied by the
Grantee directly to the existing Loan Indebtedness until paid in full and
satisfied including all interest and charges thereon, with the balance of any
proceeds to be payable to the Grantor. In the event of such
2
<PAGE> 3
loss, or in the event of a transfer of the Property by eminent domain, no
prepayment penalty will be owed for amounts transferred to Grantee. Grantee
shall be given 30 days written notice of cancellation or material adverse
modification of any policy or policies insuring the Property.
4. TAXES. The Grantor shall, from time to time as same become due and
payable, pay and discharge all taxes, assessments, and any other public charges
which may be levied or assessed against the Property or any part thereof and
shall further provide to Grantee receipts for the payment thereof along with
payments of all of their taxes, assessments, liens or encumbrances which may be
placed against the Property. If the Grantor, shall contest any taxes, liens,
claims, or encumbrances, and shall in good faith by proper legal action pursue
the contest thereof, Grantor shall not be required to pay those taxes or other
charges, or produce receipts indicating payment thereof, so long as Grantor
places with Grantee sufficient reserves to cover the outstanding assessment
being contested and so long as Grantor acts with due diligence to contest any
claim. Should the contest of any claim be discontinued for any reason, Grantor
shall be responsible for the payment of the taxes or other charges in a prompt
manner.
5. COMPLIANCE WITH LAWS AND ORDINANCES. The Grantor shall materially
comply with all Federal, State and Municipal ordinances or regulations affecting
the Property at all times. Should Grantor be notified of any violation or change
of any Federal, State, or Municipal ordinance or regulation, Grantor shall
comply within 30 days of notice thereof. This shall specifically include, but
not be limited to compliance with the Americans With Disabilities Act and
compliance with Federal and Ohio EPA requirements for the handling and storage
of hazardous substances. However, if the Grantor shall in good faith, contest
any ordinance or regulation or the validity thereof, Grantor shall not be
required to comply so long as such contest is maintained with due diligence and
so long as Grantor has notified Grantee in writing prior to doing so.
6. TRANSFER OF OWNERSHIP. Without the prior written consent of the
Grantee, the Grantor shall not (a) transfer title to or ownership of the
Property, (b) create any equitable interest in the Property in favor of a third
party (except for equipment leases in the ordinary course of business), or (c)
grant any option to purchase the Property.
7. DEFAULT AND BREACH. Upon any event of default, that event being
defined in the Loan Indebtedness, and including but not limited to any default
for failure to make prompt payment of any installment of principal or interest
on the Loan Indebtedness or the failure to comply with any of the terms and
conditions of this mortgage, the entire balance of principal, interest and all
of the charges and other sums secured by this mortgage shall at the option of
the Grantee be immediately due and payable, without notice, or demand, and
shall be collectable at once by foreclosure or otherwise. Grantee may proceed
to foreclose on this mortgage by judicial proceedings according to Ohio
statute. Any failure to exercise this option shall not constitute a waiver of
the right to exercise the option at any other time. Grantee shall be entitled
to collect all outstanding balances of principal, interest, any payments made
for taxes, assessments, insurance premiums, liens, expenses, collection fees,
and attorney fees necessary for the collection or foreclosure of this mortgage.
The proceeds of any foreclosure sale shall be applied first to the payment of
costs arising from the foreclosure and then shall be applied at the discretion
of the Grantee to principal and interest outstanding, other costs and expenses
of the foreclosure, or other outstanding indebtedness secured by this mortgage.
The Grantee shall have the right at the time of any proceeding of
foreclosure on this mortgage to seek the appointment of a receiver to collect
any rents, income, or profit from the Property and to apply them as payment on
the Loan Indebtedness, interest, costs and fees required for the collection of
this mortgage. This shall be done without notice and without regard as to the
adequacy of the property securing the indebtedness. Grantee shall have the
option, in lieu of receivership, to take possession of the Property itself
during the period of redemption, and to collect all rents and profits from the
Property and apply same to the Loan Indebtedness as set forth above.
