PURCHASE AND SALE AGREEMENT
Escondido. CA
THIS AGREEMENT is dated for reference
purposes only as of the 19th day of December,
1996, and is by and between EMERITUS CORPORATION,
a Washington corporation, or its assignee
("Purchaser"), and NORTHWEST RETIREMENT, an Oregon
general partnership ("Seller").
1. PURCHASE AND SALE
On the terms and conditions set forth herein,
Seller agrees to sell to Purchaser and Purchaser
agrees to purchase from Seller, the following:
a. The real property situated in the City
of Escondido, State of California, which is more
particularly described in Exhibit A attached
hereto (the "Real Property"), together with all of
the improvements on the Real Property, including
that certain facility consisting of eighty-two
(82) units, and commonly known as "VDR-Escondido"
(the "Facility").
b. All equipment, furniture, fixtures,
inventory, vehicles, supplies (including linens,
dietary supplies and housekeeping supplies but
specifically excluding food and other consumable
inventories) and other tangible and intangible
personal property owned by Seller and located on
the Real Property or used in connection with the
operation of the Facility, including but not
limited to, all licenses, permits and approvals
for the operation of the Facility, all
entitlements, telephone numbers, any right, title
or interest which Seller may have in and to any
service marks, trademarks or trade names owned,
used or employed by Seller in conjunction with the
operation of the Facility, specifically including
the name "VDR-Escondido" and any derivative
thereof and any trade marks related thereto and
goodwill associated therewith, as well as all
easements, licenses, governmental approvals or
permits and any other rights or privileges
appurtenant to the Real Property or Facility, but
specifically excluding cash, cash equivalents and
accounts receivable for the period prior to. the
Closing Date (as defined below) (collectively, the
"Personal Property"), which Personal Property is
more particularly described in Exhibit B.
c. The food and other consumable
inventories located at, and usable in the
operation of, the Facility on the Closing Date
(collectively, the "Consumables").
The Real Property, Facility, Consumables and
Personal Property are sometimes hereinafter
collectively referred to as "Seller's Assets."
2. PURCHASE PRICE
The purchase price payable by Purchaser for
Seller's Assets shall be Four Million Two Hundred
Thousand and no/100 Dollars ($4,200,000) (the
"Purchase Price"), payable as follows:
a. Twenty Five Thousand and no/100 Dollars
($25,000) upon execution of this Agreement (the
"Xxxxxxx Money"), which Xxxxxxx Money shall be
delivered to Chicago Title Insurance Company (the
"Escrow Agent") and shall be deposited into an
interest bearing account, with any interest earned
thereon accruing to the benefit of the party
entitled to the deposit under this Agreement.
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b. A portion of the Purchase Price shall be
paid by delivery of Purchaser's Promissory Note in
form and amount mutually agreeable to the parties.
c. The balance of the Purchase Price shall
be due and payable either in cash, by certified
check or by wire transfer at Closing (the
"Remaining Balance"); provided, however, that in
the event Purchaser elects to assume the debt
evidenced and secured by any of the mortgages or
deeds of trust which currently encumber the
Seller's Assets (the "Facility Mortgages") and the
lender consents to said assumption, then the
Remaining Balance shall be reduced by the
outstanding principal balance of said Facility
Mortgage(s).
d. The Purchase Price shall be allocated
among Seller's Assets in the manner set forth in
Exhibit C attached hereto.
Except as specifically provided in this Agreement,
Purchaser does not hereby or in connection
herewith assume any liability of Seller whatsoever
in relation to Seller's Assets which relates to
the period prior to Closing.
3. CLOSING
The closing for the purchase and sale of the
Seller's Assets under this Agreement (the
"Closing") shall occur not later than forty-five
(45) days following the expiration of the
"Feasibility Period" (as that term is defined
below) (provided all of the conditions to closing
set forth in Paragraphs 13 and 14 have been
satisfied or waived) (the "Closing Date"). Closing
shall occur at the offices of Escrow Agent or at
such other place as Purchaser and Seller may
mutually agree. Time is of the essence hereto.
4. CONVEYANCE
Conveyance of the Seller's Assets to
Purchaser shall be effected by Special Warranty
Deed and Xxxx of Sale in form and substance
reasonably acceptable to Purchaser. Fee simple
insurable title to the Real Property and
marketable title to the Personal Property shall be
conveyed from Seller to Purchaser free and clear
of all liens, charges, easements and encumbrances
of any kind, other than the following:
a. Liens for real estate taxes not yet due
and payable;
b. Such items of record as described in the
Title Report (as defined below) reviewed and
approved by Purchaser as provided in Paragraph
13.f. below, excluding, however, any monetary
liens and encumbrances referenced therein.
5. COSTS, PRORATIONS AND ADJUSTMENTS
The costs of the transaction and the expenses
related to the ownership and operation of the
Seller's Assets shall be allocated among Seller
and Purchaser as follows:
a. Seller shall pay any sales, State and
County transfer, documentary and/or excise taxes
due on the sale of the Real Property and the
Facility.
b. Seller shall pay any sales tax due on
the sale of the Personal Property.
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c. Seller shall pay the cost of a standard
owner's title insurance policy. The cost of
extended coverage and any endorsements which
Purchaser may request shall be paid by Purchaser.
d. All revenues (including but not limited
to rent due from the tenants of the Facility) and
expenses (including but not limited to payroll and
employee benefits) related to the ownership or
operation of the Seller's Assets shall be prorated
as of the Closing Date, with Seller responsible
for amounts attributable to the period prior to
the Closing Date and with Purchaser responsible
for amounts attributable to the period from and
after the Closing Date.
e. Real and Personal Property taxes and
assessments shall be prorated as of the Closing
Date, with Seller responsible for taxes and
assessments attributable to the period prior to
the Closing Date and with Purchaser responsible
for taxes and assessments attributable to the
period from and after the Closing Date.
f. Seller shall attempt to arrange for a
final statement with respect to all utilities
serving the Real Property and the Facility as of
the Closing Date and shall pay all fees identified
thereon and Purchaser shall arrange for all such
utilities to be billed in its name from and after
the Closing Date and shall pay all fees due
therefor from and after the Closing Date.
g. Purchaser and Seller shall each pay
their own attorney's fees.
h. Purchaser and Seller shall share all
recording fees related to the recording of the
conveyance deed and any escrow fees on a 50-50
basis.
i. Seller and Purchaser shall share equally
all costs, expenses and fees which may be assessed
by any governmental authority in connection with
obtaining any governmental approval or consent
which may be required in order to consummate the
purchase and sale of Seller's Assets and the
transfer of operations of the Facility.
j. Purchaser shall pay the cost of the
Environmental Report and of the Survey (as those
terms are defined below).
