PURCHASE AND SALE AGREEMENT
This Agreement is made and entered into this 20 day of August 1996, by
and between HEARTHSTONE-5K FAMILY LIMITED PARTNERSHIP, a
Washington limited partnership ("Seller"), and EMERITUS
CORPORATION, a Washington corporation ("Purchaser").
PURCHASE AND SALE
1. On the terms and conditions set forth herein, Seller shall sell to
Purchaser and Purchaser shall purchase from Seller the following:
a. The real property situated in the state of Washington, which is more
particularly described in Exhibit A attached hereto (the "Real Property")
and the improvements on the Real Property that constitute the 42 unit
congregate care and 42-unit assisted living facility commonly known as
Hearthstone Retirement Inn and located in Moses Lake, Washington
(the "Facility").
b. All equipment, furniture, fixtures, inventory (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 Properly or used in
connection with the operation of the Facility, including but not limited
to, entitlements, telephone numbers, any right, title or interest which Seller
may have in and to any service marks, trademarks or trade names owned or
employed by Seller in conjunction with the operation of the Facility
specifically including the name "Hearthstone Retirement Inn" and any trade
names and trade marks related thereto and goodwill associated therewith,
and all motor vehicles owned or leased by Seller and used in conjunction
with the operation of the business conducted at the Facility, but specifically
excluding cash, cash equivalents and accounts receivable for the period
prior to the Closing Date (as defined below) (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 (the "Consumables").
Hereinafter the foregoing shall sometimes be collectively referred to as
"Seller's Assets."
PURCHASE PRICE
The purchase price payable by Purchaser to Seller for Seller's Assets shall
be Five Million Two Hundred Thousand and no/100 Dollars ($5,200,000)
and shall be payable as follows:
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a. Fifty Thousand and no/100 Dollars ($50,000) on execution of this
Agreement (the "Xxxxxxx Money") shall be delivered by Purchaser to
Chicago Title Insurance Company, Commercial Escrow, 0000 X. 00xx
Xxxxxx, Xxxxxx, XX 00000 (the "Escrow Agent"). In the
event the purchase and sale contemplated by this Agreement is
consummated, then the Xxxxxxx Money will be credited against the Purchase
Price at Closing. In the event the purchase and sale contemplated by this
Agreement fails to occur, the Xxxxxxx Money shall be remitted to Seller or
Purchaser, as appropriate, in accordance with the provisions of
Paragraph 17 hereof. The Escrow Agent shall be authorized, at Purchaser's
option, to invest the Xxxxxxx Money in such manner as Purchaser may direct
with Seller's reasonable written approval; provided, however, that the
Escrow Agent shall invest the Xxxxxxx Money only in such manner as will
allow Escrow Agent to disburse the Xxxxxxx Money on two (2) days'
notice. All interest or other earnings on the Xxxxxxx Money shall become
part of the Xxxxxxx Money and shall be disbursed to the party who becomes
entitled to the Xxxxxxx Money pursuant to the provisions of this Agreement.
b. The balance, as reduced by the Xxxxxxx Money and any accrued interest
thereon and as adjusted by the costs and prorations provided for in
Paragraph 5, shall be due and payable by wire transfer of immediately
available funds at Closing (as defined below); provided, however, that One
Hundred Twenty Five Thousand and no/100 Dollars ($125,000) of said
proceeds shall be held in escrow by Escrow Agent (the "Escrowed Funds")
for the period specified in Paragraph 26 as security for Seller's indemnity
obligations under Paragraph 15(c) with respect to Seller's representations
and warranties in Paragraphs 7(c) and 7(d), subject to the following terms
and conditions:
(i) The Escrowed Funds shall be deposited in an interest bearing account
with interest accruing to the benefit of Seller, except as otherwise ordered
by a court of law pursuant to clause (iv). The cost of such escrow shall be
shared by Seller and Purchaser on a 50-50 basis.
(ii) Subject to clauses (iii) and (iv), Purchaser shall be entitled to obtain
the release of any or all of the Escrowed Funds upon the delivery to Seller
and to Escrow Agent of a written demand therefor setting forth the nature
of Seller's breach of said representations and warranties and accompanied
by an invoice or bid showing the amount which Purchaser has expended or
proposes to expend to undertake the repair required as a result thereof.
(iii) Seller shall have a period of ten (10) days after its receipt of
Purchaser's demand for the release of any or all of the Escrowed Funds, to
advise Purchaser and the Escrow Agent if Seller objects to Purchaser's
demand and the basis therefor, which basis shall be limited to those set
forth in Paragraph 15(c).
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(iv) Seller and Purchaser shall have a period of fifteen ( 15) days after
the delivery of Seller's objection pursuant to clause (iii) to negotiate in good
faith respect to the release of the Escrowed Funds requested by Purchaser
and in the event they are unable to resolve their dispute with respect thereto
within said period, the Escrow Agent shall be required to retain the funds
which are the subject of said dispute pending a resolution of said dispute by
an arbitrator selected by mutual agreement of Seller and Purchase, or, if
Purchaser and Seller cannot agree on an arbitrator within twenty (20) days,
by a panel of three arbitrators selected within twenty (20) days after the end
of such initial twenty (20) day period, comprised of one arbitrator
selected by Seller, one arbitrator selected by Purchaser and a third arbitrator
selected by the first two arbitrators, and to release said funds, along with the
accrued interest thereon, pursuant to the order of said arbitrator.
