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PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT ("Agreement") is made and entered into as of
this 4th day of October, 1996 by and between Sunrise Development, Inc., a
Virginia corporation, ("Purchaser") and ▇▇▇▇▇▇▇▇ Properties, Ltd., a California
limited partnership ("Seller").
R E C I T A L S:
A. Seller owns two (2) independent and assisted living facilities
(the "Facilities") known as, 1) Hillcrest Inn, Thousand Oaks,
California, consisting of 138 units and 2) Sterling Canyon
Inn, Valencia, California, consisting of 120 units, together
with all common elements, easements and improvements,
including, but not limited to all personal property, fixtures,
and inventory relating to the Facilities.
B. Seller owns certain tangible assets in connection with the
Facilities.
C. Purchaser desires to purchase and Seller desires to sell the
Facilities and other real and personal property on the terms
and conditions set forth below.
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Sale of Real Property and Personal Property.
Subject to the terms and conditions of this Agreement, Seller agrees to
sell, convey, transfer and assign to Purchaser, and Purchaser agrees to purchase
and acquire from Seller all right, title and interest of Seller, direct or
indirect, fixed or contingent, tangible or intangible, in, under and to the
following assets:
(a) Real Property.
(i) Certain real property known as;
1) Hillcrest Inn lying in Thousand Oaks,
California, consisting of land (the "Land")
and all Facilities, structures, fixtures and
other improvements located at ▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇; and
2) Sterling Canyon Inn lying in Valencia,
California, consisting of land (the "Land")
and all Facilities, structures, fixtures and
other improvements located at ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇.
The Land, Facilities and related real properties (the "Real Properties") are
more fully described on Exhibit A, and shall be deemed to include all permits,
easements, rights of way, and related appurtenances.
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(ii) Seller's right, title and interest as landlord
(whether named as such therein, or by assignment or
otherwise) in any leases and subleases, if any,
regarding the Real Properties now existing or at any
time hereafter made, and all amendments,
modifications, supplements, renewals and extensions
thereof, together with any refundable security
deposits made by tenants of the Real Properties which
are now in the possession of the Seller. A schedule
identifying each and every party currently leasing a
portion of the Facilities, together with a
description of the portion leased by each, the
applicable lease term, and the rental amount, is
attached hereto as Exhibit C.
(b) Personal Properties.
(i) Any furniture, fixtures, furnishings, machinery,
equipment, and all other tangible personal property
used in connection with the Real Properties and now
located upon the Real Properties, if any. A list of
such tangible personal property shall be prepared by
the parties during the Study Period described in
Paragraph 6 below and will be attached as Exhibit B.
(ii) Goodwill, going concern, transferable insurance
policies, assignable contracts which have been
entered into by Seller in connection with the
Facilities, and all plans, permits and records
pertaining to the Facilities, including but not
limited to licenses and various permits to the extent
that they are transferable, and the name of the
Facilities to the extent Seller has a transferable
right to said names. Seller agrees to cooperate in
the transferring of such licenses and permits to
Purchaser. Notwithstanding the foregoing the Personal
Property shall not include any tradename, trademark,
logo or other rights pertaining to the names ▇▇▇▇▇▇▇▇
Senior Properties and/or Legendary Service Guaranty.
(iii) The tangible and intangible property described in
Paragraphs 1(b)(i) and 1(b)(ii) shall be referred to
herein as the "Personal Property".
(c) The Real Properties and all Personal Property may be
referred to herein collectively as the "Property" or the "Properties".
2. No Liabilities.
Except for the assumption of obligations under assigned leases and
contracts accruing on and after the Closing, as reviewed and accepted by
Purchaser, Purchaser is assuming no liabilities attributable to Seller's
operation or ownership of the Real Properties or any Personal Property therein,
including liabilities to Seller's employees. Seller shall terminate all of its
employees at the Facilities prior to the date of Closing, and Purchaser may, but
is not obligated to, rehire any of the employees in its sole discretion. Seller
shall indemnify and hold Purchaser, including its officers, directors,
stockholders, partners, employees and agents, harmless from and against
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any and all damages, liabilities, lawsuits, claims, causes of action, costs or
expenses, including reasonable attorneys' fees (collectively "Claims"), asserted
against them by employees or creditors of Seller, by third parties or by tenants
of the Facilities, as a result of actions or failures of Seller prior to Closing
with regard to Seller's ownership or operation of the Facilities. In the event
of any such suit, claim, cause of action or other proceeding, Seller shall
undertake and have responsibility for the full and complete defense thereof at
Seller's sole cost and expense, with counsel reasonably acceptable to Purchaser.
Purchaser shall indemnify and hold Seller, including its officers, directors,
stockholders, partners, employees and agents, harmless from and against any and
all damages, liabilities, lawsuits, claims, causes of action, costs or expenses,
including reasonable attorneys' fees, asserted against them as a result of
actions or failures of Purchaser after Closing with regard to Purchaser's
ownership or operation of the Facilities. In the event of any such suit, claim,
cause of action or other proceeding, Purchaser shall undertake and have
responsibility for the full and complete defense thereof at Purchaser's sole
cost and expense, with counsel reasonably acceptable to Seller.
3. Purchase Price and Deposit.
(a) The purchase price for the Property shall be Thirty Million
Eight Hundred and no/100 Dollars ($30, 800,000.00) payable in cash ("Purchase
Price").