Should Grantor fail to pay any tax, assessment, claim, lien, insurance
premium, or encumbrance or fail to keep the Property in good repair, or permit
waste on the Property, the Grantee, at its option may pay said claim, lien, tax
assessment, encumbrance or premium and make such repairs or take such steps as
necessary as to prevent or cure the waste, and may expend additional sums of
money as it deems necessary to protect the Property. All sums of money advanced
by the Grantee shall be subject to the same interest rate as the Loan
Indebtedness, including the default rate. The failure of the Grantee to
3
<PAGE> 4
pursue its rights under this paragraph shall not act as a waiver or bar the
Grantee from taking such action at a later date.
8. ASSIGNMENTS OF LEASES AND RENTS. As further security for the payment
of the Loan Indebtedness and performance of the obligations and covenants under
the Loan Indebtedness and the mortgage, the Grantor hereby assigns to the
Grantee all leases, now existing or hereafter arising, together with all rents
which are or may become due. This assignment shall be operative only in the
event of default. Until such time, Grantor shall be responsible for all
performance under the leases now existing or hereafter arising. At such time as
default exists under this mortgage, the Grantor hereby confers to the Grantee
exclusive power to take possession of and collect all rents arising from the
Property and to apply such rents as the Grantee sees fit to the payment of all
Loan Indebtedness, taxes, costs of maintenance, repairs, and any other expenses
necessary for the maintenance of the Property. Upon such default, decisions
regarding the leases and application of rent shall be in the sole discretion of
the Grantee until such time as the Loan Indebtedness and all existing interest
and other expenses are paid in full. The Grantee shall be responsible only for
those rents and profits actually received by the Grantee. In exercising powers
under this section, the Grantee may also take possession of all personal
property contained on the Property and specifically used by the Grantor in the
rental or leasing of the Property or any part thereof. All remaining obligations
of the leases now in existence or hereafter arising shall remain the obligation
of the Grantor. It shall not be the responsibility of the Grantee to insure
performance of any obligation of Grantor under the Leases. Grantor shall not
collect more than two months' rent in advance on any lease of the Property
during the term of this mortgage.
9. SATISFACTION AND RELEASE. Upon full compliance by the Grantor of all
the provisions of this mortgage and full payment of the Loan Indebtedness and
all of the sums due and owing to the Grantee and secured hereby without further
deduction, fraud, or delay to this mortgage, the estate granted hereby shall
cease and become void. At such time, Grantee shall promptly prepare a
satisfaction and release for the mortgage from the Property.
10. NOTICE. Any notices made hereunder shall be mailed to the Grantor at
the Property Address or such address as Grantor shall supply. Notice to the
Grantee shall be made to Capital Bank, N. A., 5520 Monroe Street, Sylvania,
Ohio, 43560, Attention: Commercial Loan Department or another supplied by
Grantee. All notices shall be made either in person or by United States mail.
11. CUMULATIVE RIGHTS AND REMEDIES. All rights and remedies of the
mortgage provided to the Grantee shall be cumulative and concurrent and may be
exercised singly, successively or together at the sole discretion of the Grantee
and failure to exercise any right or remedy shall in no way be considered a
waiver or release of same.
12. APPLICABLE LAW. This mortgage shall be construed under and in
accordance with the laws of the State of Ohio. This mortgage shall be binding
upon and inure to the benefit of the parties hereto, their successors and
assigns, including heirs and executors, administrators or legal representatives.
13. SEVERABILITY. In the case that one or more of the provisions
contained in this mortgage shall for any reason be held to be invalid, illegal,
or unenforceable in any respect, the invalidity, illegality, or unenforceability
of such provision shall not affect any other provisions of this mortgage and
this mortgage shall be construed as though the invalid, illegal, or
unenforceable provision had never been contained herein.
14. TIME. For purpose of this mortgage, the loan indebtedness secured
hereby and all obligations of this mortgage or any agreement related thereto,
time is of the essence.
This mortgage is executed this 15th day of January, 1997.
