PURCHASE AND SALE AGREEMENT
THIS
PURCHASE AND SALE AGREEMENT (“this Agreement”) is made and entered into as of
the 5th
day of
August, 2005 (the “Execution Date”), by and between CHERIDAN INC., a
Washington corporation (“Seller”) and EMERITUS CORPORATION, a Washington
corporation, and/or its assigns (“Buyer”).
R
E C I T A L S:
A. Seller
owns the real property described in Exhibit 1.1(a),
the
improvements constructed thereon, which include an eighty (80) unit retirement
and residential care facility located at 000 X. Xxxxxxxxx Xxxxxx, Xxxxxxxxxxxx,
Xxxxxxxx and certain personal property used in conjunction with the operation
thereof.
B. Buyer
and
Seller have concurrently entered into a separate agreement dated the
5th day
of August, 2005 for the purchase and sale of the real property described in
Exhibit A
owned by
the Buyer (the “Trillium Park Purchase Agreement”).
C. Camlu
Real Estate Development Limited Partnership, an affiliate of Seller and Buyer,
has concurrently entered into a separate agreement dated the 5th
day of
August, 2005 for the purchase and sale of the real property described in
Exhibit B
(the
“Willow Brook Purchase Agreement”).
D. Seller
has agreed to sell to Buyer all of Seller’s right, title and interest in the
real property and improvements constructed or situated thereon, and certain
of
Seller’s personal property used in the operation of the real property and
improvements thereon located at 000 X. Xxxxxxxxx Xxxxxx, Xxxxxxxxxxxx,
Xxxxxxxx and Buyer has agreed to purchase same from Seller subject to the terms
and conditions hereinafter set forth.
In
consideration of the agreements herein contained and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Seller and Buyer agree as follows:
1. The
Property
1.1 Assets.
Subject
to the terms of this Agreement, Seller agrees to sell to Buyer and Buyer agrees
to purchase from Seller, all of Seller’s right, title and interest in and to the
following described property (it being
understood
and agreed that such property shall specifically exclude the Excluded Assets
(as
defined below)
in
accordance with the terms hereof:
(a) the
real
property situated in Russellville, Arkansas which is more particularly described
in Exhibit 1.1(a)
attached
hereto together with the eighty unit retirement and residential care facility
located thereon and commonly known as the “Wildflower” (the “Facility”) and all
other improvements and fixtures thereon (hereinafter collectively referred
to as
the “Real Property”);
PURCHASE
& SALE AGREEMENT -Wildflower
1
(b) all
equipment, computer hardware and computer software (but only to the extent
such
software is not proprietary to Seller and the licenses with respect to any
non
proprietary software are, at Buyer’s election and cost, assigned to Buyer at
Closing), vehicles, furniture, and fixtures, inventory, linens, dietary
supplies, housekeeping supplies, food and other consumable inventories owned
by
Seller and located at the Facility or used in connection with the operation
of
the Facility, all of which is more particularly described on Exhibit 1.1(b)
(hereinafter collectively referred to as “Personal Property”);
(c) all
intangibles of Seller used in the operation of the Facility including, without
limitation, telephone numbers, all of Seller’s interest in the name
“Wildflower,” as well as any licenses, governmental approvals or permits to the
extent assignable or transferable without cost to Seller and any other rights
or
privileges appurtenant to the Real Property or related to the business operated
thereon or thereat (hereinafter collectively referred to as
“Intangibles”);
(d) all
leases, rental or occupancy agreements with the residents of the Facility and
any amendment or modification thereto (the “Resident Leases”) and any other
agreements granting any person or entity the right to use or occupy any space
situated in the Facility or any portion thereof (the “Commercial Leases” and
together with the Resident Leases, the “Leases”), if and to the extent Buyer
agrees to assume the same in accordance with the terms of this Agreement (the
“Assumed Leases”);
(e) all
resident records and files and marketing databases used in conjunction with
the
operation of the business conducted upon the Real Property by Seller
(hereinafter collectively referred to as “Records”);
(f) all
contracts, oral or written, to which the Seller is a party for the Seller’s
operation of the Facility, including but not limited to contract rights,
equipment leases, maintenance contracts, service contracts and other contracts,
and operating or service manuals, warranties or guarantees relating to all
or
any portion of the Real Property or any item of the Personal Property subject
to
this Agreement (the “Contracts”), if and to the extent Buyer agrees to assume
the same in accordance with the terms of this Agreement (hereinafter
collectively referred to as “Assumed Contracts”);
(g) the
Prepaid Rents (as defined below).
The
assets and property interests of Seller described in Sections 1.1(a)
through 1.1(g) above being sold pursuant hereto shall hereinafter collectively
be referred to as the “Assets”.
1.2 Excluded
Assets. Seller
shall not sell, convey, transfer or assign to Buyer, and Buyer shall not
purchase or acquire from Seller, any of the following assets (the “Excluded
Assets”), which shall remain the sole and exclusive property of
Seller:
(a) all
insurance policies relating to Seller’s business, Facility or the Assets and the
rights thereunder;
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& SALE AGREEMENT -Wildflower
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(b) all
cash,
cash equivalents and accounts receivables earned for the period prior to the
Closing Date and all deposits (other than the Resident Deposits and any
refundable deposits held by Seller with respect to any commercial spaces in
the
Facility which are leased to third parties), bank accounts, checking accounts,
xxxxx cash, computer software programs (unless such software is proprietary
to
Seller or unless the licenses with respect to any non-proprietary software
are
not assigned, at Buyer’s election, to Buyer at Closing), utility deposits or
interest thereon, and Wenatchee, Washington central office equipment and
personal property located in Seller’s Wenatchee, Washington central office or in
the corporate office of Seller’s Manager (as defined below), a list of which is
attached hereto as Exhibit
1.2(b)
(the
“Corporate Assets”), or insurance or tax reserves relating to the Assets being
sold pursuant hereto, and the other assets disclosed on Exhibit
1.2(b);
and
(c) refunds
of real estate taxes allocated to the period prior to the Closing if, and to
the
extent, the Purchase Price was not prorated therefor.
1.3 No
Assumption of Liabilities.
Notwithstanding anything in this Agreement to the contrary, Seller shall retain,
and Buyer shall not assume, or in any way be liable or responsible for, any
obligations or liabilities of Seller or the Facility whatsoever, whether fixed,
contingent or otherwise,
and whether known or unknown, including, without limitation:
(a) all
liabilities and obligations arising from events occurring or conditions existing
on or prior to the Closing Date, with respect to the ownership or operation
of
the Facility, the other Assets or otherwise, including, without limitation,
rent, accounts payable and notes payable;
(b) except
as
otherwise specifically provided in Section 19, all liabilities and
obligations with respect to Seller’s employees, including accrued salaries,
wages, vacation, payroll taxes, retirement plan payables and any obligations
with respect to any other employee benefit or retirement plan or policy that
arise from services performed by such employees prior to Closing;
and
(c) all
liabilities and obligations for the payment of taxes which relate to tax periods
ending on or prior to the Closing Date;
provided,
however,
nothing
herein shall be construed as imposing any obligation on Seller to perform any
obligations related to the ownership or operation of the Facility where such
obligation to perform first arises after the Closing Date.
2. Seller’s
Purchase Price
2.1 Purchase
Price. The
purchase price for the Assets is Six Million Six Hundred Thousand and 00/100
Dollars ($6,600,000.00) (“Purchase Price”). At the Closing, the Buyer shall
deliver to Escrow Agent in immediately available United States funds, the amount
of the Purchase Price (a) less the Deposit (defined below); (b) plus all Closing
costs and prorations required to be paid by Buyer pursuant to Sections 15
and 16 hereof.
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& SALE AGREEMENT -Wildflower
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2.2 Allocation
of Purchase Price.
The
Purchase Price shall be allocated among the Assets as provided on Exhibit
2.2
Buyer
and Seller agree that each will report the transaction subject to this Agreement
in accordance with such allocation and each will not take a position
inconsistent with such allocation without the prior written consent of the
other
party to this Agreement,
which
consent shall not be unreasonably withheld.
3. Escrow.
Within
three (3) business days after the Execution Date (“Opening of Escrow”), Buyer
shall deliver to Chicago Title Insurance Company whose address is
00000 00xx Xxxxxx
Xxxxx, Xxxxx 000, Xxxxxxx Xxx, XX 00000, Attn: Xxxxxx Xxxxxxx, telephone
number: (000) 000-0000 (“Escrow Agent”), Fifty Thousand Dollars
($50,000.00) xxxxxxx money deposit (the “Deposit”) to be held subject to the
terms of this Agreement. If Buyer at the end of the Feasibility Period (defined
below), has not elected to terminate this Agreement, then, subject to the terms
of this Agreement, the Deposit shall become nonrefundable. If the purchase
and
sale contemplated by this Agreement is completed, then at Closing, the Escrow
Agent will credit the Deposit against the Purchase Price, and the Deposit shall
be remitted to Seller along with the balance of the Purchase Price. If the
purchase and sale contemplated by this Agreement fails to close, the Deposit
shall be remitted to Buyer or Seller, as appropriate, in accordance with the
terms of this Agreement. All interest or other earnings on the Deposit, if
any,
shall become part of the Deposit and shall be disbursed to the party who becomes
entitled to the Deposit pursuant to the terms of this Agreement.
4. Title.
At
Closing, Seller
shall deliver to Buyer by limited warranty deed title to the Real Property
subject only to the Permitted Exceptions (as defined in Section 5(b)
below).
5. Title
Commitment/Survey/Litigation and Lien Searches
(a) Within
ten (10) days after the Execution Date (the “Title Delivery Period”), Seller
shall direct Escrow Agent to provide Buyer with a preliminary commitment (“Title
Commitment”) for an extended coverage owner’s title insurance policy to be
issued by Chicago Title Insurance Company (“Title Company”) describing the Real
Property, with coverage in the amount of the Purchase Price, together with
a
legible and complete copy (to the extent available to the Title Company) of
each
of the documents forming the basis for each exception therein (the “Exception
Documents” and together with the Title Commitment, the “Title Documents”).
Buyer
shall pay the difference in the additional premium cost between the cost of
a
standard owner’s policy of title insurance (including any endorsements required
to remove or cure objections in the Title Objection Notice that Seller elects
to
remove or cure pursuant to Section 5(b)) and the cost of the title policy
actually issued, inclusive of endorsements. Seller will provide the Title
Company with any indemnity agreement in form acceptable to Seller to enable
the
Title Company to remove policy exceptions, which would not be removed if the
Title Policy was an owner’s standard title insurance policy. Buyer agrees, at
its sole cost and expense, to pay any and all costs associated with obtaining
any additional items including, without limitation, any ALTA survey, which
are
required by the Title Company as a condition of its issuance of an owner’s
extended coverage title insurance policy. If Buyer fails to satisfy the Title
Company's requirements of Buyer for the issuance of an owner's extended coverage
title insurance policy, then Buyer shall accept a standard owner's policy of
title insurance.
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& SALE AGREEMENT -Wildflower
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(b) Buyer
shall have a period of twenty (20) days from receipt of the Title Documents
to
approve or disapprove the Title Documents (the “Title Review Period”) by written
notice to Seller setting forth in reasonable detail the nature of Buyer’s Title
objections (the “Title Objection Notice”). Any exceptions or other items set
forth in the Title Commitment to which Buyer does not object within the Title
Review Period, it being understood and agreed that Buyer shall not have the
right to object to exceptions for liens for local real estate taxes and
assessments not yet due or payable, shall hereinafter be deemed to be “Permitted
Exceptions”. With regard to items to which Buyer does object within the Title
Review Period, Seller shall notify Buyer in writing within ten (10) days after
Seller’s receipt of the Title Objection Notice of any exceptions to title which
Seller is unwilling to remove or otherwise resolve (the “Title Response Notice”)
and Buyer may, at Buyer’s option, to be exercised on or before 5:00 p.m.