(v) Any of the Escrowed Funds which remain in escrow at the
expiration of the two year period provided for in Paragraph 26, along with
the accrued interest thereon, shall be released by Escrow Agent after its
receipt of written notice delivered by Seller to Escrow Agent and Purchaser,
which notice shall be delivered by Seller within ten ( 10) days following the
expiration of the two year period, subject to the following: If Purchaser,
within such ten (10) day period, provides to Seller and the Escrow Agent
written notice (the "Objection Notice") that the two (2) year period
provided for in Paragraph 26 has been extended by the filing of one or more
claims within said two year period which then remains unresolved and
identifies the amount requested in such claim(s), the amount so requested in
such claim(s) shall be retained by the Escrow Agent pending the final
resolution of such claim(s) and the remaining balance of the Escrowed
Funds, if any, along with the accrued interest thereon, shall be disbursed to
Seller; provided that if Seller provides the Escrow Agent and
Purchaser with a written notice that it disputes the claim(s) (to the extent it
has not already disputed the claim(s)) or the Objection Notice, then such
dispute, and the release of the funds which are the subject of such claim(s)
and Objection Notice, shall be resolved in accordance with clauses (iii) and
(iv) of this Paragraph 2(b).
c. The purchase price shall be allocated among Seller's Assets in the
manner set forth in Exhibit C.
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, the Real Property, the Personal Property or the
Facility which relates to the period prior to Closing.
CLOSING
3. The Closing of the purchase and sale under this Agreement (the
"Closing") shall take place on or before October 1,1996 (provided all of the
conditions to closing set forth in Paragraphs 13 and 14 have been satisfied
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or waived) (the "Closing Date"); provided, however, that Purchaser shall
have the right on written notice to Seller delivered on or prior to the Closing
Date to extend the Closing Date for a period of up to thirty (30) days.
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.
CONVEYANCE
4. Conveyance of the Seller's Assets to Purchaser shall be effected by a
Warranty Deed, Xxxx of Sale and Assignment of Contracts in form and
substance substantially the same as those attached hereto as Exhibits D, E
and F; provided, however, that Purchaser acknowledges and agrees that title
to the Real Property may be conveyed by Webko Partnership on behalf of
Seller and Seller acknowledges and agrees that such conveyance shall not
affect Seller's responsibility for the representations and warranties set forth
in this Purchase Agreement with respect to title to the Real Property. Fee
simple insurable title to the Real Property and indefeasible 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)
which are Permitted Exceptions (as defined in Paragraph 1 I(a)(ii));
c. All laws, ordinances and governmental regulations, including, but not
limited to, all applicable building, zoning, land use and environmental
ordinances and regulations; provided, however, that the provisions of this
clause (c) shall be subject to Purchaser's right to object thereto and Seller's
agreement to take corrective action in response to said objections all as
specified more fully in Paragraph 11(a)(ii); and
d. The rights of the residents of the Facility under written rental
agreements.
e. The terms of any leases or contracts assumed by Purchaser at Closing
pursuant to the terms of this Agreement to the extent the same create any
liens, charges, easements or encumbrances on Seller's Assets.
COSTS, PRORATIONS AND ADJUSTMENTS
5. 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 transfer or documentary stamp or excise tax due on
the recording of the Deed.
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b. Seller shall pay any sales tax due on the sale of the Personal Property.
c. Seller and Purchaser shall share on a 50-50 basis the cost of the Title
Report and title insurance policy issued pursuant thereto and Purchaser
shall pay the cost of any title endorsements requested by Purchaser. Seller
shall pay the cost of the ALTA survey required
to deliver the title insurance policy.
d. Seller shall pay for the cost of the environmental assessments of the
Seller's Assets which the Purchaser elects to secure prior to Closing, it
being understood and agreed that such assessment shall be limited to a
Phase I Assessment unless the Phase I Assessment by its terms recommends
that a further assessment or investigation be conducted, in which case
such assessment shall include such further assessment or investigation as
may be recommended in the Phase I Assessment; provided, however, that
Seller shall in no event be obligated to pay more than $5,000 pursuant to
this Paragraph 5(d) and accordingly any amount owed in excess of $5,000
shall be paid by Purchaser.
e. All revenues (including but not limited to rent due from the residents 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
therefor for the period prior to the Closing Date and with Purchaser
responsible therefor for the period from and after the Closing Date.
f. Real and Personal Property taxes shall be prorated as of the Closing
Date, with Seller responsible therefor for the period prior to the Closing
Date and with Purchaser responsible therefor for the period from and after
the Closing Date.
g. Seller shall 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 as of the Closing Date.
h. Purchaser and Seller shall each pay their own attorney's fees incurred in
connection with the negotiation, preparation and execution of this
Agreement and the consummation of the transaction provided for herein.
i. Purchaser and Seller shall share recording fees related to the recording
of the Deed and any escrow fees on a 50-50 basis.
j. In the event Seller elects to cure any objections Purchaser makes to the
items described in the Title Report or the UCC-1 search report, then Seller
shall pay the cost of obtaining and recording any releases necessary to
deliver title to the Seller's Assets in accordance with the terms of this
Agreement. Seller shall have the right to use the proceeds from the
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transaction contemplated by this Agreement to discharge all such liens and
to pay all costs and prorations for which it is responsible hereunder.
