AGREEMENT TO PURGHASE
CONSTRUCTION LOAN
THIS AGREEMENT TO PURCHASE CONSTRUCTION LOAN
(this "Agreement") is made effective as of the
30th day of January, 1997, by and between RMI
CAPITAL MANAGEMENT CO., whose address is 0000
Xxxxxx Xxxxx Xxxxx Xxxxx, Xxxxx 000, Xxxxxx,
Xxxxxxxx 00000 ("Construction Lender") and
EMERITUS CORPORATION ("Emeritus"), whose address
is 0000 Xxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxx,
Xxxxxxxxxx 00000.
RECITALS
WHEREAS, Construction Lender has agreed to
make a loan in the amount of up to Five Million
Eighty Thousand Eighty-Two and 39/l00 Dollars
($5,080,082.39) (the "Loan") to Emeritus
Properties II, Inc. (the "Borrower"); and
WHEREAS, the Borrower will use the Loan to
acquire certain property and construct
improvements consisting of an assisted and
independent living facility in Lewiston, Idaho on
real estate legally described in Exhibit "A-1"
attached to this Agreement (the "1'roperty"); and
WHEREAS, the Borrower is executing this date
its promissory note (the "Note") payable to
Construc2ion Lender in the amount of the Loan; a
Deed of Trust, Assignment of Rents, Security
Agreement and Financing Statement (the "Deed of
Trust") encumbering the Property; an Assignment of
Lessor's Interest; a Construction Loan Agreement;
an Environmental Indemnity Agreement; and other
documents given to further evidence the Loan or
secure repayment of the Note (collectively the
"Loan Documents"); and
WHEREAS, repayment of the Note is guaranteed
by that certain Guaranty Agreement executed by
Emeritus Corporation ("Guarantor"); and
WHEREAS, as a condition to making such loan,
Construction Lender requires an absolute and
unconditional agreement and undertaking by
Emeritus to purchase the Note in the event it is
not paid in full for any reason on its maturity
date; and
WHEREAS, Emeritus acknowledges and warrants that
it derived or expects to derive financial and
other advantage and benefit directly or indirectly
from the Loan and each and every advance thereof;
NOW THEREFORE, the parties agree as follows:
1. AGREEMENT TO PURCHASE LOAN. If for any
reason the Note is not paid in full on the date
which is thirty-six (36) months from the date
hereof, or at an earlier time upon the conditions
set forth in Section 7 below, then Emeritus hereby
absolutely and unconditionally agrees to purchase
the Note within three (3) business days following
written demand from Construction Lender to
Emeritus.
2. PURCHASE PRICE. Construction Lender agrees
to sell the Note and Emeritus agrees to purchase
the Note by paying the then unpaid principal
balance thereof together with accrued and unpaid
interest, late charges, and other charges and
advances made by Construction Lender pursuant to
the Loan Documents, including but not limited to
advances to complete construction of the
Improvements as defined in and provided by the
terms of the Construction Loan Agreement
("Purchase Price"). Payment of the Purchase Price
shall be made by wire transfer to the account of
Construction Lender.
3. ASSIGNMENT OF LOAN DOCUMENTS. Upon receipt
of the Purchase Price, Construction Lender agrees
to endorse the Note to Emeritus without recourse,
to execute an assignment of the Deed of Trust in
recordable form and to deliver to Emeritus the
original Loan Documents, the original Lender's
Title Insurance Policy, the legal opinions of
Borrower's counsel, and copies of such other due
diligence documentation related to the Loan in the
possession of Construction Lender as requested by
Emeritus.
4. REVIEW OF LOAN DOCUMENTS. Emeritus
acknowledges` its receipt, review and approval of
the Loan Documents. In addition, Emeritus
represents and warrants that it has conducted its
own due diligence concerning the Property and the
Loan and is satisfied with the results of such due
diligence investigation.
5. USE OF LOAN PROCEEDS. Emeritus agrees that
Construction Lender is under no obligation or duty
nor has Construction Lender represented that it
will see to the application of the Loan proceeds
by the person or persons to whom the Construction
Lender disburses such proceeds, and any
application or use of such proceeds for purposes
other than construction of improvements on the
Property shall not defeat the agreement made
herein by Emeritus to purchase the Loan.
6. REPRESENTATION AND WARRANTY. Emeritus has
reviewed its cash balances, cash flow projections,
unused balances of lines of credit, its ability to
issue additional stock and other sources of
liquidity and hereby represents and warrants to
Construction Lender that it has made a
determination that Emeritus has the financial
ability to purchase the Note in accordance with
the terms hereof.
7. FINANCIAL INFORMATION. Emeritus agrees to
furnish quarterly financial information to
Construction Lender sixty (60) days after the end
of each calendar quarter commencing with the first
quarter of 1997 and annual financial information
one hundred ( 100) days after the end of each
calendar year beginning with calendar year 1997.