Pacific Time on the fifth (5th
) day
after receipt of the Title Response Notice from Seller, either (i) waive
the objections set forth in the Title Objection Notice which Seller is unwilling
to remove or otherwise resolve in accordance with the terms of the Title
Response Notice, in which case such items shall be deemed to be included in
within the Permitted Exceptions or (ii) terminate this Agreement by written
notice to Seller. If Buyer timely elects to terminate this Agreement, Escrow
Agent shall immediately return the Deposit to Buyer and this Agreement will
terminate except for those provisions of this Agreement which specifically
survive termination. In the event Seller elects to cure or remove the items
identified in the Title Objection Notice but fails by Closing to take such
action as may be necessary to cure or remove the items identified in the Title
Objection Notice, then Buyer shall have the option of either waiving the
applicable items set forth in the Title Objection Notice, in which event such
items shall be deemed to be included within the Permitted Exceptions, or
terminating this Agreement by delivery of written notice of termination to
Seller within five (5) days after Seller’s act or omission giving rise to such
termination right, and the Deposit shall be returned to Buyer and thereafter
neither Buyer nor Seller shall have any further rights or obligations hereunder,
except under those provisions of this Agreement which specifically survive
termination. In the event any supplement to the Title Commitment shows an
additional exception, Buyer shall accept or disapprove the same and Seller
shall
respond to Buyer’s objection in the same manner as above with the exception that
each of the time periods involved shall be shortened to five (5)
days.
(c) Within
ten (10) days after the Execution Date, Buyer shall order an ALTA survey of
the
Real Property (the “Survey”), prepared by a duly licensed land surveyor
reasonably acceptable to the Title Company and Buyer and Buyer shall cause
the
same to be delivered to Buyer and Seller within thirty (30) days after the
Execution Date (the “Survey Delivery Period”). The Survey shall be dated and
certified not earlier than the Execution Date, shall show the location of the
Real Property, the improvements located thereon, building and set-back lines,
fences, ponds, creeks, streams, rivers, officially designated 100-year flood
plains, easements, roads, rights-of-way, encroachments and such other exceptions
located on the Real Property as may be described in the Title Commitment, and
shall contain a legal description of the boundaries of the Real Property metes
and bounds which shall also include a reference to the recorded plat, if any.
The Survey and certificate shall be completed in accordance with the Minimum
Standard Detail Requirements for any ALTA/ACSM land title survey as adopted
by
the American Congress of Surveying and Mapping and the American Land Title
Association, pursuant to the accuracy requirements of a Class A Urban Survey.
Buyer shall have a period of ten (10) days from receipt of the Survey to approve
or disapprove the Survey (the “Survey Review Period”) by written notice to
Seller setting forth in reasonable detail the nature of
PURCHASE
& SALE AGREEMENT -Wildflower
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Buyer’s
Survey objections (the “Survey Objection Notice”). In the event that Buyer
disapproves any or all items referred to in the Survey (including, without
limitation, any encroachments, discrepancies in property lines, gaps, gores,
or
other matters which constitute a defect in the Real Property as determined
by
Buyer), Seller
shall have a period of ten (10) days after receipt of the Survey Objection
Notice (the “Survey Response Period”) within which to notify Buyer in writing
whether Seller is willing or able to take such action as may be necessary by
Closing to cure or remove, or to cause the surveyor to revise the Survey in
a
manner which is responsive to, the items identified in the Survey Objection
Notice (the “Survey Response Notice”). In the event Seller notifies Buyer within
the Survey Response Period that it is unable or unwilling to take such action
as
may be necessary to cure or remove, or to cause the surveyor to revise the
Survey as to the items in the Survey Objection Letter, Buyer may, at Buyer’s
option, to be exercised on or before 5:00 p.m. Pacific Time on the fifth
(5th)
day
after receipt of the Survey Response Notice, either waive the objections set
forth in the Survey Objection Notice which will not be resolved as provided
in
the Survey Response Notice, in which event such items shall be deemed to be
included within the Permitted Exceptions or (ii) terminate this Agreement by
written notice to Seller. If Buyer timely elects to terminate this Agreement,
Escrow Agent shall immediately return the Deposit to Buyer and this Agreement
will terminate except for those provisions of this Agreement which specifically
survive termination. In the event Seller elects to cure or remove the items
objected to by Buyer in the Survey Objection Notice but fails by Closing to
take
such action as may be necessary to cure or remove, or to cause the surveyor
to
revise the Survey in a manner which is responsive to, the items identified
in
the Survey Objection Notice, then Buyer shall have the option of either waiving
the applicable items set forth in the Survey Objection Notice, in which event
such items shall be deemed to be included within the Permitted Exceptions,
or
terminating this Agreement by delivery of written notice of termination to
Seller within five (5) days after Seller’s act or omission giving rise to such
termination right, and the Deposit shall be returned to Buyer and thereafter
neither Buyer nor Seller shall have any further rights or obligations hereunder,
except under those provisions of this Agreement which specifically survive
termination.
(d) Within
the Title Delivery Period Seller shall also cause to be prepared and furnished
to Buyer a litigation, bankruptcy, judgment and security interest search in
the
names of Seller and the Facility conducted in the state and county in which
the
Facility is located, the State of Washington and the County in which the Seller
maintains its principal place of business (the “Litigation and Lien Search”). In
the event that Buyer disapproves any or all items referred to in the Litigation
and Lien Search, Buyer shall so advise Seller in writing prior to the end of
the
Title Review Period (the “Litigation and Lien Objection Notice”). Seller shall
have a period of ten (10) days after receipt of the Litigation and Lien
Objection Notice (the “Lien Response Period”) within which to notify Buyer in
writing whether Seller is willing or able to take such action as may be
necessary by Closing to cure or remove the items identified in the Litigation
and Lien Objection Notice (the “Lien Response Notice”). In the event Seller
notifies Buyer within the Lien Response Period that it is unable or unwilling
to
take such action as may be necessary to cure or remove by Closing the items
identified in the Litigation and Lien Objection Notice, Buyer may, at Buyer’s
option, to be exercised on or before 5:00 p.m. Pacific Time on the fifth
(5th)
day
after receipt of the Lien Response Notice, either (i) waive the objections
set forth in the Litigation and Lien Objection Notice which will not be resolved
as provided in the Lien Response Notice or (ii) terminate this Agreement by
written notice to Seller. If Buyer timely elects to terminate this Agreement,
Escrow Agent shall immediately return the Deposit to Buyer
PURCHASE
& SALE AGREEMENT -Wildflower
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and
this
Agreement will terminate except for those provisions of this Agreement which
specifically survive termination. In the event Seller elects to cure or remove
the items objected to by Buyer in the Litigation and Lien Objection Notice
but
fails by Closing to take such action as may be necessary to cure or remove
the
items identified in the Litigation and Lien Objection Notice, then Buyer shall
have the option of either waiving the applicable items set forth in the Survey
Objection Notice, in which event such items shall be deemed to be included
within the Permitted Exceptions, or terminating this Agreement by delivery
of
written notice of termination to Seller within five (5) days after Seller’s act
or omission giving rise to such termination right, and the Deposit shall be
returned to Buyer and thereafter neither Buyer nor Seller shall have any further
rights or obligations hereunder, except under those provisions of this Agreement
which specifically survive termination. Any liens reflected on the Litigation
and Lien Search which are not objected to by Buyer or as to which any objection
is later waived by Buyer shall be included within the Permitted
Exceptions.
(e) The
costs
of the Title Commitment, Survey and Litigation and Lien Search shall be borne
by
Seller and Buyer in the manner set forth in Section 15(c).
(f) For
purposes of this Section 5, the obligations of the parties set forth in
Section 7(b) and in Section 18 of this Agreement shall be deemed to be
obligations which specifically survive termination of this
Agreement.
6. Information
(a) Within
ten (10) days after the Execution Date Seller shall deliver to Buyer the
information described in Exhibit
6
hereto
(the “Due Diligence Materials”) if to the extent the same is in the possession
of Seller or Frontier Management, LLC (“Seller’s Manager”). In the event that
any of the Due Diligence Materials that are in the possession of Seller or
Seller’s Manager shall not be delivered within the aforesaid ten (10) day
period, the Feasibility Period (as defined below) shall automatically be
extended, day for day, until all of the Due Diligence Materials are delivered.
Buyer shall acknowledge in writing the receipt of all of the Due Diligence
Materials within one (1) day of receipt of same. Further, Seller shall provide
such other information that is in the possession of Seller or Seller’s Manager
that Buyer may reasonably request from time to time that pertain to the Assets;
provided,
however,
that to
the extent any such request is made after the expiration of the ten (10) day
period described in the first sentence hereof, the Seller’s delivery of the
requested information shall not serve in any manner to extend the Feasibility
Period.
(b) In
addition to what was delivered pursuant to Section 6(a) above, Seller has
offered to make available to Buyer for review Seller’s records which are in the
possession of Seller or Seller’s Manager which relate to the ownership,
condition or operation of the Real Property (the “Books and Records”). The Books
and Records will be made available to Buyer at (i) Seller’s business office
located at 000 Xxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxxx 00000, or
(ii) Seller’s Manager’s office located at Xxx
Xxxxxxxxx, Xxxxx 000, 00000 XX Xxxxx Xxxxxx Ferry Road, Durham, Oregon or (iii)
at the Facility, as designated by Seller.
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& SALE AGREEMENT -Wildflower
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(c) Notwithstanding
Sections 6(a) or 6(b) above, Seller shall not be obligated to disclose (i)
any information that is subject to attorney-client privilege, or that if
disclosed to Buyer would cause the same or other information to not be protected
by attorney-client privilege, (ii) any information the disclosure of which
is conditioned upon Seller’s receipt of consent from the issuer thereof who has
restricted the redelivery thereof to any person other than Seller without its
consent; provided,
however,
upon
Buyer’s request Seller shall use reasonable efforts to secure such consent,
(iii) any tax returns of Seller, or (iv) any purchase offers or purchase and
sale agreements delivered to or received by Seller relating to a potential
sale
of the Assets to any third party.
(d) The
financial, other information and records provided by Seller to Buyer in
connection with Buyer’s inspection and examination of the Assets and the
business conducted therewith, including those provided pursuant to this
Section 6, shall be subject to the terms of Section 18
hereof.
7. Feasibility
Period
(a) Buyer
shall have until 5 p.m. Pacific Time, on the forty fifth (45th)
day
after
all
of the Schedules have been completed and all of the Exhibits have been agreed
to
by the parties, as confirmed in writing by both Buyer and Seller (the
“Feasibility Period”), within which to conduct Buyer’s due diligence review of
the Assets and the business conducted therewith. Such due diligence review
may
include, but not be limited to, a review of the Due Diligence Materials, matters
related to the construction and the operation of the Real Property and its
compliance with law, zoning investigations, soil studies, environmental
assessments, surveys, structural inspections, pest inspections, seismic
assessments, wetlands reports, assessment of the needs and the propriety of
residency by current residents, the Financial Statements (as defined below)
and
Census Reports (as defined below), policies and procedures, advertising, the
Books and Records, the Leases, the Contracts, accounts payable records, rent
rolls, operating statements, and labor costs.
If
within fourteen (14) days after the Effective Date Buyer and Seller have not
agreed to the Schedules and Exhibits, either party may terminate this Agreement.
Such termination shall be treated as if Buyer elected to terminate the Agreement
as provided in Section 7(c) hereof.
(b) During
the Feasibility Period, Buyer shall be permitted reasonable access to the Real
Property during normal business hours to complete inspections and tests subject
to the rights of residents in possession. Seller shall have the right to
designate a representative for purposes of coordinating and overseeing Buyer’s
on-site due diligence investigation. Buyer shall give Seller’s designated
representative, if any, advance notice of its investigation of the Real
Property, describing the nature of the review work to be undertaken and the
estimated duration of the review. A representative of Seller shall have the
right to accompany Buyer and its agents, representatives and contractors that
are performing tests on or about the Real Property in connection with such
testing and to limit the duration, frequency and means of such testing to the
extent necessary to avoid disruption of residents of the Real Property providing
that no such limitation shall unreasonably interfere with Buyer’s ability to
conduct such tests or to have the same conducted on Buyer’s behalf. Buyer
covenants that it will conduct its tests and other due diligence activities
in a
professional manner and in a manner which minimizes interference with residents
of the Real Property. Buyer shall indemnify, defend and hold Seller harmless
from and
PURCHASE
& SALE AGREEMENT -Wildflower
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against
all losses, damages, liabilities, claims, fines, penalties, causes of action
and
expenses arising from or out of the presence or activities of Buyer or its
agents, employees, representatives, consultants, or contractors on the Real
Property, both before and after Closing and, if Buyer does not purchase the
Assets, Buyer shall repair any damage to the Real Property caused by such
presence or activities. The terms of this Section 7(b) shall survive
Closing or termination of this Agreement.
