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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) April 30, 1999
JUST LIKE HOME, INC.
(Exact name of registrant as specified in its charter)
Florida 0-25908
(State or other jurisdiction of incorporation) (Commission File No.)
3655 Cortez Road West, Suite 110
Bradenton, Florida 34210
(Address of principal executive office)
Registrant's telephone number, including area code: (941) 756-2555
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ITEM 1. CHANGE IN CONTROL REGISTRANT
The Company has entered into a letter of intent with Peridot
Enterprises, Inc. ("Peridot"). Peridot has committed $1,000,000 to the Company
in the following manner:
A. Peridot will purchase 400,000 shares of Common Stock of the
Company for $100,000, or $.25 per share, which was
approximately the most recent trading price for the Common
Stock at the time the agreement in principle was reached.
B. Peridot will establish a line of credit in Peridot's name for
$900,000, which shall be available immediately upon the
nomination of Robert C. Lohr as a director and chairman of
the board and chief executive officer of the Company.
C. The Company will create a 5% cumulative convertible preferred
stock issue and commit to sell Peridot 1,800,000 shares for
$900,000. The preferred stock will be convertible into Common
Stock in the Company at a conversion rate of one share of
preferred stock for 1.4 shares of Common Stock.
Mr. Lohr will have the right to name two additional persons to the
Board of Directors of the Company. The two persons nominated by Mr. Lohr were
elected to the Board on May 5, 1999, and are named under Item 5(a) below.
The obligation of Peridot to make the equity investment in the Company
is subject to a number of conditions, most of which have already been
satisfied, including the resignation of Messrs. Levitan and Callahan as board
members or officers of the Company (as described below under Item 5), the
settlement of the litigation with HealthCare REIT with respect to the proposed
termination of leases the Company has with HealthCare REIT as described below
under Item 5), the election of Mr. Lohr as a member of the board and the
Company's chief executive officer (which has been done), and the resolution of
certain matters that arose from the settlement of the Desrosiers litigation
described below. As of the date of this report, Peridot has invested $200,000
in the Company, but the Company has not yet formalized the terms of the
preferred stock or issued any shares of preferred or Common Stock to Peridot.
Additionally, an affiliate of Peridot has provided $320,000 in letters of
credit on behalf of the Company in conjunction with the settlement of the
Health Care REIT litigation described under Item 5(b).
As a condition precedent to the agreement of Peridot to make an equity
investment in the Company, each of Betty A. Conard (the single largest
shareholder of the Company) and John F. Robenalt (the former Chief Executive
Officer of the Company from April, 1997 through October, 1998) were required to
enter into a voting agreement to vote their shares of Common Stock in the
Company as directed by Mr. Lohr.
By Agreement dated April 23, 1999, Mrs. Conard agreed to transfer the
2,400,000 shares of Common Stock of the Company held by her to Mr. Lohr as
voting trustee, thereby giving Mr. Lohr, as voting trustee, the right to vote
those shares in his sole and absolute discretion in all matters coming before a
meeting of the shareholders of the Company. The Agreement with Mrs. Conard is
effective until December 31, 2004. The Agreement further provides that Mrs.
Conard may sell shares of Common Stock subject to the Agreement in accordance
with SEC Rule 144 (which contains certain limitations on the number of shares
that may be sold by Mrs. Conard in any three-month period).
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By Shareholder Agreement dated April 21, 1999, Mr. Robenalt granted to
Mr. Lohr all of the voting rights with respect to an aggregate of 457,272
shares of Common Stock of the Company held by Mr. Robenalt or his wife. The
Shareholder Agreement is effective until December 31, 2003. Additionally, the
Shareholder Agreement terminates if Mr. Lohr ceases to be the Chief Executive
Officer of the Company at any time prior to July 1, 2000, or ceases to be the
Chairman of the Board of Directors of the Company at any time thereafter.
The Shareholder Agreement with Mr. Robenalt does not restrict his
ability to sell shares, and any shares sold will be transferred free and clear
of the voting rights granted to Mr. Lohr. Additionally, Mr. Robenalt has
granted certain rights of first refusal with respect to any shares of Common
Stock that Mr. Robenalt proposes to sell.
The Shareholder Agreement with Mr. Robenalt is not effective until Mr.
Lohr (or Peridot) has actually invested $1,000,000 in the Company. As of the
date of this Report, the aggregate investment by Peridot is $200,000, and
therefore, the Shareholder Agreement is not presently in effect.
The [Voting] Agreement with Mrs. Conard dated April 23, 1999, and the
Shareholder Agreement among the Company, Mr. Robenalt and Mr. Lohr, dated April
21, 1999, are filed with this Report as Exhibits 10.1 and 10.2 hereto.
If all of the shares of Common Stock (including shares issuable upon
conversion of the preferred stock described above) are issued to Peridot, Mr.
Lohr, acting through Peridot, will have pecuniary ownership of 2,920,000 shares
of Common Stock. Additionally, Mr. Lohr presently has the right to vote the
2,400,000 shares of Common Stock beneficially owned by Mrs. Conard, and upon
the completion of the full investment of $1,000,000 by Peridot, Mr. Lohr will
have the right to vote the 457,272 shares of Common Stock held by Mr. Robenalt
or his wife. These voting rights and the right to vote the Common Stock and the
preferred stock that the Company has agreed to issue to Peridot give Mr. Lohr,
acting through Peridot, effective voting control of the Company.
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
(a) Effective May 25, 1999, the Company dismissed
PricewaterhouseCoopers LLP as the Company's independent accountants. The report
of PricewaterhouseCoopers on the financial statements of the Company for the
years December 31, 1996 and 1997, did not contain an adverse opinion or
disclaimer of opinion, nor was it modified as to uncertainty, audit scope or
accounting principles. PricewaterhouseCoopers has not audited, reviewed or
otherwise participated in the preparation of the Company's financial statements
for the year ended December 31, 1998, because the Company was in arrears in its
payment of professional fees to PricewaterhouseCoopers.
The decision to change accountants was approved by the Board of
Directors of the Company. There were no disagreements with
PricewaterhouseCoopers on any matter of accounting principles or practices,
financial statement disclosure or auditing scope or procedure, which, if not
resolved to the satisfaction of PricewaterhouseCoopers, would have caused it to
make reference to the subject matter of the disagreement in connection with its
report.
(b) The Company has selected Templeton & Company, Royal Palm Beach,
Florida, as independent auditors for purposes of auditing the Company's
financial statements for the year ended December 31, 1998. The Company did not
consult with Templeton & Company regarding the application of accounting
principles to a specific completed or contemplated transaction or the type of
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audit opinion that might be rendered on the Company's financial statements, and
no written or oral advice was provided by Templeton & Company that was an
important factor considered by the Company in reaching a decision as to the
accounting, auditing or financial reporting issue.
ITEM 5. OTHER EVENTS
(A) MANAGEMENT CHANGES.