(b) Purchaser shall deposit with Chicago Title Insurance
Company, Los Angeles, California, or Commonwealth Land Title Insurance Company,
Los Angeles, California as "Escrow Agent", a deposit of One Hundred Thousand and
no/100 Dollars ($100,000.00) within five (5) days of execution of this
Agreement. The deposit will be refundable to Purchaser in the event that
Purchaser terminates the Agreement during the Study Period. Sunrise will also
post with the Escrow Agent a non-refundable additional deposit of One Hundred
Thousand and no/100 Dollars ($100,000.00) upon expiration of the Study Period,
unless the Agreement is terminated. Escrow Agent will deposit all funds held by
Escrow Agent in an interest-bearing account at a federally-insured commercial
bank. The accrued interest on the Deposit shall follow, and for all purposes of
this Agreement shall be treated as a part of, the Deposit, and shall be applied
to the Purchase Price upon Closing. The initial $100,000.00 deposit and any
additional deposits shall be referred to herein as the "Deposit.
(c) At Closing, the Deposit shall be applied to the Purchase
Price. Should Closing not occur, the Escrow Agent shall distribute the Deposit
in accordance with Paragraph 6, 8 or 21, as applicable.
4. Plans, Engineering, Title Examination,
Operational Records and Other Documents to Purchaser.
In consideration of the execution of this Agreement, the Seller agrees
to provide to the Purchaser, for Purchasers review, at no cost, all items
requested in Exhibit E, within the period of time specified therein. It is also
understood by the parties hereto that during the Study Period, Purchaser may
request that other items be provided by Seller in addition to those specifically
listed in Exhibit E, which items shall be provided if mutually agreed upon by
the parties.
5. Title.
(a) Purchaser shall obtain a Commitment for Title Insurance (the
"Title Commitment"), issued by Chicago Title Insurance Company or Commonwealth
Land Title Insurance Co. ("Title Company"), committing to
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insure upon the payment of a requisite premium at standard rates that Purchaser
shall acquire good and indefeasible fee simple title to the Properties, subject
only to the Permitted Exceptions, as defined herein. Purchaser shall promptly
forward a complete copy of the Title Commitment to Seller. Purchaser shall have
until the expiration of the Study Period, as defined hereinbelow, within which
to object, by written notice to Seller, to any exceptions to title set forth in
the Title Commitment. Such objections shall be within Purchaser's sole
discretion. If Purchaser fails to object to any such item by written notice to
Seller prior to the expiration of the Study Period, Purchaser shall be deemed to
have approved such item. If Purchaser objects to any such item by timely written
notice to Seller, Seller shall have the right (without any obligation to do so)
to cure or attempt to cure Purchaser's objections to such item prior to the date
of Closing. In the event Seller is unable to or elects not to cure any one or
more of Purchaser's objections, Seller may notify Purchaser in writing of such
election and request that Purchaser waive Purchaser's right to terminate this
Agreement due to such objections(s). If Purchaser does not terminate this
Agreement within ten (10) days of receiving such notice from Seller, Purchaser
shall be deemed to have waived its right to terminate this Agreement due to such
objections.
(b) The term "Permitted Exceptions", as used herein, shall mean (i)
the lien of real estate taxes not yet due and payable, (ii) all matters revealed
in the Title Commitment obtained by Purchaser and approved or deemed approved as
provided hereinabove, (iii) all Facilities, zoning and other city, state, county
or federal laws, codes and regulations affecting the Properties, provided such
zoning or other matters permit the operation of an independent and/or an
assisted living facility on the Properties as appropriate to any specific
property; provided any objections to the items set forth in this subjection
(iii) shall be made by Purchaser during the Study Period as set forth in Section
5(a) herein, (iv) any existing general utility easements serving the Properties,
(v) any title exception created directly by any act or omission of Purchaser or
its representatives, agents, employees or invitees, and (vi) the leases and
other contracts affecting the Property which are to be assigned to and assumed
by Purchaser at the Closing.
(c) Title to the Real Properties shall be conveyed to Purchaser at
Closing in fee simple by Grant Deed or its equivalent, free and clear of any and
all liens, mortgages, deeds of trust and security interests, and free and clear
of any and all covenants, conditions, restrictions, easements, rights-of-way,
licenses, unrecorded agreements and claims of any persons, encroachments,
judgments or encumbrances of any kind whatsoever, except the Permitted
Exceptions.
(d) If the Purchaser elects to have made a survey of the Real
Properties, then any objections to title based upon such survey shall be
governed by the above Paragraph 5(a). Any such objections shall be due to the
Seller on the same date as the title objections are due, and the failure to
deliver objections shall constitute a waiver thereof. Purchaser shall bear the
cost of the entire premium and expenses for the Commitment, the Owner's policy
of title insurance and any survey.