POSSESSION
6. At Closing, Purchaser shall be entitled to possession of the Seller's
Assets, subject only to the rights of the residents of the Facility under the
Facility Leases (as defined below) and the rights of any parties to the
Operating Contracts (as defined below) but only to the extent such
Operating Contracts grant such parties any possessory rights with respect to
the Seller's Assets.
REPRESENTATIONS AND WARRANTIES
7. Seller hereby warrants and represents to Purchaser that:
a. Status of Seller. Seller is a limited partnership duly organized, validly
existing and in good standing under the laws of the State of Washington.
b. Seller's Authority. Seller has full power and authority to execute and to
deliver this Agreement and all related documents, and to carry out the
transaction 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 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 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.
c. Title. Seller has good and insurable fee simple title to the Real Property,
and the Facility, which at Closing will be subject only to the easements,
reservations and encumbrances, if any, permitted under Paragraph 4, and
good and indefeasible title to the Personal Property free and clear of all
leases, liens and encumbrances other than any leases, liens and
encumbrances evidenced by any of the Operating Contracts assumed by
Purchaser at Closing. The Personal Property is, and at Closing will be, in
good operating condition and repair and accordingly in the same or better
condition and repair, and in sufficient quantity and quality to meet all
governmental requirements applicable to the Facility, as on the date
of Purchaser's inspection thereof pursuant to Paragraph 11 (a)(iv).
d. The Real Property. The Facility is located on that certain parcel of land
more particularly described in Exhibit A attached hereto. The Facility and
the roof 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 the good operating condition and
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repair and accordingly in the same or better condition and repair as
on the date of Purchaser's inspection thereof pursuant to Paragraph 11
(a)(iv) and have a remaining useful life of no less than two (2) years with
nothing more than ordinary maintenance and repair thereof being required
to be undertaken by Purchaser with respect thereto.
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. 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 Seller's Assets, the
Facility, the Real Property or the Personal Property 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. For purposes hereof, litigation, an
investigation or other proceeding 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.
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
and correct in all material respects.
i. The Facility Leases. Attached hereto as Exhibit G is a true and correct
copy of an exemplar of the forms of rental or admission agreement entered
into by Seller with each of the current residents of the Facility and each of
the rental or admission agreements entered into by Seller is in substantially
the form as the exhibit attached hereto (the "Facility Leases"), modified
only by ordinary rent increases. A true and correct copy of each of the
Facility Leases entered into by Seller with each of the current residents of
the Facility has been provided by Seller to Purchaser. Each of the Facility
Leases executed by Seller with the residents of the Facility is in full force
and effect and none of the Facility Leases has been modified or amended
except as set forth in Exhibit G. Seller has no knowledge or notice that
it is 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 or time or
the giving of notice or both would constitute a default, under the Facility
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Leases by any of the residents 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 H is a true and correct rent roll as of
July 1, 1996, which identifies each of the residents 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. Seller further represents
and warrants that it has the right under the Facility Leases to increase the
rents and related fees and charges paid by the residents of the Facility on no
more than sixty (60) days notice and that it has not agreed orally or in
writing to provide room, board or other services to any resident or
prospective resident for a reduced or nominal fee or without charge.
k. Liens. There are no mechanics', materialmen's or similar 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. Environmental Matters. Except in accordance with, and in full
compliance with, any and all applicable governmental laws, regulations and
requirements (collectively, the "Environmental Laws") relating to
environmental and occupational health and safety matters and
hazardous materials, substances or wastes (as defined from time to time
under any applicable federal, state or local laws, regulations or ordinances),
Seller has not released into the environment, or discharged, placed or
disposed of any such hazardous materials, substances or wastes or caused
the same to be so released into the environment or discharged, placed or
disposed of at, on or under the Seller's Assets. Seller has not installed any
underground storage tanks on the Real Property and Seller has not used the
Real Property as a dump for hazardous waste material. To the actual
knowledge of Seller's general partner based on a review of any Phase I or
other environmental assessments which may be in Seller's possession or
under Seller's control as of the date hereof and on any other information
actually known by Seller's general partner, (i) no hazardous materials,
substances or wastes are located on the Real Property or the Facility or have
been released into the environment or discharged, placed or disposed of in,
on or under the Real Property or the Facility except in accordance with
applicable laws and regulations; (ii) no underground storage tanks are
located on the Real Property; (iii) the Real Property has not been used by
Seller as a dump for waste material; and (iv) the Facility and the prior uses
of the Real Property and the Facility by Seller at all times complied with all
Environmental Law.