Effective April 30, 1999, the Company announced the following
management changes: Robert C. Lohr was elected Chairman of the Board and Chief
Executive Officer of the Company. Effective that same day, Isidore Siegel, who
has been a member of the Board of Directors since 1995, stepped aside as Acting
Chief Executive Officer and Chairman of the Board. Mr. Siegel continues as a
member of the Board of Directors. Mr. Siegel was named Acting Chief Executive
Office and Chairman of the Board effective March 25, 1999, when Daniel D.
Levitan resigned as Chairman of the Board and Chief Executive Officer of the
Company, and Darryl R. Callahan resigned as President of the Company. Mr.
Levitan assumed the positions of Chairman of the Board and CEO of the Company
effective September 28, 1998, in anticipation of an equity investment in the
Company by an investor group led by Mr. Levitan. Neither Mr. Levitan nor any
group associated with him ever made an equity investment in the Company.
The Company also announced that effective May 5, 1999, Michael W.
Monahan, Bruce C. Baldwin and Raymond G. Smith were elected to the Board of
Directors, bringing the total number of directors to seven. Michael W. Monahan,
who resigned as Chief Financial Officer of the Company in August 1998, was
added to the Board of Directors and will continue to work with the Company on a
consulting basis in connection with certain ongoing financial and reporting
matters and as agreed to on special projects. Mr. Monahan served as Chief
Financial Officer of the Company from April 1997 until August 1998. He joined
the Company at the time the Company acquired by merger Community Assisted
Living Center, Inc.
Mr. Baldwin is the President and Chief Executive Officer of Baldwin,
Thomas and Associates, Inc., a health care management company, which owns three
skilled nursing homes in Florida. His past experience includes Director of
Operations for United Health Services, Inc., hospital administrator at the
University of Virginia Medical Center, and nursing home administrator in the
states of Florida and Virginia. Mr. Baldwin has also been active in the Florida
Health Care Association and the American Health Care Association since 1980. He
holds a Bachelor of Arts Degree from Randolph-Macon College and a Masters
Degree in Hospital and Health Care Administration from the Medical College of
Virginia.
Mr. Smith is the Vice President and General Manager of Ranbar
Electrical Materials, Inc., where he is responsible for all facets of managing
a specialty chemical company. His career encompasses more than 25 years of
experience in a variety of business enterprises, including as an executive with
Westinghouse Electric Corporation, and management responsibility in
manufacturing, marketing/sales, strategic planning quality and technology. Mr.
Smith received his BA in Economics from UCLA and his MBA from the University of
Pittsburgh.
The three other continuing directors of the Company are Ronald O.
Braun, Isidore Siegel and Elizabeth A. Conard, who have served as directors of
the Company since 1997, 1995 and 1995, respectively.
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(B) SETTLEMENT OF HEALTH CARE REIT LITIGATION.
As the Company previously reported, in March 1999, the Company
received from Health Care REIT ("HCRI") Notices of Termination of its Lease
Agreements for all eight facilities operated by the Company. The Company filed
counterclaims in various courts in Florida, seeking among other things, to
block the terminations of the Leases and to construe the Leases as financing
arrangements subject to Florida laws regarding foreclosure of mortgages.
By Letter Agreement dated April 16, 1999, and executed by HCRI and the
Company on April 19 1999, the Company and HCRI reached a settlement of all
pending disputes between them, which went into effect on April 30, 1999. The
Letter Agreement provides in pertinent respects for the following:
1. The parties will enter into a stipulated Judgment Entry in each
of the five actions pending in the four Florida counties. In the stipulated
Judgment Entries, the Court will specifically find that the subject lease
between the parties is a true lease, that the lease is not a financing lease or
a mortgage, that the Company does not have an option to purchase, that the
Company does not have any type of ownership interest in any of the Leased
Property, that the Company is in default of the lease, and that HCRI had the
right to, and properly did, terminate the lease without prior notice to the
Company. The stipulated Judgment Entry will also provide that, if the Company
defaults under the new lease referenced below, HCRI may provide notice of the
default to the Company by facsimile, during the hours of 9:00 a.m. - 5:00 p.m.
Monday through Friday, and, if the default is not cured within 48 hours of the
time of the facsimile notice, not including weekends, the Court, upon the
filing of an affidavit by a representative of HCRI stating that a default has
occurred and the 48 hour cure period has expired without the cure being
effectuated, will issue an immediate order evicting the Company without any
other prior notice to the Company.
2. The parties will enter into a new single lease for a nine-month
term. The property subject to the new lease will be all eight facilities
operated by the Company and the subject of the five terminated leases
(collectively the "Leased Property"). The rent due under the new lease will be
equal to the total of the lease rents under the five terminated leases. The new
lease between the parties is, and is intended to be, a true lease, that the
lease is not a financing lease or a mortgage, that the Company does not have an
option to purchase other than the rights set forth below, and that the Company
does not have any other ownership interest in any of the Leased Property.
3. HCRI previously drew on the Letters of Credit issued on behalf
of the Company in the amount of $521,019. The amount necessary to be paid by
the Company for rent and other expenses through April was $516,894, which was
fully offset by the amounts drawn by HCRI on the Letters of Credit. In
addition, the Company agreed to pay to HCRI a total of $200,000 to compensate
HCRI for the attorneys' fees and expenses incurred by HCRI in enforcing its
remedies under the leases. The Company paid $102,161 of this amount to HCRI at
closing and agreed to pay the remainder in monthly payments, as follows: the
Company will pay $47,838 to HCRI in nine consecutive monthly installments of
$5,315 beginning on May 1, 1999, plus, at the closing of the purchase of the
Leased Property by the Company as referenced in paragraph 9 below, the Company
will pay the remaining $50,000 to HCRI. If the Company purchases the Leased
Property, at the time of closing on that purchase it will pay to HCRI all
remaining amounts still owed for HCRI's attorneys' fees and expenses, up to a
total of $200,000. Failure of the Company to make any of the payments required
by this paragraph will be a default under the new lease and HCRI will be
allowed, with 48 hours faxed notice, to obtain an eviction order in accordance
with paragraph 1 above.
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4. At closing the Company also provided a second Letter of Credit
in favor of HCRI in the amount of $50,000 for security that the Company will
pay KDA Financial, Inc., F/K/A KDA, Inc. ("KDA"), which acted as contractor on
the two facilities most recently constructed by the Company and financed by
HCRI under the lease structure. The Company is also obligated to enter into a
settlement agreement with KDA and require that KDA dismiss the arbitration
proceedings and the litigation proceedings against the Company and HCRI with
prejudice and release any lien KDA or any of its subcontractors have on the
Leased Property. When a settlement is reached with KDA, HCRI agrees to
contribute, directly or indirectly, 50% of the initial payment, up to a total
contribution by HCRI of $100,000.00. The amounts referenced in this sentence
that are paid by HCRI will be reimbursed to HCRI by the Company and they will
be paid in addition to the sums referenced in paragraph 9. The Company is
required to increase the $50,000 Letter of Credit by $17,500 per month until a
settlement with KDA is reached. Failure by the Company to timely increase the
Letter of Credit as required by this paragraph will be an "Event of Default"
allowing HCRI to immediately terminate the lease upon 48 hours facsimile notice
and obtain an eviction order in accordance with paragraph 1 above. Presuming
that an agreement with KDA is reached, failure to timely make any payment to
KDA required by the settlement agreement with KDA will also be an "Event of
Default" allowing HCRI to immediately terminate the lease upon 48 hours
facsimile notice pursuant to paragraph 1 and obtain an eviction order in
accordance with paragraph 1 above. The Company also agrees to pay to HCRI, at
the closing of the purchase of the Leased Property by the Company as referenced
in paragraph 9 below, HCRI's attorneys' fees and expenses, up to the amount of
$15,000, incurred by HCRI in the KDA arbitration and litigation proceedings
after the date of the Letter Agreement. The Letter of Credit will be released
upon a written, binding settlement being entered into with KDA.
