<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
[ ] TRANSITION REPORT PURSUANT SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________________ to ____________________
Commission file number 0-25908
JUST LIKE HOME, INC.
(Exact name of small business issuer as specified in its charter)
FLORIDA 65-0568234
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
2440 TAMIAMI TRAIL NORTH
NOKOMIS, FLORIDA 34275
(Address of principal executive offices)
941-966-3636
(Issuer's telephone number)
3647 CORTEZ ROAD WEST
BRADENTON, FLORIDA 34210-3106
(Former name, former address and former fiscal year, if
changed since last report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes X No
---- ----
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required
to be filed by Section 12, 13 or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by court. Yes No
---- ----
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes
of common equity, as of April 10, 1997: 7,073,711 shares of Common Stock
Transitional Small Business Disclosure Format (check one):
Yes No X
---- ----
<PAGE> 2
PART I--FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
JUST LIKE HOME, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEET
(Unaudited)
<TABLE>
<CAPTION>
MARCH 31,
ASSETS 1997
<S> <C>
Current Assets
Cash $ 91,033
Restricted cash 135,518
Restricted certificate of deposit 250,000
Accounts receivable - trade 164,379
Due from related parties - net 106,609
Other current assets 82,322
-----------
Total current assets 829,861
PROPERTY AND EQUIPMENT, net 5,032,254
PROPERTY HELD FOR SALE 1,579,836
RESTRICTED CASH 56,897
GOODWILL AND OTHER TANGIBLE ASSETS, net 496,317
OTHER ASSETS 26,935
-----------
Total assets $ 8,022,100
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 724,601
Current portion of long-term debt 1,407,926
Due to related parties 150,000
-----------
Total current liabilities 2,282,527
LONG-TERM DEBT, less current portion 3,644,118
NOTE PAYABLE TO RELATED PARTY, less current portion 322,017
COMMON STOCK AND OPTIONS SUBJECT TO PUT OPTIONS 409,443
-----------
Total liabilities 6,658,105
-----------
Stockholders' Equity
Preferred stock, $.01 par value; 2,000,000 shares authorized; none issued and
outstanding at March 31, 1997 0
Common stock, $.001 par value; 13,000,000 shares authorized; 3,917,461 shares
issued and outstanding at March 31, 1997 3,917
Additional paid-in capital 6,135,981
Accumulated deficit (4,775,903)
-----------
Total stockholders' equity 1,363,995
-----------
Total Liabilities and Stockholders' Equity $ 8,022,100
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
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<PAGE> 3
JUST LIKE HOME, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
1997 1996
----------- -----------
<S> <C> <C>
Revenue
Resident fees $ 420,916 $ 177,242
Management and consulting fees 168,387 144,227
Companion fees 79,993 0
Other income 37,911 30,966
----------- -----------
Total revenue 707,207 352,435
Operating, selling, general and administrative 902,067 591,698
----------- -----------
Operating loss (194,860) (239,263)
----------- -----------
Non-operating income (expense):
Interest expense (102,425) (52,524)
Interest income 11,311 24,639
----------- -----------
Total non-operating expense (91,114) (27,885)
----------- -----------
Net loss (285,974) (267,148)
=========== ===========
Net loss per common and common equivalent share $ (0.07) $ (0.07)
=========== ===========
Weighted average common or common equivalent shares outstanding 2,917,461 3,888,371
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
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<PAGE> 4
JUST LIKE HOME, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
1997 1996
--------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES: $(105,124) $ (17,466)
--------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions of property and equipment (99,903) (2,068,670)
Loans to related parties 0 (2,649)
Repayments of related-party loans 0 8,272
Payments for organization costs and intangible costs 0 (434,706)
Payments for other assets 0 (6,608)
Purchase of certificate of deposit 0 (800,000)
Proceeds from certificate of deposit 0 350,000
Deposits into restricted cash accounts (53,537) 0
--------- -----------
Net cash used in investing activities (153,440) (2,954,361)
--------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from mortgages and notes payable 29,948 1,379,279
Repayment of mortgages and notes payable (18,486) (2,186)
Borrowings from related parties 151,000 6,912
Repayment of related-party loans 0 (4,166)
--------- -----------
Net cash provided by financing activities 162,462 1,379,839
--------- -----------
Net decrease in cash (96,102) (1,591,988)
Cash, beginning of period 187,135 1,847,974
--------- -----------
Cash, end of period $ 91,033 $ 255,986
========= ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
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<PAGE> 5
JUST LIKE HOME, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION:
In the opinion of the management of Just Like Home, Inc. and Subsidiaries
(the "Company"), the accompanying unaudited consolidated condensed
financial statements contain all adjustments, consisting only of normal
recurring accruals, necessary to present fairly the Company's financial
position, results of operations and cash flows for the periods presented.
The results of operations for the interim periods presented are not
necessarily indicative of the results to be expected for the full year.
The consolidated condensed financial statements should be read in
conjunction with the consolidated financial statements and the related
disclosures contained in the Company's annual report on Form 10-KSB for
the year ended December 31, 1996.
2. NET LOSS PER COMMON SHARE:
Primary net loss per common share is computed by dividing net loss by the
weighted average number of common shares outstanding during each period.
Common stock equivalents are not included in the calculation as their
impact would be anti-dilutive.
3. FUTURE ACCOUNTING REQUIREMENTS:
EARNINGS PER SHARE: In February 1997, Statement of Financial Accounting
Standards No. 128, "Earnings Per Share" (SFAS No. 128), was issued. SFAS
No. 128 specifies the computation, presentation, and disclosure
requirements for earnings per share.
SFAS No. 128 is designed to improve the Earnings Per Share (EPS)
information provided in financial statements by simplifying the existing
computational guidelines, revising the disclosure requirements, and
increasing the comparability of EPS data on an international basis. Some
of the changes made to simplify the EPS computations include: (a)
eliminating the presentation of primary EPS and replacing it with basic
EPS, with the principal difference being that common stock equivalents
are not considered in computing basic EPS, (b) eliminating the modified
treasury stock method and the three percent materiality provision, and
(c) revising the contingent share provisions and the supplemental EPS
data requirements. SFAS No. 128 requires dual presentation of basic and
diluted EPS on the face of the income statement for all entities with
complex capital structures regardless of whether basic and diluted EPS
are the same. It also requires a reconciliation of the numerator and
denominator used in computing basic and diluted EPS.
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<PAGE> 6
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS, CONTINUED
3. FUTURE ACCOUNTING REQUIREMENTS, CONTINUED
EARNINGS PER SHARE, CONTINUED
SFAS No. 128 is effective for financial statements issued for periods
ending after December 15, 1997, including interim periods. Earlier
application is not permitted. The statement requires restatement of all
prior-period EPS data presented after the effective date. The Company has
not yet determined the impact adoption of SFAS No. 128 will have on its
financial statements.
CAPITAL STRUCTURE DISCLOSURE: In February 1997, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards No.
129, "Disclosure of Information About Capital Structure" (SFAS No. 129).
SFAS No. 129 consolidates the existing requirements to disclose certain
information about an entity's capital structure.
SFAS No. 129 requires that disclosure about an entity's capital structure
include a brief discussion of rights and privileges for securities
outstanding, including dividend and liquidation preferences,
participation rights, call prices and dates, conversion or exercise
prices or rates and pertinent dates, sinking-fund requirements, unusual
voting rights, and significant terms of contracts to issue additional
shares. The number of shares issued upon conversion, exercise or
satisfaction of required conditions during at least the most recent
annual fiscal period and any subsequent interim period presented also are
required to be disclosed. In addition, companies that issue stock with
liquidation preferences or redeemable stock are required to disclose all
pertinent characteristics of those securities.
SFAS No. 129 is effective for financial statements for period ending
after December 15, 1997. As SFAS No. 129 relates only to disclosure
issues, there will be no impact on the Company's financial statements
upon adoption.
4. SUBSEQUENT EVENTS AND LIQUIDITY:
MERGER: In February, 1997, the Company entered into a merger agreement
with Community Assisted Living Centers, Inc. ("Community") pursuant to
which Community will merge with a new wholly-owned subsidiary of the
Company, Just Like Home Acquisition Corp. Under the terms of the
agreement, Community will exchange each of its shares of common stock for
one and one-half shares of the Company's common stock.
The agreement provided that, as of March 17, 1997, Community took
operational control of the Company. Community will use its best efforts
in operating the business and will make such changes as it deems
necessary after consultation and approval of the Company. In addition,
Community has agreed to fund the operational needs of the Company based
upon Community's reasonable determination of the cash needs of the
Company's business between March 17, 1997 and the effective date
(excluding any capital expenditures or real estate taxes that may come
due during that period). The merger became effective on April 10, 1997
and was accounted for as a pooling-of-interests.
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<PAGE> 7
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS, CONTINUED
4. SUBSEQUENT EVENTS AND LIQUIDITY, CONTINUED
PRIVATE PLACEMENT: On March 27, 1997, the Company issued a private
placement memorandum offering up to 2,500,000 shares of its common stock
at a purchase price of $1.00 per share. The Company will use the proceeds
of the offering to pay certain existing liabilities of the Company, to
pay anticipated and future operating expenses, to fund development and
start-up costs, and for general corporate purposes. The private placement
closed on April 10, 1997 and the Company received approximately
$1,510,000 in proceeds.
GOING CONCERN: The Company has experienced recurring losses and at
December 31, 1996 had limited resources. On April 10, 1997, the
management of Community ("New Management") took effective control of the
Company. In addition to the events described above, New Management has
plans to dispose of the property held for sale at its carrying value,
sell certain operating assets to an assisted-living facility real estate
investment trust and lease them back, significantly improve operating
results at facilities owned by the Foundation (see Note 3) and utilize
Community's existing resources. Current projections and plans indicate
that the Company will have sufficient resources to continue as a going
concern.
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<PAGE> 8
JUST LIKE HOME, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
March 31, 1997
(Unaudited)
In February, 1997, the Company entered into a merger agreement with Community
Assisted Living Centers, Inc. ("Community") pursuant to which Community will
merge with a new wholly-owned subsidiary of the Company, Just Like Home
Acquisition Corp. Under the terms of the agreement, Community will exchange each
of its shares of common stock for one and one-half shares of the Company's
common stock. The merger became effective on April 10, 1997 and was accounted
for as a pooling-of-interests.