6. Feasibility Study Period.
(a) During the period beginning on the date of full execution of this
Agreement and for Sixty (60) days thereafter (the "Study Period"), Purchaser
shall have the right to review and evaluate the Real Properties, the Personal
Property, and the nature and extent of the Properties and operations and all
rights and liabilities related thereto. Seller agrees to provide or make
available to Purchaser and its authorized representatives all books, records and
other information concerning the Real Properties and the personal property in
the possession of Seller. Without limiting the generality of the foregoing,
Seller shall furnish or make available to Purchaser or its representatives as
soon as possible the following which are in Seller's possession:
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(i) Any title insurance policies, surveys, contracts,
leases, equipment agreements, personnel records and
information regarding any claims affecting the Real
Properties or the Personal Property, including
contracts of employees of Seller currently working at
the Real Properties; in no event shall Seller be
required to provide any employee medical records;
(ii) Any licenses and permits currently held by Seller
for the Real Properties;
(iii) Any current Certificates of Use and Occupancy for
the Real Properties;
(iv) Any financial records and other operational
information for the Real Property not previously
provided to Purchaser per Exhibit E; and
(v) Information concerning any claims or proceedings
in any way pertaining to the Real Properties or
the Personal Properties.
(b) In addition, during the Study Period and thereafter until Closing,
Seller and its representatives shall reasonably cooperate with Purchaser in
conducting its evaluation of the Real Properties and introduce Purchaser to such
persons, other than tenants and occupants, with knowledge of the Facilities as
Purchaser shall reasonably request, including Facility employees. However,
Purchaser shall not contact or otherwise communicate with any of the tenants or
occupants of any of the Facilities whatsoever and shall not contact or otherwise
communicate with any of the staff members or other employees or others providing
goods or services to any of the Facilities without the prior written consent of
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ or ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ("Senior Executives"), which
shall not be unreasonably withheld or delayed. The parties will prepare as soon
as possible after the execution of this Agreement a joint communication to be
delivered by Seller to the Facility employees.
(c) At any time during the Study Period, Purchaser shall have the
right, in its sole discretion and for any reason or no reason, to terminate this
Agreement and receive the return of the Deposit and all accrued interest by
providing written notice to Seller and Escrow Agent. Upon such notice, this
Agreement shall terminate and be of no further force and effect, and the Deposit
and all accrued interest thereon shall be promptly returned to Purchaser by
Escrow Agent.
(d) Upon the expiration of the Study Period, Purchaser shall have
thirty (30) days in which to prepare for closing. Purchaser may extend this
period for an additional thirty (30) days by delivering to the Escrow Agent an
additional non-refundable deposit of One Hundred Thousand and no/100 dollars
($100,000.00) which additional Deposit shall be applied toward the Purchase
Price.
(e) In connection with any evaluation of the Property, Purchaser shall
not unreasonably interfere with the use and occupancy of the Property by the
tenants thereof. Purchaser agrees to indemnify, defend and hold harmless Seller,
Seller's affiliates, and their directors, officers, agents and employees,
against and from, and shall obtain insurance coverage reasonably satisfactory to
Seller for, any and all claims, damages, loss, liability, costs and expenses
(including, without limitation, reasonable attorneys' fees), directly arising in
connection with the activities of the Purchaser or its employees, agents,
representatives or contractors in connection with the evaluation of the
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Property by Seller. The immediately preceding sentence shall survive the
termination of this Agreement and the Closing.
7. Actions Pending Closing.
(a) During the Study Period and prior to Closing, Seller undertakes
and hereby covenants and agrees as follows:
(i) It will not enter into or modify any lease with
respect to the Properties, make any commitment, take
any action or incur any obligation without the prior
written consent of Purchaser, other than in the
ordinary course of business and for a duration of
less than one (1) year and which can be terminated
by Seller with thirty (30) days notice;
(ii) Seller will maintain the Real Properties and
the Personal Property in substantially their
present condition;
(iii) Seller will not sell or dispose of, or cause to be
sold or disposed of, all or any portion of the Real
Properties or the Personal Property, other than in
the ordinary course of business;
(iv) Seller will apprise Purchaser of any event,
circumstance or situation of which Seller becomes
aware which would, in Seller's reasonable opinion,
have a material adverse effect on the Real
Properties, the Personal Property and/or the
operations of the Facilities;
(v) Seller shall cooperate with Purchaser to obtain
consents of governmental officials regarding
acquisition by Purchaser of necessary licenses and
permits.
(vi) Seller will not enter into any "back-up" contract
for the purchase of the Facilities and/or enter into
negotiations for a contract to purchase the
Facilities.
(b) If any agreements, undertakings or covenants in Paragraph 7(a)
above shall be breached by Seller prior to Closing, then Purchaser shall have
the right, in its sole discretion (i) to waive the breach or (ii) to terminate
this Agreement, receive a return of the Deposit and pursue its remedies
described in Paragraph 21(a) of this Agreement.
8. Conditions Precedent to Closing.
(a) The obligation of Seller to consummate the transactions
contemplated herein shall be subject to the representations and warranties made
by Purchaser hereunder being true and correct in all material respects and
confirmed in writing on the date of Closing.
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(b) The obligation of Purchaser to consummate the transactions
contemplated herein shall be subject to the occurrence, satisfaction or waiver
of the following conditions:
(i) Seller shall have no knowledge of any suit, action,
investigation, inquiry or other proceeding by any
governmental authority or any other person, pending
or threatened, relating to the Property or the
operation of the Facilities, which would have a
material adverse effect on the Properties;
(ii) Purchaser shall have obtained all Department
of Social Services licenses and permits
necessary to complete the legal transfer to
Purchaser of the Properties as operating
independent and/or assisted living facilities,
as is appropriate for each specific property.