5. During the lease term, the Company will be required to make the
monthly rental payment to HCRI as required by the lease, maintain all insurance
required under the lease, timely pay all real estate taxes on each of the eight
facilities and timely pay all other taxes. The Company agreed that at the
closing of the Letter Agreement, all real estate and personal property taxes
currently due and payable, including any penalties and interest, on the Leased
Property would be paid by the Company, which was done. The failure to do any
one of the above by the Company will result in an immediate Event of Default
and will allow HCRI, upon 48 hours facsimile notice in accordance with
paragraph 1 above, to immediately terminate the new lease and file an affidavit
with the Court to obtain an immediate eviction order for all eight facilities.
The Company will also timely pay the Company's new payables and provide
evidence of all money being invested in or contributed to the Company. "New
Payables" will mean all amounts actually owed by the Company falling due after
the date of the Letter Agreement. The Company will, within 30 days after
execution of the Letter Agreement, pay $200,000 toward accounts payable
existing as of the date of the Letter Agreement. The amounts referenced in the
preceding sentence will include any amounts paid toward outstanding real estate
taxes. Following the execution of the Letter Agreement, the Company will
provide reasonable weekly financial reports to HCRI including check registers,
accounts payable aging reports, and census reports. In addition, the Company
will contribute an additional $25,000 per month toward accounts payable
existing as of the date of the Letter Agreement. the Company may cease making
the monthly payment referenced in the preceding sentence when all accounts
payable existing as of the date of the Letter Agreement are paid in full,
according to the terms negotiated by the Company. If the Company fails to make
the $200,000 initial payment or any $25,000 monthly payment contemplated by
this paragraph, it will be an "Event of Default" allowing HCRI to immediately
terminate the lease upon 48 hours facsimile notice pursuant to paragraph 1 and
obtain an eviction order in accordance with paragraph 1 above.
6. Within 60 days of the date of closing, the Company will meet the
operating benchmarks set forth in the pro formas prepared by Mr. Lohr
("Operating Benchmarks"). If, at the end of the first
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60-day period, the Company has failed to meet the Operating Benchmarks, it
shall have 30 days to cure. If the Company fails to cure within the 30-day
period, the Company will provide an additional Letters of Credit to HCRI in the
amount of $68,000 or HCRI will have the right to obtain an immediate eviction
order in the manner set forth in paragraph 1 above. For each following month in
which the Company fails to meet the Operating Benchmarks, the Company will
provide an additional Letters of Credit to HCRI in the amount of $45,000 or
HCRI will have the right to obtain an immediate eviction order in the manner
set forth in paragraph 1 above.
7. In addition to the Letters of Credit referenced above, at
closing, the Company shall provide a new Letter of Credit in favor of HCRI
acceptable to HCRI in the amount of $270,000 to be security for the payment of
rent under the new lease and to insure that the Company will, upon termination
or expiration of the lease, fulfill its promises to immediately and voluntarily
surrender the Leased Property without resistance, not file bankruptcy, and take
all necessary actions to assist in the transfer of the Leased Property to HCRI
or its designee. Failure to do any of the above, will allow HCRI to immediately
draw the entire amount of the Letter of Credit. Upon the Company entering into
an agreement with KDA for the repayment of the amounts the Company owes to KDA,
HCRI will also have the right to immediately draw the entire amount of the
Letter of Credit if the Company defaults on any of its payments to KDA.
8. The Company will pay HCRI's reasonable travel expenses, up to an
aggregate of $10,000 but with no more than $1,000 being required to be paid in
any one month, for HCRI's employees or representatives to visit each of the
eight facilities once a month.
9. Unless the new lease has been terminated or the Company is in
default of any term of the lease, the Company will have the right to purchase
the Leased Property at any time during the lease term but this right will
automatically expire at the end of the lease term. However, prior to having any
right to purchase the Leased Property from HCRI, the Company must, prior to or
at the time of closing on its purchase of the Leased Property, pay all amounts
owed to KDA under the agreement referenced in paragraph 4 above which will
result in the release of any lien KDA or any of its subcontractors has against
the Leased Property and the dismissal with prejudice of all KDA's claims
against the Company and HCRI. If the Company is going to exercise this right to
purchase, the Company must purchase all of the Leased Property from HCRI. If
the Leased Property is purchased during the first four months of the new nine
month lease term, the purchase price will be $10,356,510, plus $50,000 owed by
the Company for HCRI's attorneys' fees and expenses as set forth in paragraph 3
above, plus any other amounts for HCRI's attorneys' fees and expenses required
to be paid by paragraphs 3 and 4 above that the Company has not yet paid, plus
any amount paid by HCRI to KDA, directly or indirectly, in accordance with
paragraph 5 above. If the Leased Property is purchased after the fourth month,
but by the end of the ninth month, the purchase price will increase 3/4 of one
percent each month beginning at the start of the fifth month. If, during the
lease term, the Company delivers to HCRI an executed, binding commitment letter
for the financing of the Company's purchase of the Leased Property from a
lender acceptable to HCRI ("Commitment Letter"), the Company will be allowed to
extend the lease term up to three months to allow for the consummation of the
purchase of the Leased Property provided, however, that the Company must
continue to timely meet and satisfy all of its obligations under the lease. To
the extent necessary, the term of the lease will automatically be extended,
only once, for a period up to three months to allow for the closing of the
purchase to occur but, to the extent the lease is extended, all obligations,
duties and rights of both the Company and HCRI under the lease shall continue
during this additional period, including HCRI's right to obtain an immediate
eviction order in accordance with paragraph 1 above. It is also agreed that,
during each month following the original nine-month lease term, the purchase
price shall continue to increase 3/4 of one percent each month. The Company
shall not
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have the right to purchase the Leased Property if it is in default of the lease
or if the lease has expired or terminated. If HCRI has not received a
Commitment Letter from the Company during the nine-month lease term, the
Company will have no right to purchase the facilities after the original
nine-month lease term. It will be stipulated and agreed that the purchase
prices stipulated above equal the fair market value of the Leased Property
being purchased at the time it is purchased by the Company. The right to
purchase the property will immediately, and automatically, be forfeited upon
the termination or expiration of the lease. Under no circumstances, will the
lease be for a period longer than 12 months nor will the Company's right to
purchase the Leased Property be for a period longer than 12 months.
