PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT is made and entered into as of the 26th
day of March, 2002 by and between TDC Convalescent, Inc., a California
corporation ("Seller") and Emeritus Corporation, a Washington corporation
("Purchaser").
RECITALS
A. Seller and Purchaser are partners of a partnership known as
TDC/Emeritus Paso Xxxxxx Associates, a Washington general partnership (the
"Partnership").
B. The Partnership owns and operates an assisted living facility
commonly known as Creston Village, 0000 Xxxxxxx Xxxx, Xxxx Xxxxxx, Xxxxxxxxxx
(the "Facility").
C. The Purchaser intends to consummate a transaction with Health Care
REIT, Inc. ("HC REIT") pursuant to which, among other things, the Facility will
be sold to HC REIT and leased to Purchaser and subleased by Purchaser to the
Partnership or a limited liability company which is the successor to the
Partnership (the "HC REIT Transaction").
D. In connection therewith, Purchaser is interested in purchasing and
Seller is interested in selling first all of Seller's economic interest in and
to the Partnership at an initial closing, and then all of Seller's remaining
interest in and to the Partnership as a final closing, all upon and subject to
the terms and conditions set forth herein.
E. Purchaser and Seller are interested in documenting the terms and
conditions of such purchase and sale transaction.
F. All capitalized terms used herein and not otherwise defined shall
have the meaning set forth in the Partnership Agreement of the Partnership dated
as of June 1, 1995 (the "Partnership Agreement").
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants of the parties set forth herein, IT IS HEREBY AGREED AS FOLLOWS:
AGREEMENT
1. PURCHASE AND SALE.
Seller does hereby agree to sell to Purchaser and Purchaser does hereby
agree to purchase from Seller the following:
a. All of Seller's economic interest in and to the Partnership (the
"Economic Interest"), concurrently with and subject to the closing of the HC
REIT Transaction; and
b. All of Seller's right, title and interest (excluding the Economic
Interest) in and to the Partnership (the "Remaining Interest", and together with
the Economic Interest, the "Interest"), when Purchaser shall have obtained the
Approvals (as hereinafter defined) and provided that the Initial Closing (as
hereinafter defined) shall have occurred.
c. By their signatures set forth below, Seller and Purchaser shall be
deemed to have consented to the purchase and sale of the Interest as required by
Section 7 of the Partnership Agreement.
2. PURCHASE PRICE
The purchase price payable by Purchaser to Seller for the Interest shall be
Two Million Six Hundred Fifty Thousand Dollars ($2,650,000.00) for the Economic
Interest (the "Economic Interest Purchase Price"), which shall be payable in
full by wire transfer of funds on the Initial Closing Date (as hereinafter
defined), and One Dollar ($1.00) for the Remaining Interest (the "Remaining
Interest Purchase Price"), which shall be payable in cash or by check on the
Final Closing Date (as hereinafter defined).
3. INITIAL CLOSING AND FINAL CLOSING
a. Subject to Purchaser obtaining the approval of its Board of Directors and
any other necessary approvals, including any necessary regulatory approvals
(collectively, the "Approvals") and provided that all of the conditions to the
closing of the HC REIT Transaction (the "HC REIT Closing") shall be satisfied:
(i) The closing of the purchase and sale of the Economic Interest
(the "Initial Closing") shall occur on the date of the HC REIT Closing (the
"Initial Closing Date"). The Initial Closing shall occur through the same
escrow as for the HC REIT Closing (the "Escrow").