The following unaudited Pro Forma Condensed Consolidated Balance Sheet is
presented as if the consummation of the Merger Agreement had occurred on March
31, 1997. Such information should be read in conjunction with the financial
statements. In management's opinion, all adjustments necessary to reflect the
effects of this transaction have been made.
The following unaudited Pro Forma Condensed Consolidated Balance Sheet is not
necessarily indicative of what the actual financial position would have been
assuming such transaction had been completed as of March 31, 1997, nor does it
purport to represent the future financial position of the Company.
<TABLE>
<CAPTION>
COMMUNITY
ASSISTED
JUST LIKE LIVING
ASSETS HOME, INC. CENTERS, INC. ADJUSTMENTS COMBINED
---------- ------------- ----------- --------
<S> <C> <C> <C> <C>
CURRENT ASSETS
Cash $ 91,033 $588,886 $ $ 679,919
Restricted cash 135,518 135,518
Restricted certificate of deposit 250,000 250,000
Accounts receivable - trade 164,379 20,495 184,874
Due from related parties - net 106,609 100,836 (51,000)(1) 156,445
Other current assets 82,322 14,867 97,189
---------- -------- -------- ----------
Total current assets 829,861 725,084 (51,000) 1,503,945
PROPERTY AND EQUIPMENT, NET 5,032,254 110,752 5,143,006
PROPERTY HELD FOR SALE 1,579,836 1,579,836
RESTRICTED CASH 56,897 56,897
GOODWILL AND OTHER
INTANGIBLE ASSETS, NET 496,317 32,125 528,442
OTHER ASSETS 26,935 640 27,575
---------- -------- -------- ----------
Total assets $8,022,100 $868,601 $(51,000) $8,839,701
========== ======== ======== ==========
</TABLE>
(1) Elimination of loan from Community Assisted Living Centers, Inc. to Just
Like Home, Inc.
(continued)
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<PAGE> 9
JUST LIKE HOME, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED
CONSOLIDATED BALANCE SHEET
March 31, 1997
(Unaudited)
(continued)
<TABLE>
<CAPTION>
COMMUNITY
ASSISTED
LIABILITIES AND STOCKHOLDERS' JUST LIKE LIVING
EQUITY HOME, INC. CENTERS, INC. ADJUSTMENTS COMBINED
---------- ------------- ----------- --------
<S> <C> <C> <C> <C>
CURRENT LIABILITIES
Accounts payable and accrued
expenses $ 724,601 $ 12,163 $(51,000)(1) $ 685,764
Current portion of long-term debt 1,407,926 1,407,926
Due to related parties 150,000 150,000
----------- ----------- -------- -----------
Total current liabilities 2,282,527 12,163 (51,000) 2,243,690
LONG-TERM DEBT, less current
portion 3,644,118 3,644,118
NOTE PAYABLE TO RELATED
PARTY, less current portion 322,017 0 322,017
COMMON STOCK AND OPTIONS
SUBJECT TO PUT OPTIONS 409,443 409,443
----------- ----------- -------- -----------
Total liabilities 6,658,105 12,163 (51,000) 6,619,268
----------- ----------- -------- -----------
STOCKHOLDERS' EQUITY
Preferred stock 0 0 0
Common stock 3,917 1,087,500 1,091,417
Additional paid-in capital 6,135,981 6,135,981
Accumulated deficit (4,775,903) (231,062) (5,006,965)
----------- ----------- -------- -----------
Total stockholders' equity 1,363,995 856,438 0 2,220,433
----------- ----------- -------- -----------
Total Liabilities and Stockholders'
Equity $ 8,022,100 $ 868,601 $(51,000) $ 8,839,701
=========== =========== ======== ===========
</TABLE>
(1) Elimination of loan from Community Assisted Living Centers, Inc. to Just
Like Home, Inc.
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<PAGE> 10
JUST LIKE HOME, INC. AND SUBSIDIARIES
PRO FORMA COMBINED CONDENSED STATEMENTS OF OPERATIONS
for the year ended December 31, 1996 and the three months ended March 31, 1997
(Unaudited)
The following unaudited Pro Forma Combined Condensed Statements of Operations
are presented as if the consummation of the Merger Agreement had occurred as of
the beginning of the periods presented. Such pro forma information is based upon
the combined statements of operations of Just Like Home, Inc. and Subsidiaries
and Community Assisted Living Centers, Inc. Such information should be read in
conjunction with the financial statements. In management's opinion, all
adjustments necessary to reflect the effects of this transaction have been made.
The following unaudited Pro Forma Combined Condensed Statements of Operations
are not necessarily indicative of what results of operations of Just Like Home,
Inc. and Subsidiaries would have been assuming such transactions had been
completed as of the beginning of the periods presented nor does it purport to
represent the results of operations for future periods. The Pro Forma Combined
Condensed Statement of Operations for the three months ended March 31, 1996 are
not presented as Community Assisted Living Centers, Inc. had no operations for
that period.
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 1997
---------------------------------------------------------------------
COMMUNITY
ASSISTED
JUST LIKE LIVING
HOME, INC. CENTER, INC. ADJUSTMENTS COMBINED
---------- ------------ ----------- --------
<S> <C> <C> <C> <C>
Revenue
Resident fees $ 420,916 $ 0 $ $ 420,916
Management and consulting fees 168,387 3,966 172,353
Companion fees 79,993 79,993
Other income 37,911 7,049 44,960
--------- --------- ------- -----------
Total revenue 707,207 11,015 0 718,222
Expenses
Operating, selling, general and administrative 824,496 124,629 949,125
Depreciation and amortization 77,571 77,571
--------- --------- ------- -----------
Total expenses 902,067 124,629 0 1,026,696
--------- --------- ------- -----------
Operating loss (194,860) (113,614) 0 (308,474)
--------- --------- ------- -----------
Non-operating income (expense):
Interest expense (102,425) 0 (102,425)
Interest income 11,311 0 11,311
--------- --------- ------- -----------
Total non-operating expense (91,114) 0 0 (91,114)
--------- --------- ------- -----------
Net loss $(285,974) $(113,614) $ 0 $ (399,588)
========= ========= ======= ===========
</TABLE>
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<PAGE> 11
JUST LIKE HOME, INC. AND SUBSIDIARIES
PRO FORMA COMBINED CONDENSED STATEMENTS OF OPERATIONS
for the year ended December 31, 1996 and the three months ended March 31, 1997
(Unaudited)
(continued)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1996
-----------------------------------------------------------------------
COMMUNITY
ASSISTED
JUST LIKE LIVING
HOME, INC. CENTER, INC. ADJUSTMENTS COMBINED
---------- ------------ ----------- --------
<S> <C> <C> <C> <C>
Revenue
Resident fees $ 1,209,366 $ 0 $ $ 1,209,366
Management and consulting fees 618,579 11,966 630,545
Companion fees 67,845 67,845
Other income 58,645 8,530 67,175
----------- --------- ------- -----------
Total revenue 1,954,435 20,496 0 1,974,931
Operating, selling, general and administrative 3,476,281 161,451 3,637,732
Loss from impairment of property held for sale 818,500 0 818,500
Litigation settlement 409,443 0 409,443
----------- --------- ------- -----------
Total expenses 4,704,224 161,451 0 4,865,675
----------- --------- ------- -----------
Operating loss (2,749,789) (140,955) 0 (2,890,744)
----------- --------- ------- -----------
Non-operating income (expense):
Interest expense (307,096) 0 (307,096)
Interest income 78,804 23,507 102,311
----------- --------- ------- -----------
Total non-operating expense (228,292) 23,507 0 (204,785)
----------- --------- ------- -----------
Net loss $(2,978,081) $(117,448) $ 0 $(3,095,529)
=========== ========= ======= ===========
</TABLE>
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<PAGE> 12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
This discussion and analysis contains both historical and
forward-looking information. The forward-looking statements may be
significantly affected by risks and uncertainties and are made pursuant to the
safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
There can be no assurance that anticipated future results will be achieved.
Readers are cautioned that a number of factors, which are described in this
report, the Company's report on Form 10-KSB and below, could adversely affect
the Company's ability to obtain these results.
OVERVIEW
The historical financial statements represent the consolidated results
of operations and financial condition of Just Like Home, Inc. and its
subsidiaries. On April 10, 1997, Community Assisted Living Centers, Inc.
merged into a newly formed subsidiary of the Company.
The following table sets forth the number of facilities owned or
managed and the total beds and occupancy as of the end of each of the periods
presented.
<TABLE>
<CAPTION>
December 31, March 31,
---------------------- ---------
1995 1996 1997
---- ---- ----
<S> <C> <C> <C>
Facilities owned . . . . . . . . . . . . . . . . . . . . . . 2 6 6
Facilities managed . . . . . . . . . . . . . . . . . . . . . 3 3 3
Total beds . . . . . . . . . . . . . . . . . . . . . . . . 100 184 184
Occupancy percentage at end of period . . . . . . . . . . 97.0% 81.0% 81.5%
</TABLE>
RESULTS OF OPERATIONS
Revenues for the quarter ended March 31, 1997, increased by 100% from
approximately $352,000 in 1996 to $707,000 in 1997. Resident fees increased
138% from $177,000 in 1996 to $421,000 in 1997. This increase is due to the
acquisition of Charis Place in March, 1996, which was a 44-unit two-facility
acquisition, and to the two newly constructed facilities completed in July and
December, 1996. In addition, Just Like Family, the Company's home health care
division, was not in operation in the first quarter of 1996, but reported
revenues of $80,000 in the first quarter of 1997.
Operating expenses increased from $592,000 in the first quarter of
1996 to $902,000 in 1997, or 52%, due primarily to operating costs attributable
to the Charis Place facilities and the two newly constructed facilities and
operating costs of Just Like Family. Operating expense also reflects a $21,000
bad debt expense for management fees owed by the National Foundation, which the
Company does not expect to collect. The Company is continuing to manage three
facilities for the National Foundation (64 units) under its Management
Agreement with National Foundation, but intends to review its obligations under
the Management Agreement and to determine whether it is in the best interest of
the Company to continue to manage those facilities or to terminate the
Management Agreement. The Company believes that if it can improve the
occupancy of those facilities that the cash flow from operations of those
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<PAGE> 13
facilities will be sufficient to pay the operating expenses of those
facilities, the debt service on those facilities (to which the Company's
management fee is subordinated) and the Company's management fee. Accordingly,
the Company's present plan is to continue to work to improve the occupancy in
those facilities so that they are capable of generating cash sufficient to pay
the management fee.