(c) In
the
event that at or prior to the end of the Feasibility Period Buyer concludes,
in
its sole and absolute discretion, that it is not satisfied with its due
diligence review Buyer may terminate this Agreement upon Buyer’s delivery of a
written notice of termination to Seller on or before the expiration of the
Feasibility Period, after which neither party shall have any further obligation
to the other hereunder with the exception of Buyer’s obligations under this
Section 7 and Section 18 and Buyer’s right to secure the immediate
return of the Deposit. If Buyer fails to notify Seller in writing of Buyer’s
election to terminate this Agreement at or prior to the expiration of the
Feasibility Period, Buyer shall be deemed to have elected to have waived its
right to terminate this Agreement pursuant to this Section 7 and
Section 7 of the Related Agreements (as defined below).
8. Contracts
and Leases. Attached
hereto as Exhibit
8
is a
copy of the Contracts and Leases. Prior to the expiration of the Feasibility
Period Buyer shall notify Seller in writing as to which of the Contracts and
Leases Buyer will agree to assume and those which Buyer wants terminated by
Seller at Closing.
9. Representations
and Warranties of Seller.
Seller
represents and warrants to Buyer as follows:
(a) Seller
is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Washington, has received all necessary approval and
authority to own its property and to carry on its business as now owned and
operated by Seller and is duly qualified to do business in the State of
Arkansas.
(b) Seller
is
not a foreign person (as that term is defined in the Internal Revenue Code
and
Income Tax Regulations) and Seller agrees to execute a certification of
nonforeign status pursuant to Section 1445 of the Internal Revenue Code
prior to Closing.
(c) The
person executing this Agreement on behalf of Seller has the requisite power
and
authority to execute and deliver this Agreement in the name of
Seller.
(d) The
execution, delivery and performance of this Agreement by the person executing
the same on behalf of Seller, have been duly and validly authorized, and this
Agreement and the other agreements and instruments contemplated hereby to be
executed or delivered by Seller constitute legal, valid and binding obligations
of Seller, enforceable in accordance with their respective terms except as
such
enforceability may be limited by creditors rights laws and general principles
of
equity. Seller does not require the consent of any third party to consummate
the
transaction provided for herein.
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& SALE AGREEMENT -Wildflower
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(e) Except
as
set forth in Exhibit
9(e),
neither
the execution of this Agreement nor the consummation of the transactions
contemplated hereby shall result in a breach of or constitute a default under
any agreement, document, instrument, or other obligation to which Seller is
a
party or by which Seller may be bound or, to Seller’s knowledge, under any law,
statute, ordinance, rule, governmental regulation or any writ, injunction,
order
or decree of any court or governmental body, applicable to Seller or to the
Property where such breach or default would prevent or invalidate Seller’s
execution of this Agreement or would prevent Seller from consummating the
transactions contemplated hereby.
(f) Except
as
set forth in Exhibit
9(f),
Seller
has not received any written notice, and has no knowledge, of any
investigations, suits, actions, administrative or arbitration proceedings
pending, whether involving a governmental authority or a private party, to
which
Seller is a party or in connection with the Assets.
(g) Except
as
set forth in Exhibit
9(g),
Seller
has not received any written notice from any governmental authority, and has
no
knowledge of, any alleged violation of any fire, zoning, health, safety,
sanitation, environmental or any federal, state or local law with respect to
the
Property.
(h) Except
as
set forth in Exhibit
9(h),
Seller
has not received any written notice, and has no knowledge, that the Real
Property is subject to any existing, pending or threatened investigation or
lien
by any governmental authority under, any federal, state or local law, statute,
ordinance, regulation or order pertaining to hazardous substances including,
but
not limited to: The Resource Conservation and Recovery Act of 1976, 42 U.S.C.
‘6901 et.
seq.,
and
the rules, regulations and orders promulgated thereunder (“RCRA”); the Clean Air
Act (42 U.S.C. ‘7401 et.
seq.);
the
Comprehensive Environmental Response, Compensation and Liability Act of 1980
(42
U.S.C. ‘9601 et.
seq.)
(“CERCLA”); the Federal Hazardous Substances Act (15 U.S.C. ‘1261 et.
seq.);
the
Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. ‘136
et.
seq.);
the
Federal Water Pollution Control Act (33 U.S.C. ‘1251 et.
seq.);
and
the Toxic Substances Control Act (15 U.S.C. ‘2601 et.
seq.).
Except as set forth in Exhibit
9(h),
Seller
has not, and Seller has no knowledge that any predecessor in interest of Seller
or any other person or entity has, generated, manufactured, stored, transported,
treated, recycled, disposed of or otherwise handled in any way any Hazardous
Substances on, beneath or about any of the Real Property (other than medical
and
infectious wastes and other Hazardous Substances disposed of in accordance
with
applicable laws). Except as set forth in Exhibit
9(h),
Seller
has not, and Seller has no knowledge that any predecessor in interest of Seller
or any other person or entity has, released or discharged, as such terms are
defined in applicable environmental, health and safety laws, rules and
regulations, in violation of applicable law, any Hazardous Substance into the
soil, surface waters, groundwater, drinking water supplies, navigable waters,
land, surface or subsurface strata, ambient air or other environmental medium
related to the Real Property. Except as set forth in Exhibit
9(h),
there
are no other locations where any Hazardous Substances generated from the
operation of the Facility or the ownership of the Real Property or any of the
other Assets have been stored, treated, recycled or disposed of, whether by
Seller or, to the knowledge of Seller, any other person or entity on behalf
of
Seller, other than locations where medical and infectious wastes have been
disposed of in accordance with applicable law. “Hazardous Substances” is any
substance, material and/or waste which is regulated under
PURCHASE
& SALE AGREEMENT -Wildflower
10
applicable
local, state or federal law, or which is classified as hazardous, toxic, or
otherwise harmful under federal, state or local laws or
regulations.
(i) No
underground storage tank (as defined in RCRA,) or any above-ground storage
tank
for storing or dispending any hydrocarbon on or at the Real Property have been
installed on, or removed from, the Real Property by Seller.
(j) The
Real
Property is all of the real property that is currently used in connection with
the ownership and operation of the Facility. Seller has not received any written
notice of any pending condemnation proceedings and Seller has no knowledge
of
any threatened condemnation proceedings against the Real Property or any part
thereof. Seller has received no written notice, and has no knowledge, of the
intent of any public authority or public or quasi-public utility to take or
use
the Real Property or any part thereof.
(k) To
Seller’s knowledge, neither Seller nor any other party to any of the Contracts
or the Leases, is in default of any terms or obligations under the Contracts
or
the Leases nor to Seller’s knowledge has any event occurred which, with the
passage of time or the giving of notice or both would constitute such a
default.
(l) Except
as
set forth in Exhibit
9(l)
and
except with respect to the Permitted Exceptions, Seller has good and marketable
title to the Assets and, subject to the rights of the residents of the Facility
and any possessory rights granted to parties to the Contracts and Leases and
to
Seller’s Manager, has sole possession of and control over the Assets. Seller
acknowledges and agrees that nothing in this Section 9(l) shall affect
Seller’s obligation to deliver title to the Assets in accordance with the
provisions of Section 5.
(m)
The
Facility is currently licensed by the Arkansas Department of Human Services
(the
"Department") for forty (40) licensed residential care bed and the Facility
currently operates thirty six (36) units as residential care and forty four
(44)
units as unlicensed independent living units. Seller
has no written notice or knowledge that any licenses, permits and certificates
necessary to operate the Facility in compliance with applicable law have not
been obtained by Seller or are not in full force and effect. Exhibit
9(m)
provides
a correct and complete list of all licenses, permits, approvals, qualifications,
registrations, certifications and other authorizations of any governmental
authority held by Seller with respect to the Facility and its operation as
of
the Execution Date (the “Operating Licenses and Certifications”)
and copies of all such Operating Licenses and Certifications have been provided
to Buyer or will be provided to Buyer as part of the Due Diligence Materials.
Except
as
set forth in Exhibit
9(m),
Seller
has no written notice or knowledge of any pending action by any governmental
authority or other party to suspend,
revoke,
terminate or challenge any of the Operating Licenses and Certifications
or claiming that Seller is not in compliance in all material respects with
all
such Operating Licenses and Certifications and Seller has no knowledge of the
threat of the commencement of any such action.
(n) Except
as
set forth in Exhibit
9(n),
to
Seller’s knowledge the Assets and the Corporate Assets constitute all material
assets and properties currently used to operate the Facility consistent with
past practices, except for assets and properties disposed of in the ordinary
course of business that have in the aggregate been replaced by items of
comparable use
PURCHASE
& SALE AGREEMENT -Wildflower
11
and
function in all material respects. Except as set forth in Exhibit
9(n),
to
Seller’s knowledge each item of Personal Property is in working condition and
usable for its intended purpose in the operation of the Facility. Seller
represents to Buyer that at Closing, the Facility will have inventory levels
which comply with applicable law and are sufficient to carry on the continued
operations of the Facility following the Closing in substantially the same
manner as conducted prior to the Closing.
(o) Attached
hereto as Exhibit
9(o)
are (i)
Seller’s unaudited internally prepared annual income statements for the Facility
for the year 2004, and the balance sheet of Seller as of December
31, 2004, and (ii) Seller’s unaudited internally prepared income statement for
the Facility for the five-month period ended May 31, 2005, together with the
balance sheets of Seller as of the end of such five-month period (the “Financial
Statements”). To Seller’s knowledge, the Financial Statements have been prepared
in accordance with generally accepted accounting principles consistently
applied, except that the depreciation amounts are recorded using the Federal
Method instead of Book Method and to Seller’s knowledge accurately reflect in
all material respects and fairly present the financial condition and results
of
operations of Seller and the Facility as of the dates and for the periods
indicated thereon.
(p) To
Seller’s knowledge attached hereto as Exhibit
9(p)
are
correct and complete copies of the annual census statements for the Facility
for
calendar years 2003 and 2004 and for the five-month period ended May 31, 2005
(the “Census Reports”). To Seller’s knowledge, each of the Census Reports
provides a correct and complete census of residents at the Facility for the
dates reflected thereon.
(q) Except
as
disclosed on Exhibit
9(q),
Seller
has no written notice or knowledge of any claim or liability against the
Facility or Seller with respect to its ownership or operation of the Facility
of
any nature whatsoever, whether absolute, accrued, contingent or otherwise,
that alone or combined with all claims or liabilities would reasonably be
expected to have a material adverse effect upon the Facility or any of the
other
Assets.
(r) All
federal, state and other tax returns and reports required to be filed in
connection with the Facility or any of the other Assets have been filed by
Seller or will be timely filed in accordance with the requirements of applicable
law, and all taxes and other assessments and levies (including all interest
and
penalties), including, without limitation, income, franchise, real estate,
sales, gross receipts, use, excise and service taxes and employee withholding
taxes, accrued by Seller in connection with the ownership of the Assets or
the
operation of the Facility have been paid by Seller or will be timely paid by
Seller in accordance with the requirements of applicable law. Seller has not
waived any statute of limitation with respect to any tax or other assessment
or
levy applicable to Seller, the Facility or the other Assets and all such taxes
and other assessments and levies that Seller is required by law to withhold
or
to collect have been duly withheld and collected and have been paid over to
the
proper governmental authorities or segregated and set aside for such payment
and, if so segregated and set aside, shall be so paid by Seller as required
by
applicable Law. Except as may be reflected in the Title Documents or in the
Litigation and Lien Search, neither the Internal Revenue Service nor any other
taxing authority is now asserting or, to Seller’s knowledge, has threatened to
asset against Seller any deficiency or claim for additional taxes or interest
thereon or penalties in connection therewith. Except as may be reflected in
the
Title Documents or in the Litigation and Lien Search, Seller
PURCHASE
& SALE AGREEMENT -Wildflower
12
has
no
knowledge that any of the Assets is subject to any lien for payment of any
tax
or assessment, other than taxes and assessments not yet due and
payable.