(ii) On the Initial Closing Date, Seller shall execute and deliver
to Purchaser through Escrow an Economic Interest Assignment and Power of
Attorney with respect to the Economic Interest in the form attached hereto as
Exhibit A and such other documents as may be necessary in order to convey title
to the Economic Interest to Purchaser, and Purchaser shall pay the Economic
Interest Purchase Price to Seller through Escrow. In addition, Seller and
Purchaser each shall pay through Escrow one-half of the $100,000.00 prepayment
penalty that
will be due to Finova Capital Corporation ("Finova") for prepayment of the loan
made by Finova (the "Finova Loan") to the Partnership and secured by the
Facility, and Seller shall pay to Purchaser through Escrow the remaining unpaid
balance of Seller's promissory note relating to the Granite Bay facility [(which
balance was $125,000 as of January 25, 2002)]. Nothing herein shall affect the
respective rights of the parties pursuant to Section 6.5(b) of the Partnership
Agreement to management fees accrued prior to the Initial Closing Date (Seller
specifically retains its interest therein and Purchaser agrees to pay Seller its
share thereof on the Initial Closing Date) , but any such management fees for
the period from and after the Initial Closing Date are included in the Economic
Interest to be transferred to Purchaser hereunder and therefore shall belong to
Purchaser. On the Initial Closing Date, the Partnership will cause all monetary
obligations relating to the Finova Loan to be repaid in full so that the
liability of the Partnership and its partners for such obligations is terminated
as of the Initial Closing Date.
b. Subject to Purchaser obtaining the Approvals and provided that the
Initial Closing shall have occurred:
(i) The closing of the purchase and sale of the Remaining Interest (the
"Final Closing") shall occur on the date on which Purchaser shall have obtained
all necessary regulatory approvals for the transfer of the Remaining Interest
(or such date within a reasonable time thereafter as may be designated by
Purchaser by notice to Seller) (as applicable, the "Final Closing Date"). The
Final Closing shall occur by mail or other means approved by the parties.
(ii) On the Final Closing Date, Seller shall execute and deliver to
Purchaser an Remaining Interest Assignment with respect to the Remaining
Interest in the form attached hereto as Exhibit B and such other documents as
may be necessary in order for Seller to convey to Purchaser all of the Seller's
remaining right, title and interest in and to the Partnership, and Purchaser
shall pay the Remaining Interest Purchase Price to Seller.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS.
a. SELLER'S REPRESENTATIONS, WARRANTIES AND COVENANTS. Seller hereby
represents and warrants to and covenants with Purchaser as follows:
(i) Subject to Purchaser and/or Seller, as applicable, obtaining the
Approvals, Seller has full power and authority to execute and to deliver this
Agreement and all related documents, and to carry out the transactions
contemplated herein and therein.
(ii) This Agreement is valid, binding and enforceable against Seller in
accordance with its terms. The execution of this Agreement and the consummation
of the transactions contemplated herein in accordance with the terms hereof do
not and will not result in a breach of the terms and conditions of nor
constitute a default under 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's assets may be bound or affected.
(iii) Seller has not previously and as of the Initial Closing Date and
the Final Closing Date, respectively shall not have granted, assigned,
hypothecated, pledged, or otherwise transferred its Economic Interest or its
Remaining Interest in the Partnership or any interest therein or entered into
any agreement (other than this Agreement) to do so, and the Economic Interest
and the Remaining Interest shall, at the time of the conveyance thereof to
Purchaser, each be free and clear of all liens, charges and encumbrances.
(iv) Seller has not in its capacity as a Partner of the Partnership
performed any act or entered into any transaction (A) other than transactions
known to Purchaser and in which Purchaser was involved, or (B) which is in
violation of the terms of the Partnership Agreement, including, but not limited
to, any transaction involving the granting of any lien or encumbrance on any of
the assets of the Partnership or otherwise obligating the Partnership in any way
and there are no obligations or liabilities relating to the Seller's interest in
the Partnership which have not been disclosed in writing to the Purchaser. From
and after the Initial Closing Date, except as otherwise specifically provided in
this Agreement or with the prior written consent of the Purchaser, Seller shall
not perform any act, execute, deliver or accept any certificate, instrument,
document or agreement or enter into any transaction whatsoever in Seller's
capacity as a partner of the Partnership.