Purchaser agrees to use good faith efforts to
obtain all such licenses and permits and to
submit applications for such licenses and
permits during the first thirty days of the
Study Period: Purchaser shall promptly provide
Seller with a copy of all such applications
and will keep Seller apprised of the status of
such application processing;
(iii) Seller shall deliver to the Purchaser true copies of
properly executed letters from Seller to all tenants
under the Leases to be dated as of Closing, advising
of the change of ownership, which
letters may be prepared jointly by Seller and
Purchaser at the option of Purchaser;
(iv) All documents required hereunder for Closing shall
have been executed and delivered by Seller.
(c) In the event any condition precedent set forth in this Paragraph 8
is not satisfied in full as of the date scheduled for Closing, pursuant to
Section 9, as extended in accordance with such Section 9, the party in favor of
whom such condition precedent is made may, in its sole discretion, (i) waive the
condition in writing or (ii)provide the other party with written notice of its
intention to terminate this Agreement. If the unsatisfied condition is not
satisfied within five (5) days following receipt of such notice, then this
Agreement shall be terminated, upon which, in the case of a failure of the
conditions set forth in Paragraph 8(b), the Deposit and all accrued interest
shall be returned to Purchaser and no party shall have any further obligation
hereunder, provided however Seller shall have the right to extend the Closing
date for up to sixty (60) days and Purchaser may not terminate the Agreement
during such extention if the unsatisfied condition arises under Paragraph
8(b)(ii) and such licenses and permits can reasonably be obtained during the
extention period.
9. Closing.
(a) Closing of the transactions contemplated hereby shall take place
on or before 30 days after the expiration of the Study Period, unless extended
as set forth in Paragraph 6(d), but in no event prior to January 2, 1997,
provided the Conditions Precedent contained in Paragraph 8 are satisfied in
their entirety, or waived, at the offices of the Escrow Agent provided, however,
that the date for Closing may be postponed at the mutual agreement of the
parties. TIME IS OF THE ESSENCE.
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(b) At Closing, Seller shall deliver the following documents to
Purchaser:
(i) The confirmation of the representations and
warranties of Seller;
(ii) ▇▇▇▇ of Sale pursuant to which the Seller transfers,
assigns and conveys, without recourse,
representation or warranty, all of its right, title
and interest in and to all furniture, fixtures,
equipment, appliances, inventory, supplies and other
items of Personal Property used in connection with
the operation of the Real Properties and now located
upon the Real Properties;
(iii) Grant Deed, or its equivalent in recordable form
conveying the Real Properties in fee simple to
Purchaser;
(iv) Any and all other documents, instruments and
agreements in form and content reasonably acceptable
to Seller, which are necessary and appropriate in
the reasonable opinion of Purchaser's counsel to
transfer and convey the Real Properties and the
Personal Property and all interests therein to
Purchaser in accordance with this Agreement;
(v) A fully executed assignment and assumption agreement
pursuant to which the Seller transfers, assigns and
conveys all of its right, title and interest in, to
and under all leases, tenancies and occupancy
agreements relating to the Real Properties as well
as any refundable security deposits made by tenants
of the Real Properties which are now in the
possession of the Seller;
(vi) A fully executed assignment and assumption agreement
pursuant to which the Seller transfers, assigns and
conveys all of its right, title and interest in, to
and under any governmental permits and licenses, to
the extent assignable; service and repair warranties
and guaranties; all of Seller's right, if any, to
the Property names subject to paragraph 1(b);
contracts and agreements affecting the Properties
after the Closing date; and all telephone exchange
numbers;
(vii) A properly completed letter to each tenant under the
Leases from Seller advising each of the transfer of
the ownership of the Real Properties;
(viii) All plans, specifications and blueprints relating
to the Real Properties which are in Seller's
possession and have not previously been forwarded to
Purchaser;
(ix) Keys to all improvements and to any lock which
exists for the Facilities with a note on each key
referencing the precise lock it opens;
(x) Such books, records (for the three most recent
years), copies of contracts
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and other documents regarding the operation of the
Facilities which are in the possession of Seller and
which Purchaser reasonably requires be provided to
it;
(xi) A closing statement executed by Purchaser and
Seller; and
(xii) Evidence of termination of employees of the
Facilities.
(c) At Closing, Purchaser shall deliver the following:
(i) The Purchase Price in cash, less application of the
Deposit and accrued interest;
(ii) The confirmation of the representations and
warranties of Purchaser in form and content
acceptable to Seller in its reasonable discretion;
(iii) Acceptance of the assignments set forth in Paragraph
(b)(v) and (b)(vi) together with an assumption of
the obligations under the leases and agreements
assigned thereunder executed by Purchaser, and
indemnification of Purchaser to Seller with respect
thereto including reasonable attorneys' fees
incurred by Seller in connection therewith; and
(iv) A closing statement executed by Purchaser and
Seller.
10. Certain Credits, Charges and Prorations.
(a) All general real estate taxes and personal Property taxes for the
current year with respect to the Real Properties and the Personal Property shall
be prorated through the date of Closing, and all general real estate taxes and
personal Property taxes for all prior years shall be paid in full by Seller
prior to Closing. Seller shall pay, or credit to the Purchase Price at the
option of Purchaser, all assessments, if any, prorated through the date of
Closing that pertain in any way to the Real Properties or the Personal Property
as of the date of Closing. Seller represents and warrants to Seller's actual
knowledge, that it has received no notice of any pending assessments, or any
threatened public improvements which could result in additional assessments
being levied against the Real Properties or the Personal Property. Seller shall
pay all accrued and unpaid water, sewer and other utility charges through the
date of Closing.