LIQUIDITY AND CAPITAL RESOURCES
The losses incurred by the Company during the first quarter of 1997
were funded through working capital loans. Additionally, under the terms of
the Merger Agreement with Community Assisted Living Centers, Inc. (Community),
Community assumed operational control of the Company on March 17, 1997, and
agreed to fund certain cash needs of the Company until the merger was completed,
which occurred on April 10, 1997. Community expended approximately $65,000
fulfilling this obligation.
The Company's merger with Community has resolved the immediate
short-term cash requirements of the Company. At March 31, 1997, Community had
approximately $589,000 in cash and cash equivalents, which is now available to
fund the Company's and Community's operations. Additionally, simultaneously
with the closing of the merger, the Company closed a private placement of
1,510,000 shares of its Common Stock at a purchase price of $1.00 per share,
for an aggregate purchase price of $1,510,000. The Company also is offering
for sale two parcels of land acquired in the last two years for future assisted
living facility developments. These parcels are of a size or in a location
that is not consistent with the Company's current plans to focus on smaller
facilities in more rural communities. The Company is obligated to apply all of
the net proceeds of these sales to the reduction of certain indebtedness of the
Company. Thus these sales will not directly provide additional working
capital, but they should reduce the debt burden of the Company and the
corresponding interest expense. Since the end of the quarter, the Company has
negotiated the termination of its earlier commitment to purchase an 800-acre
tract of land in Ohio, which proposed project is not consistent with the
Company's current focus on smaller assisted living facilities in more rural
communities.
Finally, the Company entered into a letter agreement on April 30,
1997, with HealthCare REIT, a real estate investment trust ( the "REIT") for up
to $41,800,000 in sale-leaseback financings for assisted living facilities.
The initial financing will involve the sale-leaseback of five assisted living
facilities owned by the Company for an aggregate sale price of approximately
$4,000,000. If this phase of the financing is completed, the Company will have
changed its current focus from owning each of its assisted living facilities
and financing those facilities with traditional mortgage financings to a
philosophy of transferring ownership to the REIT or similar financing sources
and entering into long-term operating leases for those facilities. By
transferring ownership of the Company's assisted living facilities to a REIT,
the Company will free up capital in existing facilities that can be used to
help roll-out new facilities and will reduce the amount of the Company's
capital needed for future growth. Each phase of the REIT financing is subject
to numerous conditions, including satisfaction of certain financial coverage
tests by the Company. The Company anticipates that the REIT financing will
provide the Company with over $1,000,000 in additional working capital after
the payment of certain long-term and short-term indebtedness related to the
five facilities to be sold to the REIT, which the Company intends to use to
fund start-up losses associated with opening new facilities.
The remaining $37,800,000 of availability under the REIT financing
will be available, subject to continuing satisfaction of the various financial
and other covenants in the agreement, to fund up to 21
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<PAGE> 14
assisted living facilities in the eastern United States over a three-year
period. The financing commitment expires on May 1, 2000.
The primary cash needs of the Company relate to start-up costs
associated with opening new facilities, projected operating losses for those
facilities until they reach a stabilized occupancy and certain corporate office
expense until all facilities are generating sufficient cash flow to cover those
expenses.
The Company has recently acquired three sites for new facilities and
has several other sites under contract. The Company expects to finance two of
the three sites through a sale-leaseback financing with a private investor, and
presently intends to finance any additional sites under the REIT financing
commitment. The rate at which the Company can develop these sites and future
sites will be directly affected by the continuing availability of the REIT
financing and the Company's ability to generate or raise the cash necessary to
finance the anticipated start-up costs associated with opening new facilities.
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<PAGE> 15
PART II--OTHER INFORMATION
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
From time to time since 1987, Elizabeth A. Conard has made loans to
the Company to support its operations. The Company has repaid only a portion
of those loans. At December 31, 1996, the total amount of the loans, including
interest, was $335,405. The loans bear interest at 10% per annum, payable
quarterly and the principal is payable $150,000 on April 1, 1997 and the balance
on April 1, 1998. The Company was in default in the $150,000 principal payment
due April 1, 1997. The Company has negotiated with Mrs. Conard an extension of
the principal payment of the loan. The terms of the extension include an
immediate payment of $75,000, then interest only payments until October 1, 1998,
at which time an amortization payment plan will go into effect of interest and
principal payments for a term not yet determined.
ITEM 5. OTHER INFORMATION.
Effective April 30, 1997, the Company entered into a letter agreement
(the "Commitment") with HealthCare REIT (the "REIT") under which the REIT has
agreed to provide up to $41,800,000 in financing for the acquisition,
development, conversion and refinancing of assisted living facilities. Under
the Commitment, the REIT agreed to provide financing for operating leases for
assisted living facilities located in the eastern United States, each of which
will be leased to Company for a wholly-owned single-purpose subsidiary of the
Company. Each new facility will contain approximately 44-beds/units. The
funding amount available for any facility will be up to 100% of the approved
costs (as defined in the Commitment) of that facility and is subject to various
tests including a loan to value test, a projected debt service coverage test
for the facility, a minimum capitalization requirement for the Company and the
REIT's due diligence review of each proposed financing and financed facilities.
The Commitment provides for financing for both new construction and
refinancings of existing facilities or acquired facilities. The REIT will
lease each financed facility to Company or a wholly-owned subsidiary of the
Company under an operating lease for an initial term of 10 years with one
10-year renewal option. The lease rate will be based upon a yield to the REIT
equal to then current 10-Year Treasury Note rate plus 3.9%, subject to
adjustment by an inflation factor at the beginning of the 10-year renewal term.
The Company will have the option to purchase each financed facility at the
expiration of the initial or renewal term for an option price equal to the fair
market value of that facility, subject to certain minimums.
The Company has agreed to pay certain commitment and availability fees
to the REIT for the Commitment and for financings completed under the
Commitment and, in addition, has granted the REIT a warrant to purchase up to
50,000 shares of Common Stock of the Company at the price of $3.00 per share.
The Commitment expires on May 1, 2000.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
The following exhibits are filed with this Form 10-QSB.
10.1 Settlement Agreement dated April 10, 1997, among Just Like
Home, Inc., Whitaker's Landing, Inc., Joann Desrosiers, David
Desrosiers and Jeffrey S. Russell as Co-Personal
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<PAGE> 16
Representatives of the Estate of Wilfred N. Desrosiers,
Community Assisted Living Centers, Inc., and Richard T. Conard
and Elizabeth A. Conard.
10.2 Letter Agreement dated as of April 10, 1997, between
HealthCare REIT, Inc. and the Company, as amended by First
Amendment to Commitment Letter dated April 25, 1997.
27.1 Financial Data Schedule (for SEC use only)
(b) Reports on Form 8-K.
The following current reports on Form 8-K were filed in the quarter
ended March 31, 1997:
1. Form 8-K dated February 13, 1997 reporting execution of Merger
Agreement among the Company, a wholly-owned subsidiary of the
Company and Community Assisted Living Centers, Inc. (the
"Merger Agreement").
2. Form 8-K dated March 18, 1997, reporting extension of time for
closing of the merger under the Merger Agreement, and
assumption of operational control of the Company by Community.
3. Form 8-K dated March 31, 1997, reporting extension of time for
closing of the merger under the Merger Agreement.
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<PAGE> 17
SIGNATURES
In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
JUST LIKE HOME, INC.
(Registrant)
Date: May 15, 1997 /s/ John F. Robenalt
------------------------------------
John F. Robenalt, President, CEO and COO
Date: May 15, 1997 /s/ Michael W. Monahan
------------------------------------
Michael W. Monahan,
Treasurer and Chief Financial Officer
(Principal financial officer and
principal accounting officer)
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<PAGE> 1
EXHIBIT 10.1
AGREEMENT
This Agreement is made and entered into as of the Effective Date (as
hereinafter defined) by and among Just Like Home, Inc., a Florida corporation
("JLH/F"), Just Like Home, Inc., a Nevada corporation ("JLH/N"), Whitaker's
Landing, Inc., a Florida corporation ("WL"), Joann Desrosiers ("JD"), David
Desrosiers and Jeffrey S. Russell as Co-Personal Representatives of the Estate
of Wilfred N. Desrosiers (the "Estate"), Community Assisted Living Centers,
Inc., a Florida corporation ("CAL") and Richard T. Conard and Elizabeth A.
Conard, husband and wife (collectively, "Conard").
SECTION 1. RECITATION OF FACTS.
1.1 JD and WL are plaintiffs and JLH/F and JLH/N are defendants in
that certain litigation filed in the Circuit Court of the Twelfth Judicial
District in and for Sarasota County, Florida being Case No. 96-1978-CA-01 (the
"Litigation"). The Estate is the successor in interest to Wilfred N. Desrosiers
as shareholder relative to the stock of WL.
1.2 The Litigation involves, inter alia, (i) claims associated
with the issuance to JD and Wilfred N. Desrosiers of share certificate No. JLH
0036 for seventy five thousand (75,000) shares of the common stock of JLH/F and
the issuance to WL of share certificate No. JLH 0035 for one hundred and thirty
nine thousand eight hundred and eighty two (139,882) shares of the common stock
of JLH/F (collectively, the "Stock") and (ii) and claims associated with the
obligations of JLH/N and JLH/F under certain promissory notes in favor of WL in
the aggregate amount of Four Hundred and Twenty Five Thousand Dollars
($425,000.00) (collectively, the "Notes").
1.3 CAL is contemplating a merger (the "Merger") with JLH/F which
will result in JLH/F being the surviving corporation. The Conard's are the
original incorporators of and stockholders of JLH/F.
1.4 Conard was previously a stockholder in Conosier, Inc., a
Florida corporation ("Conosier"). Conosier is the owner of certain real
property situated in Manatee County, Florida. Conard holds an unrecorded
quit-claim deed (the "Deed") to that portion of the Conosier property described
in Exhibit 1 hereof.
