Anclote Psychiatric Center, Inc. - Page 8

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                  hospital.  Thus, the proposed sale as described will                                   
                  not benefit those in a controlling position with                                       
                  respect to you by virtue of the ability of such persons                                
                  to unfairly manipulate the transaction.  The sale will                                 
                  not jeopardize your tax exempt status under section                                    
                  501(c)(3) of the Code.                                                                 
                  On or about February 1983, Mr. O'Donnell assisted in forming                           
            Anclote Manor Hospital, Inc. (AMH), a Florida for-profit                                     
            corporation whose stock was owned by petitioner's board members                              
            individually, to purchase petitioner's assets.                                               
                  On February 8, 1983, petitioner hired Stanley W. Rosenkranz                            
            (Mr. Rosenkranz), a partner in the law firm of Holland and                                   
            Knight, to negotiate the sale of the hospital.  In these                                     
            negotiations, Mr. O'Donnell represented AMH as buyer and Mr.                                 
            Rosenkranz represented petitioner as seller.  Both lawyers knew                              
            the sale had to be for fair market value.  Both relied in part on                            
            Mr. Sheldrick's appraisal in setting the purchase price.  Both                               
            knew Mr. Sheldrick's appraisal did not include the Belcher Road                              
            or County Road #77 properties.  Negotiations between Mr.                                     
            Rosenkranz and Mr. O'Donnell continued between February 1983 and                             
            April 1983, with the parties exchanging several drafts of a                                  
            purchase and sale agreement.  Mr. Rosenkranz insisted that AMH                               
            assume petitioner's liabilities including the liability for                                  
            contributions to the pension plans.  He also required that a bank                            
            hold the paper and foreclose on the mortgage if the payments were                            
            not made.                                                                                    






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