(v) The right or ability of Seller to consummate the transaction
contemplated herein has not been challenged by any governmental agency or any
other person and Seller has no knowledge of the occurrence of any event which
would provide a reasonable basis for any such litigation, investigation or other
proceeding.
(vi) No representation or warranty by or on behalf of Seller contained
in this Agreement and no statement contained in any certificate, list, exhibit,
or other instrument furnished or to be furnished to Purchaser by Seller pursuant
hereto 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, in light of the circumstances
under which they were made, not misleading.
b. PURCHASER'S REPRESENTATIONS, WARRANTIES AND COVENANTS. Purchaser
hereby represents and warrants to and covenants with Seller as follows:
(i) Subject to Purchaser and/or Seller, as applicable, obtaining the
Approvals, 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 and therein.
(ii) This Agreement is valid, binding and enforceable against Purchaser
in accordance with its terms. The execution of this Agreement and the
consummation of the transactions contemplated herein in accordance with the
terms hereof do not and will not result in a breach of the terms and conditions
of nor constitute a default under any law, regulation, court order, mortgage,
note, bond, indenture, agreement, license or other instrument or obligation to
which Purchaser is now a party or by which any of Purchaser's assets may be
bound or affected.
(iii) The right or ability of Purchaser to consummate the transaction
contemplated herein has not been challenged by any governmental agency or any
other person and Purchaser has no knowledge of the occurrence of any event which
would provide a reasonable basis for any such litigation, investigation or other
proceeding.
(iv) No representation or warranty by or on behalf of Purchaser
contained in this Agreement and no statement contained in any certificate, list,
exhibit, or other instrument furnished or to be furnished to Seller by Purchaser
pursuant hereto 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, in light of the
circumstances under which they were made, not misleading.
5. AUTHORITY FOR HC REIT TRANSACTION; POWER OF ATTORNEY; ASSUMPTION AND
INDEMNITY
a. Effective from and after the date of this Agreement, the Seller, as
a partner of the Partnership, hereby authorizes the Purchaser, on behalf of the
Partnership, to take any and all actions and execute and deliver and accept any
and all certificates, instruments, documents and agreements on behalf of the
Partnership as Purchaser deems to be reasonably necessary to consummate the HC
REIT Transaction, including, but not limited to, those agreements, documents and
instruments referenced in Recital C above.
b. Effective from and after the Initial Closing Date, the Seller hereby
makes, constitutes and appoints the Purchaser as the Seller's true and lawful
agent and attorney-in-fact, with full power of substitution and full power and
authority in the Seller's name, place and stead, for all purposes under the
Partnership Agreement, to make all Partnership decisions, to exercise all
management, voting and other rights and to make any determinations and to take
any and all actions and execute and deliver and accept any and all certificates,
instruments, documents and agreements on behalf of the Seller under the
Partnership Agreement, including, without limitation, any and all such decisions
and voting and other determinations and actions and the execution, delivery and
acceptance of any and all certificates, instruments, documents and agreements in
connection with (a) the HC REIT Transaction, (b) the conversion of the
Partnership to a limited liability company, if Purchaser in its sole discretion
elects to do so, and all conveyances and other certificates, instruments,
documents and agreements deemed advisable by the Purchaser to effect such
conversion and/or the dissolution and termination of the Partnership in such
event, (c) any other change or modification of the Partnership Agreement or the
Partnership in accordance with this Agreement; (d) all other certificates,
instruments, documents and agreements which may be required or permitted by law
to be executed or filed on behalf of the Partnership. The power of attorney
granted herein is hereby declared irrevocable and a power coupled with an
interest, shall survive the death, incompetency, bankruptcy, dissolution or
other termination of the Seller, shall extend and be binding upon the Seller's
successors and assigns and shall continue in full force and effect regardless of
whether the Seller sells, assigns, transfers or otherwise terminates, in whole
or in part, its investment in the Partnership. The Seller hereby agrees to be
bound by any representations made by the attorney and agent acting in good faith
pursuant to such power of attorney, and hereby waives any and all defenses which
may be available to contest, negate, or disaffirm any action of the attorney and
agent taken under such power of attorney.