1.5 As a condition precedent to their obligations hereunder, JD,
the Estate and WL have required that CAL, Conard, JLH/F and JLH/N enter into
this Agreement and perform the terms hereof. As a condition precedent to the
Merger, CAL has required that the Litigation be dismissed.
1.6 As specified above, although JLH/F will be the surviving
corporation upon the completion of the Merger, its chief operating, executive
officers and management personnel will be the current chief operating,
executive officers and management personnel of CAL.
1.7 The parties have entered into this Agreement in consideration
of the mutual covenants and undertakings contained herein and for other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged by all of the parties hereto.
1.8 The parties acknowledge and agree that the Stock was duly and
validly issued, is outstanding, is duly paid and non-assessable, has no
restrictions on its alienation or transferability and was never cancelled,
rescinded or revoked and JLH/F acknowledges and agrees that any purported
cancellation of the Stock was and is void ab initio.
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<PAGE> 2
SECTION 2. AGREEMENTS OF JLH/F.
2.1 JLH/F will grant in favor of JD, as to a thirty-five percent
(35%) interest and WL as to a sixty-five percent (65%) interest, at the time of
the Merger, the option to purchase fifty thousand (50,000) shares of the common
stock of JLH/F (the "Option Stock") within two (2) years of the effective date
of the Merger at a purchase price of Two Dollars ($2.00) per share (the
"Option"). The parties agree that the Stock and the Option Stock (as and when
the latter is acquired pursuant to the terms of the Option) shall, at the option
of JD and/or WL (collectively, the "Owners") be purchased by JLH/F in the manner
and under the terms specified below (the "Put").
2.1.1 JLH/F shall be required to purchase the Stock and/or
the Option Stock at any time for a thirty (30) day period after the second
anniversary of the Closing Date (as defined below) for a price per share equal
to the Purchase Price (as defined below).
2.1.2 The purchase price (the "Purchase Price") for any
portion of the Stock and/or the Option Stock which is tendered pursuant to the
Put shall be the sum of Four Dollars ($4.00) per share. In the event of any
stock splits, recapitalizations, reverse splits or other similar actions by
JLH/F, the Purchase Price shall be applicable on a pro-rata basis to the number
of shares then held by the Owners, but in no event shall the Purchase Price be
less than that applicable to the Stock and the Option Stock if the Put were
exercisable as of the date hereof and if a diminution in the number of shares
of the Stock and/or the Option Stock should occur by virtue of corporate
actions taken by JLH/F, then the Put shall be applicable, and the Purchase
Price shall be determined, as though such diminution has not occurred.
2.1.3 The number of shares of Option Stock and the Purchase
Price for the Put will be adjusted to give effect to any stock dividends paid
with respect to Stock prior to the second anniversary of the Merger. Such
stock dividends shall be subject to the Put by the Owners at the Purchase
Price, as adjusted, in the same manner as the Stock and the Option Stock are
subject to the Put hereunder
2.1.4 The Put may be exercised by the Owners, or either of
them, or their permitted assignees (as defined below), in one transaction as to
a portion or all of the Stock and/or the Option Stock, but the Put shall expire
as to all of the Stock and/or the Option Stock as to which the Put has not been
exercised thirty (30) days after the second anniversary of the Closing Date.
2.1.5 In order to exercise the Put as to any or all of the
Stock and/or the Option Stock, the Owners, or either of them or their permitted
assignees, shall notify JLH/F of its or their intention to exercise in the
manner provided for notices herein (the "Notice"). The Notice shall specify
the number of shares for which the Put is to be exercised and the date upon
which presentment of the shares for which the Put has been exercised will be
made, which such date (the "Presentment Date") shall be not less than ten (10)
days from the date on which the Notice has been mailed to JLH/F. Presentment
of the shares for which the Put has been exercised on the Presentment Date
shall be made in person at the principal office of JLH/F, which such principal
office shall be deemed to be at the address within the State of Florida as
filed with the Secretary of State of the State of Florida for JLH/F, unless
JLH/F shall notify the Owners, in the manner provided herein, of a change of
address of the registered office of JLH/F.
2.1.6 Certificates for the Stock and/or the Option Stock
held by the Owner or the permitted assignee who is exercising the Put shall be
presented on the Presentment Date, duly endorsed for transfer, and JLH/F shall
(i) deliver to such Owner or permitted assignee the Purchase Price relative to
the number of shares for which the Put has been exercised in the form of a
cashier's check issued from the office of a bank doing business in Sarasota
County, Florida and payable at the office or branch office of
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<PAGE> 3
such institution in Sarasota County, Florida and (ii) deliver to such Owner or
permitted assignee at the time of presentment, a replacement certificate for
the number of shares of JLH/F owned by the Owner making the presentment as are
not being purchased pursuant to the terms of Put, as specified in the Notice
from such Owner or permitted assignee. Such replacement certificate shall be
executed by the president and secretary of JLH/F and shall be deemed as fully
paid and non-assessable.
2.2 It is understood and agreed by the parties that the Put is
exercisable solely at the option of the Owners or their permitted assignees.
The Owners have the right to transfer the Stock and/or the Option Stock in any
market transaction without reference to the Put. The Put can be initiated only
by an Owner, or the permitted assignee of an Owner, and upon a Notice being
given by an Owner and after the giving of a Notice, JLH/F shall be obligated to
purchase the Stock and/or the Option Stock in such amounts as may be specified
in the Notice. For the purposes of this Agreement, a "permitted assignee"
shall be limited to any entity in which JD, the Estate or the beneficiaries of
the Estate own the legal or beneficial interests of such entity.
2.3 JLH/F agrees that if JD and/or WL and/or a permitted assignee
wishes to exercise the Put relative to the Option Stock at the time they
exercise the Option, they may notify JLH/F of both the exercise of the Option
and the exercise of the Put at any time during the term of the Option. Should
this occur, the Option Stock will not be issued to JD and/or WL or a permitted
assignee and on the date the Put becomes operative, JLH/F will pay the Purchase
Price relative to the Option Stock to JD and/or WL and/or a permitted assignee
without the necessity of the issuance and tender of the Option Stock.
SECTION 3. ACTIONS BY ALL PARTIES. Subject to the conditions precedent
specified herein, on the date the Merger is consummated (the "Closing Date"),
but in no event later than April 11, 1997, the following shall occur:
3.1 JLH/F shall execute and deliver the Option in favor of JD, as
to a thirty-five percent (35%) interest, and WL as to a sixty-five percent
(65%) interest.
3.2 Conard shall deliver to the Estate the original of the Deed
and shall execute and deliver to Conosier, Inc., in recordable form, a
quit-claim deed for the property described in Exhibit 1 hereof.
3.3 Conard, JLH/F and JLH/N shall be deemed to have released and
by their execution hereof shall have released on behalf of themselves and on
behalf of all their predecessors, successors, affiliates, subsidiaries, parent
companies, heirs, administrators, personal representatives and assigns, JD, the
Estate, WL and Conosier, Inc., their predecessors, successors, affiliates,
subsidiaries, parent companies, heirs, administrators, personal
representatives, their past and present employees, officers, directors and
shareholders and assigns of and from any and all claims, disputes, demands,
causes of action, damages, judgments or suits at law or equity of any kind
whatsoever, through the Closing Date, whether direct or contingent, liquidated
or unliquidated, patent or latent, known or unknown, foreseen or unforeseen;
provided, however, that this release shall not be applicable to any obligations
of the released parties pursuant to this Agreement.
3.4 JD and WL shall be deemed to have released and by their
execution hereof shall have released JLH/N and JLH/F from any and all liability
relative to the indebtedness represented by the Notes, inclusive of principal,
interest, penalties or any other sums due and owning thereunder.
3.5 JD, the Estate, WL and Conosier, Inc., shall be deemed to have
released and by their execution hereof shall have released on behalf of
themselves and on behalf of all their predecessors,
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<PAGE> 4
successors, affiliates, subsidiaries, parent companies, heirs, administrators,
personal representatives and assigns in favor of Conard, JLH/F and JLH/N, their
predecessors, successors, affiliates, subsidiaries, parent companies, heirs,
administrators, personal representatives, their past and present employees,
officers, directors and shareholders and assigns of and from any and all claims,
disputes, demands, causes of action, damages, judgments or suits at law or
equity of any kind whatsoever, through the Closing Date, whether direct or
contingent, liquidated or unliquidated, patent or latent, known or unknown,
foreseen or unforeseen; provided, however, that this release shall not be
applicable to any obligations of the released parties pursuant to this
Agreement.
3.6 The plaintiffs and defendants relative to the Litigation shall
dismiss all claims, counterclaims, crossclaims and third-party claims by and
between the said parties, with prejudice and each party shall bear its own
costs, attorneys' fees, paralegals' fees and legal assistants' fees relative
thereto.
SECTION 4. CONDITIONS PRECEDENT. The following, at the option of the
party for whom the condition must be satisfied, shall be conditions precedent
to such party's obligation to perform hereunder, and in the event any of said
conditions are not satisfied on or before the date specified, such affected
party may terminate this Agreement by delivering to the other parties hereto
written notice so indicating within the applicable time period.
4.1 The Merger shall occur and the Plan and Agreement of Merger
shall be accepted by and filed with the Secretary of State of the State of
Florida on or before March 31, 1997 (the "Closing Date").
4.2 WL, the Estate and JD shall have received, on or before the
Closing Date, an opinion of the securities counsel for CAL and JLH/F, in form
and content satisfactory to counsel for WL, the Estate and JD to the effect that
(i) the Option and Put are the valid and binding obligations of JLH/F, according
to their terms and conditions; (ii) immediately after the Merger, the
obligations specified in this Agreement relative to the Put shall be the valid
and binding obligations of JLH/F; (iii) all necessary corporate action has been
taken by CAL and JLH/F to authorize the transactions contemplated by this
Agreement and performance of same thereunder; and (iv) the execution and
delivery of the this Agreement by CAL, the subsequent performance of this
Agreement by JLH/F and the resolution of JLH/F specified in sub-section 4.3
below do not violate either CAL's or JLH/F's Articles of Incorporation or bylaws
or other organizational documents
4.3 CAL shall have caused to be delivered to JD, the Estate and WL
on or before the date of the Merger a corporate resolution of JLH/F, in form
and content satisfactory to counsel for JD, the Estate and WL which ratifys and
acknowledges the obligations of JLH/F pursuant to this Agreement, including,
without limitation, the rights of JD, the Estate and WL with respect to the
Option and the Put and the warranty of JLH/F and CAL that this Agreement does
not constitute a breach of or a default under any agreement or document to
which either corporation is a party or by which it or its assets are bound or
violate any judgment, decree or order of any court or administrative tribunal,
which judgment, decree or order is binding upon either corporation or its
assets or violate any federal or Florida law, rule or regulation.