(b) Seller shall pay any and all taxes payable upon transfer of the
Personal Property, the cost of preparing the Deed, Seller's attorneys' fees and
costs. Purchaser shall pay the cost of recording the Deed, all costs of the
title company selected by Purchaser to insure title and Purchaser's attorneys'
fees and costs. The cost of all County and State transfer or recording taxes and
all escrow fees shall be shared equally by the parties.
11. Income and Expenses.
(a) All income and expenses of the Real Properties shall be prorated
on a daily basis between the
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Seller and the Purchaser as of midnight prior to the date of Closing (the
"Proration Date"). Such items to be prorated shall include:
(i) Rents and income, if any;
(ii) Utility charges, if any;
(iii) Payments under service agreements, if any; and
(iv) Periodic charges or fees assessed by any
governmental authority, if any.
(b) Any escrow accounts held by any utility companies shall be either
paid to the Seller or, if assigned to the Purchaser, Seller shall receive a
credit at Closing for any such deposit.
(c) The Purchaser shall receive all income from the Real Properties
attributable to the period after the Proration Date and shall be responsible for
all expenses of the Real Properties attributable to the period after the
Proration Date.
12. Risk of Loss.
(a) Risk of loss shall remain with Seller until delivery of the Deed
and ▇▇▇▇ of Sale at Closing. Seller shall immediately notify Purchaser of any
damage or destruction of all or any substantial portion of the Facilities or any
condemnation or taking by eminent domain of any substantial portion of the Real
Properties. Upon such notification, Purchaser shall have the option to declare
this Agreement null and void and receive return of the Deposit and all accrued
interest. In the event of any damage to the Real Properties or any condemnation
or taking by eminent domain of the Real Properties, Purchaser, provided it
proceeds to Closing and there is no reduction in the Purchase Price, shall be
entitled to all condemnation awards or insurance proceeds received by Seller on
account of such condemnation, damage or destruction if proceeds are payable
after Closing. If proceeds are paid before Closing, said proceeds shall be
deducted from the Purchase Price at Closing and Purchaser shall purchase the
Real Properties and the Personal Properties subject to said damage or
diminution. Any proceedings with respect to condemnation or insurance matters
pending prior to Closing shall be undertaken by Seller exclusively; provided,
however, in the event Purchaser shall be entitled to condemnation or insurance
proceeds, the pending condemnation or insurance proceedings shall become the
responsibility of Purchaser from and after Closing. Any proceedings with respect
to condemnation or insurance matters pending at Closing will be assigned to
Purchaser, with liabilities therefor delegated to Purchaser at Closing. Any such
proceedings commenced after Closing will be Purchaser's responsibility.
Purchaser shall have the further right to insure its equitable interest prior to
Closing in the amounts and to the extent it deems necessary.
(b) For the purposes of the above Paragraph 12(a), a "substantial
portion" of the Real Properties shall be deemed to mean any damage or
destruction to a Facility, the cost of repair of which exceeds Twenty Percent
(20%) of the value of such Facility, or any taking equal to or greater than
twenty percent Twenty Percent (20%) of the gross number of square feet contained
in any one Facility and shall not include any taking of less than twenty percent
(20%) of any one Facility unless such damage or taking shall preclude the use of
such Facility as an assisted living facility.. If less than a substantial
portion of the Real Properties shall be damaged or destroyed by a casualty or
taken in condemnation or under the right of eminent domain before the Closing
Date, then the parties
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shall proceed to close the transaction contemplated herein, and any proceeds
actually received by the Seller attributable to the Real Properties from such
casualty, condemnation or eminent domain and any right the Seller may have to
receive proceeds attributable to the Real Properties from such casualty,
condemnation or eminent domain shall be delivered or assigned to the Purchaser
at Closing or as soon as available, and there shall be no reduction in the
Purchase Price.
(c) The Purchaser shall have the right to terminate this Agreement
within ten (10) days after written notice of such damage, destruction or
condemnation as described in the above Paragraph 12(a). If the Purchaser does
not elect to terminate this Agreement, the Purchaser shall be obligated to
consummate this transaction.
13. Representations and Warranties of Seller.
(a) Seller hereby represents and warrants to Purchaser as follows:
(i) Seller has full power and authority to execute this
Agreement, to transfer the Real Properties and the
Personal Property, and to perform the other
obligations of the Seller hereunder.
(ii) The execution and performance of this Agreement does
not violate the terms or conditions of any other
agreement to which Seller is a party.
(iii) There will be as of Closing no contingent or other
liabilities of the Seller, whether as maker,
obligor, guarantor, surety or otherwise, which could
affect the value of Purchaser's title to the Real
Properties or the Personal Property following
Closing other than those leases, contracts or other
matter approved by Purchaser.
(iv) Except as otherwise specifically provided herein,
there are no contracts including contractors for
services or leasing agreements, relating to the Real
Properties, the Personal Property, or the operation
of the Facilities, to which Seller is a party or is
bound, and which will bind Purchaser and the
Property after the Closing, which are not terminable
by Purchaser with not more than thirty (30) days
written notice except for the leases and contracts
identified on Exhibit C and Exhibit D.