c. From and after the Initial Closing Date, Purchaser shall assume and
agree to pay any and all liabilities, costs, expenses and obligations imposed on
Seller as a partner of the Partnership and arising from and after the Initial
Closing Date under the terms of (i) the Partnership Agreement, (ii) any other
agreement to which the Partnership may be a party, except as otherwise provided
by this Agreement. Purchaser agrees to indemnify, defend and hold harmless
Seller from and against any and all losses, damages, costs and expenses,
including, but not limited to, reasonable attorneys fees, which it may incur as
a result of any and all claims which may be brought against it after the Initial
Closing Date in its capacity as a partner or former partner of the Partnership
except to the extent such claims arise from a breach by Seller of its
representations and warranties set forth in Section 4 of this Agreement. In the
event Seller believes that it has a claim which is subject to the indemnity
provisions of this paragraph it shall timely tender the same to Purchaser in
writing, specifying in reasonable detail the nature of the claim for which
indemnity is sought, and Purchaser shall assume the defense thereof with counsel
selected by Purchaser. Purchaser shall have the sole and absolute right to
control the defense of such claim and to settle or otherwise compromise such
claim provided no such settlement or compromise involves an admission of
liability by Seller. Seller shall be entitled, at its sole cost and expense, to
participate in (but not control) such defense. Nothing herein shall be
construed as imposing any obligation on Purchaser to indemnify Seller with
respect to any liabilities arising, or which relate to the period prior to, the
Initial Closing Date.
6. BREACH AND REMEDIES
a. In the event of a breach by Seller in its obligations under this
Agreement prior to the Initial Closing Date, Purchaser shall have the right
either (i) to terminate this Agreement and xxx to recover any damages it may
have suffered as a result of such breach or (ii) to seek to specifically enforce
Seller's obligations hereunder.
b. In the event of a breach by Purchaser in its obligations under this
Agreement prior to the Initial Closing Date, Seller shall have the right either
(i) to terminate this Agreement and to xxx to recover any damages it may have
suffered as a result of such breach or (ii) to seek to specifically enforce
Purchaser's obligations hereunder.
7. MISCELLANEOUS
a. Each of Seller and Purchaser shall be responsible for its own costs
and expenses associated with the purchase and sale of the Interest including any
state or federal income taxes due as a result thereof.
b. From and after the Initial Closing Date and the Final Closing Date,
Seller shall take such actions and properly execute and deliver to Purchaser
such further instruments of assignment, conveyance and transfer as may be
reasonably necessary to assure, complete and evidence the full and effective
transfer and conveyance of the Economic Interest and the Remaining Interest,
respectively.
c. 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, to the following addresses:
To Seller: TDC Convalescent, Inc.
0000 Xxxxxxx Xxxx.
Xxxxxxxxx, XX 00000
Attention: Xxx Xxxxx
Phone: 000-000-0000
Fax: 000-000-0000
To Purchaser: Emeritus Corporation
0000 Xxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, XX 00000
Attn: Xxxx Xxxxxxx
Phone: 000-000-0000
Fax: 000-000-0000
Notices may be sent by deposited in the United States mail postage prepaid,
by certified mail, return receipt requested, by facsimile transmission or by
overnight courier and shall be deemed received on actual receipt or refusal of
receipt thereof.
d. This Agreement may not be amended or modified in any respect
whatsoever except by an instrument in writing signed by the parties hereto.