4.4 The beneficiaries of the Estate shall have approved the terms
and conditions of this Agreement on or before the date of the Merger.
4.5 WL, the Estate and JD will have received, on or before the
Closing Date, an opinion of securities counsel for CAL and JLH/F addressed to
the stock transfer agent for JLH/F authorizing the stock transfer agent to
remove the restrictive legend on the stock certificates for the Stock which
such opinion will be effective for any date after April 29, 1997.
SECTION 5. MISCELLANEOUS.
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<PAGE> 5
5.1 Any notice, demand or other communication required or
permitted to be given to any party hereunder shall be in writing, and shall be
deemed to have been delivered when actually received or, regardless of whether
or not received, the third business day after deposit in the United States
mail, registered or certified mail, return receipt requested, postage prepaid,
addressed to the respective party at the address indicated below, or to such
other address as may hereafter be indicated by written notice delivered in
accordance with the terms hereof to the other parties:
If to WL, JD, or the Estate: % Jeffrey S. Russell, Esq., Abel, Band, Russell,
Collier, Pitchford and Gordon Chartered, 240 South Pineapple Avenue, Sarasota,
Florida, 34236.
If to CAL, JLH/F, CAL, JLH/N, or Conard: % ______________________
_________________________________________________________________.
5.2 In the event of breach of this Agreement by any party, the
non-defaulting parties shall have the right to pursue any remedy provided by
applicable law, including specific performance.
5.3 Any party failing to comply with the terms of this Agreement
will pay all expenses, including reasonable attorneys' fees, paralegal, legal
assistant and similar fees and costs, including those incurred on the appellate
level, incurred by any other party to this Agreement as a result of such
failure.
5.4 This Agreement and documents relating to same shall be
construed under the laws of the State of Florida. The venue of any action or
suit brought in connection herewith shall be in Sarasota County, Florida.
5.5 The provisions of this Agreement shall bind the heirs,
successors, personal representatives and assigns of the parties hereto.
5.6 The parties hereto acknowledge that they have read, understand
and have had the opportunity to be advised by legal counsel as to each and
every one of the terms, conditions, restrictions and effect of all of the
provisions of this Agreement, and each agrees to the enforcement of any and all
of these provisions and executes this Agreement with full knowledge of these
provisions. Should any provision of this Agreement require judicial
interpretation, it is agreed that the court interpreting or construing the
provision shall not apply a presumption that the terms hereof shall be more
strictly construed against one party by reason of the rule of construction that
a document is to be construed more strictly against the party who itself or
through its agent prepared the document. Any handwritten or typed additions to
this Agreement which have been initialed by the parties shall control over any
inconsistent printed terms.
5.7 Time is of the essence to this Agreement.
5.8 The provisions of this Agreement shall survive the
consummation of the transactions contemplated hereunder.
5.9 The Effective Date of this Agreement will be the date on which
the last of the parties hereto executes same.
5.10 This Agreement may be executed in one or more counterparts.
It shall be fully executed when each party whose signature is required has
signed at least one counterpart even though no one counterpart contains the
signatures of all the parties.
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<PAGE> 6
In witness whereof the parties have executed this Agreement as of the
date set forth in the signature line for each party.
WITNESSES: Community Assisted Living
Centers, Inc., a Florida
corporation
By: /s/ John F. Robenalt
------------------------------------
/s/ Christine M. DeCroce Print Name:
- ---------------------------------- ----------------------------
Print Name Christine M. DeCroce As Its: President
------------------------ --------------------------------
Date: 4-9-97
----------------------------------
/s/ Jennifer McCurdy
- ----------------------------------
Print Name Jennifer McCurdy
------------------------
Whitaker's Landing, Inc.,
a Florida corporation
By: /s/ Jeffrey Russell
------------------------------------
/s/ Christine M. DeCroce Print Name:
- ---------------------------------- ----------------------------
Print Name Christine M. DeCroce As Its:
------------------------ --------------------------------
Date: 4-9-97
----------------------------------
/s/ Jennifer McCurdy
- ----------------------------------
Print Name Jennifer McCurdy
------------------------
/s/ Christine M. DeCroce /s/ Joann Desrosiers
- ---------------------------------- ---------------------------------------
Print Name Christine M. DeCroce Joann Derosiers
------------------------
/s/ Jennifer McCurdy Date: 4-9-97
- ---------------------------------- ----------------------------------
Print Name Jennifer McCurdy
------------------------
/s/ Christine M. DeCroce /s/ David Desrosiers
- ---------------------------------- ---------------------------------------
Print Name Christine M. DeCroce David Desrosiers, as
------------------------ Co-Personal Representative
of the Estate of Wilfred N. Desrosiers
/s/ Jennifer McCurdy
- ---------------------------------- Date: 4-9-97
Print Name Jennifer McCurdy ----------------------------------
------------------------
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<PAGE> 7
/s/ Christine M. DeCroce /s/ Jeffrey S. Russell
- ---------------------------------- ---------------------------------------
Print Name Christine M. DeCroce Jeffrey S. Russell, as
------------------------ Co-Personal Representative
of the Estate of Wilfred N.
Desrosiers
/s/ Jennifer McCurdy
- ---------------------------------- Date: 4-9-97
Print Name Jennifer McCurdy ----------------------------------
------------------------
/s/ Christine M. DeCroce /s/ Richard T. Conard
- ---------------------------------- ---------------------------------------
Print Name Christine M. DeCroce Richard T. Conard
------------------------ Date: 4-9-97
----------------------------------
/s/ Jennifer McCurdy
- ----------------------------------
Print Name Jennifer McCurdy
------------------------
/s/ Christine M. DeCroce /s/ Elizabeth A. Conard
- ---------------------------------- ---------------------------------------
Print Name Christine M. DeCroce Elizabeth A. Conard
------------------------ Date: 4-9-97
----------------------------------
/s/ Jennifer McCurdy
- ----------------------------------
Print Name Jennifer McCurdy
------------------------
Just Like Home, Inc., a
Florida corporation
/s/ Elizabeth A. Conard
---------------------------------------
/s/ Christine M. DeCroce Print Name:
- ---------------------------------- ----------------------------
Print Name Christine M. DeCroce As Its: President
------------------------ --------------------------------
Date: 4-9-97
----------------------------------
/s/ Jennifer McCurdy
- ----------------------------------
Print Name Jennifer McCurdy
------------------------
Just Like Home, Inc., a Nevada
corporation
/s/ Elizabeth A. Conard
---------------------------------------
/s/ Christine M. DeCroce Print Name:
- ---------------------------------- ----------------------------
Print Name Christine M. DeCroce As Its: President
------------------------ --------------------------------
Date: 4-9-97
----------------------------------
/s/ Jennifer McCurdy
- ----------------------------------
Print Name Jennifer McCurdy
------------------------
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<PAGE> 8
/s/ Christine M. DeCroce /s/ Jeffrey S. Russell
- ---------------------------------- ---------------------------------------
Print Name Christine M. DeCroce Jeffrey S. Russell, as
------------------------ Co-Personal Representative
of the Estate of Wilfred N.
Desrosiers
/s/ Jennifer McCurdy
- ---------------------------------- Date: 4-9-97
Print Name Jennifer McCurdy ----------------------------------
------------------------
/s/ Christine M. DeCroce /s/ Richard T. Conard
- ---------------------------------- ---------------------------------------
Print Name Christine M. DeCroce Richard T. Conard
------------------------ Date: 4-9-97
----------------------------------
/s/ Jennifer McCurdy
- ----------------------------------
Print Name Jennifer McCurdy
------------------------
/s/ Christine M. DeCroce /s/ Elizabeth A. Conard
- ---------------------------------- ---------------------------------------
Print Name Christine M. DeCroce Elizabeth A. Conrad
------------------------ Date: 4-9-97
----------------------------------
/s/ Jennifer McCurdy
- ----------------------------------
Print Name Jennifer McCurdy
------------------------
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<PAGE> 1
EXHIBIT 10.2
HEALTH CARE REIT, INC.
One SeaGate, Suite 1500
Toledo, OH 43604
Phone: 419-247-2800
Fax: 419-247-2826
GEORGE L. CHAPMAN
President, Chairman and C. E. O.
April 10, 1997
Mr. John F. Robenalt, President & CEO
Just Like Home, Inc.
2440 Tamiami Trail North
Nokomis, FL 34275
Dear Mr. Robenalt:
We understand that Just Like Home, Inc. a Florida corporation, ("Just Like
Home") would like Health Care REIT, Inc. (the "Lessor") to provide financing
for the acquisition, development, conversion and refinancing of the facilities
described below. This letter outlines the terms and conditions pursuant to
which Lessor would agree to provide financing.
1. CREDIT FACILITY TERMS
1.1 Lessee: The lessee (the "Lessee") will be Just Like Home or a wholly
owned single purpose entity organized for each Facility.
1.2 Financing Type. The financing type will be operating leases.
1.3 Facilities: The facilities to be financed will be assisted living
facilities (individually, a "Facility" and collectively , the
"Facilities") located or to be located in the Eastern United States
(the "Approved Region"). The new Facilities will contain approximately
44 beds/units. Each Facility will be subject to Lessor's due diligence
review and approval process as set forth below.
1.4 Credit Facility Amount and Funding Amount: The total amount of the
credit facility will be up to Forty Million Dollars ($40,000,000). The
funding amount available for any Facility will be up to 100% of the
Approved Costs (as hereinafter defined) provided that [i] Lessee is
successful in securing $1,500,000 in private placement equity and
Community Assisted Living Centers, Inc. will contribute approximately
$800,000 as equity capital; [ii] Lessee has availability under the
credit facility; [iii] the Facility meets the LTV Test (as hereinafter
defined); [iv] the Facility meets the Coverage Test (as hereinafter
defined); [v] Lessee has
Page 1
<PAGE> 2
met the Minimum Capitalization Requirements; and [vi] Lessee has met
all other conditions to funding.