6. POSSESSION
At Closing, Purchaser shall be entitled to
possession of the Seller's Assets, subject only to
the rights of the tenants of the Facility under
the Facility Leases (as defined below).
7. SELLER'S REPRESENTATIONS AND WARRANTIES
Seller hereby warrants and represents to
Purchaser that:
a. SELLER'S AUTHORITY. Seller has full
power and authority to execute and deliver this
Agreement and all related documents, and to carry
out the transactions contemplated herein. This
Agreement is valid, binding and enforceable
against Seller in accordance with its terms,
except as such enforceability may be limited by
creditors' rights, laws and applicable principles
of equity. The execution of this
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Agreement and the consummation of the transaction
contemplated herein do not result in a breach of
the terms and conditions of nor constitute a
default under or violation of, any of Seller's
partnership agreement, or any law, regulation,
court order, mortgage, note, bond, indenture,
agreement, license or other instrument or
obligation to which Seller is now a party or by
which Seller or any of the assets of Seller may be
bound or affected.
b. TITLE. Seller will deliver good and
insurable fee simple title to the Real Property
and the Facility, subject only to the easements,
reservations and encumbrances, if any, permitted
under Paragraph 4, and good and marketable title
to the Personal Property free and clear of all
leases, liens and encumbrances, except as
disclosed by Seller and accepted in writing by
Purchaser. The Personal Property includes all of
the furniture, fixtures and equipment necessary to
operate the Facility at full capacity and all of
such Personal Property is, and at Closing will be,
in good condition and repair, ordinary wear and
tear excepted.
c. THE REAL PROPERTY. The Facility is
located on that certain parcel of land more
particularly described in Exhibit A attached
hereto. The roof of the Facility is and, as of the
Closing Date, will be, in good and workable
condition and repair and does not leak (and shall
not leak as of the Closing Date) and all major
mechanical systems at the Facility, including, but
not limited to, the air conditioning, electrical
and heating and ventilating systems are and, at
Closing, shall be, in good
and workable condition and repair.
e. NECESSARY ACTION. Seller will proceed
with all due diligence to take all action and
obtain all consents prior to Closing necessary for
it to lawfully enter into and carry out the terms
of this Agreement.
f. TAXES AND TAX RETURNS. All tax returns,
reports and filings of any kind or nature required
to be filed by Seller prior to Closing with
respect to its ownership and operation of the
Facility and its ownership of the Real Property
and the Personal Property have been properly
completed and timely filed in material compliance
with all applicable requirements and all taxes or
other obligations which are due and payable by
Seller have been timely paid.
g. LITIGATION. Except as provided in
Exhibit D, there is no litigation, investigation,
or other proceeding pending or, to the best of
Seller's knowledge, threatened against or relating
to Seller, its properties or business, which is
material to any of Seller's Assets or to this
Agreement, or which would prevent Seller from
performing its obligations hereunder, and the
transaction contemplated herein has not been
challenged by any governmental agency or any other
person, nor does Seller know or have reasonable
grounds to know, of any basis for any such
litigation, investigation or other proceeding.
h. BOOKS AND RECORDS. All of the books and
records maintained by Seller with respect to its
ownership and/or operation of the Seller's Assets
are true, accurate and correct in all material
respects.
i. THE FACILITY LEASES. Attached hereto as
Exhibit E is a true and correct copy of the form
of lease utilized by Seller for the leasing of
units at the Facility. During due diligence,
Seller will provide Purchaser copies of each of
the leases with the tenants
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of the Facility which are currently in effect
(collectively the "Facility Leases"). Each of the
Facility Leases is in ful1 force and effect and
none of the Facility Leases have been modified or
amended except as set forth in any amendment
provided to Purchaser. Seller is not in default of
any of its obligations under the Facility Leases
nor is Seller aware of any default or any action
which, with the passage of time or the giving of
notice or both, would constitute a default under
the Facility Leases by any of the tenants who are
parties thereto. At Closing, Seller shall deliver
to Purchaser duly executed assignments of the
Facility Leases.
j. RENT ROLL. Attached hereto as Exhibit F
is a true and correct rent roll as of November 30,
1996, which identifies each of the tenants of the
Facility, the monthly rent currently being paid by
each such tenant and the date to which said rent
has been paid and, in the event of any rent
delinquencies, an explanation of the reason
therefor and the efforts being undertaken by
Seller to collect said rent. Seller shall update
the rent roll on a monthly basis between the date
hereof and the Closing Date.
k. LIENS. There are no mechanics',
materialmen's or similar claims or liens presently
claimed or, to the best of Seller's knowledge,
which will be claimed against the Seller's Assets
for work performed or commenced prior to the date
hereof at the request of Seller or of which Seller
has knowledge, Seller having made or caused to be
made arrangements for payment of all those
improvements now under construction or
development.
l. EMPLOYEES; UNIONS. None of Seller's
employees are members of a labor union or subject
to any collective bargaining agreement with
respect to their employment with Seller. There are
no labor disputes or grievances pending with
respect to the operations at the Facility, except
as otherwise provided in Exhibit G. For purposes
hereof, a labor dispute or grievance shall be
deemed to be pending if the same has been served
on Seller or Seller has otherwise been advised
either orally or in writing of the pendency
thereof.