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m. Employees. Unions. None of the employees of the Facility are members
of a labor union or subject to collective bargaining agreement with respect
to their employment at the Facility. There are no labor disputes or
grievances pending with respect to the operations at the Facility, except as
otherwise provided in Exhibit I. 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.
n. Compliance with Law
(i) To the best knowledge of the Seller's general partner, 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.
o. Operating Contracts. Set forth in Exhibit J are true and correct copies of
all operating contracts (including personal property leases) to which Seller
or the Facility is a party in connection with the operation of the Facility (the
"Operating Contracts"). Each of the Operating Contracts is in full force and
effect and none of the Operating Contracts has been modified or amended
except as set forth in Exhibit J. Seller has no notice or knowledge that it or
the Facility, as applicable, is in default of any obligations under the
Operating Contracts nor is Seller aware of any default or any action which,
with the passage or 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, or cause to be delivered, to Purchaser duly
executed assignments of any of the Operating Contracts which Purchaser
elects to assume pursuant to Paragraph II (a)(v).
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p. The Facility The Facility is a congregate care and assisted living facility
licensed, with respect to the assisted living unit included therein, by the
State of Washington as a boarding home with a total of 42 licensed units
and 42 unlicensed congregate care units. The Facility is certified to
participate in Medicaid. There is no action pending or, to the best
knowledge of Seller, recommended by the appropriate state agency having
jurisdiction thereof, to terminate the Facility's license or to take any action
of any other type which would have a material adverse effect on the
Facility, its operations or business.
q. Inventory. All inventories of non-perishable food; central supplies, linen,
housekeeping and other supplies located at the Facility are in sufficient
condition and quantity to operate the Facility at normal capacity for two
weeks. All inventories of perishable food are at the level normally
maintained at the Facility.
r. 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.
The representations and warranties of Seller in this Paragraph 7 shall be
true and correct in all respects, are made by Seller both as of the date hereof
and as of the date of Closing.
8. 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 in good
standing under the laws thereof.
b. Authority. Subject to Purchaser obtaining the approval of its Board of
Directors on or before September 1,1996, 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. There is no litigation, investigation or other proceeding
pending or, to the best of Purchaser's knowledge, 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. For purposes hereof,
litigation, an investigation or a proceeding shall be deemed to be pending if
the same has been served on Purchaser or Purchaser has been advised either
orally or in writing of the pendency thereof.
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, using its best efforts to obtain 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.
The representations and warranties of Purchaser in this Paragraph 8 shall
be true and correct in all respects, are made by Purchaser both as of the date
hereof and as of the date of Closing.
9. BROKER
Each party hereby represents and warrants to the other party that it has not
contacted or entered into any agreement with any real estate broker, agent,
finder, or any other party in connection with this transaction and that it has
not taken any action which would result in any real estate broker's, finder
or other fees or commissions being due and payable to any other party with
respect to the transaction contemplated by this Agreement, other than Xxxxx
Xxxx Xxxxx, who has been retained and shall be compensated by Seller.
Each party hereby indemnifies and agrees to hold the other party harmless
from any loss, liability, damage, cost, or expense (including reasonable
attorney's fees) resulting to the other party by reason of a breach of the
representation and warranty made by the indemnifying party in this
paragraph. Notwithstanding anything to the contrary contained in this
Agreement, the indemnity set forth in this paragraph and any sums due
pursuant to such indemnity shall constitute separate agreements in causes of
action in addition to any liquidated damages provided for in this
Agreement.
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COVENANTS
10. Seller
a. Pre-Closing. Between the date hereof and the Closing Date, except as
contemplated by this Agreement or with the consent of Purchaser:
i. 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;
ii. 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;
iii. Seller will operate the Facility only in the ordinary course and will
continue to maintain and repair the Facility and the Personal Property in the
same manner as previously done by Seller;
iv. Seller will take all reasonable action to preserve the goodwill of the
residents of the Facility;
v. Seller will not make any 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 any of the Seller's Assets;
vi. Seller will use its reasonable efforts to retain the services and
goodwill of the employees located at or connected with the operation of the
Facility;
vii. Seller will maintain in force the existing hazard and liability
insurance policies, or comparable coverage, for the Seller's Assets as now
in effect;
viii. 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, if any,
substantially in accordance with existing employment practices disclosed to
Purchaser, if any or except for increases which will not affect Purchaser's
operations at the Facility after closing;
ix. Seller will not enter into any contract or commitment affecting the
Seller's Assets except in the ordinary course of business and Seller will
advise Purchaser of any contracts or commitments which it enters, whether
in the ordinary course of business or otherwise;
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x. During normal business hours, Seller will provide Purchaser and its
agents with access (in the company of a representative of Seller) on 24
hours notice to the Real Property and the Facility, provided Purchaser does
not interfere with the operation of the Facility and provided Purchaser uses
its best efforts not to disturb any residents of the Facility during the course
of such inspections and at such times Seller shall permit Purchaser to
inspect the books and records and the physical and structural condition of
the Facility, the Real Property and the Personal Property, which inspection
shall be completed by Purchaser prior to September 7, 1996;
xi. Seller will timely pay all obligations which are due and payable with
respect to the Seller's Assets;
xii. Seller will operate the Facility in substantial 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;
xiii. Seller will take all reasonable action to achieve substantial
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 which require compliance prior to
Closing;
xiv. Seller will proceed with all due diligence to secure any consents
which may be necessary for the assignment of the Facility Leases and
Operating Contracts;
xv. As soon as practicable after the date hereof but in no event later than
twenty (20) days following full execution of this Agreement, Seller will (a)
deliver to Purchaser a UCC-1 search report (herein so called), (b) shall
cause Chicago Title Insurance Company to furnish to Purchaser a current
title commitment (the "Title Report") for the issuance to Purchaser of
an extended coverage Owner's title insurance policy with a value equal to
the purchase price (the "Title Policy"), insuring Purchaser's interest in the
Real Property and the Facility, subject to no exceptions other than those of
the usual printed exceptions, which are acceptable to Purchaser and the
Permitted Exceptions (hereafter defined) and (c) arrange with a survey firm
acceptable to Purchaser for the preparation and delivery of an ALTA
Survey of the Real Property and the Facility (the "Survey");
13
xvi. Seller will provide Purchaser within ten (10) days after execution of
this Agreement with copies of any environmental reports, structural report
or geological reports which may be in Seller's possession with respect to the
Facility and the Real Property, it being understood and agreed, however,
that Seller makes no representation or warranty as to the accuracy of any
such reports; and
xvii. Seller will cooperate with Purchaser in any efforts which Purchaser
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
provided that Purchaser shall pay all costs thereof.