"Approved Costs" means the following: [i] Facility Costs, and [ii]
Closing Costs. "Approved Costs" does not include unreasonably large
contractors profits, Letter of Credit Deposit, the Required Working
Capital, or fees paid to Lessee, or any affiliates of Lessee except
for Development Fees permitted as a part of Facility Costs.
"Facility Costs" means the following reasonable costs: [i] for
acquisition and refinancing transactions, the purchase price for the
land and building and personal property costs not to exceed 10% of the
financing amount; [ii] for development and conversion transactions,
the following costs: [a] land acquisition cost and, for conversion
projects, acquisition costs of the existing land and building; [b]
cost of construction of the building and fixtures; [c] costs of
architectural and engineering services; [d] costs of soil borings and
other customary testing services; [e] cost of personal property not to
exceed 10% of the financing amount; [f] Development Fees (as
hereinafter defined); [g] construction period interest; and [h] other
reasonable and customary costs approved by Lessor.
"Closing Costs" means the following reasonable costs to meet Lessor's
closing requirements: [i] Commitment Fees; [ii] title insurance
premiums and search fees; [iii] cost of surveys; [iv] costs of
environmental studies; [v] legal fees of Lessor's counsel and Lessee's
counsel; [v] property inspection fees; [vi] Letter of Credit; and
[vii] other costs customarily incurred in closing financings.
"Letter of Credit Deposit" means the amount of cash collateral
required to be pledged as security for the Letter of Credit required
by Lessor.
"Development Fees" means any fees paid to Lessee or their affiliates,
not to exceed four percent (4%) of the financing amount, for services
rendered in connection with the acquisition and development of a
Facility with one third payable at closing, one third payable at
completion of construction, and one third payable when the Facility
Coverage Test is met for four (4) consecutive quarters.
"Required Working Capital" means Lessee's reasonable estimate, subject
to Lessor's approval, of the cash needed to fund [i] preopening
operating expenses e.g. marketing, staffing, advertising, and office
expenses; [ii] operating losses during fill-up; [iii] financing
payments during fill-up prior to cash flow breakeven; and [iv]
permanent working capital.
"LTV Test" means that the financing amount must not exceed 80% of the
Appraised Value of the Facility. The Appraised Value will be
determined by an MAI appraiser acceptable to Lessor.
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<PAGE> 3
"Coverage Test" means that the financing amount must be less than the
quotient of the ANOI / 1.25 / Payment Constant. "ANOI" means the NOI
less a five percent (5%) management fee and less a replacement reserve
of $400 per bed. "NOI" means the stabilized net operating income of
the Facility and will be based upon the following assumptions: [i] 95%
stabilized occupancy; [ii] a unit mix and rate structure consistent
with local market conditions; and [iii] operating expenses consistent
with similar facilities operated by Just Like Home and local market
conditions. "Payment Constant" means the assumed payment constant for
the permanent financing and will be based upon Lessor's reasonable
estimate of the forward yield on comparable term USTNs plus the
applicable rate spread.
"Minimum Capitalization Requirement" means that Lessee have cash on
deposit at Closing of not less than the sum of the cash collateral
required for the Letter of Credit Deposit and the Required Working
Capital.
1.5 Use of Proceeds: Financing proceeds will be used solely for Approved
Costs.
1.6 Operator: Each Facility will be operated by Just Like Home, Inc. or
another affiliate of Just Like Home, Inc.
1.7 Guarantors: Just Like Home.
1.8 Term of Credit Facility: The term of the credit facility will commence
on April 23, 1997 (the "Commencement Date") and expire on May 1, 2000
(the "Expiration Date"). Lessor may cancel the credit facility if the
credit facility is not adequately utilized for any reason. To be
adequately utilized, the credit facility must meet the closing
schedule (the "Closing Schedule") set forth in Section 1.9 below.
1.9 Credit Facility Fee. In consideration for the availability of the
credit, Lessee will pay Lessor the Credit Facility Fee set forth in
the schedule below per annum, payable monthly, on the unused balance
of the credit; provided, however, that the Credit Facility Fee in
years 2 and 3 will be 0% if Lessee meets the Closing Schedule for the
prior year as set forth below:
<TABLE>
<CAPTION>
==========================================================================
YEAR FEE CLOSINGS
==========================================================================
<S> <C> <C>
1 0% $10,000,000
==========================================================================
2 .25% $15,000,000
==========================================================================
3 .25% $15,000,000
==========================================================================
</TABLE>
1.10 Financing Submissions: Just Like Home agrees to meet the Closing
Schedule and to submit to Lessor all proposed financings for
Facilities in the Approved Region, including, but not limited to, the
Proposed Financings set forth on Exhibit A attached hereto. The
submission package for each Facility will contain the following
information:
Page 3
<PAGE> 4
(a) Parties. The name, organizational documents, and financial
statements for Lessee.
(b) Facility. Detailed description of the building, land, site
improvements, construction budget or purchase terms,
location, market demographics and competition analysis.
(c) Proforma. A 5 year proforma for the Facility with a detailed
description of all assumptions including, but not limited to,
unit/bed mix, ancillary services, payors and rate structure,
staffing analysis, month by month absorption period proforma,
and computation of the Required Working Capital.
(d) Licensure/Reimbursement Analysis. Summary of the
licensure/reimbursement system in the State where the
Facility will be located.
(e) Other Information. All other pertinent information directly
related to the submission.
1.11 Financing Approval. Lessor will have thirty (30) days to review and
take action upon the financing. Lessee shall furnish to Lessor such
information as may be reasonably requested. If Lessor fails to approve
the financing, then Just Like Home may seek alternative financing for
that Facility.
1.12 Bundled Maturities and Option Exercises. All financings will have
coterminous maturity dates, termination periods and fees, and option
exercise periods so that Lessee's decision to abandon, renew, acquire,
or terminate any of the financings for the Facilities will be the same
for all Facilities. Accordingly, as each financing is closed, the
maturity date, termination periods and fees, and option exercise
periods for prior financings will be extended to be coterminous with
the most recently closed financing.
1.13 Working Capital Escrow. At the closing of any financing for a
Facility, Lessee will, at Lessor's reasonable request, fund a Working
Capital Escrow with the Required Working Capital. The Working Capital
Escrow will be an account with National City Bank of Cleveland. Lessee
will grant to Lessor a perfected security interest in the Working
Capital Escrow. Lessee may not withdraw escrow funds for any purpose
other than working capital uses. Lessor must consent to any withdrawal
of escrow funds, which consent will not be unreasonably withheld. In
the event of a monetary default, Lessor may use the escrow funds to
cure any default. All interest in the escrow account will be retained
in the account as escrow funds. The escrow account will be released
when all of the Credit Facility has been used and each Facility has
reached stabilized occupancy.
2. FINANCING TERMS
2.1 Terms During Construction/Conversion Period. The following terms will
be applicable to any construction or conversion period:
Page 4
<PAGE> 5
(a) Amount. The financing amount will be 100% of Approved Costs.
(b) Term. The construction period will commence on the closing
date and will expire on the earlier of twelve months after
the closing or date of licensure.
(c) Rate.
(1) Construction Rate: Base Rate announced from time to
time by National City Bank (Cleveland) plus 2.75%.
(2) Calculation Method: 365/360.
(d) Amortization and Payments: Monthly payments of interest only.
(e) Commitment Fee. 1% of the total financing amount payable at
closing.
(f) Prepayment: No prepayment.
(g) Security: Lessor will require the following security: [i] fee
simple ownership of any real estate or tangible personal
property financed by Lessor; [ii] second lien on receivables
and second lien on personal property not financed by Lessor;
[iii] letter of credit for five percent (5%) of the lease
amount; [iv] subordination of any management fees to payments
to Lessor; [v] subordination, attornment and nondisturbance
agreement with any lessee of the Facility; [vi] a
nondisturbance agreement with any equipment financier; [vii]
assignment and estoppel agreement for any material contracts;
[viii] upon default, assignment of Facility licenses and
permits, where permissible; [ix] cross-default and
cross-collateralization; [x] any guaranty described above;
and [xi] security interest in Working Capital Escrow.
(h) Disbursements: Disbursements will be made monthly in
accordance with a construction draw schedule. Disbursements
will be subject to customary conditions including title
updates, survey updates, and certificate by Lessor's
consulting architect.
(i) Retainage: Retainage will be 10%.
(j) Payment and Performance Bonds: Lessee will provide payment
and performance bonds with dual obligee endorsement in an
amount equal to construction contract.
(k) List of Contractors and Vendors: Supplied to Lessor.
(l) Construction Budget: The final construction budget will be
subject to Lessor's approval.
Page 5
<PAGE> 6
(m) Collateral Assignment of Architect's and Contractor's
Agreement: Lessee will collaterally assign the Architect's
Contract and Contractor's Contract.
(n) Consultant's Inspection Fee: A fee of $750.00 per visit plus
expenses.
(o) Commencement of Construction: Lessee shall be required to
commence construction within thirty (30) days of closing.
2.2 Terms for Operating Leases. The following terms will apply to any
permanent operating leases:
(a) Lease Amount. The purchase price will be 100% of the Approved
Costs.
(b) Term.
(1) Initial Term: Ten (10) years.
(2) Renewal Term: 10 years at Lessee's option.
(c) Lease Rate.
(1) Initial Rate: Yield on comparable term U.S. Treasury
Note + 3.90%.
(2) Renewal Rate: Prior year's Lease Rate increased by
the Inflation Adjustment set forth below.
(3) Inflation Adjustment: Rate during second and each
subsequent year of the Initial and Renewal Terms
will be increased by 25 bps per annum.
(4) Calculation Method: 365/360.
(5) Absolute Net Lease. Lessee shall be responsible for
all costs and expenses associated with the Facility
including but not limited to insurance, taxes,
utilities, repairs and replacements.
(d) Lease Payments: Rent paid monthly in advance at Lease Rate.
(e) Commitment Fee. 1% of the financing amount payable at
closing.