(s) There
is
no action, suit, claim, proceeding or investigation pending against Seller
or,
to Seller’s knowledge, against Seller’s Manager (and Seller has no written
notice or knowledge
of any threat thereof) affecting (i) Seller’s ability to perform its obligations
under this Agreement, (ii) the Facility, or (iii) any of the other Assets
arising out of or relating to Seller’s
care for any of the residents located at any time at the Facility. Seller has
no
life care or fixed or limited fee agreements with any of its
residents.
(t) Exhibit
9(t)
contains
a correct and complete list of all persons currently employed at the Facility,
together with the present compensation rate (including commissions and bonuses),
accrued vacation days and accrued sick days for each such person. With respect
to the employees of Seller or Seller’s Manager employed at the Facility, neither
Seller nor to Seller’s knowledge, Seller’s Manager, has recognized any labor
organization, nor has any such organization been certified as the exclusive
bargaining agent of any such
employees. There has been no demand on behalf of any labor organization to
represent any such employees and Seller has no knowledge of any present efforts
of any labor organization for authorization to represent any employees of Seller
or, to Seller’s knowledge, Seller’s Manager employed at the Facility. Seller is
not now, and has never been, a party to any collective bargaining or other
agreement with any labor organization with respect to its operations at the
Facility. Neither Seller nor, to Seller’s knowledge, Seller’s Manager has
experienced any strikes, work stoppages, grievance proceedings, claims of unfair
labor practices filed or other employment law difficulties of any nature with
respect to its operations at the Facility which remain unresolved as of the
date
hereof, nor does Seller have knowledge of any grounds for any employment law
difficulties of any nature. Neither Seller nor, to Seller’s knowledge, Seller’s
Manager is currently a party to any litigation, claim or other proceeding
asserting that Seller or Seller’s Manager has not complied in all material
respects with all laws relating to the employment of the employees of the
Facility. Except as set forth in Exhibit
9(t),
neither
Seller nor, to Seller’s knowledge, Seller’s Manager is a party to any contract
of employment or severance pay agreement or arrangement with any of the
employees of the Facility. Each Employee Compensation Agreement (as hereinafter
defined) offered or sponsored by Seller or Seller’s Manager with respect to the
Facility has been maintained, operated and administered in compliance with
its
terms and any related documents or agreements and in compliance with all
applicable laws. Neither Seller nor Seller’s Manager has provided any notice of
“plant closure” with respect to the Facility that may be required by the
provisions of the Worker Adjustment and Retraining Notification Act, 29 U.S.C.
§§ 2101 2109 (the “WARN Act”) in connection with the
transactions contemplated by this Agreement. For purposes hereof an “Employee
Compensation Agreement” shall be defined as any (i) “employee benefit
plan,” as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended, (ii) Seller deferred compensation, excess
benefit, stock, stock option and incentive plans, contracts, programs, funds
or
arrangements of any kind, if any, and (iii) any other plans, contracts,
programs, funds or arrangements sponsored or offered by Seller or Seller’s
Manager providing benefits, if any, to present or former employees, directors,
officers, managers, members, consultants or independent contractors of Seller
or
Seller’s Manager, or with respect to which Seller or Seller’s Manager has made
or is required to make, payments, transfers or contributions.
PURCHASE
& SALE AGREEMENT -Wildflower
13
(u) Attached
hereto as Exhibit
9(u)
is a
correct and complete list of any resident trust funds and an inventory of all
property of residents at the Facility held by the Seller or Seller’s Manager as
of the Execution Date (the “Resident Trust Funds”). Seller and Seller’s Manager
have complied, in all material respects, with all laws applicable to the
Resident Trust Funds.
(v) Except
as
set forth in Exhibit
9(v),
to
Seller’s knowledge the Facility has completed and maintained all resident
medical records in material compliance with applicable laws. To Seller’s
knowledge the Facility has complied in all material respects with applicable
laws governing confidentiality of medical records.
(w) Except
as
set forth in Exhibit
9(w),
the
Facility does
not
participate in the Medicare or the Arkansas Medicaid programs.
(x) None
of
the documents, certificates, instruments or information furnished or to be
furnished by Seller to Buyer or any of Buyer’s representatives is to the
Seller’s knowledge false or misleading as to any material fact or knowingly
omits or will knowingly omit to state a material fact necessary to make any
of
the statements contained therein not misleading. Each of the representations
and
warranties set forth in this Section 9 shall be deemed to be material and
relied upon by Buyer; provided, however, in the event Seller is able to
demonstrate that Buyer was aware at Closing that any such representation or
warranty was untrue or inaccurate at Closing and that Buyer nonetheless elected
to close, Buyer shall have no rights or remedies against Seller after Closing
as
a result of such untruth or inaccuracy.
Except
for the warranties set forth in this Section 9, Seller is not making and
has not made any warranty or representation to Buyer.
The
representations and warranties of Seller provided in this Section 9 shall
survive the Closing for a period of nine (9) months from the Closing Date after
which they shall terminate and be of no further force or effect except to the
extent any litigation has been commenced with respect thereto prior to the
expiration of such nine (9) month period, in which case they shall survive
until
the final, non appealable resolution of such litigation.
For
purpose of this Section 9 and Section 11, “knowledge” means the actual
knowledge of (i) Xxxxx X. Xxxxxxxx, the chief executive officer and the
sole shareholder of Seller, or (ii) Xxxxxxx Xxxxxxxx, the chief executive
officer of Seller’s Manager and “notice” means either written notice or verbal
notice which has been received, directly or indirectly, by, Xxxxx X. Xxxxxxxx,
the chief executive officer and sole shareholder of Seller, or by Xxxxxxx
Xxxxxxxx, the chief executive officer of Seller’s Manager, in each instance
after reasonable inquiries directed to the on site manager of the
Facility.
10. Representations
and Warranties of Buyer.
Buyer
represents and warrants to Seller as follows:
(a) Buyer
is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Washington and has received all necessary approval and
authority to own its property and to carry on its business as is now owned
and
operated by it.
PURCHASE
& SALE AGREEMENT -Wildflower
14
(b) Subject
to the satisfaction of the conditions to Closing, the execution, delivery and
performance of this Agreement has been, or in the event Buyer elects to proceed
with the transaction provided for herein as of the end of the Feasibility Period
will prior to the end of the Feasibility Period have been, duly authorized
by
all necessary corporate action of Buyer.
(c) The
person executing this Agreement on behalf of Buyer has the requisite power
and
authority to execute and deliver this Agreement in the name of
Buyer.
(d) The
execution, delivery and performance of this Agreement by the person executing
the same on behalf of the Buyer have been duly and validly authorized, and
this
Agreement and the other agreements and instruments contemplated hereby to be
executed and delivered by Buyer constitute legal, valid and binding obligations
of Buyer enforceable in accordance with their respective terms, except as such
enforceability may be limited by creditors rights laws and general principles
of
equity.
(e) Neither
the execution of this Agreement nor the consummation of the transactions
contemplated hereby shall result in a breach of or constitute a default under
any agreement, document, instrument, or other obligation to which Buyer is
a
party or by which Buyer may be bound or, to Seller’s knowledge, under any law,
statute, ordinance, rule, governmental regulation or any writ, injunction,
order
or decree of any court or governmental body, applicable to Buyer or to the
Property.
(f) Buyer
is
knowledgeable in the acquisition and operation of facilities of the type and
nature being conveyed by Seller under this Agreement.
Except
for the warranties set forth in this Section 10, Buyer is not making and
has not made any warranty or representation to Seller.
The
representations and warranties of Buyer provided in this Section 10 shall
survive the Closing for a period of nine (9) months from the Closing Date after
which they shall terminate and be of no further force or effect except to the
extent any litigation has been commenced with respect thereto prior to the
expiration of such nine (9) month period, in which case they shall survive
until
the final, non appealable resolution of such litigation.
11. Covenants
of Seller.
Seller
covenants that from and after the date of this Agreement,
except
as contemplated by this Agreement or with the consent of Buyer and provided
this
Agreement has not been terminated, Seller will:
(a) timely
pay or cause to be paid in the ordinary course of its business all obligations
which are due and payable with respect to the Assets;
(b) operate,
and cause Seller’s Manager to operate, the Facility in the ordinary course of
Seller’s business;
(c) take,
and
cause Seller’s Manager to take, all reasonable action to preserve the occupancy
of the residents and the goodwill of the suppliers of the Facility;
PURCHASE
& SALE AGREEMENT -Wildflower
15
(d) use,
and
cause Seller’s Manager to use, reasonable efforts to retain the services of the
employees at the Facility;
(e) not
increase, or permit Seller’s Manager to increase, the compensation or other
benefits or bonuses payable or to become payable to any of the employees at
the
Facility except for wage increases to non salaried employees which would
normally occur in accordance with currently existing employment practices of
Seller disclosed to Buyer;
(f) not
hire,
or permit Seller’s Manager to hire, any new employees at the Facility except to
replace existing employees in the ordinary course of business, as necessary,
and
not compensate any replacement employees at a rate that is more than five
percent (5%) above the rate of compensation of the person being
replaced;
(g) not
enter
into, or permit Seller’s Manager to enter into, any contract or commitment
affecting the Assets except which can be canceled without penalty upon thirty
(30) days notice, or sell, dispose of, or encumber any portion of the Assets,
other than in the ordinary course of operating the Facility;
(h) at
Buyer’s sole expense, reasonably cooperate, whether prior to or after Closing,
with Buyer in any efforts which it may undertake to audit the operating
financial statements with respect to the operation of the Facility for periods
prior to the Closing;
(i) maintain,
and cause Seller’s Manager to maintain, the Real Property, the Facility and the
other tangible Assets in the ordinary course of business, ordinary wear and
tear
excepted, from the end of the Feasibility Period through the Closing
Date.
(j) maintain,
or cause Seller’s Manager to maintain, in force the existing hazard and
liability insurance policies, or comparable coverage, for the Real Property,
the
Facility and the other tangible Assets;
(k) promptly
notify Buyer of any changes which affect materially the validity or accuracy
of
its representations and warranties of which it has knowledge or with respect
to
which it receives written notice prior to the Closing;
(l) prepare
or cause to be prepared all income, franchise, sales and other tax returns
or
reports required by law and promptly make all tax payments that are required
through the Closing Date, cooperate with Buyer in the submission to any state
taxing authorities to which Seller is subject of any requests for tax clearances
that Buyer deems to be necessary or appropriate and cooperate with such
authorities to facilitate the issuance of all such tax clearances;
(m) give
Buyer access to Seller’s
employees at such times as may be agreed upon by Seller and Buyer, and in any
event not less than five business days prior to Closing, for purposes of
allowing Buyer to discuss potential employment of any or all of such employees
with Buyer;
PURCHASE
& SALE AGREEMENT -Wildflower
16
(n) use
its
commercially reasonable efforts to (i) as soon as reasonably practicable after
the end of the Feasibility Period (assuming Buyer has not elected to terminate
this Agreement at or prior to the end of the Feasibility Period) to cooperate
with Buyer’s efforts to obtain all consents of governmental authorities and
third parties listed on Exhibit 11(n)
attached
hereto which Seller is required to obtain in order to consummate the transaction
provided for herein, (ii) cause to be fulfilled and satisfied all of the other
conditions to the Closing to be fulfilled and satisfied by Seller and (iii)
cause to be performed all of the matters required of Seller at or prior to
the
Closing;
(o) not
take,
or permit Seller’s Manager to take, any action, or suffer any omission,
inconsistent with its obligations under this Agreement or which could hinder
or
delay the consummation of the transactions contemplated by this Agreement,
or
intentionally take any action or suffer any omission that would reasonably
be
expected to result in any inaccuracy or breach of any of the representations
or
warranties of the Seller contained in this Agreement as of the Closing Date;
and
(p) cooperate,
at no cost or expense to Seller, in any audit which may be conducted by or
at
the direction of Buyer of the Financial Statements of the Facility in order
to
enable Buyer to comply with any securities law requirements applicable to
Buyer.