(v) The individual resident leases for the facilities
are in the form attached as Exhibit F, with no
material changes in terms or conditions except for
rental and for those identified on Exhibit G.
(vi) To the actual knowledge of Seller's Senior
Executives there are no suits, actions or
proceedings pending or threatened relating to the
Real Properties or the Personal Property which would
materially adversely affect the Properties or the
operation of the Facilities, other than as disclosed
in writing to Purchaser during the Study Period.
(vii) Except as disclosed to Purchaser, during Seller's
ownership of the Properties, Seller has not caused
or, to its actual knowledge permitted its tenants to
cause any storage,
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discharge, spillage, controlled loss, seepage or
filtration (a "Spill") of oil, petroleum or chemical
liquids or solids, liquid or gaseous products or any
hazardous waste or hazardous substance, as those
terms are used in the Comprehensive Environmental
Response, Compensation and Liability Act of 1980
("CERCLA") or in any other federal, state or local
law governing hazardous substances, as such laws may
be amended from time to time (collectively, the
"Hazardous Waste Laws") at, upon, under or within
the Properties, except in compliance with all
applicable Hazardous Waste Laws.
(viii) To the actual knowledge of Seller's Senior
Executives, Seller has not caused or permitted to
occur, and shall not permit to exist, any conditions
on the Properties which have caused a Spill in
violation of the Hazardous Waste Laws, at, upon,
under or within the Properties or on any contiguous
real estate which has or could materially effect the
Properties.
(ix) To the actual knowledge of Seller's Senior
Executives, neither Seller nor any other party has
been, is or will be involved in operations at the
Properties, other than in the ordinary course of
business of operating an Assisted Living facility
which could lead to (a) the imposition of liability
on the Seller or any subsequent owner of the
Properties under the Hazardous Waste Laws, or (b)
the creation of a lien on the Properties under the
Hazardous Waste Laws.
(b) Any material breach of any representation or warranty contained herein which
is not cured prior to Closing shall constitute a breach of this Agreement,
entitling Purchaser to exercise the rights and remedies contained in Paragraph
21 hereof. Purchaser agrees to promptly notify Seller of any breach of Seller's
representations and warranties contained herein of which Purchaser acquires
knowledge prior to Closing. In such event Seller may elect within five (5)
business days after Purchaser has notified Seller of such breach, to cure such
breach in Seller's sole and absolute discretion. If Seller elects to cure the
breach, Seller shall have the right to extend the Closing Date for up to five
(5) business days to cure the breach. If Seller does not elect to cure the
breach, Purchaser's remedy for such breach shall be to either (i) terminate this
Agreement, or (ii) waive such breach and proceed to close escrow. If Purchaser
elects to terminate the Agreement, then Purchaser shall have the right to
exercise its rights and remedies set forth in Paragraph 21 of this Agreement on
a breach of this Agreement by Seller. If Purchaser does not terminate the
Agreement, Purchaser shall be deemed to have expressly waived any and all
remedies for the breach of any representation and warranty discovered by
Purchaser prior to Closing. As a material inducement to the execution and
delivery of this Agreement by Seller of its duties and obligations hereunder,
Purchaser does hereby acknowledge and agree to and with Seller that as of the
closing of Escrow, and except as expressly represented and warranted by Seller
herein, (i) Purchaser is purchasing the Property in an "as is" condition as of
the date of the Agreement with respect to any facts, circumstances, conditions
and defects of all kinds, (ii) Seller has no obligation to repair or correct any
such facts, circumstances, conditions or defects or compensate Purchaser for
same, (iii) Purchaser is and will be relying strictly and solely upon
Purchaser's inspections and examinations, along with the advice and counsel of
its own agents and officers, in connection with its evaluation of the Property
and its purchase thereof, (iv) except as otherwise expressly set forth herein,
Seller is not making and has not made any warranty or representation with
respect to the Property, and (v) by reason of all the foregoing, Purchaser shall
assume the risk of any loss or damage occasioned by any fact, circumstance,
condition or defect pertaining to the Property after Closing.
(c) Each of the foregoing representations and warranties shall be
reconfirmed as of Closing by the
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execution of a confirmation of representations and warranties, and as updated
shall survive for one (1) year following Closing. Subsequent to Closing,
Purchaser agrees to promptly notify Seller of any breach of Seller's
representations and warranties contained herein of which Purchaser acquires
knowledge after Closing. In such event, Seller may elect within five (5)
business days after Purchaser has notified Seller of such breach, to cure such
breach in Seller's sole and absolute discretion. If Seller does not elect to
cure such breach, Purchaser shall be entitled to seek recovery of its damages
resulting from such breach.
14. Representations and Warranties of Purchaser.
(a) Purchaser represents and warrants as follows:
(i) The execution and performance of this Agreement
does not violate the terms and conditions of any
other agreement to which Purchaser is a party; and
(ii) Purchaser has full power and authority to execute
and perform this Agreement and to transfer the Real
Properties and the "Personal Property".
(b) Any material breach of any representation or warranty contained
herein which is not cured prior to Closing shall constitute a breach of this
Agreement, entitling Seller to exercise the rights and remedies contained in
Paragraph 21 hereof.
(c) Each of the foregoing representations and warranties shall be
reconfirmed as of Closing by the execution of a confirmation of representations
and warranties, which as updated, shall survive Closing for a period of two
years.