4
<PAGE> 5
WITNESSES AS TO ALL SIGNERS ARBOR HEALTH CARE COMPANY
/s/ Clara L. Hanf By: /s/ W. W. Wondolowski
- ------------------------ ----------------------------------
/s/ Dennis R. Smith William W. Wondolowski,
- ------------------------ Vice President and Treasurer
STATE OF OHIO )
) SS:
COUNTY OF ALLEN )
Before me, a Notary Public, in and for said County and State, personally
appeared William W. Wondolowski, Vice President and Treasurer of Arbor Health
Care Company, a Delaware Corporation, and acknowledged the execution of the
above and foregoing mortgage on this 15th day of January, 1997.
/s/ Constance Sims
-----------------------------
Notary Public
This instrument prepared by
Capital Bank, N.A.
5520 Monroe Street
Sylvania, OH 43560
5
<PAGE> 6
EXHIBIT "A"
A parcel of land being Lot 18 in the Replat of Lots 4 and 5 Port Sylvania Plat
Two as recorded in Volume 133, Pages 80-82, Lucas County Record of Plats,
located in Sylvania Township, Lucas County, Ohio, and being more particularly
described as follows:
Commencing at the Southeast corner of the Southwest 1/4 of Section 21, Town 9
South, Range 6 East; thence Northerly along the East line of the Southwest 1/4
of said Section 21, having an assumed bearing of North 4(degree) 18' 40" East, a
distance of 555.68 feet to the Southeast corner of said Lot 18 (said corner also
being the true Point of Beginning); thence Westerly along the South line of said
Lot 18 (said line also being the Northerly right-of-way line of Port Sylvania
Drive), having a bearing of North 85(degree) 33' 03" West, a distance of 305.90
feet to a point (said point also being the Southeast corner of Lot 3 in Port
Sylvania Plat One); thence Northerly along the East line of said Lot 3, having a
bearing of North 4(degree) 26' 57" East, a distance of 420.00 feet to a point
(said point also being the Northeast corner of said Lot 3); thence Westerly
along the North line of said Lot 3, having a bearing of North 85(degree) 33' 03"
West, a distance of 320.00 feet to a point (said point also being the Northwest
corner of said Lot 3); thence Northerly along the West line of said Lot 18 (said
line also being the Easterly right-of-way line of Meijer Drive), having a
bearing of North 4(degree) 26' 57" East, a distance of 50.00 feet to the
Northwest corner of said Lot 18; thence Easterly along the North line of said
Lot 18, having a bearing of South 85(degree) 33' 03" East, a distance of 624.77
feet to the Northeast corner of said Lot 18; thence Southerly along the East
line of said Lot 18 (said line also being East line of the Southwest 1/4 of said
Section 21), having a bearing of South 4(degree) 18' 40" West, a distance of
470.00 feet to the true point of beginning. Subject to legal highways.
<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 ENDED
MARCH 31
--------------------------------
1996 1997
---- ----
<S> <C> <C>
Net income (1)................................................ $2,023 $ 2,527
=========== ==============
Weighted average shares outstanding
Common Stock................................................ 6,893 6,908
Common Stock equivalents based upon the
treasury stock method........................... 77 77
----------- --------------
Totals(2) 6,970 6,985
=========== ==============
Net income per share (1) / (2)................................ $0.29 $0.36
=========== ==============
</TABLE>
24
<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> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 4,885
<SECURITIES> 0
<RECEIVABLES> 50,802
<ALLOWANCES> 2,304
<INVENTORY> 3,141
<CURRENT-ASSETS> 62,623
<PP&E> 173,375
<DEPRECIATION> 35,666
<TOTAL-ASSETS> 218,039
<CURRENT-LIABILITIES> 46,734
<BONDS> 97,032
<COMMON> 207
0
0
<OTHER-SE> 68,471
<TOTAL-LIABILITY-AND-EQUITY> 218,039
<SALES> 0
<TOTAL-REVENUES> 59,524
<CGS> 0
<TOTAL-COSTS> 46,100
<OTHER-EXPENSES> 6,813
<LOSS-PROVISION> 453
<INTEREST-EXPENSE> 2,015
<INCOME-PRETAX> 4,143
<INCOME-TAX> 1,616
<INCOME-CONTINUING> 2,527
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,527
<EPS-PRIMARY> 0.36
<EPS-DILUTED> 0.36
</TABLE>