m. COMPLIANCE WITH LAW
(i) The Seller's Assets are in compliance
with all currently applicable municipal, county,
state and federal laws, regulations, ordinances,
standards and orders and with all municipal,
health, building and zoning by-laws and
regulations (including, without limitation, the
building and zoning codes) where the failure to
comply therewith or to obtain a waiver therefrom
could have a material adverse effect on the
business, property, condition (financial or
otherwise) or operation of the Seller's Assets;
(ii) There are no outstanding deficiencies or
work orders of any authority having jurisdiction
over the Seller's Assets requiring conformity to
any applicable statute, regulation, ordinance or
by-law pertaining thereto; and
(iii) Seller is not aware of any claim,
requirement or demand of any agency supervising or
having authority over the Facility to rework or
redesign it or to provide additional furniture,
fixtures or equipment so as to conform to or
comply with any existing law, code or standard
which has not been fully satisfied prior to the
date hereof or which will not be satisfied prior
to the Closing Date.
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n. OPERATING CONTRACTS. During xxx
diligence, Seller will provide Purchaser true and
correct copies of all operating contracts to which
Seller is a party in connection with its operation
of the Facility (the "Operating Contracts"). Each
of the Operating Contracts is in full force and
effect and none of the Operating Contracts have
been modified or amended except as set forth in
any amendment provided to Purchaser. Seller is not
in default of any of its obligations under the
Operating Contracts nor is Seller aware of any
default or any action which, with the passage of
time or the giving of notice or both would
constitute a default, under the Operating
Contracts by any other party thereto. At Closing,
Seller shall deliver to Purchaser duly executed
assignments of any of the Operating Contracts
which Purchaser elects to assume pursuant to
Paragraph 11.a.(iii).
o. THE FACILITY. The Facility consists of
eighty-two (82) units and operates as a congregate
care retirement home. The Facility operates as a
congregate care retirement home. There is no
action pending or, to the best knowledge of
Seller, recommended by any state or federal agency
having jurisdiction thereof, or any action of any
other type, which would have a material adverse
effect on the Facility, its operations or
business.
p. INVENTORY. All inventories of non-
perishable food, central supplies, linen,
housekeeping and other supplies located at the
Facility are, and shall be at the time of Closing,
in sufficient condition and quantity to operate
the Facility at normal capacity.
q. DISCLOSURE. No representation or
warranty by Seller contained in this Agreement and
no statement contained in any certificate, list,
exhibit, or other instrument furnished or to be
furnished to Purchaser pursuant hereto, or in
connection with the transaction contemplated
hereby, contains or will contain any untrue
statement of a material fact, or omits or will
omit to state any material facts which are
necessary in order to make the statements
contained herein or therein not misleading.
8. PURCHASER'S REPRESENTATIONS AND WARRANTIES
Purchaser hereby warrants and represents to
Seller that:
a. STATUS OF PURCHASER. Purchaser is a
corporation duly organized and validly existing
under the laws of the State of Washington and is,
or prior to Closing will be, duly qualified to do
business in the State of California.
b. AUTHORITY. Purchaser has full power and
authority to execute and to deliver this Agreement
and all related documents, and to carry out the
transactions contemplated herein. This Agreement
is valid, binding and enforceable as against
Purchaser in accordance with its terms, except as
such enforceability may be limited by creditors'
rights laws and applicable principles of equity.
The execution of this Agreement and the
consummation of the transaction contemplated
herein do not result in a breach of the terms and
conditions of nor constitute a default under or
violation of Purchaser's Articles of Incorporation
or By-laws or any law, regulations, court order,
mortgage, note, bond, indenture, agreement,
license or other instrument or obligation to which
Purchaser is a party or by which Purchaser or any
of the assets or Purchaser may be bound or
affected.
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c. LITIGATION. To the best of Purchaser's
knowledge, there is no litigation, investigation
or other proceeding pending or threatened against
or relating to Purchaser, its properties or
business which is material to this Agreement, or
which would prevent Purchaser from performing its
obligations hereunder, nor does Purchaser know or
have reasonable grounds to know of any basis for
any such action.
d. NECESSARY ACTION. Purchaser will proceed
with all due diligence to take all action and
obtain all consents prior to Closing necessary for
it to lawfully enter into and carry out the terms
of this Agreement, including, but not limited to,
obtaining the consent of its Board of Directors.
e. DISCLOSURE. No representation or
warranty by Purchaser contained in this Agreement
and no statement contained in any certificate,
list, exhibit, or other instrument furnished or to
be furnished to Seller pursuant hereto, or in
connection with the transaction contemplated
hereby, contains or will contain any untrue
statement of a material fact, or omits or will
omit to state any material facts which are
necessary in order to make the statements
contained herein or therein not misleading.
9. BROKER
Neither party has employed a broker or finder
in connection with this transaction. In the event
any claim, damage or cause of action for brokerage
and/or finder's fees is asserted against either
party, the other shall indemnify, defend (with an
attorney of indemnitee's choice) and hold harmless
the indemnitee from and against any and all such
claims, demands and causes of action.