b. Closing. On the Closing Date, if Purchaser has fully performed its
obligations pursuant to the terms of this Agreement, Seller agrees that it
will:
i. Execute and deliver to Purchaser a good and sufficient Warranty Deed
to the Real Property (including the Facility), 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) subject to the
limitations set forth in Paragraph 26 and setting forth the incumbency of the
partners executing documents on behalf of Seller, a copy of the
resolutions adopted by Seller's partners authorizing the transaction provided
for herein and the execution of this Purchase Agreement and the other
documents contemplated herein;
iii. Deliver the tangible property included in the Seller's Assets to
Purchaser in the condition and repair required by the terms of this
Agreement;
iv. Execute and deliver to Purchaser an assignment and assumption
agreement with respect to the Facility Leases (the "Facility Leases
Assignment Agreement");
v. Pay its share of the Closing costs, including, but not limited to, the
Title Report, Title Policy and Survey described in Paragraph 10(a)(xv);
vi. Execute and deliver to Purchaser an Assignment and Assumption
Agreement with respect to any of the Operating Contracts which Purchaser
elects to assume at Closing pursuant to Paragraph 11(a)(v) (the "Operating
Contract Assumption Agreement");
14
vii. Deliver to Purchaser the Resident Deposits (as defined in Paragraph
19);
viii. Deliver to Purchaser the Benefits Schedule (as defined in Paragraph
18) and pay the Vacation Pay to the employees in accordance with the
provisions of Paragraph 18; and
ix. Deliver to Purchaser evidence of the designation of a duly authorized
representative to act with full power and authority on behalf of Seller with
respect to any post-closing obligations imposed on Seller hereunder.
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.
11. Purchaser
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. Within ten ( 10) days after its receipt of the UCC-1 Search Report, the
Title Report and the Survey, Purchaser shall advise Seller in writing of its
objections, if any, to each of the UCC-1 Search Report, the Title Report and
the Survey. In the event Purchaser fails to notify Seller in writing of
Purchaser's objections within said ten ( 10) day period, Purchaser shall be
deemed to have waived its right to object. Within five (5) days of Seller's
receipt of Purchaser's objections, Seller shall advise Purchaser whether it
intends to correct the defects to which Purchaser has objected. Seller shall
be obligated to act in good faith in responding to Purchaser's title
objections; provided, however, that if Seller fails to respond to Purchaser's
objections within the five day period provided for herein, Seller shall be
deemed to have elected not to take any corrective action with respect to the
matters which are the subject thereof. For purposes hereof, Seller shall be
deemed to have failed to act in good faith if, and only if, its refuses to
correct any matter which is the subject of such title objections where the
only costs to it in doing are normal filing or recording fees or delivery
15
charges and where the objections relate to liens which appear of record but
relate to previously discharged debt. If Seller refuses to correct some or all
of such defects, Purchaser shall have five (5) days to advise Seller of its
decision to close, notwithstanding the defects, in which case Purchaser shall
waive any and all claims against Seller relating to such defects,
or to terminate this Agreement, in which case 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 UCC-1 Search Report, the Title Report or the Survey not
objected to in accordance with the terms hereof or any objection
raised by Purchaser and thereafter waived by Purchaser in accordance with
the terms hereof shall be deemed accepted by Purchaser and to be
"Permitted Exceptions" (herein so called). Notwithstanding anything
contained herein to the contrary, in the event Seller requires
additional time to prepare either the Survey or the title Report, then Seller
shall have such additional time to deliver the same to Purchaser, however,
in no event shall such extension be longer than fifteen (15) additional days;
iii. 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, including, but not limited to, a license from
the Washington Department of Health;
iv. Purchaser will proceed with all due diligence and at its sole cost and
expense and without interference with any of the residents of the Facility to
conduct such investigations with respect to Seller's Assets as it deems to be
reasonably necessary in connection with its purchase thereof, including, but
not limited to, zoning investigations, soil studies, environmental
assessments, seismic assessments, wetlands reports and investigations of
Seller's and the Facility's books and records and operations, including a
review of the licensure files maintained by the State of Washington with
respect to the Facility to the extent the same are publicly available, and
structural inspections and to complete the same by (A) in the case of any
physical inspections of the Seller's Assets included in Purchaser's
Due Diligence Review (as defined below), September 7,1996 and (B) with
respect to any other aspects of Purchaser's Due Diligence Review the earlier
to occur, (i) forty five (45) days after the date of this Agreement or (ii) the
Closing Date, provided no investigations will be physically intrusive on the
Real Property or the Facility unless Seller consents thereto, which consent
shall not be unreasonably withheld (the "Due Diligence Review");
provided, however, nothing herein shall be construed as amending or
modifying in any manner the representations or warranties of Seller set
forth in this Agreement or relieving Seller from its obligation to ensure that
said representations and warranties are true and correct at Closing, which
representations and warranties shall be separate from and unaffected by
Purchaser's Due Diligence Review except to the extent that Seller is able to