10. Upon termination or expiration of the lease, if the Company has
not purchased the Leased Property from HCRI, the Company will immediately and
voluntarily, without resistance of any kind, surrender all the Leased Property
to HCRI. Upon termination or expiration of the lease, the Company will assist
in any way necessary to transfer operation of the Leased Property and
facilitate issuance of the necessary licenses to HCRI or HCRI's designee. If it
fails to do any of the above, HCRI will be able to immediately draw the entire
amount of the Letters of Credit referenced above.
The settlement with HCRI was effective April 30, 1999. As of that
date, the Company had performed a number of obligations under the Letter
Agreement (certain of which are not summarized above), including paying all
past due real and personal property taxes on the Leased Facilities, delivering
Letters of Credit to HCRI in the aggregate amount of $50,000 and $270,000. The
two Letters of Credit were provided by Sardonyx IV, L.P., an affiliated entity
with Peridot and Robert C. Lohr. As of the date of this Report, the Company is
current in its other financial obligations under the Letter Agreement.
Additionally, the Company is in negotiations with KDA to resolve any
outstanding disputes with KDA. KDA is claiming that the Company owes KDA
approximately $500,000 in connection with the construction of two facilities by
KDA for the Company.
As described repeatedly in the Letter Agreement, any default by the
Company in virtually any of its financial or nonfinancial obligations under the
Letter Agreement will result in termination of the new lease for all eight
facilities upon 48 hours facsimile notice by HCRI. If that were to occur, the
Company would have no operating assets and zero prospects for continued
operations.
The commitment by Peridot to invest up to $1,000,000 in equity
securities in the Company is intended to be used by the Company to meet its
ongoing operating expenses for the next nine months and to meet its financial
obligations to HCRI under the Letter Agreement. Each draw by Peridot on the
$900,000 line of credit to fund investments in the Company is solely within the
discretion of Mr. Lohr, and the Company has no right or ability to compel Mr.
Lohr or Peridot to invest all or any part of the $900,000 in the Company beyond
that which Peridot has invested as of any given date. Mr. Lohr has advised the
Company that Peridot will continue to make investments in the Company up to the
maximum of $1,000,000 only if Mr. Lohr determines that each additional
investment in the Company is likely to result in the continuing viability of
the Company. Mr. Lohr and Peridot may determine at any time, in their sole and
absolute discretion, not to make any additional investments in the Company.
There can be no assurance that the Company will be able to satisfy any
of its obligations under the Letter Agreement with HCRI or that it will have
the financial ability to obtain financing from another source to purchase the
Leased Property from HCRI by January 31, 2000.
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(C) SETTLEMENT IN PRINCIPLE OF DESROSIERS MATTERS.
In April 1997, the Company settled certain litigation with various
affiliates of the Desrosiers family by granting the Desrosiers family a put
right with respect to 264,882 shares of Common Stock (including 50,000 shares
of Common Stock subject to an option to purchase those shares) held by them.
The put right required the Company to repurchase those shares at a purchase
price of $4.00 per share in April, 1999. The Company has reached an agreement
in principle to issue approximately 2,435,000 shares of Common Stock to the
various affiliates of the Desrosiers family in exchange for the cancellation of
all put rights they have against the Company.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(C) EXHIBITS.
<TABLE>
<S> <C>
10.1 [Voting] Agreement dated April 23, 1999, between Elizabeth
Conard and Robert C. Lohr.
10.2 Shareholder Agreement dated April 21, 1999, among the
Company, John F. Robenalt and Robert C. Lohr.
10.3 Letter Agreement (Settlement Agreement) with Health Care
REIT, Inc. effective April 30, 1999.
</TABLE>
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
JUST LIKE HOME, INC.
/s/ Robert C. Lohr
---------------------------------------
Name: Robert C. Lohr
Title: Chief Executive Officer
Dated: May 28, 1999
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EXHIBIT 10.1
AGREEMENT
THIS AGREEMENT is made and entered into this 23rd day of April, 1999 by and
among Betty Conard (the "Shareholder") and Robert C. Lohr (the "Trustee").
WITNESSETH:
WHEREAS, the Shareholder is holder of record of shares in Just Like Home, Inc.,
a Florida corporation (the "Corporation"), in the following amount: $2,400,000
and
WHEREAS, it is anticipated that the Trustee through his company, Peridot
Enterprises, Inc., will make a substantial investment in the Corporation and
assume responsibility as Chief Executive Office of Just Like Home, Inc.; and
WHEREAS, it is desired by all parties that the Trustee have full discretion in
the continuing operation of Just Like Home, Inc. and have full power to vote
all such shares in the manner deemed by the Trustee to be beneficial to Just
Like Home, Inc. and its shareholders; and
WHEREAS, Robert C. Lohr has agreed to act as voting trustee of the shares,
IT IS THEREFORE AGREED:
1. TRANSFER OF STOCK TO TRUSTEE. The Shareholder, simultaneously with the
execution of this Agreement, shall assign and deliver all shares owned
or controlled by the Shareholder to the Trustee, to be hold subject to
the terms of this Agreement until December 31, 2004 or for such
further periods of time as the Shareholder may agree. The Trustee
immediately shall cause the stock to be transferred to himself, as
Trustee, on the books of the Corporation and shall endorse across the
face of all certificates held by him hereunder the following legend:
This certificate is held subject to a voting trust
agreement dated April 23, 1999, a copy of which is
in the possession of Robert C. Lohr, as Trustee.
2. VOTING. At all meetings of shareholders of the Corporation and in all
proceedings affecting the Corporation, the Trustee shall vote the
shares transferred to him hereunder in such manner as he may determine
in his discretion.
3. LIABILITY OF TRUSTEE. The Trustee shall not be liable for the
consequences of any vote cast in good faith, and the Shareholder
hereby agrees to indemnify the Trustee for any liabilities or expenses
suffered or incurred by him s a result of voting the shares. .
4. SELLING OF SHARES. During the Term of this Agreement, if the
Shareholder receives at any time a bona fide offer, whether or not
solicited, for the purchase or exchange of any of the shares, or the
Shareholder otherwise proposes to sell any of the shares:
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1. The Shareholder will promptly deliver to the Trustee written
notice of the receipt of the offer or such proposal, together
with a copy of said offer and all related documents and
agreements and statements as to the identity of each real
party in interest making the offer and other pertinent
information relating to such offer or such proposal.
2. The Trustee and/or Just like Home, inc. shall have the right
to purchase all or some of the shares upon the terms and
conditions as those set forth in the written notice.
3. In order to exercise its right of first refusal, the Trustee
and Just Like Home, Inc. shall deliver to the Shareholder,
within two (2) days Receipt of the written notice, written
notice of his election to purchase the shares.
4. If the Trustee and/or Just Like Home, Inc. decide to exercise
such right of first refusal, the Trustee shall pay the
purchase price set forth in the written notice for the
shares.
5. If the Trustee and/or Just Like Home, inc. does not elect to
exercise his right of first refusal; then, during the two (2)
day period commencing immediately after the written notice is
given to the Trustee, the Shareholder shall have the right to
transfer the shares.
6. No shares may be sold to any person unless the purchaser
agrees in writing that such shares are subject to this
Agreement.
5. LIMITATION OF SHARES TO BE SOLD. During any calendar year, the
Shareholder may sell pursuant to Rule 144 of the General Rules and
Regulations under the Securities Act of 1933, as amended.