(f) Option to Purchase: Lessee will have the option to purchase
the Facilities at the expiration of the Initial or Renewal
Terms for an option price equal to the FMV subject to a floor
of the Lease Amount and an appreciation split of 50% to Just
Like Home and 50% to Lessor. The purchase option will be an
"all or none" option, meaning Just Like Home can not just
pick select facilities to purchase. If the purchase option is
exercised, it will be for all of the facilities. Lessee will
pay all
Page 6
<PAGE> 7
costs and expenses in connection with the closing of the
purchase, including but not limited to, transfer fees, title
insurance, surveys, environmental, etc. Lessor will convey
title pursuant to quitclaim deed and quitclaim bill of sale.
(g) Warrants: Intentionally omitted.
(h) Security: Lessor will require the following security: [i] fee
simple ownership of any real estate or tangible personal
property financed by Lessor; [ii] second lien on receivables
and second lien on personal property not financed by Lessor;
[iii] letter of credit for five percent (5%) of the financing
amount; [iv] subordination of any management fees to payments
to Lessor; [v] subordination, attornment and nondisturbance
agreement with any sublessee of the Facility; [vi] a
nondisturbance agreement with any equipment financier; [vii]
assignment and estoppel agreement for any material contracts;
[viii] upon default, assignment of Facility licenses and
permits, where permissible; [ix] cross-default and
cross-collateralization; [x] any guaranty as described above;
and [xi] security interest in Working Capital Escrow if
required.
3. GENERAL TERMS
3.1 Subordination of Payments: In the event of default, distributions
and payments to Lessee orany affiliate, shall be subordinated to all
obligations owed to Lessor.
3.2 Late Payment Charge: 5% of the amount then due.
3.3 Default Rate of Interest: The greater of 18.5% or 2.5% plus the then
applicable rate.
3.4 Events of Default: 10-day and 30-day grace period after written notice
for monetary and nonmonetary defaults, respectively, cross-defaulted
with any obligations owed to Lessor by Lessee, any affiliates.
3.5 Financial Covenants: The following financial covenants will be
included and tested quarterly:
(a) Facility Financial Covenants.
(1) Facility Coverage Test: Each Facility shall have
payment coverage of 1.25 to 1 (including management
fees equal to 5% of gross revenues and a replacement
reserve equal to $400 per bed, per year) after the
first 12 months of operation;
(b) Just Like Home Financial Covenants.
Page 7
<PAGE> 8
(1) Minimum Net Worth. Just Like Home shall maintain a
minimum net worth of $500,000 (the method of
calculating net worth and valuing business assets
shall be consistent with the financial statements
previously provided to Lessor).
(2) Liquidity. Just Like Home shall maintain a minimum
cash balance of not less than $200,000.
(3) Current Ratio. Just Like Home shall maintain a
current ratio of 1.1 to 1.0.
(4) Debt to Equity. Just Like Home shall maintain a
debt-to-equity ratio in accordance with the
following schedule, including all operating leases
as debt.
Year Debt-to-Equity
---- --------------
1997 15:1
1998 20:1
1999 25:1
2000 18:1
2001 10:1
(c) The following financial information shall be furnished to
Lessor:
(1) annual audited financial statements of Lessee,
Operators and Facilities due within 90 days after
FYE;
(2) quarterly unaudited internal financial statements of
Lessee, Operator and the Facility due 45 days after
quarter ends:
(3) monthly unaudited financial for Facility due within
30 days after month end. Facility financial
statements will include income statement, balance
sheet, statement of cash flow, occupancy, payor mix
with actual vs. budget.
3.6 Negative Covenants: The following will be prohibited without the prior
written consent of Lessor which consent will not be unreasonably
withheld: [i] transfer of any interest in the Facility; [ii] change in
control management of Lessee or Just Like Home; [iii] creation of
other Facility indebtedness; [iv] modification of any material
contracts; [v] mergers, consolidations, sale of substantially all of
the assets or other structural changes in Lessee; and [vi] mergers,
consolidations, or transfers of any assets, voluntary or involuntary,
which would cause the net worth of Just Like Home to fall below the
amounts specified above.
3.7 Escrows: Upon default, monthly escrows of taxes and insurance.
3.8 Governing Law: Financing will be governed by the laws of the State in
which the Facility is located.
Page 8
<PAGE> 9
3.9 Due Diligence Review: Lessor's customary due diligence review
including, but not limited to, review and approval of the following
items: [i] title policy through a mutually agreed upon agent of
Lawyers Title Insurance Corporation; [ii] ALTA survey; [iii]
environmental assessment; [iv] property inspection; [v] pest
inspection; [vi] MAI appraisal; [vii] CON, licensure and reimbursement
requirements; [viii] compliance with laws including zoning; [ix]
financial condition and creditworthiness of Lessee; [x] five-year
proforma operating statements; [xi] property and liability insurance;
[xii] legal opinion. All due diligence items will be subject to
meeting Lessor's underwriting requirements.
3.10 Conditions to Closing: Lessor's obligation to close any financing will
be conditioned upon the following: [i] approval of the due diligence
review including compliance with financial covenants; [ii] approval of
the transaction by the Board of Directors of Lessor; [iii] approval of
the transaction by Lessor's line of credit banks; [iv] the
availability of funding to Lessor; [v] approval of security and loan
documentation; and [vi] no material adverse change in the financial
condition of Lessee after Lessor's review of their financial
statements.
3.11 Deposit: A nonrefundable Credit Facility Processing Fee of $10,000
payable upon execution of this agreement. $25,000 Credit Facility
Processing Fee payable upon acceptance of Commitment Letter. A
nonrefundable deposit of $25,000 per Facility upon approval of
financing submission. Deposit will be applied against Commitment Fee
at Closing.
3.12 Closing Date: The closing for each Facility financing shall occur no
later than sixty (60) days after Lessor approves the financing
submission; provided, however, that Lessor may extend the Closing Date
at its option. The failure to close by such date does not terminate
this Commitment Letter unless Lessor gives Lessee notice of
termination. Time is of the essence.
3.13 Commitment Expiration Date. This Commitment will expire if not
accepted and returned to Lessor by 3:00 p.m. eastern time on April 16,
1997 along with a check payable to Lessor in the amount of the Credit
Facility Processing Fee.
3.14 Standard Terms: The Standard Terms of Commitment are attached hereto
and incorporated herein. Just Like Home acknowledges that they have
read, understand and agree to the Standard Terms of Commitment.
In compliance with the Fair Credit Report Act, this notice is to inform the
undersigned that in connection with this transaction, an investigation may be
made as to the financial history, character, general reputation, personal
characteristics, and mode of living of Lessee. Lessee may request from Lessor a
complete disclosure of the nature and scope of the investigation.
Sincerely, Accepted By:
HEALTH CARE REIT, INC. Just Like Home, Inc.
George L. Chapman By:
Chairman -------------------------------------
John F. Robenalt, President
Date of Acceptance:
- ----------------
Page 9
<PAGE> 10
STANDARD TERMS OF COMMITMENT
1. COMMITMENT FEE AND DEPOSIT. The Commitment Fee will be deemed
earned and nonrefundable upon execution by Customer of this Commitment Letter
unless i) the Board of Directors of Health Care REIT, Inc. fails to provide the
Financing in accordance with this Commitment Letter; ii) Health Care REIT, Inc.
defaults under this Commitment Letter; or iii) Health Care REIT, Inc. fails to
approve all due diligence and other items required to be submitted to Health
Care REIT, Inc. including but not limited to the title insurance policy,
survey, environmental assessment and appraisal. The Deposit will be
nonrefundable; provided, however, that if the Commitment Fee is refundable
pursuant to this paragraph, then Health Care REIT, Inc. will refund to Customer
the Deposit less, in the case of iii) hereof, any costs and expenses incurred
by Health Care REIT, Inc. The Commitment Fee constitutes the bargained-for
consideration for Health Care REIT, Inc.'s issuance of this Commitment Letter
and does not constitute liquidated damages for any damages arising from
Customer's breach hereunder.
2. EXPENSES. In addition to the Commitment Fee and upon the acceptance
of this Commitment Letter, Customer agrees to pay, or reimburse Health Care
REIT, Inc., for all reasonable costs and expenses in connection with this
transaction (whether or not a closing occurs), including but not limited to the
following: i) title insurance premiums, search fees, commitment fees, and
cancellation fees; ii) survey fees and expenses; iii) environmental assessment
fees and expenses; iv) inspection fees and expenses including fees of
consulting architects or engineers and reimbursement of expenses for inspection
by Health Care REIT, Inc.'s representatives; v) appraisal fees and expenses;
vi) pest inspection fees and expenses; vii) UCC search fees and expenses; viii)
costs and expenses incurred by Health Care REIT, Inc. in investigating and
negotiating this transaction including travel, meals, and lodging; and ix)
attorneys' fees and expenses for Health Care REIT, Inc.'s inside counsel in
connection with this transaction.
3. RELIANCE BY HEALTH CARE REIT, INC. This Commitment Letter has been
issued in reliance upon the accuracy of the information furnished to Health
Care REIT, Inc. by or on behalf of Customer and any guarantor and,
notwithstanding any investigation by Health Care REIT, Inc., all such
information is deemed to be material. Health Care REIT, Inc. intends to notify
Customer's auditors of its reliance on the audited financial statements of
Customer and any guarantor in making the Financing. Health Care REIT, Inc.'s
obligation to close is conditional upon no material adverse change in the
financial condition of Customer, any guarantor, or the Facility.
4. COMPLIANCE WITH LAW. If any law or regulation affecting Health Care
REIT, Inc.'s entering into this transaction imposes upon Health Care REIT, Inc.
any material obligation, fee, liability, loss, cost, expense or damage which is
not contemplated by this Commitment Letter, the commitment evidenced hereby may
be terminated by Health Care REIT, Inc. without any obligation of Health Care
REIT, Inc. hereunder.
5. ASSIGNMENT. Health Care REIT, Inc. may assign all or a part of this
Commitment Letter of the Financing to another institutional investor. This
Commitment Letter and the Financing Documents are not assignable by Customer by
operation of law or otherwise.