demonstrate that Purchaser acquired actual knowledge prior to Closing of
any facts or circumstances inconsistent with any of Seller's representations
16
and warranties, Seller failed to take any corrective action with respect to
said inconsistency and Purchaser nonetheless elected to close the
transaction provided for herein; and provided, further, that Purchaser shall
maintain the confidentiality of any documents or information obtained by it
during the course of its Due Diligence Review and shall return the same to
Seller in the event the transaction provided for herein fails close for any
reason whatsoever. Purchaser shall indemnify, defend and hold Seller and
the Seller's Assets harmless of and from any and all losses, liabilities,
costs, expenses (including without limitation, reasonable attorney's fees and
costs of court at trial and on appeal), damages, liens, claims (including,
without limitation mechanics' or materialmans' liens or claims of liens),
actions and causes of action arising from or relating to Purchaser's (or
Purchaser's Agents, employees, or representatives) entering on the Real
Property and/or the Facility to test, study, investigate or inspect the same or
any part thereof, whether pursuant to this paragraph or otherwise. The
foregoing indemnity shall expressly survive the Closing or the earlier
termination of this Agreement; and
v. Within fifteen ( 15) days after the later of the date hereof or the date
of their delivery to Purchaser, 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, if Seller has fully performed its obligations
pursuant to this Agreement, Purchaser agrees that it will:
i. Pay the balance of the Purchase Price due at Closing;
ii. Pay its share of the Closing costs as herein provided;
iii. Deliver to Seller a certificate of a responsible officer dated as of
the Closing Date, certifying in such detail as Seller may reasonably specify the
fulfillment of the conditions set forth in Paragraph(s) 14(a) and (b) subject
to the limitations set forth in Paragraph 26 and setting forth the incumbency
of the officers executing documents on behalf of Purchaser, a copy of the
resolutions adopted by Purchaser's Board of Directors authorizing the
transaction provided for herein and the execution of this Purchase
Agreement and the other documents contemplated herein and attaching a
certificate of good standing issued by the Washington Secretary of State
within no more than thirty (30) days prior to Closing;
iv. Execute and deliver to Seller the Operating Contract Assumption
Agreement, if applicable; and
v. Execute and deliver to Seller the Facility Leases Assignment
Agreement.
c. Post-Closing. After the Closing of this Agreement, Purchaser agrees that
it will:
17
i. 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.
CONDITIONS
13. All obligations of Purchaser under this Agreement are subject to
fulfillment, prior to or at Closing, of each of the following conditions, any
one or all or which may be waived in writing by Purchaser:
a. Seller's Representations and Warranties True at Closing. Seller's
representations and warranties contained in this Agreement or in any
certificate 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.
c. 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.
18
d. Due Diligence Review. Purchaser shall be satisfied with the results of its
Due Diligence Review, including, but not limited to the results of an EPA
Phase I Assessment of the Real Properly and the Facility within the period
specified in Paragraph I 1(a) (iv); provided, however, nothing herein shall
be construed as amending or modifying in any manner the representations
or warranties of Seller set forth in this Agreement or relieving Seller from
its obligation to ensure that said representations and warranties are true and
correct at Closing, which representations and warranties shall be separate
from and unaffected by Purchaser's Due Diligence Review except to the
extent that Seller is able to demonstrate that Purchaser acquired actual
knowledge prior to Closing of any facts or circumstances inconsistent with
any of Seller's representations and warranties, Seller failed to take any
corrective action with respect to said inconsistency and Purchaser
nonetheless elected to close the transaction provided for herein. In the event
Purchaser elects to terminate this Agreement within the period specified in
Paragraph 11 (a)(iv) and this Paragraph 13(d), the parties shall have no
further rights or obligations hereunder, other than Purchaser's right to the
return of its Xxxxxxx Money and Seller's obligation to pay any title
cancellation and UCC search fees incurred as a result of such termination.
e. Title. The Title Insurer shall issue to Purchaser as of the date of Closing,
an Owner's extended coverage policy of title insurance for the Real
Property and the Facility in accordance with the requirements of Paragraph
4.
f. Survey. Purchaser shall be satisfied as to the results of the ALTA Survey
in accordance with the provisions of Paragraph 11 (a)(ii).
g. UCC Search. Purchaser shall be satisfied with the results of the UCC
search conducted by Seller pursuant to Paragraph 10(a)(xv) in accordance
with the provisions of Paragraph 11 (a)(ii).
i. Approvals. Purchaser shall have received all consents and approvals as
may be necessary for it to own and to operate the Facility, including, but
not limited to, the issuance by the Washington Department of Health to
Purchaser of a license to operate the Facility and the approval of Purchaser's
Board of Directors; provided, however, Purchaser shall be deemed to have
waived the condition with respect to the approval of its Board of Directors
unless Purchaser has advised Seller on or before September I, 1996 that its
Board of Directors has refused to approve the transaction.
j. Financing Commitment. Purchaser shall have secured a written
commitment from an institutional lender to finance the transaction provided
for herein on terms acceptable to Purchaser [and all of the documents
necessary to implement said financing commitment shall have been
executed by Purchaser and said lender and delivered into escrow].
