Complex sentence: O'Neil and his wife Barbara were close friends of Ernest Hemingway and his first wife Hadley, who had known O'Neil from St. Louis, and Hemingway wrote an acidulous sketch based on O'Neil.
Split into simpler sentences: O'Neil and his wife were close friends of Ernest Hemingway and his first wife Hadley. They had known O'Neil from St. Louis, and Hemingway wrote an acidulous sketch based on O'Neil.