6. ASSIGNMENT OF SHARES. The beneficial interest in any shares deposited
hereunder may by transferred by a separate instrument of assignment,
which shall refer to the provisions of this Agreement. Upon delivery
of a copy of such assignment to the Trustee, the assignee shall be
deemed to be the beneficial owner of such shares for all purpose of
this Agreement.
7. DIVIDENDS. The shareholder shall be entitled to receive payments from
the Trustee equal to the cash dividends received by the Trustee on the
shares deposited by such Shareholder. If dividends are declared in
voting stock of the Corporation, the Trustee shall retain such stock,
which shall be deemed to have been deposited under the terms of this
Agreement, provided that the Trustee notifies the Shareholder of the
declaration of such dividends.
8. TERMINATION. Upon the termination of this Agreement, the Trustee shall
assign and deliver to the Shareholder the shares which are
beneficially entitled.
9. BINDING EFFECT. This Agreement shall inure to the benefit of and be
finding up the Shareholder, any successors and assigns, and upon the
Trustee.
10. ENTIRE AGREEMENT. This Agreement supersedes all prior agreements
between the parties relating to its subject matter. There are no other
understandings of the agreements between the parties concerning the
subject matter.
11. NOTICES. All notices or other documents under this Agreement shall be
in writing and delivered personally or mailed by certified mail,
return receipt requested, postage prepaid, addressed to the party(s)
at their last known addresses.
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12. NON-WAIVER. No delay or failure by a party to exercise any right under
this Agreement, and no partial or single exercise of that right shall
constitute a waiver of that or any other right, unless otherwise
expressly provided herein.
13. HEADINGS. Headings in the Agreement are for convenience only and shall
not be used to interpret or construe its provisions.
14. GOVERNING LAW. The Agreement shall be construed in accordance with the
laws of the State of Florida.
15. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have signed this Agreement hereunto, set their
hands and seals the day and year set forth above.
/s/ Betty Conard
/s/ Robert C. Lohr
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EXHIBIT 10.2
SHAREHOLDER AGREEMENT
This is an agreement executed as of this 21st day of April, 1999 by and between
Just Like Home, Inc. a corporation duly organized and existing under the laws
of the state of Florida ("JLH"), John F. Robenalt, ("JFR") and Robert C. Lohr
("RCL" or "Trustee").
WITNESSETH:
WHEREAS, JLH and JFR have come to certain agreements concerning the terms and
conditions of certain amounts due JFR and wish to reduce such negotiations to
this writing; and
WHEREAS, the Lohr and JFR have negotiated concerning the terms and conditions
under which they hold their Common Stock and wish to reduce such negotiations
to this writing;
WHEREAS, JFR is holder of record of shares in JLH in the following amount:
JFR 126,204 Shares
Vancene F. Robenalt 308,568 Shares
JFR, Trustee 22,500 Shares
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
contained in this Agreement, and intending to be legally bound, the parties
agree as follows:
16. Voting Rights:
1. JFR grants unto Lohr all of the voting rights on JFR's Stock
as of the date of this agreement (the "Voting Rights"). Lohr
shall be entitled to exercise all rights, including the right
to vote in person or by proxy, in respect of any and all
JFR's shares as of the date of this agreement. However, JFR
shall be entitled to receive payments from any and all
dividends paid by JLH with respect such shares.
2. The voting Rights shall be in effect until 12/31/2003.
3. JFR shall continue to receive all documents of any kind or
nature that are sent to other shareholders and JFR shall be
added to the mailing list for distribution of all shareholder
information and SEC filings.
4. In the event Lohr is no longer the Chief Executive Officer of
JLH until July 1, 2000 and thereafter Chairman of the JLH
Board of Directors then the Voting Rights shall terminate as
of the last day that Lohr was CEO of JLH.
5. Lohr shall be the only person to have the right to exercise
the Voting Rights. The voting Rights shall not be assigned,
transferred or sold.
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17. Transfers Allowed:
Notwithstanding anything to the contrary contained in this Agreement,
JFR may sell, distribute, or transfer his shares of JLH on the public
market at any time and under any circumstances by block sale or by
arrangement with an investment banker (the "JFR Share Sale"). All
shares sold by the JFR Share Sale into the public market shall be
transferred free and clear of the Voting Rights. Upon such JFR Share
Sale the Voting Rights shall not transfer and the Voting Rights as to
shares sold will terminate.
18. Right Of First Refusal:
During the Term of this Agreement, if JFR shall decide to sell his
shares to any non family third party in a private placement then:
1. JFR will promptly deliver to the Trustee written notice of
such proposal, together with a copy of any related documents
and agreements and statements as to the identify of each real
party in interest and other pertinent information relating to
such proposal. The Trustee and/or JLH shall have the right to
purchase all or some of the shares, upon and subject to
substantially identical terms and conditions as those set
forth in the written notice.
2. In order to exercise its right of first refusal, the Trustee
and/or JLH shall deliver to JFR, within three (3) days from
his receipt of the written notice, written notice of his
election to purchase the shares.
3. If the Trustee and/or JLH decide to exercise such right of
first refusal, the Trustee shall pay the purchase price set
forth in the written notice for the shares.
4. If the Trustee and/or JLH does not elect to exercise his
right of first refusal; then JFR shall have the right to
transfer the shares and such sale be free and clear of the
Voting Rights and any other restrictions of any kind.
5. The closing of the purchase shall take at the principal
office of the JLH or may be completed by regular US mail.
6. The notice from JFR regarding the sale of the JFR Stock shall
be delivered to Lohr by fax or overnight mail at:
<TABLE>
<S> <C>
Robert C. Lohr For Overnight:
PO Box 10805 -------------
Pittsburgh, PA 15236 448 Old Clairton Road
412-653-1128 Clairton, PA 15025
Fax 412-655-3330
</TABLE>
Any notice from Lohr regarding the purchase of the
JFR Stock shall be delivered to JFR by fax or
overnight mail at:
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<PAGE> 3
John F. Robenalt
887 MacEwen Drive
Osprey, FL 34229
941-966-7755
Fax 941-966-6678
7. The right of first refusal terminates upon the termination of
the Voting Rights.
19. Termination of Voting Rights:
The Voting Rights shall terminate on any one of the following events:
1. The written agreement of Lohr and JFR;
2. The dissolution, bankruptcy, or insolvency of the JLH; or
3. The merger, acquisition, sale or material change in the
ownership of JLH;
4. Lohr is no longer the CEO of JLH until July 1, 2000 and
thereafter Chairman of the JLH Board of Directors.
5. As to shares sold under the JFR Share Sale the Voting Rights
shall terminate upon sale as set forth in paragraph 2 above.
20. Amount Owned to JFR:
JLH agrees, subject to their internal audit, that it owes to JFR
approximately $140,000.00 for past due rent, past due salaries and
past due legal fees. This amount does not take into account any
interest that is due in addition the total set forth above, Lohr and
JFR agree that they will meet to create a payment plan acceptable to
both parties by May 31, 1999.