10. SELLER'S COVENANT,
a. PRE-CLOSING. Between the date hereof and
the Closing Date, except as contemplated by this
Agreement or with the consent of Purchaser:
(i) Other than as set forth in Paragraph 4,
Seller will satisfy and discharge all claims,
liens, security interests, tenancies (other than
any Operating Contracts which Purchaser elects to
assume at Closing pursuant to the terms hereof and
the Facility Leases), and encumbrances on Seller's
Assets;
(ii) Seller will file all tax returns,
reports and filings of any kind or nature required
to be filed by Seller and will timely pay all
taxes or other obligations which are due and
payable with respect to Seller's Assets;
(iii) Seller will not take any action
inconsistent with its obligations under this
Agreement or which could hinder or delay the
consummation of the transactions contemplated by
this Agreement, and Seller will continue until the
Closing to fulfill any obligations which it may
have under the Facility Leases;
(iv) Seller will operate the Facility only in
the ordinary course and with due regard to the
proper maintenance and repair of the Facility and
the Personal Property;
(v) Seller will take all reasonable action to
preserve the goodwill of the tenants of the
Facility;
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(vi) Seller will make no material change in
the operation of the Facility nor sell or agree to
sell any of the items which comprise the Personal
Property, nor otherwise enter into an agreement
materially affecting the Seller's Assets, except
in the ordinary course of business;
(vii) Seller will use its reasonable efforts
to retain the services and goodwill of the
employees of Seller located at or connected with
the operation of the Facility;
(viii) Seller will maintain in force the
existing hazard and liability insurance policies,
or comparable coverage, for the Seller's Assets as
now in effect;
(ix) Seller will not increase the
compensation or other benefits or bonuses payable
or to become payable to any of the Seller's
employees connected with the operation of the
Facility, except for increases substantially in
accordance with existing employment practices, if
any;
(x) Seller will not enter into any contract
or commitment affecting the Seller's Assets,
except in the ordinary course of business and any
such contract or commitment shall be terminable
upon not more than thirty (30) days' notice, and
Seller will advise Purchaser of any contracts or
commitments which it enters, whether in the
ordinary course of business or otherwise;
(xi) During normal business hours, Seller
will provide Purchaser and its agents with access
on 24 hours notice to the Real Property and the
Facility, provided Purchaser does not unreasonably
interfere with the operation of the Facility and
at such times Seller shall permit Purchaser to
inspect the books and records related to the
Facility covering a period of not less than three
(3) years prior to the date hereof and conduct an
audit of said books and records (which may be
conducted by Purchaser or Purchaser's
representative) and inspect the physical and
structural condition of the Facility, the Real
Property and the Personal Property. Said books and
records shall include, but not be limited to, all
escrow accounts, leases, accounts payable records,
rent rolls, operating statements, inventory of
personal property, title reports and all
documentation outlined therein, MAI appraisals,
soils and engineering tests, structural
inspections, all zoning and related agreements and
certification from all governmental agencies
relating to the Seller's Assets, and all other
contracts and agreements which relate to the
Seller's Assets;
(xii) Seller will timely pay all obligations
which are due and payable with respect to the
Property;
(xiii) Seller will cause the Facility to be
operated in compliance with all applicable
municipal, county, state and federal laws,
regulations, ordinances, standards and orders as
now in effect (including without limitation, the
building and zoning codes as currently applied
with respect thereto), and with the Environmental
Laws, where the failure to comply therewith could
have a material adverse effect on the business,
property, condition (financial or otherwise) or
operation of the Facility or on the Seller's
Assets;
(xiv) Seller will take all reasonable action
to achieve compliance with any laws, regulations,
ordinances, standards and orders applicable to the
Seller's Assets which are enacted after execution
of this Agreement and prior to Closing; and
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(xv) Seller will proceed with all due
diligence to secure any consents which may be
necessary for the assignment of the Facility
Leases.
(xvi) Cooperate with Purchaser's undertaking
to obtain UCC-I search reports at both the county
and state level covering the name of Seller and
the name of the Facility, (b) cooperate with
Purchaser to cause the Title Insurer to issue and
delivery to Purchaser and to Purchaser's attorney
a title report or commitment covering the Real
property, together with copies of all exception
documents referenced therein (the "Title Report"),
(c) cooperate with Purchaser to cause a survey
firm acceptable to Purchaser to prepare and
deliver to Purchaser an ALTA/ACSM Survey of the
Real Property and the Facility (the "Survey") and
(d) cooperate with Purchaser to cause an
environmental engineering firm acceptable to
Purchaser to prepare and deliver to Purchaser a
Phase I environmental assessment of the Real
Property and Facility (the "Environmental
Report");
(xvii) Seller will provide Purchaser within
fifteen (15) days following the mutual execution
of this Agreement with copies of the following
documents relating to the Real Property and the
Facility to the extent the same are in Seller's
possession or reasonable control (together with
those materials referenced in paragraph l0.a.(xi),
the "Property Documents"): evidence of appropriate
zoning, all environmental reports, structural
reports and geological reports, plans and
specifications, governmental licenses, permits and
approvals, service and maintenance contracts not
previously delivered as part of the Operating
Contracts, existing surveys of the Real Property
including any as-built surveys for the
improvements, wetland reports, soils reports,
architectural drawings, plans and specifications,
engineering tests and reports, and all appraisals
prepared for the Real Property and the Facility.
In addition, Seller will cooperate with Purchaser
in providing such additional information regarding
the Real Property and/or Facility as may be
reasonably required by Purchaser;
(xviii) Neither Seller nor anyone authorized
to act on its behalf shall directly initiate or
solicit or otherwise engage in discussions
relating to any alternative acquisition proposal
or similar transaction.
b. CLOSING. On the Closing Date, Seller
agrees that it will:
(i) Execute and deliver to Purchaser a good
and sufficient Special Warranty Deed to the Real
Property (including the Facility) and Xxxx of Sale
with respect to the Personal Property and such
endorsements, assignments and other instruments of
transfer and conveyance as shall be necessary to
transfer and assign Seller's Assets to Purchaser
as herein provided;
(ii) Deliver to Purchaser a certificate dated
as of the Closing Date, certifying in such detail
as Purchaser may reasonably specify the
fulfillment of the conditions set forth in
Paragraph(s) 13.a. and b.;
(iii) Deliver the Seller's Assets to
Purchaser in good condition and repair, ordinary
wear and tear excepted;
(iv) Deliver to Purchaser a duly executed
assignment of the Facility Leases in form and
substance acceptable to Purchaser (the "Facility
Lease Assignment Agreement");
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(v) Pay its share of the Closing costs,
including, but not limited to, the premium for the
issuance of a standard coverage Title Policy;
(vi) Deliver to Purchaser an Assignment and
Assumption Agreement in form and substance
acceptable to Purchaser with respect to any of the
Operating Contracts which Purchaser elects to
assume at Closing pursuant to Paragraph 11.a.(iii)
(the "Operating Contract Assumption Agreement");
(vii) Deliver to Purchaser the Resident
Deposits, or at Purchaser's option, receive a
credit against the Purchase Price in the amount of
said Resident Deposits (as defined in Paragraph
19); and
(viii) Deliver to Purchaser the Benefits
Schedule (as defined in Paragraph 18) and pay the
Accrued Employee Benefits to Purchaser.