12. Disclaimer,
Release and “AS IS” Sale.
As a
material inducement to the execution and delivery of this Agreement by Seller,
and the performance by Seller of its duties and obligations hereunder, the
following provisions shall apply in the event Buyer does not elect to terminate
this Agreement at the end of the Feasibility Period:
(a) Buyer
acknowledges and warrants that Buyer will have had as of the end of the
Feasibility Period adequate opportunity to become fully acquainted with the
nature and condition, in all respects, of the Assets and Seller’s independent
and assisted living business conducted at the Real Property, the existence
or
availability of all licenses, permits and approvals from governmental
authorities necessary to operate Seller’s business, the manner of construction
and the condition and state of repair of the tangible Assets.
(b) Buyer
will be expressly purchasing the Assets in their existing condition, “AS IS,
WITHOUT RECOURSE, AND WITH ALL FAULTS, AND DEFECTS, KNOWN OR UNKNOWN, AND
WITHOUT ANY REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, OF ANY KIND,
FROM
SELLER OTHER THAN THOSE SPECIFICALLY SET FORTH HEREIN” and Seller shall have no
obligation to repair or correct any facts, circumstances or conditions or
defects or to compensate Buyer for same unless the same is a breach by Seller
of
its representations, warranties or covenants of this Agreement or any term
thereof.
(c) Absent
fraud or a breach by Seller of its obligations under this Agreement, including
its indemnity obligations set forth in Section 17, Buyer specifically
agrees that Seller shall have no liability to Buyer and Buyer hereby waives
any
right of recourse against Seller, whether arising at law or in equity, under
contract, tort law or statute (specifically including any Environmental Laws)
with respect to the condition of the tangible Assets, any past uses of any
of
the foregoing, the economic feasibility of the Assets or Seller’s business
operation therewith or
PURCHASE
& SALE AGREEMENT -Wildflower
17
the
compliance or non-compliance of the Assets or Seller’s business operation with
all laws, rules of regulations affecting or applicable to same.
(d) Buyer
expressly understands and acknowledges that it is possible that unknown
problems, conditions or claims may exist with respect to the Assets or the
business operated therewith and that Buyer explicitly will have taken such
into
account in electing to proceed with the transaction on the terms set forth
in
this Agreement, including the purchase price for the Assets, and that a portion
of such consideration, having been bargained for between the parties with the
knowledge of the possibility of such unknown problems, conditions or claims,
was
given in exchange for a full accord, satisfaction and discharge of all such
problems, conditions, losses and claims. Accordingly, absent fraud or a breach
by Seller of its obligations under this Agreement, including its indemnity
obligations set forth in Section 17, Buyer acknowledges that, except as
otherwise specifically set forth in this Agreement, following Closing Seller
shall have no liability or duty of any kind to Buyer with respect to the Assets,
regardless of the basis for the claim. Seller and Buyer acknowledge that this
disclaimer and full and complete release has been specifically
negotiated.
Initial
Buyer Initial
Seller
13. Buyer’s
Conditions Precedent.
The
obligation of Buyer to purchase the Assets is subject to the satisfaction,
at or
before the Closing, of each of the following conditions:
(a) The
representations and warranties of Seller contained in Section 9 shall be
true and correct in all material respects, except as to those representations
and warranties which contain a materiality exception in which case such
representations and warranties of Seller shall be true and correct in all
respects, at Closing as if the same were made on and as of that
date.
(b) Seller
shall have performed and complied with all agreements, covenants and conditions
required by this Agreement to be performed or complied with by Seller prior
to
or at Closing.
(c) The
simultaneous closing of each of the transactions subject to the Trillium Park
Purchase Agreement and Willow Brook Purchase Agreement (the “Related
Agreements”) with this transaction on the terms provided for in each respective
Related Agreement, it being specifically understood and agreed between Buyer
and
Seller that this Agreement represents one part of a multi-part transaction
related to three (3) properties and that it is the agreement of Buyer and Seller
that, unless this condition is waived in writing by Buyer and Seller, this
transaction shall not close unless the transactions subject to the Related
Agreements close simultaneously with this transaction; provided, however, if
the
transaction subject to the either or both of the Related Agreements is
terminated on account of material damage to the real property subject thereto,
the closing of such transaction shall not be a condition precedent to this
Closing.
PURCHASE
& SALE AGREEMENT -Wildflower
18
(d) Seller
shall not be in default, where said default cannot be cured by Closing, under
any mortgage, contract, lease or other agreement affecting or relating to the
Facility or any of the other Assets.
(e) No
suit,
action or proceeding shall be pending or threatened by any third party before
any governmental authority in which it is sought to restrain or prohibit or
to
obtain damages or other relief in connection with this Agreement or the
transactions contemplated thereby nor shall there have been filed by or against
Seller at any time prior to the Closing Date any bankruptcy, reorganization
or
arrangement petition.
(f) Buyer
shall have secured all necessary consents and/or approvals of governmental
authorities or third parties listed on Exhibit
11(n),
including without limitation all licenses and permits necessary for the lawful
operation by Buyer of the Facility as an assisted/independent living facility
with no less than thirty six (36) licensed residential care units and forty
four
(44) independent living units.
(g) Except
for any damage, destruction or condemnation subject to Section 22 hereof,
there shall have been no Material Reduction (as hereinafter defined) in the
census of the Facility since the Execution Date nor any Substantial Change
(as
hereinafter defined) in the condition of the Real Property, the Facility or
the
other Tangible Assets. For purposes hereof, a Material Reduction in census
shall
mean a loss of more than 10 residents from the number of persons residing at
the
Facility at the end of the Feasibility Period and a Substantial Change in the
condition of the Real Property, the Facility or the other Tangible Assets shall
mean that the cost to Buyer to repair or replace the same will exceed,
individually or in the aggregate, Fifty Thousand and no/100 Dollars ($50,000).
The provisions of this Section 13(g) shall not limit or restrict Seller’s
covenant to maintain the Assets as provided in Section 11(i).
(h) Buyer
shall have secured the approval of its Board of Directors to the transaction
provided for herein and in the Related Agreements; provided, however, this
condition shall be deemed to have been satisfied or waived unless Buyer has
advised Seller at or prior to the end of the Feasibility Period that it is
unable to secure such approval.
(i) The
Title
Insurance Policy shall have been issued by the Title Company, insuring Buyer’s
title to all of the Real Property, subject to no exceptions other than Permitted
Exceptions.
If
any
one or more of the conditions set forth above are not satisfied prior to Closing
and are not waived in writing by Buyer prior to the Closing then, Buyer may
terminate this Agreement by notice, in writing, with sufficient detail to inform
Seller of the reasons for the termination, delivered to Seller and the Escrow
Agent that Buyer elects to terminate this Agreement, and upon receipt of which
the Escrow Agent shall cancel the Escrow and return all documents to the
depositing party, and Buyer’s rights and remedies shall be as provided in
Section 23 hereof. Provided, if Buyer elects to close the transaction with
written notice or knowledge that any such condition has not been satisfied
or
waived, Buyer shall be deemed to have waived any such condition.
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14. Seller’s
Conditions Precedent.
The
obligation of Seller to sell the Property hereunder is subject to the
satisfaction or waiver of each of the following conditions
precedent:
(a) The
representations and warranties of Buyer contained in Section 10 shall be
true and correct at Closing as if the same were made on and as of that
date.
(b) Buyer
shall have performed and complied with all agreements, covenants and conditions
required by this Agreement to be performed or complied with by Buyer prior
to or
at Closing
including, but not limited to, the delivery to Escrow Agent of the balance
of
the Purchase Price which is due at Closing.
(c) There
shall not have been filed by or against Buyer at any time prior to the Closing
Date any bankruptcy, reorganization or arrangement petition.
(d) The
simultaneous closing of each of the transactions subject to the Related
Agreements with this transaction on the terms provided for in each respective
Related Agreement, it being specifically understood and agreed between Buyer
and
Seller that this Agreement represents one part of a multi-part transaction
related to three (3) properties and that it is the agreement of Buyer and Seller
that, unless this condition is waived in writing by Buyer and Seller, this
transaction shall not close unless the transactions subject to the Related
Agreements close simultaneously with this transaction; provided, however, if
the
transaction subject to the either or both of the Related Agreements is
terminated on account of material damage to the real property subject thereto,
the closing of such transaction shall not be a condition precedent to this
Closing.
If
one or
more of the conditions set forth above are not satisfied prior to the Closing
and are not waived in writing by Seller prior to the Closing then, Seller may
terminate this Agreement by notice, in writing, delivered to Buyer and Escrow
Agent that Seller elects to terminate this Agreement, upon receipt of which
the
Escrow Agent shall cancel the Escrow and promptly return all documents to the
depositing party, and Seller’s rights and remedies shall be as provided in
Section 23 of this Agreement. Provided if Seller elects to close the
transaction, with written notice of knowledge that any such condition has not
been satisfied or waived, Seller shall be deemed to have waived any such
condition.
15. Closing
(a) Provided
the conditions to closing set forth in Sections 13 and 14 have been
satisfied or waived and provided neither Seller or Buyer has given notice to
the
other of its election to terminate this Agreement as otherwise permitted under
this Agreement, the closing (“Closing”) will occur in the office of the Escrow
Agent (“Closing Agent”) no later than 10:00 a.m. Pacific Time on the first
day of the first month occurring after the thirtieth (30th) day following the
expiration of the Feasibility Period (“Closing Date”), or such earlier or later
date as is mutually agreed to by the parties.
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(b) At
the
Closing:
(i) Seller
shall deliver to the Escrow Agent the following:
(1) an
executed Limited Warranty Deed in the form of Exhibit 15(b)(i)(1),
conveying to Buyer the Real Property free and clear of any lien, encumbrance
or
exception other than the Permitted Exceptions;
(2) an
executed Xxxx of Sale in the form of Exhibit
15(b)(i)(2),
if
applicable;
(3) two
(2)
executed Assignment and Assumption of Assumed Leases and Assumed Contracts
in
the form of Exhibit
15(b)(i)(3);
(4) an
executed certificate required by § 1445 of the Internal Revenue Code of 1986, as
amended, in the form of Exhibit
15(b)(i)(4);
(5) such
title affidavits and indemnities in form acceptable to Seller as may be
reasonably necessary to cause the Title Company to issue the Title Policy in
accordance with the terms of this Agreement;
(6) Evidence
of the termination of any Management Agreement which may be in effect between
Seller and Seller’s Manager.
(ii) Buyer
shall deliver to the Escrow Agent the following:
(1) the
balance of the Purchase Price in immediately available funds less the Deposit,
plus an amount equal to Buyer’s share of the expenses set forth in
Section 15(c) below, in cash or immediately available funds;
and,
(2) two
(2)
executed Assignment and Assumption of Assumed Leases and Assumed Contracts
in
the form of Exhibit
15(b)(i)(3)
to be
executed in duplicate.
(iii) Seller
shall deliver to Buyer possession of the Assets free and clear of all liens,
charges and encumbrances other than the Permitted Exceptions.
(c) Seller
shall pay the cost of one-half (1/2) of the escrow fee charged by the Escrow
Agent (except as otherwise provided in Section 23), the premium for a
standard coverage title insurance policy, all transfer taxes applicable to
the
Real Property, all recording fees and title insurance cost and fees (including
the costs of any title endorsements required to deliver title to the Real
Property subject to no liens other than the Permitted Exceptions but
specifically excluding the cost of the access, comprehensive and survey
endorsements required for the delivery to Buyer of the Title Policy (the
“Extended Coverage Endorsements”)) required to be paid in order to remove any
title exceptions other than the Permitted Exceptions, the cost of recording
the
Limited Warranty Deed, all prepayment penalties or premiums which may be due
with respect to any debt secured by the Assets and its own attorneys’ fees.