15. Intentionally Left Blank.
16. Costs.
Each party shall pay the costs and expenses of its legal counsel,
accountants and other agents and personnel in respect to all aspects of the
transaction contemplated hereby; provided, however, that Purchaser and Seller
shall pay equally all fees and other charges of KPMG Peat Marwick relating to
such audited financial statements pertaining to the Properties prepared in
accordance with U.S. Generally Accepted Accounting Principles ("U.S. GAAP")
which are specifically requested by Purchaser, except that if Purchaser shall
terminate this Agreement other than due to a default by Seller, Purchaser shall
pay all such accounting fees and charges.
17. Brokers.
Seller and Purchaser warrant to each other that there is no
Broker/Agent in connection with this transaction. Each party warrants and
represents to the other that no real estate broker or agent has been involved in
negotiations leading to the execution of this Agreement and that no commission
is owed to any broker or agent as a result of the action of such party. Each
party agrees to indemnify, defend and hold the other harmless from any loss,
liability, claim, cause of action, cost or charge (including reasonable
attorneys' fees), arising from the assertion by any broker or agent that any fee
or commission is owed because of the acts or agreement of such party.
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18. Notices.
All notices, requests, demands and other communications hereunder
shall be in writing and shall be deemed to have been duly given if delivered by
hand, sent by recognized overnight courier service, or mailed, certified or
registered mail, return receipt requested, with first class postage prepaid as
follows:
If to Seller:
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ Properties, Ltd.
▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
With a copy to:
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇. 90071
If to Purchaser:
Attn: ▇▇▇ ▇▇▇▇▇▇
Sunrise Development, Inc.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
With a copy to:
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Watt, ▇▇▇▇▇▇ and ▇▇▇▇▇▇, L.L.P.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
or to such other person or place as the parties hereto shall furnish in writing
to each of the other parties hereto. All notices shall be deemed to have been
given upon the date of receipt.
19. Further Assurance.
Each of the parties hereto will, at Closing or at such other time as
another party may reasonably request, without any cost or expense to the party
so requesting, execute and deliver, or cause to be executed and delivered, to
such other party such further instruments of transfer and conveyance and will
take such other actions without cost to the performing party as may reasonably
be requested to more effectively consummate the transactions contemplated by
this Agreement.
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20. Assignment.
This Agreement may not be assigned, in whole or in part, by any of the
parties hereto without the written consent of all other parties, provided that
Purchaser may assign its rights and obligations to any entity majority owned or
controlled by Sunrise Assisted Living, Inc., and such entity shall be a
permitted assignee hereunder. In the event of an assignment, the assignee shall
then become a party to and be bound by this Agreement, with all rights,
privileges and protections afforded hereunder.
21. Remedies Upon Default.
(a) If Seller materially defaults on any of its obligations hereunder,
the Purchaser may, as its sole remedy hereunder, by serving notice in writing
upon the Seller in the manner provided in this Agreement, either:
(i) Terminate this Agreement and declare it null and
void and receive a refund of the Deposit, together
with all interest earned thereon; or
(ii) Seek specific performance against the Seller; or
(iii) Bring suit for all of Purchaser's out of pocket
costs and expenses, incurred in connection with the
transaction;
(iv) Waive any such conditions, title objections or
defaults and consummate the transaction contemplated
by this Agreement in the same manner as if there had
been no title objections, conditions or defaults
without any reduction in the Purchase Price and
without any further claim against the Seller
therefor.
(b) PURCHASER ACKNOWLEDGES AND AGREES THAT PURCHASER'S REMEDIES
SHALL BE LIMITED TO THOSE REMEDIES DESCRIBED IN THIS PARAGRAPH 21(A).
/s/ DBG /s/ SJF
------------------------- ------------------------
Purchaser's Initials Seller's Initials
(c) IN THE EVENT THE CLOSING DOES NOT OCCUR AS HEREIN PROVIDED BY
REASON OF ANY DEFAULT OF PURCHASER, PURCHASER AND SELLER AGREE THAT IT WOULD BE
IMPRACTICAL AND EXTREMELY DIFFICULT TO ESTIMATE THE DAMAGES WHICH SELLER MAY
SUFFER. THEREFORE PURCHASER AND SELLER DO HEREBY AGREE THAT A REASONABLE
ESTIMATE OF THE TOTAL NET DETRIMENT THAT SELLER WOULD SUFFER IN THE EVENT THAT
PURCHASER DEFAULTS AND FAILS TO COMPLETE THE PURCHASE OF THE PROPERTY IS AND
SHALL BE AS SELLER'S SOLE AND EXCLUSIVE REMEDY (WHETHER AT LAW OR IN EQUITY), AN
AMOUNT EQUAL TO THE DEPOSIT (WHICH INCLUDES ANY INTEREST ACTUALLY ACCRUED
THEREON). SAID AMOUNT SHALL BE THE FULL, AGREED AND LIQUIDATED DAMAGES FOR THE
BREACH OF THIS AGREEMENT BY PURCHASER, ALL OTHER CLAIMS TO DAMAGES OR OTHER
REMEDIES BEING HEREIN EXPRESSLY WAIVED BY SELLER. UPON DEFAULT BY PURCHASER,
THIS AGREEMENT SHALL BE TERMINATED AND NEITHER PARTY SHALL HAVE ANY FURTHER
RIGHTS OR OBLIGATIONS HEREUNDER, EACH TO THE OTHER EXCEPT FOR THE RIGHT OF THE
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SELLER TO COLLECT SUCH LIQUIDATED DAMAGES FROM PURCHASER AND ESCROW HOLDER. THE
PAYMENT OF SUCH AMOUNT AS LIQUIDATED DAMAGES IS NOT INTENDED AS A FORFEITURE OR
PENALTY WITHIN THE MEANING OF CALIFORNIA CIVIL CODE SECTIONS 3275 OR 3369, BUT
IS INTENDED TO CONSTITUTE LIQUIDATED DAMAGES TO SELLER PURSUANT TO CALIFORNIA
CIVIL CODE SECTIONS 1671, 1676 AND 1677.