c. POST-CLOSING. After the Closing of this
Agreement, Seller agrees that, at Purchaser's sole
cost and expense, it will take such actions and
properly execute and deliver to Purchaser such
further instruments of assignment, conveyance and
transfer as, in the reasonable opinion of counsel
for Purchaser and Seller, may be reasonably
necessary to assure, complete and evidence the
full and effective transfer and conveyance of
Seller's Assets and cooperate with Purchaser in
any efforts which it may undertake to audit
Seller's financial statements with respect to the
Facility for the periods prior to the Closing if
and to the extent such an audit is required for
Purchaser's compliance with applicable securities
laws. The obligations of Seller hereunder shall
survive the Closing of the transaction provided
for herein.
11. PURCHASER'S COVENANTS
a. PRE-CLOSING. Between the date hereof and
the Closing Date, except as contemplated by this
Agreement or with the consent of Seller, Purchaser
agrees that:
(i) Purchaser will not take any action
inconsistent with its obligations under this
Agreement or which could hinder or delay the
consummation of the transaction contemplated by
this Agreement;
(ii) Purchaser will proceed with all due
diligence to obtain all consents and approvals
necessary to permit the consummation of the
transaction contemplated by this Agreement and/or
necessary to permit Purchaser to own and to
operate the Facility.
(iii) Not less than 30 days prior to the
Closing Date, Purchaser will advise Seller in
writing which, if any, of the Operating Contracts
it elects to assume as of the Closing Date.
b. CLOSING. On the Closing Date, Purchaser
agrees that it will:
(i) Deposit with the Escrow Agent the
Remaining Balance of the Purchase Price;
(ii) Deposit with the Escrow Agent
Purchaser's share of the Closing costs as herein
provided;
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(iii) Execute and deliver to Seller or to
Escrow Agent a counter-part copy of the Operating
Contract Assumption Agreement, if applicable; and
(iv) Execute and deliver to Seller or to
Escrow Agent a counter-part of the Facility Lease
Assignment Agreement.
c. POST-CLOSING. After the Closing of this
Agreement, Purchaser agrees that it will:
(i) Upon prior reasonable notice, provide
Seller with access during normal business hours to
any books or records which Seller may need to file
or to defend tax returns or other filings filed
prior or subsequent to the Closing Date which
relate to periods prior to the Closing Date; and
(ii) Take such actions and properly execute
and deliver such further instruments as Seller may
reasonably request to assure, complete and
evidence the transaction provided for in this
Agreement.
12. MUTUAL
Following the execution of this Agreement,
Purchaser and Seller agree:
a. If any event should occur, either within
or without the knowledge or control of Purchaser
or Seller, which would prevent fulfillment of the
conditions to the obligations of any party hereto
to consummate the transaction contemplated by this
Agreement, to use its or their reasonable efforts
to cure the same as expeditiously as possible; and
b. To cooperate fully with each other in
preparing, filing, prosecuting, and taking any
other actions which are or may be reasonable and
necessary to obtain the consent of any
governmental instrumentality or any third party or
to accomplish the transaction contemplated by this
Agreement.
13. PURCHASER'S CONDITIONS
All obligations of Purchaser under this
Agreement are subject to fulfillment of each of
the following conditions, any one (1) or all or
which may be waived in writing by Purchaser:
a. SELLER'S REPRESENTATIONS AND WARRANTIES
TRUE AT LOSING. Seller's representations and
warranties contained in this Agreement or in any
certificate or document delivered in connection
with this Agreement or the transactions
contemplated herein shall be true in all material
respects at and as of the date of Closing as
though such representations and warranties were
then again made.
b. SELLER'S PERFORMANCE. Seller shall have
performed all of its obligations under this
Agreement that are to be performed prior to or at
Closing to the extent the same have not been
waived by Purchaser in accordance with the terms
hereof.
11
c. APPROVALS. On or before the Closing
Date, Purchaser shall have received all consents,
approvals and licenses as may be necessary for it
to own and to operate the Facility as a Congregate
Care retirement home, including the approval of
Purchaser's Board of Directors of the transaction
contemplated hereunder.
d. NO DEFAULTS. Seller shall not be in
default, where said default cannot be cured by
Closing, under any mortgage, contract, lease or
other agreement to which Seller is a party or by
which Seller is bound and which affects or relates
to the Real Property, the Personal Property or the
Facility, including, but not limited to, the
Facility Leases.
e. DUE DILIGENCE REVIEW. Purchaser shall
be satisfied with the results of its Feasibility
Review, including but not limited to (i)
Purchaser's approval of the physical condition of
the Real Property and the structural condition of
the Facility, including the results of the
Environmental Report, (ii) Purchaser's review and
approval of all Property Documents and (iii)
Purchaser's review of the zoning for the Real
Property to confirm that the Real Property and the
operation and development of the Facility is in
compliance with all applicable zoning laws. In the
event Purchaser has not advised Seller in writing
on or before the date forty-five (45) days
following the mutual execution of this Agreement
(the "Feasibility Period") of its objections to
the results of its due diligence investigation and
its election to terminate this Agreement, this
condition shall be deemed not satisfied as of the
date thereof. In the event Purchaser elects to
terminate this Agreement, the parties shall have
no further rights or obligations hereunder, other
than Purchaser's right to the return of its
Xxxxxxx Money and Purchaser's obligation to pay
any title cancellation and UCC search fees
incurred as a result of such termination.
f. TITLE REVIEW. Within fifteen (15) days
following receipt of the Title Report (together
with legible copies of all of the recorded
documents referenced therein as exceptions) and
the Survey, Purchaser shall have reviewed and
approved or disapproved those matters reflected on
the Title Report and the Survey. In the event
Purchaser objects to any such matters, Purchaser
shall advise Seller in writing of its objections
within said fifteen (15) day period; provided,
however that such objections shall not include
those items specifically excluded in Paragraph 4.