Buyer shall pay all and all sales and use taxes applicable to sale to Buyer
of
the Personal Property, the
cost
of the Survey, the cost of the Extended Coverage Endorsements, one-half (1/2)
of
the escrow fee
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charged
by the Escrow Agent (except as otherwise provided in Section 23), any other
title costs and its own attorneys’ fees.
(d) Seller
and Buyer shall deliver to each resident of the Facility immediately after
the
Closing, a notice regarding the sale directing that all future rents and notices
be directed to Buyer at the address of Buyer herein indicated, or at such other
address as Buyer shall provide to Seller at or prior to the Closing. The notice
shall be prepared by Seller and shall be in the form attached hereto as
Exhibit
15(d).
(e) Seller
shall deliver to Buyer outside of Escrow at Closing, the originals of all of
the
Assumed Leases and Assumed Contracts, keys to the Property, the Books and
Records and make available for copying by Buyer, at Buyer’s expense, any other
non-privileged records relating to the Property (but not Seller) which have
not
been previously copied by Buyer. From and after the Closing, Buyer will make
available to Seller, upon request, the Books and Records of the Facility if
Seller needs such in connection with claims for litigation and the filing of
reports or returns related to periods prior to Closing (including originals
if
required by Seller to comply with law or the order of a court of competent
jurisdiction), subject to Seller’s agreement to return any original Books and
Records which may be removed from the Facility and to pay for the cost of
copying such documents prior to the removal of such copies or of the originals
thereof.
(f) Each
party shall execute such additional documents, including written escrow
instructions consistent with this Agreement, as may be necessary to complete
the
transaction subject to this Agreement.
16. Prorations
(a) Rents,
assessments and real and personal property taxes, operating income and expenses
(including without limitation, utilities) and, to the extent provided in
Section 16(c)(iii) license fees, associated with the operation of the
Assets, and current installments of any LID assessments which are included
in
the Permitted Exceptions shall be prorated as of the Closing Date based upon
actual days involved. Real and personal property taxes and operating expenses
shall be prorated on the basis of the best information available as of Closing.
If after Closing real or personal property taxes or other operating expenses
or
income are determined to be different from those apportioned at Closing, then
the parties shall, within thirty (30) days of such determination, promptly
adjust the prorated amount to actual by payment from the party who paid too
little or received too much of a credit at Closing. If the Real Property is
revalued as a result of the sale transaction, there shall be no additional
proration of real and personal taxes as a result of the sale transaction;
(b) all
expenses, other than the payroll and employee benefits covered in
Section 19 of this Agreement, related to the ownership or operation of the
Assets (including but not limited to the obligations under the Contracts assumed
by Buyer), shall be prorated as of the Closing Date with Seller responsible
therefor for the period prior to the Closing Date and with Buyer responsible
therefor for the period from and after the Closing Date;
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(c) if
applicable, Buyer shall pay any filing fees and other costs associated with
Seller’s or Buyer’s compliance with the Antitrust Improvements Act of 1976 (the
“HSR Act”) as the same relates to the transaction provided for herein or in the
Related Agreements; and
(d) All
prorations shall be made on the basis of the actual number of days of the year
and month which have elapsed as of the Closing Date. The amount of proration
shall be adjusted in cash after the Closing, as and when complete and accurate
information becomes available. Seller and Buyer shall cooperate in making
post-Closing adjustments to prorations other than those described in
Section 16(b) above, within thirty (30) days following Closing and, if and
to the extent possible, it shall make adjustments with respect to the prorations
described in Section 16(b) within ninety (90) days following Closing;
and
(e) Buyer
and
Seller agree that the following shall not be subject to proration at
Closing:
(i) no
provision is made for the proration of water charges, sewer, electricity, fuel
charges, utility charges, refuse, solid waste disposal charges, telephone,
gas
or other utility charges as Seller shall terminate its account with the
providers of all such services as of the Closing Date and Buyer shall, prior
to
the Closing Date, make application to the providers of such services for the
continuation of such services in the name of Buyer. It is anticipated that
in
connection with all such services the meters will be read on or about the
Closing Date and the Seller shall be responsible for paying the bills for such
services accruing on and prior to the Closing Date and Buyer shall be
responsible for the payment of all such charges accruing after the Closing
Date;
(ii) no
provision has been made for the proration of premiums for any insurance policies
relating to the Property whether for liability, fire, theft, damage or other
casualty, and Seller shall terminate such policies as of the date of Closing.
Buyer shall be responsible for obtaining as of the date of Closing all insurance
necessary to insure Buyer for liability, theft, fire, and casualty; and
(iii) no
provision has been made for the proration of any license fees paid by Seller
for
the year in which the Closing occurs unless Buyer obtains the benefit of any
such license fees as part of its licensure application process, in which case
the same shall be prorated at closing based on the benefit derived by each
party
from the fees so paid by Seller.
17. Indemnification
(a) Except
as
otherwise provided in this Agreement, from and after the Closing Date, Seller
shall indemnify, defend and hold Buyer harmless from and against:
(i) Any
and
all obligations relating to the ownership and operation by Seller of the Assets
prior to the Closing Date and any obligations under any of the Contracts and
Leases which are not included within the Assumed Contracts and Assumed Leases
whether the same relate to the period prior to or after the Closing Date;
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(ii) Any
and
all liability for nonpayment by Seller relating to any services ordered and
performed at, or materials or goods ordered and delivered to, the Facility
prior
to the Closing Date;
(iii) Any
and
all liability or loss relating to the operation of Seller’s business at the
Facility prior to Closing, including, without limitation, any and all claims,
losses and liabilities involving Seller’s employees;
(iv) Any
breach of any representation, warranty, agreement or covenant on the part of
Seller under this Agreement, but only to the extent such breach has not been
waived prior to Closing in accordance with the terms thereof;
(v) Any
litigation, investigations or other proceedings pending or threatened against
Seller in connection with its ownership of the Assets or the business being
conducted at the Facility prior to Closing; and
(vi) Any
and
all actions, suits, proceedings, demands, assessments, judgments, reasonable
costs, and other reasonable expenses, including, but not limited to, reasonable
attorneys’ fees, incident to any of the foregoing.
For
purposes hereof, the term “claim” shall mean with respect to the amount of the
indemnity the actual costs and expenses incurred by Buyer directly related
to
any rights of the Buyer hereunder. Buyer shall act in good faith to mitigate
any
damages claimed against Seller.
(b) From
and
after the Closing Date, Buyer shall indemnify, defend and hold Seller harmless
from and against:
(i) Any
and
all obligations arising from or related to Buyer’s ownership of the Assets and
the operation of the Assets and the Facility from and after the Closing Date,
including, but not limited to any obligations under any of the Assumed Leases
or
Assumed Contracts and any obligations with respect to the Prepaid Rents and
Resident Deposits;
(ii) Any
breach of a representation, warranty, agreement or covenant on the part of
Buyer
under this Agreement, including, but not limited to, those set forth in
Sections 19(d) and 20(b), including any breach of such representation,
warranty, agreement or covenant arising from the delivery of any certificate,
schedule or other instrument furnished or to be furnished by Seller to Buyer
hereunder but only to the extent such breach has not been waived prior to
Closing in accordance with the terms thereof;
(iii) Any
claims, liens, causes of action, or obligations by persons or entities not
a
party to this Agreement which arise out of Buyer’s due diligence review before
Closing, including, without limitation, Seller’s costs, reasonable expenses and
reasonable attorney’s fees incurred in connection with defending against or
clearing Seller’s title to the Real Property of such claims, liens, causes of
actions or obligations;
(iv) Any
claim
for any service, inventory or supplies ordered in the ordinary course of
business prior to Closing and performed or delivered after Closing;
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(v) Any
and
all actions, suits, proceedings, demands, assessments, judgments, reasonable
costs and other reasonable expenses, including, but not limited to, reasonable
attorneys’ fees, incident to any of the foregoing.
For
purposes hereof, the term “claim” shall mean with respect to the amount of the
indemnity the actual costs and expenses incurred by Seller directly related
to
any rights of the Seller hereunder. Seller shall act in good faith to mitigate
any damages claimed against Buyer
(c) If
either
party (the “Indemnitee”) receives notice of any claim or commencement of any
action or proceeding with respect to which the other party (the “Indemnifying
Party”) is obligated to provide indemnification pursuant to Section 17(a)
or Section 17(b), the Indemnitee shall promptly give the Indemnifying Party
written notice thereof. Such notice shall be a condition precedent to any
liability of the Indemnifying Party under the provisions for indemnification
contained in this Agreement. The Indemnifying Party may conduct the defense,
at
such Indemnifying Party’s own expense and by such Indemnifying Party’s own
counsel, against any such matter involving the asserted liability of the
Indemnitee, and the Indemnitee shall cooperate in the defense against any such
asserted liability. Neither the Indemnitee nor the Indemnifying Party may settle
or compromise any claim over the reasonable objection of the other. If the
Indemnifying Party chooses to defend any claim, the Indemnitee shall make
available to the Indemnifying Party any books, records or other documents within
its control that are necessary or relevant for such defense.
(d) Neither
Seller nor Buyer shall have any right to seek indemnity against the other party
other than with respect to actual damages suffered by such party, it being
understood and agreed that neither Seller nor Buyer shall be entitled to recover
consequential or punitive damages from the other. With respect to claims made
solely under Sections 17(a)(iv) and 17(b)((ii), neither Seller nor Buyer
shall have any right to seek indemnity against the other party unless the amount
of the indemnity claim individually or when taken together with all other claims
brought thereunder is at least equal to Twenty Five Thousand and no/100 Dollars
($25,000.00) (“Indemnity Floor”). The maximum aggregate exposure for Seller for
indemnity claims made by Buyer solely under Section 17(a)(iv) shall be
Fifty Thousand Dollars ($50,000.00) in the aggregate (amounts which are in
excess of the Indemnity Floor but do not exceed $75,000) (the “Seller’s
Indemnity Cap”). The maximum aggregate exposure for Buyer for indemnity claims
made by Seller solely under Section 17(b)(ii) shall be Fifty Thousand
Dollars ($50,000.00) in the aggregate (amounts which are in excess of the
Indemnity Floor but do not exceed $75,000) (“Buyer’s Indemnity Cap”). (Seller’s
Indemnity Cap and Buyer’s Indemnity Cap shall collectively be referred to as the
“Indemnity Caps”.) Notwithstanding the foregoing, the Indemnity Floor and
Indemnity Caps shall not apply to indemnified matters which are the result
of
fraudulent acts of Seller or Buyer.
(e) From
and
after Closing, the rights and remedies provided for in this Section 17
shall be Seller’s and Buyer’s sole and exclusive remedy for any breach or
default by the other party.
18. Confidentiality
and Nondisclosure.
All
documents and information provided by Seller to Buyer pursuant to the terms
of
this Agreement shall be deemed confidential. If the Closing under this Agreement
does not occur, Buyer, in addition to returning
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any
physical or electronic embodiment, reproduction or copy of such information,
shall not use, exploit or disclose such information to third parties without
Seller’s express written consent, which consent may be withheld at Seller’s sole
election. Buyer shall indemnify Seller from and against any and all claims,
liabilities, costs and expenses incurred by Seller as a result of such
disclosure. The covenants and warranties contained herein shall be continuing
for a period of three (3) years after the Closing Date if the transfer of Assets
contemplated hereby does not occur for any reason. Buyer agrees that Seller
shall be entitled to specific performance with respect to the enforceability
of
Buyer’s agreement of confidentiality herein, and grants to Seller the right to
specifically enjoin or restrain such action without the requirement of bond,
should Buyer breach this provision. In such event, Buyer shall be responsible
for Seller’s reasonable attorneys’ fees and costs of obtaining any injunction or
restraining order with regard to this Agreement. Seller shall additionally
be
entitled to any actual damages which it may suffer as a result of any breach
or
threatened breach of the terms of this Section 18 by Buyer or permitted
assigns.
19. Employee
Termination/Benefits
(a) All
personnel employed by Seller at the Facility shall be terminated effective
as of
the Closing Date.