19
Subject to the limitations set forth in the foregoing Paragraph 13, in the
event any of the foregoing conditions is not satisfied by Seller or Purchaser,
as appropriate, or waived by Purchaser prior to Closing, Purchaser shall
have the right to terminate this Agreement in accordance with the
provisions of Paragraph 17.
14. CONDITIONS TO SELLER'S OBLIGATIONS
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 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.
INDEMNIFICATION
15. Seller shall indemnify and hold Purchaser harmless from and against:
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 (i) any
obligations of Seller which are to be paid or performed prior to the Closing
Date under the Facility Leases or the Operating Contracts which Purchaser
elects to assume at Closing, (ii) any obligations of Seller which are to be
paid or performed prior to the Closing Date with respect to the Resident
Deposits and (iii) any matters related to or arising from any prior
bankruptcy or foreclosure proceedings related to the Seller's Assets;
b. Any and all damage, loss or liability arising either before or after the
Closing Date under any of the Operating Contracts which Purchaser does
not elect to assume at Closing;
c. Subject to the limitations set forth in Paragraph 26, 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; provided, however,
that Seller's liability for breach of the representations and warranties set
20
forth in Paragraphs 7(c) and 7(d) shall be limited to the amount of the
Escrowed Funds and to repairs necessitated by a defect in workmanship or
materials or by Seller's deferred maintenance and shall not, in any event,
apply, to (i) repairs required due to fire or other casualty, (ii) repairs
required due to actual wear and tear to, Purchaser's misuse of, or
Purchaser's failure to maintain with ordinary maintenance, the Seller's
Assets, (iii) the cost of any repairs which are covered by insurance proceeds
or manufacturer's, suppliers or contractor's warranties which are made
available to Purchaser or (iii) repairs required due to the acts of any third
party, other than Seller or Purchaser, or any Act of God.
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 shall indemnify 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. Subject to the limitations set forth in Paragraph 26, 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 damage, loss or liability resulting from the conduct by or
the negligence or willful misconduct of Purchaser in performing its Due
Diligence Review; and
d. 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.
21
TERMINATION
17. 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 13 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;
v. If the Closing has not occurred by October 1,1996 (the "Outside
Closing Date"), unless extended by mutual agreement of the parties;
provided, however, that in the event all of the conditions to Closing
provided for in Paragraph 13 have been satisfied or waived by
the Outside Closing Date other than the Purchaser's receipt of the License
pursuant to Paragraph 13(i), provided Purchaser is diligently pursuing the
issuance of the License by the Washington Department of Health, the
Outside Closing Date shall automatically be extended for such additional
period of time as may be necessary to permit Purchaser to secure the
License; provided, further that in the event Purchaser has not secured the
License by December 1,1996, this Agreement shall thereafter terminate in
accordance with the terms hereof and the parties shall have no further rights
or obligations hereunder other than Purchaser's right to the return of its
Xxxxxxx Money.
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 which notice must be delivered within ten (10) days after
Purchaser receives notice of such damage, destruction or condemnation. In
the event Purchaser fails to exercise its termination rights hereunder, then it
shall be conclusively deemed to have waived said right and all claims
against Seller relating to such damage or destruction, in which case Seller
shall assign to Purchaser all of its rights to any insurance proceeds or
22
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; provided, however, in no event shall the
Closing Date be postponed beyond the Outside Closing Date.
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 as full and complete
liquidated damages, the parties acknowledge 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.
e. In the event of the termination of this Agreement by Purchaser under
Paragraphs 17(a)(iii) or (iv) or under Paragraph 17(a)(v) in the event the
Closing has failed to occur as of a material breach by Seller of its
obligations hereunder, Purchaser shall have the right as Purchaser's sole and
exclusive remedies either to (i) terminate this Agreement and demand
the return of its Xxxxxxx Money after which neither party shall have any
further rights or obligations hereunder or (ii) seek specific performance of
Seller's obligations hereunder.
f. In the event of the termination of this Agreement by Purchaser under
Paragraph 17(a)(iii) as a result of the failure of the conditions to Closing set
forth in Paragraphs 13 (i) and (j), $10,000 of the Xxxxxxx Money and 1/5 of
the interest accrued on the Xxxxxxx Money shall be remitted to Seller in full
and complete settlement of any obligations of Purchaser hereunder and the
balance of the Xxxxxxx Money along with the balance of the accrued
interest thereon shall be remitted to Purchaser, after which neither
Purchaser nor Seller shall have any further rights or obligations hereunder.