Within ten (10) days of Seller's receipt of
Purchaser's objections, Seller shall advise
Purchaser in writing as to whether it intends to
correct the defects to which Purchaser has
objected. If Seller fails to notify Purchaser
within said ten (10) day period or timely notifies
Purchaser of its refusal to correct some or all of
such defects, Purchaser shall have ten ( 10) days
following the earlier of (i) the expiration of
said Seller's ten (10) day response period, or
(ii) the date Purchaser receives Seller's notice
of refusal, to advise Seller of its decision to
close, notwithstanding the defects, or to
terminate this Agreement. In the event of any such
termination, neither party shall have any further
rights or obligations hereunder, other than
Seller's obligation to return or to direct the
return of Purchaser's Xxxxxxx Money. Any matter
reflected in the Title Report or the Survey not
objected to in accordance with the terms hereof
shall be deemed accepted by Purchaser;
g. TITLE POLICY. Upon the Closing, Title
Insurer shall irrevocably agree to issue to
Purchaser, effective as of the date of Closing, an
ALTA Owner's extended coverage policy of title
insurance for the Real Property and the Facility
(the "Title Policy") with a value of not less than
the total amount of the Purchase Price insuring
Purchaser's interest in the Real Property and the
Facility, and subject to no
12
exceptions other than those of the usual printed
exceptions which are acceptable to Purchaser (the
survey, parties in possession and mechanics lien
exceptions being specifically unacceptable to
Purchaser), and those exceptions accepted by
Purchaser pursuant to Paragraph 13.f.
h. UCC SEARCH. On or before the Closing
Date, Purchaser shall be satisfied with the
results of the UCC search conducted by Purchaser
pursuant to Paragraph l0.a.(xvi).
i. FINANCING. On or before the Closing
Date, Purchaser shall have obtained approvals to
assume the existing first (1st), second (2nd) and
third (3rd) mortgages, or obtained from an
institutional lender, or other lender source
acceptable to Purchaser, financing for the
Purchase Price on commercially reasonable terms
and conditions.
j. FACILITY MORTGAGES. Purchaser shall have
reviewed and approved all documentation relating
to the Facility Mortgages. If and to the extent
Purchaser elects to assume any of the Facility
Mortgages, Purchaser shall have secured the
written approval of the lender with respect
thereto and any documents required by the lender
to evidence said assumption shall have been
executed by said lender and Purchaser.
In the event any of the foregoing conditions
are not satisfied or are not otherwise waived by
Purchaser prior to the applicable period for
satisfaction or waiver, Purchaser shall have the
right to terminate this Agreement in accordance
with the provisions of Paragraph 17, and in such
event Purchaser shall receive a full refund of its
Xxxxxxx Money together with all interest earned
thereon.
14. SELLER'S CONDITION
All obligations of Seller under this
Agreement are subject to the fulfillment, prior to
or at Closing, of each of the following
conditions, any one (1) or all of which may be
waived by Seller in writing:
a. PURCHASER'S REPRESENTATIONS AND
WARRANTIES TRUE AT CLOSING. Purchaser's
representations and warranties contained in this
Agreement or in any certificate or document
delivered in connection with this Agreement or the
transactions contemplated herein shall be true in
all material respects at and as of the date of
Closing as though such representations and
warranties were then again made.
b. PURCHASER'S PERFORMANCE. Purchaser shall
have performed its obligations under this
Agreement that are to be performed prior to or at
Closing to the extent the same have not been
waived by Seller in accordance with the terms
hereof.
15. SELLER'S INDEMNIFICATION
Seller shall indemnify, defend and hold
Purchaser harmless from and against:
13
a. Except as otherwise provided in this
Agreement, any and all obligations relating to the
ownership of Seller's Assets and the operation of
the Facility which exist at the Closing Date,
including, but not limited to any obligations
under the Facility Leases or the Operating
Contracts which Purchaser elects to assume at
Closing, and any obligations with respect to the
Resident Deposits, and (iii) any prior bankruptcy
filed by Seller or anyone else in connection with
the Facility and any private or judicial
foreclosures commenced in connection with the Real
Property and/or the Facility;
b. Any and all damage, loss or liability
arising from and after the Closing Date under any
of the Operating Contracts which Purchaser does
not elect to assume at Closing;
c. Any and all damage, loss, or liability
resulting from any misrepresentation of a material
fact, breach of warranty or nonfulfillment of any
agreement on the part of Seller under this
Agreement or from any misrepresentation in any
certificate furnished or to be furnished to
Purchaser hereunder;
d. Any and all liability or loss arising
out of or relating to any failure in connection
with the transaction contemplated herein to comply
with the requirements of any laws or regulations
relating to bulk sales or transfers; and
e. Any and all actions, suits, proceedings,
demands, assessments, judgments, reasonable costs,
and other reasonable expenses, including, but not
limited to, reasonable attorney's fees, incident
to any of the foregoing.
For purposes of Paragraph 15.a., an
obligation shall be deemed to "exist" as of the
Closing Date if it relates to events which
occurred prior to the Closing Date even if it is
not asserted until after the Closing Date.