(b) Seller
shall make available continuation of group health coverage pursuant to
Section 4980B of the Code and Sections 601 through 608 of ERISA to all
current or former employees of Seller engaged in or formerly engaged in the
operation of the Facility (or their qualified beneficiaries), without regard
to
whether they receive an offer of employment from Buyer pursuant to
Section 19(e) below, who become entitled to such coverage as a result of a
qualifying event that occurs on or prior to the Closing Date.
(c) Seller
shall be responsible for all such employees’ earned and accrued unpaid wages
accrued to the Closing Date and for earned and accrued vacation and sick pay,
if
applicable, relating to their employment prior to the Closing Date or their
termination as of the Closing Date. Buyer shall assume the liability for all
earned vacation and sick pay and for all accrued vacation pay to the extent
earned after the Closing Date and paid or utilized by personnel previously
employed by Seller and employed after the Closing by Buyer. Seller shall deliver
to Buyer a schedule at Closing which reflects by employee earned and accrued
vacation and sick pay, if applicable, (“Benefits Schedule”) as of the Closing
Date and shall pay to Buyer at Closing the amount reflected on the Benefit
Schedule (“Benefits Payment”). Buyer shall acknowledge in writing, in a form
acceptable to Seller, the receipt of the Benefits Payment.
(d) In
consideration of the payment to Buyer of the Benefits Payment, Buyer shall
assume the liability for the benefits reflected on the Benefits Schedule and
shall pay the same to employees of the Facility as and when due the respective
employees listed on the Benefits Schedule.
(e) Buyer
may
offer employment, as employees at will, effective as of the Closing Date to
such
a number of the employees of Seller as Buyer may select in its sole discretion
but in no event less than the number of employees required to avoid the
application of the WARN Act to the transaction provided for herein.
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20. Accounting
for Resident Security Deposits and Prepaid Rents
(a) At
Closing, Seller shall provide Buyer with an accounting of the rents then being
held by Seller from the residents or prospective residents of the Facility
which
relate to periods on and after the Closing Date (the “Prepaid Rents”) and
refundable security and other refundable deposits being held by Seller (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 Seller’s representation that
the accounting is true, correct and complete.
(b) On
the
Closing Date, in
accordance with all applicable federal and state laws and regulations known
to
Seller, Seller shall transfer or cause to be transferred the Prepaid Rents
and
Resident Deposits to Buyer and Buyer 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 Buyer will assume all such obligations and be directly accountable to
the
residents and prospective residents of the Facility, with respect thereto.
(c) Notwithstanding
the foregoing, Seller will indemnify and hold Buyer harmless from all
liabilities, claims and demands in the event the amount of the Prepaid Rents
and
Resident Deposits transferred to the Buyer as provided in Section 20 did
not represent the full amount of the Prepaid Rents and Resident Deposits then
or
thereafter shown to have been delivered to Seller by the current residents
or
prospective residents of the Facility.
21. Accounts
Receivable
(a) At
Closing, Seller shall provide Buyer with a detailed listing by resident of
accounts receivable which are outstanding on the Closing Date (the “Accounts
Receivable Schedule”). From and after the Closing Date, Buyer shall assume
responsibility for the billing for and collection of payments on account of
rent, services rendered or goods sold by it, or others under arrangement with
it, after the Closing Date, and shall include in any invoices sent to residents
of the Facility for one billing cycle after Closing any amounts shown on the
Accounts Receivable Schedule as being not more than thirty (30) days past due
at
Closing. Seller shall retain all right, title and interest in and to its
accounts receivable for rent, services rendered or goods sold on or prior to
the
Closing Date. Any payments received by Buyer after the Closing Date from
residents with outstanding balances as of the Closing Date and which designate
the period to which they relate shall be applied in accordance with such
designation. Any payments received by Buyer after the Closing Date from
residents with outstanding balances as of the Closing Date which fail to
designate the period to which they relate shall be retained by Buyer to reduce
any balances due to Buyer from services rendered after the Closing Date,
provided that, for a period of thirty (30) days after the Closing Date, if
there
are no balances then due to Buyer from any such resident for services rendered
after the Closing Date, such resident payments shall be remitted to Seller
to
reduce any balances due to Seller.
(b) Seller
shall not prosecute any claim against any resident of the Facility without
first
giving Buyer ten (10) days’ prior written notice of any such
action.
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22. Damage,
Destruction and Condemnation.
If
prior to the Closing Date, all or any portion of the Assets are damaged,
destroyed, taken by governmental authority or otherwise rendered inoperative
(collectively the “Damage”) by fire, natural elements, or other causes beyond
Seller’s control, then the following procedures shall apply:
(a) If
the
Damage is not Material (hereinafter defined), Buyer shall proceed to close
and
purchase the Assets as diminished by such Damage, subject to a reduction in
the
Purchase Price equal to the lesser of the full estimated cost of repairing
and/or replacing the Damage or the applicable insurance proceeds or condemnation
award.
(b) If
the
Damage is Material, then either Buyer or Seller may terminate and cancel the
purchase of the Assets, neither party hereto shall have any further rights
against or obligations to the other under this Agreement other than Buyer’s
right to secure a return of the Deposit and any accrued interest
thereon.
(c) For
the
purposes of this paragraph, Damage shall be deemed to be “Material” if the cost
of repairing such Damage equals or exceeds Two Hundred Fifty Thousand Dollars
($250,000.00).
23. Termination
(a) This
Agreement may be terminated and the transaction contemplated herein abandoned
at
any time prior to Closing:
(i) By
mutual
written agreement of the parties;
(ii) By
Seller, if any of the conditions set forth in Section 14 shall have become
incapable of fulfillment prior to the Closing Date or such earlier date as
may
be specifi-cally 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
Buyer,
if any of the conditions set forth in Section 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 Buyer and the same shall not have been waived
by
Buyer;
(iv) By
either
Seller or Buyer in the event of a material breach by the other party of any
of
its representations and warranties contained in this Agreement or failure to
comply in any material respect with any of the other covenants or agreements
contained in this Agreement to be complied with or performed by such party
at or
prior to the Closing;
(v) By
Buyer,
in the exercise of its sole discretion, within the Feasibility Period.
Neither
Seller nor Buyer may claim termination of this Agreement or pursue any other
remedy referred to in this Agreement on account of a breach of a representation,
covenant or warranty by the other or failure of a condition, without first
giving such other party written notice of such breach and not less than ten
(10)
days within which to cure such breach. The
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Closing
shall be postponed during such cure period, if necessary, to afford such
opportunity to cure; provided, however, unless the parties agree otherwise,
in
no event shall the Closing occur other than on the last day of a month effective
as of midnight on such day. In any event, unless the parties hereto agree
otherwise, postponement of closing to cure a breach shall be granted only
once.
(b) In
the
event Seller has the right to terminate this Agreement under
Sections 23(a)(ii) or (iv) as a result of a default by Buyer in its
representations, warranties, covenants or agreements hereunder, Buyer and Seller
acknowledge and agree as follows:
SELLER
SHALL BE ENTITLED TO TERMINATE THIS AGREEMENT AND TO RETAIN THE DEPOSIT AS
SELLER’S SOLE AND EXCLUSIVE REMEDY AND ALL ACCRUED INTEREST THEREON AS
LIQUIDATED DAMAGES, THE PARTIES ACKNOWLEDGING AND AGREEING THAT THE AMOUNT
OF
DAMAGES WHICH SELLER MAY INCUR AS A RESULT OF SUCH TERMINATION MAY BE DIFFICULT
TO ASCERTAIN AND THAT THE DEPOSIT IS A REASONABLE AND FAIR ESTIMATE THEREOF,
AFTER WHICH THE PARTIES SHALL HAVE NO FURTHER RIGHTS OR OBLIGATIONS
HEREUNDER.
Seller’s
Initials Buyer’s
Initials
(c) In
the
event Buyer has the right to terminate this Agreement, under
Sections 23(a)(iii) or (iv) as a result of a default by Seller in its
representations, warranties, covenants or agreements hereunder, Buyer shall
have
the right either to (i) waive the condition or covenant or breach at issue
and proceed with the transaction on the terms contemplated herein or (ii) seek
specific performance of Seller’s obligations hereunder or (iii) to terminate
this Agreement and secure the return of the Deposit and any accrued interest
thereon, after which neither party shall have any further rights or obligations
hereunder.
(d) In
the
event this Agreement is terminated pursuant to Sections 23(a)(i) or
(vi) or pursuant to Section 23(a)(v), then the entire Deposit and any
accrued interest thereon shall immediately be refunded and returned to Buyer,
after which neither party shall have any further rights or obligations
hereunder.
(e) In
the
event the transaction contemplated hereby is not closed for any reason other
than a breach by Buyer or Seller, each party shall pay one half of all escrow
cancellation fees and title charges. In the event the transaction contemplated
hereby is not closed as a result of a breach by Seller or Buyer, then the
breaching party shall pay all escrow cancellation fees and title charges. In
no
event shall either party be liable to the other for consequential damages or
incidental damages.
PURCHASE
& SALE AGREEMENT -Wildflower
29
24. Attorneys’
Fees. In
the
event any suit or action is instituted to enforce or interpret any of the terms
of this Agreement, including any action or participation in or in connection
with a case or proceeding under any Chapter of the Bankruptcy Code or any
successor statute, the prevailing party shall be entitled to such sum as the
court may adjudge reasonable as attorneys’ fees in such suit, action or
proceeding or upon any appeal from any judgment, order or decree entered
therein.
25. Notices.
Any
notice required or permitted herein or by applicable law shall be deemed
properly given (a) when personally delivered (to the person designated below),
(b) three (3) days following the date sent by United States Mail,
certified or registered, postage prepaid, return receipt requested, (c) one
(1)
business day following the date sent by Federal Express or overnight United
States Mail or other national overnight carrier, and addressed in each such
case
as set forth below, or (d) on the date sent by facsimile to the facsimile number
set forth below during normal business hours (being 9:00 a.m. to 5:00 p.m.,
local time of the party to which notice is sent) on any business day provided
a
copy is thereafter promptly sent by one other method set forth
above:
TO
SELLER: Cheridan,
Inc.
X.X.
Xxx
0000
Xxxxxxxxx,
XX 00000-0000
Attn:
Xxxxx X. Xxxxxxxx
Fax:
(000) 000-0000
With
Copy
to: Powers
& Xxxxxxxx, X.X.
0000
Xxxxxx Xxxxx
Xxxxxx,
XX 00000
Attn:
Xxxxx X. Xxxxxxxx
Fax:
(000) 000-0000
TO
BUYER: Emeritus
Corporation
0000
Xxxxxxx Xxxxxx, #000
Xxxxxxx,
XX 00000
Attn:
Director of Real Estate Finance
Fax:
000-000-0000
With
copy
to: The
Xxxxxxxxx Group PLLC
0000
Xxxxxx Xxxxxx, Xxxxx Xxxxx
Xxxxxxx,
XX 00000
Attn :
Xxxxx X. Xxxxxxxxx
Fax:
000-000-0000
Any
party
may change its address for notices under this Agreement by giving formal written
notice to the other parties specifying that the purpose of the notice is to
change the party’s address.
PURCHASE
& SALE AGREEMENT -Wildflower
30
26. General
Provisions
26.1 Unenforceability.
If any
provision of this Agreement is held to be invalid, illegal or unenforceable
in
any respect, such invalidity, illegality or unenforceability shall not affect
the remainder of such provision or any other provisions hereof.
26.2 Amendment,
Modification.
This
Agreement may not be altered, amended, changed, waived, terminated or modified
in any respect or particular unless the same shall be in writing and signed
by
or on behalf of the party to be charged therewith.
26.3 Waiver.
Any
party may, at any time or times, at its election, waive any of the conditions
to
its obligations hereunder, but any such waiver shall be effective only if
contained in a writing signed by such party. No waiver shall reduce the rights
and remedies of such party by reason of any breach of any other party. No waiver
by any party of any breach hereunder shall be deemed a waiver of any other
or
subsequent breach.
26.4 Facsimile
Signatures.
Each
party (a) has agreed to permit the use, from time to time and where appropriate,
of telecopied signatures in order to expedite the transaction contemplated
by
this Agreement, (b) intends to be bound by its respective telecopied signature,
(c) is aware that the other will rely on the telecopied signature, and (d)
acknowledges such reliance and waives any defenses to the enforcement of the
documents contemplated by this Agreement that are based on the fact that a
signature was sent by telecopy.