This Agreement constitutes the entire agreement between the parties hereto with
respect to the subject matter hereof and supersedes all prior negotiations,
discussions, writings and agreements between them with respect to the subject
matter hereof.
e. Purchaser may assign any or all of its rights hereunder to an entity
which is owned or controlled, directly or indirectly, by Purchaser.
f. The waiver by any party of any breach of any of the provisions of
this Agreement shall not constitute a continuing waiver or a waiver of any
subsequent breach of any provision of this Agreement.
g. Each recital set forth and exhibit referenced in this Agreement is
incorporated and becomes an integral part of this Agreement.
h. The captions of this Agreement are for convenience of reference only
and shall not define or limit any of the terms or provisions hereof.
i. Nothing in this Agreement express or implied is intended to and
shall not be construed to confer upon or create in any person (other than the
parties hereto and Landlord) any rights or remedies under or by reason of this
Agreement, including without limitation, any right to enforce this Agreement.
j. Time is of the essence of this Agreement and of all of the
covenants, conditions, terms and provisions of this Agreement.
k. If any litigation or other proceedings are commenced between parties
to this Agreement regarding the rights and duties of any party pursuant to,
related to or arising from this Agreement, then the prevailing party with
respect to the litigation or other proceedings, shall be entitled, in addition
to the relief granted, a reasonable sum for attorneys' fees and costs of the
litigation or other proceedings.
l. This Agreement shall be governed by and construed in accordance with
the laws of the State of Washington.
m. Should any one 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.
n. Each of the parties agrees to indemnify, defend and hold harmless
the other and its directors, officers, agents, employees, members and partners
and any successors thereto, from and against any and all damages, losses, costs,
liabilities, obligations and expenses, including, but not limited to reasonable
attorneys fees and costs, including fees and costs on appeal, which it may incur
as a result of the breach by the other of its representations and warranties set
forth in Section 4 hereof or its obligations hereunder.
o. 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 and the same instrument.
p. Each party acknowledges and agrees that it has participated in the
drafting and the negotiation of this Agreement and has been represented by
counsel during the course thereof. Accordingly, in the event of a dispute with
respect to the interpretation or enforcement of the terms hereof, no provision
shall be construed so as to favor or disfavor either party hereto.
IN WITNESS WHEREOF, the parties hereby execute this Agreement as of the day
and year first set forth above.
EMERITUS CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxxxxx
Xxxxxxx X. Xxxxxxxxxx
Its: Chief Financial Officer_
TDC CONVALESCENT, INC.
By: /s/ Xxxxxx X. Clark____
Xxxxxx X. Xxxxx
Its: __________________________
STATE OF WASHINGTON )
) SS:
COUNTY OF KING )
The foregoing agreement was acknowledged before me this ___ day of
March, 2002 by _________________________, the _________________________ of
Emeritus Corporation, a Washington corporation, on behalf of the corporation.
Notary Public
My Commission Expires: [SEAL]
STATE OF _______________ )
) SS:
COUNTY OF _____________ )
The foregoing agreement was acknowledged before me this ___ day of
March, 2002 by _________________________, the _________________________ of TDC
Convalescent, Inc., a California corporation, on behalf of the corporation.
Notary Public
My Commission Expires: [SEAL]
EXHIBIT A
ECONOMIC INTEREST ASSIGNMENT
AND POWER OF ATTORNEY
Pursuant to the Purchase and Sale Agreement (the "Purchase Agreement")
dated March 26, 2002 between TDC Convalescent, Inc., a California corporation
(the "Assignor") and Emeritus Corporation, a Washington corporation
("Assignee"), Assignor does hereby sell, transfer, convey and assign to Assignee
all of Assignor's economic interest in the Washington general partnership known
as TDC/Emeritus Paso Xxxxxx Associates (the "Partnership"), free and clear of
all liens, charges, claims and encumbrances.