16. PURCHASER' INDEMNITY
Purchaser shall indemnify, defend and hold
Seller harmless from and against:
a. Except as otherwise provided in this
Agreement, any and all obligations relating to the
ownership of the Seller's Assets and the operation
of the Facility from and after the Closing Date,
including, but not limited to, any obligations
under any of the Facility Leases or Operating
Contracts which Purchaser elects to assume at
Closing and any obligations with respect to the
Resident Deposits;
b. Any and all damage, loss or liability
resulting from any misrepresentation of a material
fact, breach of warranty or nonfulfillment of any
agreement on the part of Purchaser under this
Agreement or from any misrepresentation in any
certificate furnished or to be furnished to Seller
hereunder;
c. Any and all actions, suits, proceedings,
demands, assessments, judgments, reasonable costs
and other reasonable expenses, including, but not
limited to, reasonable attorney's fees, incident
to any of the foregoing.
14
17. TERMINATION
a. This Agreement may be terminated and the
transaction contemplated herein abandoned at any
time prior to Closing:
(i) By mutual agreement of the parties;
(ii) By Seller, if any of the conditions set
forth in Paragraph 14 shall have become incapable
of fulfillment prior to the Closing Date or such
earlier date as may be specifically provided for
the performance thereof (as the same may be
extended) through no fault of Seller and the same
shall not have been waived by Seller;
(iii) By Purchaser, if any of the conditions
set forth in Paragraph I 3 shall have become
incapable of fulfillment prior to the Closing Date
or such earlier date as may be specifically
provided for the performance thereof (as the same
may be extended) through no fault of Purchaser and
the same shall not have been waived by Purchaser;
(iv) By either Seller or Purchaser in the
event of a material breach by the other party of
its obligations hereunder; or
(v) If the Closing has not occurred by the
Closing Date, unless extended by mutual agreement
of the parties.
b. In the event that prior to the Closing Date, a
material portion of the Real Property, the
Facility or the Personal Property shall have been
damaged or destroyed by fire or other casualty, or
shall have been taken or condemned by any public
or quasi-public authority under the power of
eminent domain, Purchaser shall have the right to
terminate this Agreement on written notice to
Seller. In the event Purchaser elects not to
terminate its rights hereunder, then Seller shall
assign to Purchaser all of its rights to any
insurance proceeds or condemnation award and all
claims in the connection therewith. In the event
Purchaser exercises its termination rights
hereunder, the parties shall have no further
rights or obligations hereunder other than
Purchaser's right to the return of its Xxxxxxx
Money.
c. Neither party to this Agreement may
claim termination or pursue any other remedy
referred to in Paragraph 17.a. on account of a
breach of a condition, covenant or warranty by the
other, without first giving such other party
written notice of such breach and not less than
ten ( 10) days within which to cure such breach.
The Closing Date shall be postponed, if necessary,
to afford such opportunity to cure; provided,
however, in no event shall the Closing Date be
postponed beyond September 30,1997.
d. In the event of the termination of this
Agreement by Seller under Paragraphs 17.a.(ii) or
(iv) or under Paragraph 17(a)(v) in the event the
Closing has failed to occur as a result of a
material breach by Purchaser of its obligations
hereunder, Seller's sole remedy shall be to
terminate this Agreement and to retain Purchaser's
Xxxxxxx Money, together with interest accrued
thereon as full and complete liquidated damages,
the parties acknowledging and agreeing that the
amount of damages which Seller may incur as a
result of such termination may be difficult to
ascertain and that the amount of the Xxxxxxx Money
is a reasonable and fair estimate thereof, after
which the parties shall have no further rights or
obligations hereunder.
15
e. In the event of the termination of this
Agreement by Purchaser under Paragraphs
17.a.(iii), (iv) or (v) as a result of the Closing
failing to occur due to a material breach by
Seller of its obligations hereunder, Purchaser's
sole remedy shall be to terminate this Agreement
and demand the return of its Xxxxxxx Money after
which neither party shall have any further rights
or obligations hereunder.
18. EMPLOYEE BENEFITS
On or before the Closing, Seller shall
deliver to Purchaser a schedule (the "Benefits
Schedule") setting forth all of the earned and
accrued vacation, holiday and sick pay, and
retirement and severance benefits and earned
bonuses (the "Accrued Employee Benefits") due to
and/or coming due to the employees of the Facility
as of the Closing Date. At Closing, Seller shall
terminate all of the Facility employees effective
as of the Closing Date, and pay any accrued and
earned benefits owed to employees to Purchaser,
and Purchaser shall pay the same to the employees
after the Closing, as and when due.
19. RESIDENT SECURITY DEPOSIT,
At Closing, Seller shall provide Purchaser
with an accounting of all resident security
deposits being held by Seller as of the Closing
Date (the "Resident Deposits"). Such accounting
shall set forth the names of the residents or
prospective residents for whom such funds are
held, the amounts held on behalf of each resident
or prospective resident and the Seller's warranty
that the accounting is true, correct and complete.
20. TRANSFER OF RESIDENT SECURITY DEPOSITS
On the Closing Date, Seller shall do either
of the following, the election of which shall be
made by Purchaser: (i) transfer the Resident
Deposits to the bank account designated by the
Purchaser or (ii) grant to Purchaser a credit in
the amount of said Resident Deposits against the
payment of the remaining balance due on the
Purchase Price. In either event, Purchaser shall
in writing acknowledge receipt of and expressly
assume all Seller's financial and custodial
obligations with respect thereto, it being the
intent and purpose of this provision that, at
Closing, Seller will be relieved of all fiduciary
and custodial obligations with respect to said
Resident Deposits, and that Purchaser will assume
all such obligations and be directly accountable
to the residents and prospective residents of the
Facility, with respect thereto.
21. INDEMNITY FOR RESIDENT SECURITY DEPOSITS
Notwithstanding the foregoing, Seller will
indemnify and hold Purchaser harmless from all
liabilities, claims and demands in the event the
amount of the Resident Deposits transferred to the
Purchaser's bank account or the credit for said
Resident Deposits which has been applied against
the Purchase Price, as provided in Paragraph 20,
did not represent the full amount of such Resident
Deposits then or thereafter shown to have been
delivered to Seller by the current residents or
prospective residents of the Facility.