6. APPLICABLE LAW. This Commitment Letter shall be governed in all
respects by the internal laws (as opposed to the conflicts of laws provisions)
of the State of Ohio. Customer and any guarantor i) submit to the jurisdiction
of any state or federal court located in Lucas County, Ohio over any action or
proceeding to enforce or defend any matter arising from or related to the
Commitment Letter; ii) waive the defense of an inconvenient forum to the
maintenance of any such action or proceeding; iii) agree that a final judgment
in any such action or proceeding shall be conclusive and may be enforced in any
other jurisdiction-diction by suit on the judgment or in any other manner
provided by law; and iv) agree not to institute any legal action or proceeding
against Health Care REIT, Inc. or any director, officer, employee, agent or
property of Health Care REIT, Inc., concerning any matter arising out of or
relating to the financing in any court other than one located in Lucas County,
Ohio. Nothing in this section shall affect or impair Health Care REIT, Inc.'s
rights to serve legal process in any manner permitted by law, or Health Care
REIT, Inc.'s right to bring any action or proceeding against Customer or
guarantor or the property of Customer or guarantor in the courts of any other
jurisdiction.
7. ENTIRE AGREEMENT. This Commitment Letter sets forth the entire
agreement of the parties hereto with respect to the subject matter hereof and
supersedes all other prior written or oral under-standings with respect
thereto; provided, however, that all written and oral representations made by
or on behalf of Customer with respect to the subject matter hereof shall
survive this Commitment Letter.
8. MODIFICATION. No modification or waiver of any provision of this
Commitment Letter shall be effective unless the same shall be in writing,
signed by the parties hereto.
9. NOTICES. Any notice required hereunder shall be in writing
delivered personally, or by a nationally recognized overnight courier service,
or by certified mail, return receipt requested, postage prepaid, addressed to
the party to be notified of the address set forth in the Commitment Letter or
to such other address as each party may designate for itself by like notice.
When personally delivered, all notices shall be deemed to be given when
actually received. When mailed, all notices shall be deemed to be given when
deposited with the overnight courier or with the U.S. mail.
10. ANNOUNCEMENTS. Health Care REIT, Inc. has the right to make public
announcements regarding this Financing.
11. NO BROKERS. Customer represents and warrants that no financing
brokers were used in connection with this transaction.
12. CUSTOMER'S OBLIGATIONS. Upon acceptance of this Commitment Letter,
Customer shall be obligated to provide all due diligence items required by this
Commitment Letter and to close this transaction. Customer acknowledges that
Customer's failure to close this transaction shall cause irreparable injury to
Health Care REIT, Inc. for which there is no adequate remedy at law and Health
Care REIT, Inc. shall be entitled to obtain the remedy of specific performance
(except where the failure to close is due to Health Care REIT, Inc.'s objection
to title, survey, zoning, environmental or appraisal matters). Lessee
irrevocably waives all defenses based on the adequacy of a remedy at law that
might be asserted as a bar to the remedy of specific performance.
Page 1
<PAGE> 11
EXHIBIT A: PROPOSED FINANCINGS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
ESTIMATED
FUNDING ESTIMATED
CITY STATE AMOUNT CLOSING
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------
JLH I Florida $ --- 05/02/97
- -------------------------------------------------------------------------------------------
JLH III Florida --- 05/02/97
- -------------------------------------------------------------------------------------------
JLH V Florida --- 05/02/97
- -------------------------------------------------------------------------------------------
JLH VII Florida --- 05/02/97
- -------------------------------------------------------------------------------------------
JLH VIII Florida --- 05/02/97
- -------------------------------------------------------------------------------------------
Lehigh Florida 1,800,000 Q-2/97
- -------------------------------------------------------------------------------------------
Lake Wales Florida 1,800,000 Q-2/97
- -------------------------------------------------------------------------------------------
Haines City Florida 1,800,000 Q-2/97
- -------------------------------------------------------------------------------------------
Gandy, Tampa Florida 1,800,000 Q-2/97
- -------------------------------------------------------------------------------------------
Orange City Florida 1,800,000 Q-2/97
- -------------------------------------------------------------------------------------------
Zypherhills Florida 1,800,000 Q-3/97
- -------------------------------------------------------------------------------------------
Port Charlotte Florida 1,800,000 Q-2/97
- -------------------------------------------------------------------------------------------
Lakeland Florida 1,800,000 Q-3/97
- -------------------------------------------------------------------------------------------
Cape Coral Florida 1,800,000 Q-4/97
- -------------------------------------------------------------------------------------------
Avon Park Florida 1,800,000 Q-4/97
- -------------------------------------------------------------------------------------------
Crystal River Florida 1,800,000 Q-4/97
- -------------------------------------------------------------------------------------------
Punta Gorda Florida 1,800,000 Q-4/97
- -------------------------------------------------------------------------------------------
Arcadia Florida 1,800,000 Q-4/97
- -------------------------------------------------------------------------------------------
Englewood* Florida 1,800,000 Q-1/98
- -------------------------------------------------------------------------------------------
Bonifay* Florida 1,800,000 Q-1/98
- -------------------------------------------------------------------------------------------
Palmetto* Florida 1,800,000 Q-1/98
- -------------------------------------------------------------------------------------------
Sebring Florida 1,800,000 Q-1/98
- -------------------------------------------------------------------------------------------
Fort Myers Florida 1,800,000 Q-2/98
- -------------------------------------------------------------------------------------------
Venice Florida 1,800,000 Q-2/98
- -------------------------------------------------------------------------------------------
Inverness* Florida 1,800,000 Q-4/98
- -------------------------------------------------------------------------------------------
Macclenny* Florida 1,800,000 Q-1/99
- -------------------------------------------------------------------------------------------
Brandon Florida 1,800,000 Q-1/99
- -------------------------------------------------------------------------------------------
Deland* Florida 1,800,000 Q-1/99
- -------------------------------------------------------------------------------------------
Tallahassee Florida 1,800,000 Q-2/99
- -------------------------------------------------------------------------------------------
Starke Florida 1,800,000 Q-2/99
- -------------------------------------------------------------------------------------------
Marianna Florida 1,800,000 Q-3/99
- -------------------------------------------------------------------------------------------
Panama City Florida 1,800,000 Q-3/99
- -------------------------------------------------------------------------------------------
Waycross Georgia 1,800,000 Q-4/99
- -------------------------------------------------------------------------------------------
Brunswick Georgia 1,800,000 Q-4/99
- -------------------------------------------------------------------------------------------
Valdosta Georgia 1,800,000 Q-4/99
- -------------------------------------------------------------------------------------------
Bainebridge Georgia 1,800,000 Q-1/00
- -------------------------------------------------------------------------------------------
Thomasville Georgia 1,800,000 Q-1/00
- -------------------------------------------------------------------------------------------
Moultrie Georgia 1,800,000 Q-2/00
- -------------------------------------------------------------------------------------------
Tifton Georgia 1,800,000 Q-2/00
- -------------------------------------------------------------------------------------------
Ottawa Ohio 1,800,000 Q-2/00
- -------------------------------------------------------------------------------------------
Bluffton Ohio 1,800,000 Q-2/00
- -------------------------------------------------------------------------------------------
Celina Ohio 1,800,000 Q-3/00
- -------------------------------------------------------------------------------------------
Wapakoneta Ohio 1,800,000 Q-3/00
- -------------------------------------------------------------------------------------------
VanWert Ohio 1,800,000 Q-3/00
- -------------------------------------------------------------------------------------------
Findlay Ohio 1,800,000 Q-4/00
- -------------------------------------------------------------------------------------------
</TABLE>
(Q=Quarter)
* Facilities to be developed with existing Mariner facilities (see
Section 5 below).
Page 2
<PAGE> 12
FIRST AMENDMENT TO COMMITMENT LETTER
April 25, 1997
Mr. John F. Robenalt
President and CEO
Just Like Home, Inc.
2440 Tamiami Trail
Nokomis, FL 34275
Dear Mr. Robenalt:
This First Amendment to Commitment Letter modifies the terms set forth in the
Commitment Letter dated April 10, 1997. Except as set forth herein, the terms
and conditions of the Commitment Letter shall remain in full force and effect.
1. Phases. The commitment and funding will occur in four (4) phases with
each phase subject to approval of the Investment Committee of Health
Care REIT, Inc. ("HCN"). Lessee shall be obligated to use the
financing by HCN if the Investment Committee approves the Phase.
<TABLE>
<CAPTION>
Phase Amount Comments
<S> <C> <C>
I Up to $9,400,000 Initial funding which will yield ANOI
coverage of 1.0 to 1.0 with earnout of up to
$4,000,000, when that will yield a 1.1 to
1.0 coverage for the sale/leaseback of five
facilities. Development financing of
$5,400,000 for three (3) facilities.
II $10,800,000 Development financing.
III $10,800,000 Development financing.
IV $10,800,000 Development financing.
</TABLE>
2. Warrants. HCN will receive warrants to purchase 50,000 shares of JLH
stock at a strike price of $3.00 per share. 12,500 shares will vest
upon approval of each phase; provided, however, that if JLH fails to
utilize the extra line of credit, all warrants will vest.
<PAGE> 13
Mr. John F. Robenalt
April 25, 1997
Page 2
Thank you for your business. We will seek immediate Investment Committee
approval after receipt of a signed acceptance from you.
Sincerely, Accepted By:
HEALTH CARE REIT, INC. JUST LIKE HOME, INC.
George L. Chapman By:
Chairman ----------------------------
John F. Robenalt, President
Date of Acceptance:
---------------
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
___________________ AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM
10-QSB.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 91,033
<SECURITIES> 0
<RECEIVABLES> 164,379
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 829,861
<PP&E> 5,445,131
<DEPRECIATION> 412,877
<TOTAL-ASSETS> 8,022,100
<CURRENT-LIABILITIES> 2,282,527
<BONDS> 4,375,578
0
0
<COMMON> 3,917
<OTHER-SE> 6,135,981
<TOTAL-LIABILITY-AND-EQUITY> 8,022,100
<SALES> 0
<TOTAL-REVENUES> 707,207
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 902,067
<LOSS-PROVISION> 21,000
<INTEREST-EXPENSE> 91,114
<INCOME-PRETAX> (285,974)
<INCOME-TAX> 0
<INCOME-CONTINUING> (285,974)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (285,974)
<EPS-PRIMARY> .07
<EPS-DILUTED> .07
</TABLE>