26.5 Delivery
of Possession.
Possession of the Property shall be delivered to Buyer on the Closing Date
subject to the rights of third parties under the Assumed Leases and Assumed
Contracts and the Permitted Exceptions.
26.6 Entire
Agreement.
This
Agreement constitutes the entire agreement among the parties with respect to
the
subject matter hereof and supersedes any prior agreements, written or oral,
express or implied, and all negotiations or discussions of the parties, whether
oral or written, and there are no warranties, representations or agreements
among the parties in connection with the subject mater hereof except as set
forth herein.
26.7 Governing
Law. This
Agreement shall, in all respects, be governed, construed, applied and enforced
in accordance with the laws of the State of Arkansas.
26.8 Headings.
The
article, Section or paragraph headings in this Agreement are intended
solely for convenience of reference and shall be given no effect in the
construction or interpretation of this Agreement.
26.9 Counterparts.
This
Agreement may be executed in two (2) or more counterparts, and by facsimile
transmission, each of which shall be deemed an original, but all of which
together shall be considered one and the same agreement. If this Agreement
is
executed via facsimile transmission, the party so executing this Agreement
shall
forward an original executed document to the other party within five (5) days
of
such execution.
PURCHASE
& SALE AGREEMENT -Wildflower
31
26.10 Interpretation,
No Presumption. It
is
acknowledged by the parties that this Agreement has undergone several drafts
with the negotiated suggestions of both and therefore no presumptions shall
arise favoring either party by virtue of the authorship of any of its
provisions.
26.11 Incorporation
of Recitals. The
recitals are incorporated in the body of this Agreement as if set forth at
length.
26.12 Time
of the Essence.
All of
the terms and conditions of this Agreement and the time for performance of
the
parties hereunder are of the essence of this Agreement.
26.13 Exhibits. The
exhibits referred to herein and attached hereto are hereby incorporated into
this Agreement wherever reference is made to them to the same extent as if
the
same were set out in full at the point at which such reference is
made.
26.14 Business
Days.
All
references to days herein shall be deemed to refer to calendar days unless
otherwise specified. In the event that the final date for performance of any
act
required by this Agreement falls on a Saturday, Sunday, or legal holiday, such
act may be performed on the next day which is not a Saturday, Sunday, or legal
holiday.
26.15 Successors.
The
terms of this Agreement shall be binding upon and inure to the benefit of Buyer
and Seller and be enforceable by and against the heirs, successors and assigns
of the parties hereto. Neither party shall be entitled to assign its rights
or
delegate its obligations hereunder without the other party’s prior written
consent, provided, however, that Buyer shall have the right in connection with
Buyer’s financing of the transaction provided for herein to assign this
Agreement on written notice to, but without the prior written consent of, Seller
to an entity owned or controlled by Buyer or to a real estate investment trust
(“REIT”) or to an entity owned or controlled by a REIT; provided, however, no
such assignment shall relieve Buyer of its obligations hereunder until Closing;
provided, further, that the representations and warranties of Seller shall
not
be assignable to any such REIT or other person or entity but the right to
enforce the same shall remain with Buyer.
26.16 Attorneys’
Fees. In
the
event of litigation or other proceedings involving the parties to this Agreement
to enforce any provision of this Agreement, to enforce any remedy available
upon
default under this Agreement, or seeking a declaration of the rights of either
party under this Agreement, the prevailing party shall be entitled to recover
from the other such reasonable attorneys’ fees and costs as may be actually
incurred, including its costs and fees on appeal.
26.17 Waiver
of Jury Trial.
EACH OF
THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO TRIAL BY JURY IN ANY LEGAL ACTION
BROUGHT ON OR WITH RESPECT TO THIS AGREEMENT, INCLUDING TO ENFORCE OR DEFEND
ANY
RIGHTS HEREUNDER AND AGREES THAT ANY SUCH ACTION SHALL BE TRIED BEFORE A COURT
AND NOT BEFORE A JURY. DRAFTING NOTE: WE HAVE NOT DELETED THIS PROVISION AS
REQUESTED BY SELLER AS WE BELIEVE IT IS APPROPRIATE AND COMMERCIALLY
REASONABLE.
PURCHASE
& SALE AGREEMENT -Wildflower
32
26.18 Third
Party Beneficiary.
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,
subject to the limitations set forth in Section 26.16, their permitted
successors and assigns) any rights or remedies under or by reason of this
Agreement, including without limitation, any right to enforce this
Agreement.
27. Joint
Escrow Instructions.
This
Agreement shall constitute joint escrow instructions to Escrow Agent. In
addition, the parties shall execute and be bound by such reasonable and
customary escrow instructions as may be necessary or reasonably required by
Escrow Agent or by either party in order to consummate the purchase and sale,
provided that such escrow instructions are consistent with the terms hereof.
The
parties designate Escrow Agent as the “Reporting Person” for this transaction
pursuant to Section 6045(e) of the Internal Revenue Code of 1986, as
amended, and the regulations hereunder.
28. 1031
Exchange Provisions.
Either
party hereto may desire to structure the acquisition or disposition of the
Property as an exchange transaction within the meaning of Section 1031 of
the Internal Revenue Code of 1986. Each party will cooperate with the other
to
enable Buyer or Seller, as the case may be, to accomplish an exchange, provided
that neither Buyer nor Seller shall be obligated to incur any additional cost
or
liability as party of such exchange, nor shall the Closing be delayed. Neither
Seller’s or Buyer’s obligations to close shall not in any event be contingent
upon Seller or Buyer’s ability to sell or acquire the Property as part of an
exchange transaction.
29. Brokers.
Seller
and Buyer each represent, covenant, and warrant to the other that each has
employed no other broker or finder in connection with the transaction
contemplated herein. Seller agrees to indemnify and hold Buyer harmless from
and
against all liability, claims, demands, damages or costs of any kind, including
attorneys’ fees, arising from or connected with any broker’s commission or
finder’s fee or commission or charge claimed to be due any person arising from
Seller’s conduct with respect to this transaction. Buyer agrees to indemnify and
hold Seller harmless from and against all liability, claims, demands, damages
or
costs of any kind, including attorneys’ fees, arising from or connected with any
broker’s commission or finder’s fee or commission or charge claimed to be due
any person arising from Buyer’s conduct with respect to this
transaction.
Remainder
of Page Intentionally Left Blank
Signatures
on Following Page
PURCHASE
& SALE AGREEMENT -Wildflower
33
Executed
the day and year first above written.
SELLER: BUYER:
CHERIDAN,
INC., EMERITUS
CORPORATION,
a
Washington
corporation
a
Washington corporation
By: /s/
Xxxxx
X. Xxxxxxxx By:/s/
Xxxxxxx X. Xxxxxxx
Xxxxx
X.
Xxxxxxxx Its:
Xxxxxxx
X. Xxxxxxx
President Director
of Real Estate Finance
PURCHASE
& SALE AGREEMENT
(Cheridan-Wildflower)
PURCHASE
& SALE AGREEMENT -Wildflower
REVISED
7-22-05
EXHIBIT
LIST
A Trillium
Park Real Property Description
B Willow
Brook Real Property Description
1.1(a) Legal
Description (Wildflower)
1.1(b) Personal
Property List
1.2(b) Corporate
Assets and Other Excluded Assets
2.2 Allocation
of Purchase Price
6 Due
Diligence Materials
8 List
of
All Contracts and Leases
9(e) Exceptions
to No Conflict Representation
9(f) Exceptions
to Litigation Representation
9(g) Exceptions
to Violation of Law Representation
9(h) Exceptions
to Environmental Representation
9(l) Exceptions
to Title Representation
9(m) Operating
Licenses and Certificates
9(n) Exceptions
to Condition and Adequacy of Assets Representation
9(o) Financial
Statements
9(p) Census
Reports
9(q) Exceptions
to Absence of Material Change Representation
9(t) Employee
Information
9(u) Resident
Trust Fund Information
9(v) Exceptions
to Records Representation
9(w) Exceptions
to Medicare and Medicaid Representation
PURCHASE
& SALE AGREEMENT -Wildflower
11(n) Third
Party Consents
15(b)(i)(1) Form
of
Limited Warranty Deed
15(b)(i)(2) Form
of
Xxxx of Sale
15(b)(i)(3) Form
of
Assignment/Assumption of Assumed Leases & Assumed Contracts
15(b)(i)(4) Nonforeign
Status Affidavit
15(d) Notice
Letter to Residents
PURCHASE
& SALE AGREEMENT -Wildflower
Exhibit
A
Trillium
Park Real Property Description
PURCHASE
& SALE AGREEMENT -Wildflower
Exhibit
B
Willow
Brook Real Property Description
PURCHASE
& SALE AGREEMENT -Wildflower
Exhibit
1.1(a)
Legal
(Wildflower)
PURCHASE
& SALE AGREEMENT -Wildflower
Exhibit
1.1(b)
Personal
Property List
PURCHASE
& SALE AGREEMENT -Wildflower
Exhibit
1.2(b)
Corporate
Assets and Other Excluded Assets
PURCHASE
& SALE AGREEMENT -Wildflower
Exhibit
2.2
Allocation
of Purchase Price
PURCHASE
& SALE AGREEMENT -Wildflower
Exhibit
6
Due
Diligence Materials
PURCHASE
& SALE AGREEMENT -Wildflower
Exhibit
8
List
of All Contracts and Leases
PURCHASE
& SALE AGREEMENT -Wildflower
Exhibit
9(e)
Exceptions
to No Conflict Representation
PURCHASE
& SALE AGREEMENT -Wildflower
Exhibit
9(f)
Exceptions
to Litigation Representation
PURCHASE
& SALE AGREEMENT -Wildflower
Exhibit
9(g)
Exceptions
to Violation of Law Representation
PURCHASE
& SALE AGREEMENT -Wildflower
Exhibit
9(h)
Exceptions
to Environmental Representation
PURCHASE
& SALE AGREEMENT -Wildflower
Exhibit
9(l)
Exceptions
to Title Representation
PURCHASE
& SALE AGREEMENT -Wildflower
Exhibit
9(m)
Operating
Licenses and Certificates
PURCHASE
& SALE AGREEMENT -Wildflower
Exhibit
9(n)
Exceptions
to Condition and Adequacy of Assets Representation
PURCHASE
& SALE AGREEMENT -Wildflower
Exhibit
9(o)
Financial
Statements
PURCHASE
& SALE AGREEMENT -Wildflower
Exhibit
9(p)
Census
Reports
PURCHASE
& SALE AGREEMENT -Wildflower
Exhibit
9(q)
Exceptions
to Absence of Material Change Representation
PURCHASE
& SALE AGREEMENT -Wildflower
Exhibit
9(t)
Employee
Information
PURCHASE
& SALE AGREEMENT -Wildflower
Exhibit
9(u)
Resident
Trust Fund Information
PURCHASE
& SALE AGREEMENT -Wildflower
Exhibit
9(v)
Exceptions
to Records Representation
PURCHASE
& SALE AGREEMENT -Wildflower
Exhibit
9(w)
Exceptions
to Medicare and Medicaid Representation
PURCHASE
& SALE AGREEMENT -Wildflower
Exhibit
11(n)
Third
Party Consents
PURCHASE
& SALE AGREEMENT -Wildflower
Exhibit
15(b)(i)(1)
Form
of Limited Warranty Deed
PURCHASE
& SALE AGREEMENT -Wildflower
Exhibit
15(b)(i)(2)
Form
of Xxxx of Sale
PURCHASE
& SALE AGREEMENT -Wildflower
Exhibit
15(b)(i)(3)
Form
of Assignment/Assumption of Assumed Leases & Assumed
Contracts
PURCHASE
& SALE AGREEMENT -Wildflower
Exhibit
15(b)(i)(4)
Nonforeign
Status Affidavit
PURCHASE
& SALE AGREEMENT -Wildflower
Exhibit
15(d)
Notice
Letter to Residents
PURCHASE
& SALE AGREEMENT -Wildflower