/s/ DBG /s/ SJF
------------------------- ------------------------
Purchaser's Initials Seller's Initials
22. Confidentiality.
No press release or public dissemination of the transaction
contemplated herein shall be made before the Closing has occurred, unless upon
the prior written agreement of the parties hereto; provided, however that
Purchaser or Seller may disclose this transaction if and to the extent necessary
to comply with securities laws, including in prospecturer or other securities
filings by Purchaser. Purchaser shall provide Seller with a copy of any press
release to be issued by Purchaser as required under the securities laws, as soon
as reasonably possible prior to such release. Either party may issue press
releases or public dissemination of the transaction upon the completion of the
Closing, without the consent of the other.Except as necessary to comply with
securities laws or as provided below, Purchaser shall maintain the
confidentiality of all information obtained from the Sellers, their managing
agents, past or present employees and representatives with respect to the
Properties and the ownership, operation and management thereof and the terms and
conditions of this Agreement (collectively, the "Information"), shall not
directly or indirectly disclose any of the Information or permit the disclosure
of any of the Information to any person or entity except professional advisers
who have agreed to maintain such confidentiality, and shall not use the
Information for any purpose other than evaluating the purchase and sale
contemplated by this Agreement. Nothing contained herein shall prevent
Purchaser's producing the Information pursuant to any court order or subpoena
that Purchaser, on advice of counsel, believes to be bona fide, and in such
event Purchaser shall give the Sellers immediate written notice of receipt of
such order or subpoena, detailing the specific Information sought and for whom
it is to be produced, so that Sellers (or any of them) and/or Senior Properties,
Inc. (which is agreed to be an express third party beneficiary of this
Paragraph) may seek a protective order or other appropriate remedy. Purchaser
shall produce only that portion of the Information that Purchaser is advised by
counsel that it is required to disclose and will exercise its best efforts to
obtain reliable assurances that confidential treatment will be accorded to any
Information so released. All of the Information is proprietary to Sellers and
Senior Properties, Inc.
23. Advice of Counsel and Construction.
All parties to this Agreement have been represented by counsel or have
had the opportunity to be so represented. Accordingly, the rule of construction
of contract language against the drafting party is hereby waived by both
parties.
24. Miscellaneous.
(a) Entire Agreement. This Agreement constitutes the entire agreement
between the parties, and all prior oral discussions or agreements are merged
herein.
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(b) Singular and Plural, Genders. The singular shall be substituted for
the plural, and vice versa, and any gender or the neuter for any other gender,
as appropriate.
(c) Headings. The headings of the paragraphs of this Agreement are
inserted for convenience only, and shall not constitute a part of or limit the
content of any paragraph.
(d) Parties in Interest. This Agreement shall be binding upon and inure
to the benefit of the parties hereto, and their respective estates, heirs,
executors, representatives, successors and assigns.
(e) Governing Law. This Agreement shall be construed and interpreted in
accordance with the laws of the State of California.
(f) 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.
(g) Exhibits. The description of Real Properties attached as Exhibit A
hereto pursuant to Paragraph 1(a)(i) above, the schedule of "Personal Property"
to be attached as Exhibit B hereto pursuant to Paragraph 1(b)(i) above, the
schedule of leases attached as Exhibit C hereto pursuant to Paragraph 1(a)(ii)
above, the Schedule of certain Contracts attached as Exhibit D ,the Audit and
Collateral Checklist attached as Exhibit E hereto pursuant to Paragraph 4 above
hereto are or shall be (in the case of Exhibit B), the resident leases for the
Facilities attached as Exhibit F and any changes pertaining to the resident
leases in terms and conditions attached as Exhibit G hereto pursuant to
Paragraph 13(a)(viii) shall be incorporated in this Agreement as though fully
set forth herein.
(h) Waivers. No purported waiver of any provision of this Agreement
shall be valid unless in writing signed by the person against whom such waiver
is sought to be enforced.
(i) Severability. In the event one or more of the provisions hereof
shall be held to be illegal, invalid or unenforceable, such provision(s) shall
be deemed severable and the remaining provisions shall continue in full force
and effect.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date and year first above written for the uses and purposes
herein contained.
SELLER:
▇▇▇▇▇▇▇▇ Properties, Ltd., a California limited
partnership
By: Senior Properties, Inc., its sole
general partner
By: /s/ Samford ▇. ▇▇▇▇▇▇▇▇▇
-------------------------------
Name: Samford ▇. ▇▇▇▇▇▇▇▇▇
----------------------------
Title: Executive Vice President
----------------------------
PURCHASER:
Sunrise Development, Inc.,
a Virginia corporation
By: /s/ ▇.▇. ▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Vice President
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