21. Conditions Precedent:
Unless waived by JFR, this agreement and the Voting Rights are subject
to each of the conditions enumerated below.
1. That Lohr has actually invested $1,000,000 in JLH and has
given evidence of such investment to JFR,
2. That Lohr, Elizabeth Conard and Richard Conard have entered
into an agreement that allows Lohr to vote the Conard's
shares in JLH and Lohr has delivered evidence of such
agreement to JFR,
3. That the agreement with Health Care Reit, Inc. has become
effective and Lohr has given evidence of such to JFR.
22. Further Assurances:
Each party agrees to perform any further acts and to execute and
deliver any further documents that may be reasonably necessary to
carry out the provisions of this Agreement.
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<PAGE> 4
23. Severability:
If any provision of this Agreement is held to be unenforceable or
invalid by any court of competent jurisdiction, the validity and
enforceability of the remaining provisions shall not be affected
thereby.
24. Construction:
Whenever used in this Agreement, the singular number shall include the
plural, and the plural number shall include the singular, and use of
any gender shall include all genders. The paragraph headings in this
Agreement are for convenience of reference only and shall not be used
as an aid in the construction of any provision. This Agreement shall
be deemed to have been prepared y each of the parties and there shall
be no canon of construction applied t this Agreement for or against
any party by reason of the preparation of this Agreement.
25. Governing Law.
This Agreement has been executed in and shall be governed by and
construed in accordance with the laws of the state of Florida
applicable to agreements made and to be wholly performed in the state.
26. Inurement:
Subject to the restrictions against transfer or assignment as
contained in this Agreement, the provisions of this Agreement shall
inure to the benefit of and shall be binding on the assigns,
successors in interest, personal representatives, estates, heirs, and
legatees of each of the parties.
27. Amendment:
This Agreement may be amended only by the written consent of all of
the parties to this Agreement at the time of the amendment.
28. Entire Agreement:
This Agreement contains the entire understanding between the parties
concerning the subject matter contained in this Agreement. There are
no representations, agreements, arrangements, or understandings, oral
or written, between or among the parties relating to the subject
matter of this Agreement that are not fully expressed in this
Agreement.
29. Counterparts:
This Agreement may be executed in one or more counterparts and in
making proof of this Agreement it shall not e necessary to produce or
account for more than one fully executed counterpart of this
agreement.
The rest of this page is left intentionally blank
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<PAGE> 5
IN WITNESS WHEREOF, the parties have executed this Agreement or caused
this Agreement to be executed by their duly authorized officers.
Just Like Home, Inc.
By: /s/ Robert C. Lohr
Title: President, Chairman and CEO
/s/ John F. Robenalt
John F. Robenalt
/s/ Robert C. Lohr
Robert C. Lohr
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<PAGE> 1
EXHIBIT 10.3
SHUMAKER, LOOP & KENDRICK, LLP
NORTH COURTHOUSE SQUARE
1000 JACKSON
TOLEDO, OHIO 43624-1573
TELEPHONE (419) 241-9000
FAX (419) 241-6894
DAVID J. COYLE
(419) 321-1418
[email protected]
April 16, 1999
Charles F. Johnson, III, Esquire VIA FACSIMILE
Blalock, Landers, Walters & Vogler, P.A.
802-11th Street West
Bradenton, FL 34205
Re: HEALTH CARE REIT, INC.:
JLH Series I, Inc.
Our File No. 4476845138
CONFIDENTIAL LETTER AGREEMENT
Dear Mr. Johnson:
This letter memorializes the settlement agreement reached
between your clients, Just Like Home, Inc. and JLH Series I, Inc. (jointly
"JLH") and my client Health Care REIT, Inc. ("HCRI"). JLH and HCRI each agree
to all of the following:
1. The parties will enter into a stipulated Judgment
Entry in each of the five actions pending in the four Florida counties. The
stipulated Judgment Entries will be filed in each county and will be final
orders. In the stipulated Judgment Entries, the Court will specifically find
that the subject lease between the parties is a true lease, that the lease is
not a financing lease or a mortgage, that JLH does not have an option to
purchase, that JLH does not have any type of ownership interest in any of the
Leased Property, that JLH is in default of the lease, and that HCRI had the
right to, and properly did, terminate the lease without prior notice to JLH.
The stipulated Judgment Entry will also provide that, if JLH defaults under the
new lease referenced below, HCRI may provide notice of the default to JLH by
facsimile, during the hours of 9:00 a.m. - 5:00 p.m. Monday through Friday,
and, if the default is not cured within forty-eight (48) hours of the time of
the facsimile notice, not including weekends, the Court, upon the filing of an
affidavit by a representative of HCRI stating that a default has occurred and
the forty-eight (48) hour cure period has expired without the cure being
effectuated, will issue an immediate order evicting JLH without any other prior
notice to JLH. The facsimile notice to JLH referenced above shall be made by
faxing the default notice to JLH at its corporate offices at 941-755-1845, to
JLH's directors at the following numbers:
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<PAGE> 2
Isidore Siegel at 561-499-3518; Ron Braun at 314-727-2622; and Betty Conard at
941-794-1023, to Robert Lohr at 412-655-3330, and to JLH's attorney, Charles
Johnson, Esquire at 941-745-2093.
2. The parties will enter into a new single lease for a
limited nine month term. The property subject to the new lease will be all of
the Leased Property, as defined under the five terminated leases (collectively
called "Leased Property"). The terms of the new lease will be identical in most
respects to the Lake County lease, plus typical Letters of Credit and security
provisions. Obviously there will be some modifications to the lease terms
including, but not limited to, JLH not having a right to renew or extend the
term of the lease except to the limited extent provided below. The rent due
under the new lease will be equal to the total of the lease rents under the
five terminated leases. At the end of the nine month lease term, JLH will have
no rights in the Leased Property.
3. The parties will stipulate and agree that the new
lease between the parties is, and is intended to be, a true lease, that the
lease is not a financing lease or a mortgage, that JLH does not have an option
to purchase other than the rights set forth herein, and that JLH does not have
any other ownership interest in any of the Leased Property.
4. The total amount drawn by HCRI on the Letters of
Credit in this matter was $521,019.00. The amount necessary to be paid by JLH
for rent and other expenses through April is $516,894.39. The amount held by
HCRI from the Letters of Credit will be applied toward the rent through April.