Assignor hereby makes, constitutes and appoints the Assignee as the
Assignor's true and lawful agent and attorney-in-fact, with full power of
substitution and full power and authority in the Assignor's name, place and
stead, for all purposes under the Partnership's Partnership Agreement dated June
1, 1995 (the "Partnership Agreement"), to make all Partnership decisions, to
exercise all management, voting and other rights and to make any determinations
and to take any and all actions and execute and deliver and accept any and all
certificates, instruments, documents and agreements on behalf of the Assignor
under the Partnership Agreement, including, without limitation, any and all such
decisions and voting and other determinations and actions and the execution,
delivery and acceptance of any and all certificates, instruments, documents and
agreements in connection with (a) the transaction with Health Care REIT, Inc.
pursuant to which, among other things, the facility owned by the Partnership
will be sold to Health Care REIT, Inc. and leased to Assignee or an affiliate of
Assignee, (b) the conversion of the Partnership to a limited liability company,
if Assignee in its sole discretion elects to do so, and all conveyances and
other certificates, instruments, documents and agreements deemed advisable by
the Assignee to effect such conversion and/or the dissolution and termination of
the Partnership in such event, (c) any other change or modification of the
Partnership Agreement or the Partnership in accordance with this Agreement; (d)
all other certificates, instruments, documents and agreements which may be
required or permitted by law to be executed or filed on behalf of the
Partnership. The power of attorney granted herein is hereby declared
irrevocable and a power coupled with an interest, shall survive the death,
incompetency, bankruptcy, dissolution or other termination of the Assignor,
shall extend and be binding upon the Assignor's successors and assigns and shall
continue in full force and effect regardless of whether the Assignor sells,
assigns, transfers or otherwise terminates, in whole or in part, its investment
in the Partnership. The Assignor hereby agrees to be bound by any
representations made by the attorney and agent acting in good faith pursuant to
such power of attorney, and hereby waives any and all defenses which may be
available to contest, negate, or disaffirm any action of the attorney and agent
taken under such power of attorney.
This Economic Interest Assignment and Power of Attorney shall be effective
as of March 26, 2002 (the "Effective Date").
TDC CONVALESCENT, INC.
By: /s/ Xxxxxx X. Clark_______
Xxxxxx X. Xxxxx
Its: __________________________
STATE OF ________________ )
) SS:
COUNTY OF ______________ )
The foregoing Economic Interest Assignment and Power of Attorney was
acknowledged before me this ___ day of March, 2002 by _________________________,
the _________________________ of TDC Convalescent, Inc., a California
corporation, on behalf of the corporation.
Notary Public
My Commission Expires: [SEAL]
EXHIBIT B
REMAINING INTEREST ASSIGNMENT
Pursuant to the Purchase and Sale Agreement (the "Purchase Agreement") dated
March 26, 2002 between TDC Convalescent, Inc., a California corporation (the
"Assignor") and Emeritus Corporation, a Washington corporation ("Emeritus"),
Assignor does hereby sell, transfer, convey and assign to Emeritus, a Washington
corporation ("Assignee") all of Assignor's remaining right, title and interest
in and to the Washington general partnership known as TDC/Emeritus Paso Xxxxxx
Associates (the "Partnership"), free and clear of all liens, charges, claims and
encumbrances, and does hereby release Emeritus from any liability to it under
the terms of the Partnership's Partnership Agreement dated June 1, 1995 (the
"Partnership Agreement") or otherwise, whether known or unknown, contingent or
determined. The undersigned does hereby further acknowledge and agree that from
and after the Effective Date (as hereinafter defined) it shall have no further
rights or obligations as a partner of the Partnership.
This Assignment shall be effective as of March 26, 2002 (the "Effective Date").
TDC CONVALESCENT, INC.
By: /s/ Xxxxxx X. Clark_______
Xxxxxx X. Clark______________
Its: ____________________________
STATE OF ________________ )
) SS:
COUNTY OF ______________ )
The foregoing Remaining Interest Assignment was acknowledged before me
this ___ day of March, 2002 by _________________________, the
_________________________ of TDC Convalescent, Inc., a California corporation,
on behalf of the corporation.
Notary Public
My Commission Expires: [SEAL]