EMPLOYEE BENEFITS
18. At Closing, Seller shall terminate all of the Facility employees and pay
to the employees of the Facility, all wages, earned and accrued vacation
pay, sick pay, holiday pay and other benefits due to such employees as of
the Closing Date, but only in the case of those employees hired by
Purchaser effective as of the day after the Closing Date.
23
RESIDENT SECURITY DEPOSITS
19. At Closing, Seller shall provide Purchaser with an accounting of a11
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. On the Closing Date, Seller shall transfer the Resident Deposits to the
bank account designated by the Purchaser and Purchaser shall in writing
acknowledge to Seller 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, 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. 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 as provided in Paragraph 21 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.
NOTICES
22. 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: Hearthstone 5 Ks Family Limited Partnership
0000 X. X. Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attn: Mr. Xxxxxxx Xxxxxx
Phone No.: 000-000-0000
FAX No.: 000-000-0000
To Purchaser: Emeritus Corporation
0000 Xxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, XX 00000
Phone No. : (000) 000-0000
FAX No. : (000) 000-0000
24
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).
SOLE AGREEMENT
23. 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.
SUCCESSORS
24. The terms of this Agreement shall be binding upon and inure to the
benefit of and be enforceable by and against the heirs and successors 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 an affiliate; provided no such assignment shall
relieve Purchaser of its obligations hereunder and provided, further, that
Purchaser shall provide Seller 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, on written notice to Seller, to
assign its rights hereunder to a real estate investment trust (the "REIT") in
connection with its financing of the transaction provided for herein. In the
event of such an assignment, Purchaser shall advise Seller as to those
documents and deliveries contemplated by this Agreement which are to run
in favor of the REIT rather than Purchaser and those documents and
deliveries contemplated by this Agreement which will be delivered by the
REIT rather than Purchaser, if any, it being understood and agreed that in
the event of such an assignment, the only right which the REIT will assume
is Purchaser's right to take title to the Seller's 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. In addition, in the event of an assignment of
this Agreement, Purchaser shall not be able to assign its rights under
Paragraph 15(c) with respect to the breach of Seller's representations and
warranties se forth in Paragraphs 7(c) and (d), it being understood and
agreed that said representations and warranties are personal to Purchaser
and shall be retained by Purchaser in the event of any such assignment.
CAPTIONS
25. The captions of this Agreement are for convenience of reference only
and shall not define or limit any of the terms or provisions hereof.
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SURVIVAL/LIMITATION OF ACTION,
26. All covenants, warranties and representations of Purchaser and Seller
herein other than Seller's representation and warranty in Paragraph 7(1),
which shall survive for the applicable statute of limitations period, shall
survive for two years after Closing after which they shall automatically
expire; provided, however, that in the event notice of a claim is delivered
by Seller or Purchaser prior to expiration of said two year period or
applicable statute of limitation period in the case of a claim brought under
Paragraph 7(1), the representation, warranty or covenant which is the
subject of said claim shall survive until the final, non-appealable resolution
thereof.
GOVERNING LAW
27. This Agreement shall be governed by and construed in accordance with
the laws of the State of Washington.
SEVERABILITY
28. 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.
COUNTERPARTS
29. 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. This Agreement may be executed (i) on
an original, (ii) a copy of an original, or (iii) by a facsimile transmission
copy of an original followed within five (5) calendar days with execution of
an original.
THIRD PARTY BENEFICIARY
30. The provisions of this Agreement are not intended to confer any
benefits upon any person or entity not a party to this Agreement.
ACCOUNTS RECEIVABLE
31. Within ten 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.
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32. 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.
33. Any payments received by Purchaser after the Closing Date from
residents with balances due for the periods prior to and after the Closing
Date which designate the period to which they relate shall be applied in
accordance with said designation; any payments received by Purchaser after
the Closing Date from residents with balances due for the period prior to
and after the Closing Date which do not designated the period to which they
relate, shall for the first thirty days after Closing, be remitted by Purchaser
to Seller, to the extent necessary to reduce any pre-Closing Date balances
from the resident(s) making said payment(s), with the excess, if any,
retained by Purchaser to reduce post-Closing Date balances due from said
resident(s) and thereafter such payments shall first be applied by Purchaser
to reduce any post-Closing Date balances due from said resident(s) with the
excess, if any, remitted to Seller to reduce pre-Closing Date balances due
from said resident(s).
34. Seller shall have the right during normal business hours and on
reasonable notice to Purchaser to inspect Purchaser's books and records
with respect to the accounts receivable received by it after the Closing Date
from residents with balances due as of the Closing Date.
ATTORNEYS FEES
35. In the event of a dispute between the parties hereto with respect to the
interpretation or enforcement of the terms hereof, the prevailing party shall
be entitled to collect from the other its reasonable costs and attorneys fees,
including its costs and fees on appeal.
CONSTRUCTION
36. Both parties acknowledge and agree that they have participated in the
negotiation and drafting of this Agreement and accordingly that no
provision hereof shall be construed so as to favor or disfavor either party
hereto.
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IN WITNESS WHEREOF, the parties hereby execute this Agreement as
of the day and year first set forth above.
SELLER: HEARTHSTONE FIVE Ks FAMILY LIMITED
PARTNERSHIP.
By: /s/ Xxxxxxx Xxxxxx
------------------------
Managing Partner
PURCHASER: EMERITUS CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxxxxx
----------------------------------
President
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