In addition, JLH will be required to pay to HCRI a total of $200,000.00 to
compensate HCRI for the attorneys' fees and expenses incurred by HCRI in
enforcing its remedies under the leases, preserving HCRI's rights under the
leases, and responding to the arbitration and civil proceedings brought by KDA
Financial, Inc., F/K/A KDA, Inc. ("KDA"). JLH will pay $102,161.02 of this
amount to HCRI at closing and the remainder in monthly payments in the manner
set forth below. The $102,161.02 to be paid at closing will be paid in the
following manner. The remainder of the Letters of Credit funds, in the amount
of $4,124.61, will be applied toward the payment of the attorneys' fees and
expenses. In addition, the total amount remaining in escrow or other funds of
JLH held by HCRI is $18,036.41. This amount will also be applied toward the
payment of HCRI's attorneys' fees and expenses. This will extinguish any right
JLH has to any escrow or other funds. (There is not any retainage being held by
HCRI.) Therefore, the total amount of the remaining Letters of Credit funds and
escrow funds, jointly totaling $22,161.02, will be applied at closing to JLH's
payment to HCRI's attorneys' fees and expenses. At closing, JLH will pay an
additional $80,000.00 to HCRI for attorneys' fees and expenses. JLH will, in
addition to all other amounts set forth herein and in the new lease, pay the
remaining $97,838.98 as follows: JLH will pay $47,838.96 to HCRI in nine (9)
consecutive monthly installments of $5,315.44 beginning on May 1, 1999 plus, at
the closing of the purchase of the Leased Property by JLH as referenced in
paragraph 11 below, JLH, in addition to all other amounts to be paid by it at
closing, shall pay the remaining $50,000.00 to HCRI. If JLH purchases the
Leased Property, at the time of closing on that purchase it will pay to HCRI
all remaining amounts still owed for HCRI's attorneys' fees and expenses, up to
a total of $200,000.00. Failure of JLH to make any of the payments required by
this paragraph will be a default under the new lease and HCRI will be allowed,
with forty-eight hours faxed notice, to obtain an eviction order in accordance
with paragraph 1 above.
5. JLH will immediately, or as soon as possible, enter
into a binding settlement agreement with KDA. The settlement shall set forth
the manner and the amount necessary for KDA to release any mechanic liens
against any of the eight facilities and JLH will require KDA, upon completion
of payments to it, to dismiss with prejudice the arbitration proceeding and
civil actions it has filed against JLH and HCRI, and release any lien KDA or
any of its subcontractors have on the Leased Property. In addition to any other
Letters of Credit required herein, at closing JLH shall provide a new Letter of
Credit in favor of HCRI acceptable to HCRI in the amount of $50,000.00 for
security that JLH will pay KDA and require that
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<PAGE> 3
KDA dismiss the arbitration proceedings and the litigation proceedings against
JLH and HCRI with prejudice and release any lien KDA or any of its
subcontractors have on the Leased Property. If and when a settlement is reached
with KDA, HCRI agrees to contribute, directly or indirectly, 50% of the initial
payment, up to a total contribution by HCRI of $100,000.00. The amounts
referenced in this sentence that are paid by HCRI shall be reimbursed to HCRI
by JLH and they shall be paid in addition to the sums referenced in paragraph
11. In addition to the other obligations of this paragraph, JLH shall increase
the $50,000.00 Letter of Credit by 17,500.00 per month until a settlement with
KDA is reached. The Letter of Credit referenced herein will be released upon a
written, binding settlement being entered into with KDA. Such monies shall be
used exclusively for payment to KDA. Failure by JLH to timely increase the
Letter of Credit as required by this paragraph will be an "Event of Default"
allowing HCRI to immediately terminate the lease upon forty-eight (48) hours
facsimile notice and obtain an eviction order in accordance with paragraph 1
above. Presuming that an agreement with KDA is reached, failure to timely make
any payment to KDA required by the settlement agreement with KDA will also be
an "Event of Default" allowing HCRI to immediately terminate the lease upon
forty-eight (48) hours facsimile notice pursuant to paragraph 1 and obtain an
eviction order in accordance with paragraph 1 above. JLH will take all action
necessary to cause all other mechanic liens on any of the facilities to be
released. JLH also agrees to pay to HCRI, at the closing of the purchase of the
Leased Property by JLH as referenced in paragraph 11 below, HCRI's attorneys'
fees and expenses, up to the amount of $15,000.00, incurred by HCRI in the KDA
arbitration and litigation proceedings after the date of this Letter Agreement.
6. During the lease term, JLH will be required to timely
make the monthly rental payment to HCRI as required by the lease, maintain all
insurance required under the lease, timely pay all real estate taxes on each of
the eight facilities and timely pay all other taxes. At or prior to the closing
on this Letter Agreement, all real estate and personal property taxes currently
due and payable, including any penalties and interest, on the Leased Property
must be paid by JLH. The failure to do any one of the above by JLH will result
in an immediate Event of Default and will allow HCRI, upon forty-eight (48)
hours facsimile notice in accordance with paragraph 1 above, to immediately
terminate the new lease and file an affidavit with the Court to obtain an
immediate eviction order. Any such Event of Default under the lease shall allow
HCRI to immediately obtain a Court eviction order for all eight facilities.
Upon the issuance of an Eviction Order, JLH will immediately and voluntarily
surrender all the Leased Property to HCRI. JLH shall also timely pay JLH's new
payables and provide evidence of all money being invested in or contributed to
JLH. "New Payables" shall mean all amounts actually owed by JLH falling due
after the date of this Letter Agreement. It is agreed that the word "Payables"
herein does not refer to amounts owed by JLH to HCRI, including amounts owed to
HCRI for its attorneys' fees and expenses, or amounts owed to KDA. Other
standard Events of Default and remedies contained in the terminated leases will
be made part of the new lease and will apply. JLH will, within thirty days from
execution of the Letter Agreement, pay $200,000.00 toward accounts payable
existing as of the date of this Letter Agreement. The amounts referenced in the
preceding sentence will include any amounts paid toward outstanding real estate
taxes. Following the execution of this Letter Agreement, JLH will provide
reasonable weekly financial reports to HCRI including check registers, accounts
payable aging reports, and census reports. In addition, JLH will contribute an
additional $25,000.00 per month toward accounts payable existing as of the date
of this Letter Agreement. JLH may cease making the monthly payment referenced
in the preceding sentence when all accounts payable existing as of the date of
this Letter Agreement are paid in full, according to the terms negotiated by
JLH. If JLH fails to make the $200,000.00 initial payment or any $25,000.00
monthly payment contemplated by this paragraph, it shall be an "Event of
Default" allowing HCRI to immediately terminate the lease upon forty-eight (48)
hours facsimile notice pursuant to paragraph 1 and obtain an eviction order in
accordance with paragraph 1 above.
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<PAGE> 4
7. Within sixty (60) days of the date of closing, JLH
shall meet the operating benchmarks set forth in the pro formas prepared by
Lohr ("Operating Benchmarks"). If, at the end of the first sixty (60) day
period, JLH has failed to meet the Operating Benchmarks, it shall have thirty
(30) days to cure. If JLH fails to cure within the thirty (30) day period, JLH
will provide an additional Letters of Credit to HCRI in the amount of
$68,000.00 in the same form as the first Letters of Credit or HCRI will have
the right to obtain an immediate eviction order in the manner set forth in
paragraph 1 above. For each following month in which JLH fails to meet the
Operating Benchmarks set forth in the Lohr pro formas, JLH will provide an
additional Letters of Credit to HCRI in the amount of $45,000.00 in the same
form as the first Letters of Credit or HCRI will have the right to obtain an
immediate eviction order in the manner set forth in paragraph 1 above.