Such financial information shall be in form and
substance reasonably satisfactory to Construction
Lender, including but not limited to
identification of cash balances, cash flow
projections, unused balances of lines of credit,
ability to issue additional stock and other
sources of liquidity. Emeritus shall certify in
writing the accuracy and completeness of such
financial information and, with the annual report,
will reaffirm its representation and warranty set
forth in paragraph 6 above.
In the event that Emeritus fails to provide
the annual certification or annual or quarterly
financial information or in the event that
Emeritus' outside auditor gives a qualified
opinion of the Emeritus financial statements based
upon a going concern risk, then Construction
Lender shall give Emeritus ten (10) days notice of
such qualified
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opinion or failure to provide documentation, in
which event Emeritus shall have ten (10) days in
which to provide the missing information or to
substantiate to Construction Lenders reasonable
satisfaction that Emeritus' financial ability has
not been materially impaired. If the Construction
Lender is not reasonably assured during said ten
day period of the continued viability of the
Emeritus representation and warranty set forth in
paragraph 6 above, then Lender may elect to sell
the Note and Emeritus agrees to purchase the Note
at any time thereafter upon written demand from
Construction Lender to Emeritus.
8. NOTICE OF DEFAULT OPPORTUNITY TO CURE. If
a Event of Default shall occur under the Loan
Documents as defined therein, Construction Lender
agrees not to accelerate the maturity of the Note
nor to commence foreclosure proceedings until it
has given Emeritus written notice of such Event of
Default and of its intention to accelerate and
foreclose its liens and security interests. In
addition, Construction Lender agrees to furnish
copies to Emeritus of any default notices
delivered to Borrower.
9. SEVERABILITY. If any provision of this
Agreement or its application to any party or
circumstances shall be determined by any court of
competent jurisdiction to be invalid or
unenforceable to any extent, the remainder of this
Agreement shall not be affected thereby, and each
provision hereof shall be valid and shall be
enforced to the fullest extent permitted by law.
10. TIME. Time is of the essence of this
Agreement.
11. CONTROLLING LAW; VENUE. This Agreement
shall be performed in, governed by and interpreted
in accordance with the laws of the State of
Colorado. The parties mutually consent to the
jurisdiction of any local, state or federal court
situated in the City and County of Denver,
Colorado, and waive any objection which they may
have pertaining to improper venue or forum non
conviens to the conduct of any proceeding in such
court. The parties hereto agree that venue for any
action in connection herewith, shall be in the
City and County of Denver, Colorado.
12. AMENDMENT. This Agreement may be altered,
amended or revoked only by an instrument in
writing signed by the party to be charged thereby.
13. NOTICE. Any notice, request, demand,
consent, approval, or other communication required
or permitted hereunder shall be in writing and
shall be deemed to have been given when personally
delivered, or one day after delivery to a national
overnight delivery courier service, cost prepaid,
or three days following deposit in the United
States mail, certified mail, return receipt
requested, postage prepaid, addressed to the party
for whom it is intended at their addresses set
forth on page 1; provided, however, that a party
may change its address for purposes of receipt of
any such communication by giving ten (10) days
prior written notice of such change to the other
party in the manner above prescribed.
14. ENTIRE AGREEMENT. This Agreement contains
the entire agreement between the parties with
respect to the subject matter hereof and
supersedes and cancels any prior understandings
and agreements between the parties with respect to
the subject matter hereof except as specifically
set forth herein.
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15. WAIVER. The failure of a party to insist
upon strict performance of any of the terms or
provisions of this Agreement or to exercise any
option, right or remedy herein contained or
available pursuant to applicable law, shall not be
construed as a waiver or relinquishment of such
term, provision, option, right or remedy, but the
same shall continue and remain in full force and
effect. No waiver by a party of any term or
provision hereof shall be deemed to have been made
unless expressed in writing and signed by such
party.
16. ATTONEYS' FEES. In the event of any
controversy, claim, dispute, or litigation between
the parties hereto to enforce or interpret any of
the provisions of this Agreement or any right of a
party hereto, the non-prevailing party to such
dispute or litigation agrees to pay to the
prevailing party all costs and expenses, including
reasonable attorneys' fees, incurred by the
prevailing party including without limitation,
fees incurred during a trial of any action and any
fees incurred as a result of an appeal from a
judgment entered in such litigation.
17. COUNTERPARTS. This Agreement and any
attached Consents or Exhibits requiring signatures
may be executed in counterparts, but all
counterparts shall constitute but one and the same
document.
18. FURTHER ASSURANCE. The parties shall each
execute and deliver to the other all such
additional documents and instruments and shall
perform such further acts as are reasonably
requested by any other party to effectuate the
transactions contemplated hereby.
19. AUTHORITY . Each person signing on behalf
of Emeritus represents that it is fully authorized
to execute this Agreement and to bind Emeritus
according to the terms hereof.
IN WITNESS WHEREOF, the parties have signed
this Agreement to be effective the date first
above written.
RMI CAPITAL MANAGEMENT CO.
By:
--------------------------------------------
EMERITUS CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxxxxx
--------------------------------------------
President
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