16
22. NOTICES
Any notice, request or other communication to
be given by any party hereunder shall be in
writing and shall be sent by registered or
certified mail, postage prepaid, by overnight
courier guaranteeing overnight delivery or by
facsimile transmission (if confirmed verbally or
in writing by mail as aforesaid), to the following
address:
To Seller: Northwest Retirement
Attn: Xxxxxx X. Xxxxxxx
Post Office Box 14111
Xxxxx, Xxxxxx 00000
Telephone No. : (000) 000-0000
Facsimile No.: (503) 375-
7644
To Purchaser: Emeritus Corporation
0000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxxxx 0000 1
Telephone No.: (000) 000-0000
Facsimile No.: (206) 301-
4500
With a copy to: The Xxxxxxxxx Group
Attn: Xxxxxx X. Xxxxxxxxx,
Esq.
0000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxxxx 00000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Notice shall be deemed given three (3)
business days after deposit in the mail, on the
next day if sent by overnight courier and on
receipt if sent by facsimile (and confirmed
verbally or by mail as aforesaid).
23. SOLE AGREEMENT
This Agreement may not be amended or modified
in any respect whatsoever except by instrument in
writing signed by the parties hereto. This
Agreement constitutes the entire agreement between
the parties hereto and supersedes all prior
negotiations, discussions, writings and agreements
between them.
24. SUCCESSORS
The terms of this Agreement shall be binding
upon and inure to the benefit of and be
enforceable by and against the heirs and successor
of the parties hereto, it being specifically
understood and agreed that Purchaser shall have
the right to assign in whole or in part its rights
and obligations hereunder to any entity sponsored
by or affiliated with Purchaser; provided,
Purchaser shall provide Buyer with notice of any
such assignment and such assignee shall assume all
of Purchaser's obligations hereunder in writing.
In addition, Purchaser shall have the right to
assign its rights hereunder to a real estate
investment trust (the "REIT") in connection with
its financing of the transaction provided for
herein, it being understood and agreed that in the
event of such an assignment, the only right which
the REIT wil1 assume is Purchaser's right to take
title to the Seller's
17
Assets and the only obligation which the REIT will
assume is Purchaser's obligation to pay the
purchase price in accordance with the terms hereof
and that, in any event, Purchaser shall not be
relieved of any of its obligations hereunder in
the event of such an assignment to a REIT.
25. CAPTION
The captions of this Agreement are for
convenience of reference only and shall not define
or limit any of the terms or provisions hereof.
26. GOVERNIN LAW
This Agreement shall be governed by and
construed in accordance with the laws of the State
of California.
27. SEVERABILITY
Should any one (1) or more of the provisions
of this Agreement be determined to be invalid,
unlawful or unenforceable in any respect, the
validity, legality and enforceability of the
remaining provisions hereof shall not in any way
be affected or impaired thereby.
28. COUNTERPARTS
This Agreement may be executed in any number
of counterparts, each of which shall be an
original; but such counterparts shall together
constitute but one (1) and the same instrument.
29. THIRD PARTY BENEFICIARY
The provisions of this Agreement are not
intended to confer any benefits upon any person or
entity not a party to this Agreement.
30. ACCOUNTS RECEIVABLE
Within ten (10) days prior to the Closing
Date, Seller shall provide Purchaser with a
detailed listing of Seller's accounts receivable
which are anticipated to be outstanding on the
Closing Date.
31. RESPONSIBILITY FOR COLLECTIONS
From and after the Closing Date, Purchaser
shall assume responsibility for the billing for
and collection of payments on account of services
rendered or goods sold by it on and after the
Closing Date and Seller shall retain all right,
title and interest in and to and all
responsibility for the collection of its accounts
receivable for services rendered or goods sold
prior to the Closing Date.
18
32. APPLICATION OF PAYMENT,
Any payments received by Purchaser for the
first thirty (30) days after the Closing Date from
residents with balances due for the period prior
to and after the Closing Date, shall be applied by
Purchaser first to reduce any pre-Closing Date
balances due to Seller. After that time, Purchaser
is entitled to all amounts received.
Notwithstanding the foregoing, in the event any
payment received by Purchaser during the first
thirty (30) days after the Closing Date
specifically designates that it relates to
services rendered after the Closing Date, that
payment, or that portion of the payment which
directly relates to the services rendered after
the Closing Date, shall be retained by Purchaser.
33. ATTORNEY'S FEES
Should either party institute any action or
proceeding to enforce or interpret this Agreement
or any provision hereof, for damages by reason of
any alleged breach of this Agreement or of any
provision hereof, or for a declaration of rights
hereunder, the prevailing party in any such action
or proceeding shall be entitled to receive from
the other party all costs and expenses, including
reasonable attorneys' and other fees, incurred by
the prevailing party in connection with such
action or proceeding. The term "attorneys' and
other fees" shall mean and include attorneys'
fees, accountants' fees, and any and all other
similar fees incurred in connection with the
action or proceeding and the preparations
therefor. The term "action or proceeding" shall
mean and include actions, proceedings, suits,
arbitrations, appeals and other similar
proceedings.
[Signature page follows.]
19
IN WITNESS WHEREOF, the parties hereby
execute this Agreement as of the day and year set
forth opposite each party's signature below with
the last date constituting the date of mutual
execution of this Agreement.
Dated: 12/19/96 PURCHASER:
EMERITUS CORPORATION,
a Washington corporation
By: /s/ Xxxxxxx X. Xxxxxxxxxx
------------------------
---------------
Its: President
Dated: December 6, 1996 SELLER:
NORTHWEST RETIREMENT,
an Oregon general partnership.
By: /s/ Xxxxxx X. Xxxxxxx,
------------------------
-------------
Its : General Partner
20