8. In addition to the Letters of Credit referenced above,
at closing, JLH shall provide a new Letter of Credit in favor of HCRI
acceptable to HCRI in the amount of $270,000.00 to be security for the payment
of rent under the new lease and to insure that JLH will, upon termination or
expiration of the lease, fulfill its promises to immediately and voluntarily
surrender the Leased Property without resistance, not file bankruptcy, and take
all necessary actions to assist in the transfer of the Leased Property to HCRI
or its designee. Failure to do any of the above, will allow HCRI to immediately
draw the entire amount of the Letter of Credit. Upon JLH entering into an
agreement with KDA for the repayment of the amounts JLH owes to KDA, HCRI will
also have the right to immediately draw the entire amount of this Letter of
Credit if JLH defaults on any of its payments to KDA.
9. JLH will pay HCRI's reasonable travel expenses, up to
an aggregate of $10,000.00 but with no more than $1,000.00 being required to be
paid in any one month, for HCRI's employees or representatives to visit each of
the eight facilities once a month.
10. Robert Lohr ("Lohr") shall immediately become the CEO
of JLH and Lohr or an entity controlled by Lohr shall be solely responsible for
the management of the Leased Property and the management of the Leased Property
will not be changed without the prior written consent of HCRI.
11. Unless the new lease has been terminated or JLH is in
default of any term of the lease, JLH will have the right to purchase the
Leased Property at any time during the lease term but this right will
automatically expire at the end of the lease term. However, prior to having any
right to purchase the Leased Property from HCRI, JLH must, prior to or at the
time of closing on its purchase of the Leased Property, pay all amounts owed to
KDA under the agreement referenced in paragraph 5 above which will result in
the release of any lien KDA or any of its subcontractors has against the Leased
Property and the dismissal with prejudice of all KDA's claims against JLH and
HCRI. If JLH is going to exercise this right to purchase, JLH must purchase all
of the Leased Property from HCRI. If the Leased Property is purchased during
the first four months of the new nine month lease term, the purchase price will
be $10,356,510.42, plus $50,000.00 owed by JLH for HCRI's attorneys' fees and
expenses as set forth in paragraph 4 above, plus any other amounts for HCRI's
attorneys' fees and expenses required to be paid by paragraphs 4 and 5 above
that JLH has not yet paid, plus any amount paid by HCRI to KDA, directly or
indirectly, in accordance with paragraph 5 above. The purchase price is,
therefore, $10,406,510.42, plus any remaining attorneys' fees and expenses that
are required by paragraphs 4 and 5 to be paid, plus amounts paid by HCRI
pursuant to paragraph 5 above. If the Leased Property is purchased after the
fourth month, but by the end of the ninth month, the purchase price will
increase 3/4 of one percent each month beginning at the start of the fifth
month. If, during the lease term, JLH shall deliver to HCRI an executed,
binding commitment letter for the financing of JLH's purchase of the Leased
Property from a lender acceptable to HCRI ("Commitment Letter"), JLH will be
allowed to extend the lease term up to three (3) months to allow for the
consummation of the purchase of the Leased Property provided, however, that JLH
must continue to timely meet and
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<PAGE> 5
satisfy all of its obligations under the lease. To the extent necessary, the
term of the lease will automatically be extended, only once, for a period up to
three (3) months to allow for the closing of the purchase to occur but, to the
extent the lease is extended, all obligations, duties and rights of both JLH
and HCRI under the lease shall continue during this additional period,
including HCRI's right to obtain an immediate eviction order in accordance with
paragraph 1 above. It is also agreed that, during each month following the
original nine (9) month lease term, the purchase price shall continue to
increase 3/4 of one percent each month. JLH shall not have the right to
purchase the Leased Property if it is in default of the lease or if the lease
has expired or terminated. If HCRI has not received a Commitment Letter from
JLH during the nine month lease term, JLH will have no right to purchase the
facilities after the original nine month lease term. It will be stipulated and
agreed that the purchase prices stipulated above equal the fair market value of
the Leased Property being purchased at the time it is purchased by JLH. The
right to purchase the property will immediately, and automatically, be
forfeited upon the termination or expiration of the lease. Under no
circumstances, will the lease be for a period longer than twelve (12) months
nor will JLH's right to purchase the Leased Property be for a period longer
than twelve (12) months.
12. JLH will agree that it will not file a petition in
bankruptcy.
13. JLH will agree that, if it does file a petition in
bankruptcy, it will assume or reject the new lease within one (1) month of the
bankruptcy petition date.
14. Upon termination or expiration of the lease, if JLH
has not purchased the Leased Property from HCRI, JLH will immediately and
voluntarily, without resistance of any kind, surrender all the Leased Property
to HCRI. Upon termination or expiration of the lease, JLH will assist in any
way necessary to transfer operation of the Leased Property and facilitate
issuance of the necessary licenses to HCRI or HCRI's designee. If it fails to
do any of the above, HCRI will be able to immediately draw the entire amount of
the Letters of Credit referenced above.
15. All shares of JLH stock owned by Richard and Betty
Conard and their affiliates and all shares of JLH stock owned by John Robenalt
and his affiliates shall be placed in a voting trust that will be controlled
and voted by Lohr. Lohr shall control and have domain over all shares placed in
the Trust as well as all rights conferred on the holders thereof. Once placed
in the Trust, the shares cannot be removed from the Trust until the lease has
been terminated or JLH has purchased all of the Leased Property from HCRI. The
voting trust must be approved by HCRI.
16. JLH will release any and all claims it has or may have
against HCRI.
17. Prior to and after closing, JLH will, upon request by
HCRI, provide all information to HCRI that JLH is obligated to deliver to HCRI
under the five terminated leases including, but not limited to, copies of
current insurance certificates for all of the Leased Property.
18. JLH will execute all documents necessary to effectuate
the agreement.
19. Upon execution of this Letter Agreement, a stipulated
Judgment Entry referenced in paragraph 1 will be filed with the Court in each
of the five actions. This stipulated Judgment Entry must be filed on or before
April 19, 1999.
20. The closing of this Letter Agreement will be completed
on or before April 30, 1999 or HCRI will have the right to immediately obtain
the eviction order referenced in paragraph 1 above. Time is of the essence.
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21. This Letter Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but such counterparts
shall together constitute but one and the same Letter Agreement. A facsimile
signature will suffice and be treated in all respects as an original signature.
22. By signing below, Health Care REIT, Inc., Just Like
Home, Inc. and JLH Series I, Inc. each acknowledge, adopt and agree to all of
the terms and conditions set forth in this Letter Agreement. The individuals
signing below on behalf of a corporate entity hereby expressly represent that
they are authorized by their corporate entity to execute this Letter Agreement,
that they have read and fully understand this Letter Agreement, that they have
consulted their respective counsel before executing this Letter Agreement, and
that they have voluntarily executed this Letter Agreement.
If you have any questions, please contact me.
Very truly yours,
David J. Coyle
HEALTH CARE REIT, INC. JUST LIKE HOME, INC.
By /s/ George L. Chapman By /s/ Isidore Siegel
George L. Chapman, President, Isidore Siegel, Chairman and
Chairman and Chief Executive Chief Operating Officer
Officer
JLH SERIES I, INC.
By /s/ Isidore Siegel
Isidore Siegel, Chairman and
Chief Operating Officer
DJC/gaf
Enclosure
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