PARTNERSHIP INTEREST
PURCHASE AND SALE AGREEMENT XXXXXXX TOWERS
This Partnership Interest Purchase and Sale Agreement (the
"Agreement") is dated, for reference purposes only, as of the 4th
day of June,1998, and is by and between ESC XX XX, INC., a
Washington corporation ("GP"), and EMERITUS PROPERTIES IV, INC., a
Washington corporation ("LP"), (together "Seller"), and COLUMBIA
PACIFIC MASTER FUND 98 GENERAL PARTNERSHIP, a Washington general
partnership ("CPMF") and XXXXXX X. XXXX, an individual ("Xxxx").
CPMF and Xxxx are hereinafter together referred to as "Purchaser".
GP owns a one percent (l%) general partnership interest, and LP
owns a ninety-nine percent (99%) limited partnership interest, in
that certain Washington limited partnership known as ESC II LP
("the Partnership").
1. PURCHASE AND SALE. GP agrees to sell to CPMF, and CPMF
agrees to acquire, GP's one percent (l%) general partnership
interest in the Partnership. LP agrees to sell to CPMF, and CPMF
agrees to acquire, a ninety-eight percent (98%) limited
partnership interest in the Partnership. LP agrees to sell to
Xxxx, and Xxxx agrees to acquire, a one percent (l%) limited
partnership interest in the Partnership.
Following Closing of this transaction, it is the intention of the
parties that CPMF will own a one percent (l%) general partnership
interest and a ninety-eight percent (98%) limited partnership
interest in the Partnership, and that Xxxx will own a one percent
(l%) limited partnership interest in the Partnership. All of the
foregoing partnership interests are hereinafter collectively
referred to as the Interest. The Partnership owns:
a. The real property situated in the City of Dallas, State of
Texas, which is more particularly described in Exhibit A attached
hereto (the "Real Property"), together with all of the
improvements on the Real Property, including that certain
congregate and assisted living facility consisting of295 units and
commonly known as the "Xxxxxxx Towers" (the "Facility").
b. All equipment, furniture, fixtures, inventory, vehicles,
supplies (including linens, dietary supplies and housekeeping
supplies but specifically excluding food and other consumable
inventories) and other tangible and intangible personal property
owned by Seller and located on the Real Property or used in
connection with the operation of the Facility, including but not
limited to, all licenses, permits and approvals for the operation
of the Facility, all entitlements, telephone numbers, any right,
title or interest which Seller may have in and to any service
marks, trademarks or trade names owned, used or employed by Seller
in conjunction with the operation of the Facility, but
specifically excluding cash, cash equivalents and accounts
receivable for the period prior to the Closing Date (as defined
below) (collectively, the "Personal Property"). The Personal
Property is more particularly described in Exhibit B.
c. The food and other consumable inventories located at, and
usable in the operation of, the Facility on the Closing Date
(collectively, the "Consumables").
The Real Property, Facility, Consumables and Personal Property are
sometimes hereinafter collectively referred to as the "Partnership
Assets."
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2. PURCHASE PRICE. The purchase price payable by Purchaser for
the Partnership Assets shall be FIVE MILLION EIGHT HUNDRED TEN
THOUSAND DOLLARS ($5,810,000) (the "Purchase Price"), payable as
follows:
a. One Million Dollars ($1,000,000) by Purchaser's execution and
delivery of a Promissory Note at Closing (the "Convertible Note")
payable to Seller or Seller's designee. The Convertible Note shall
be substantially in the form of Exhibit C attached hereto and
shall include the following provisions, all as more particularly
set forth on Exhibit C:
(i) interest shall accrue at the rate of nine percent (9"%) per
annum;
(ii) due and payable in full after ten (10) years;
(iii) convertible at the noteholder's option for a fifteen percent
(15%) limited partner ownership interest in Purchaser; and
(iv) provide for Purchaser's ability to draw up to an additional
$500,000 in principal to cover cash operating losses from
Purchaser's operation of the Facility.
The Convertible Note is in the original principal amount of
$1,500,000 to reflect the $1,000,000 purchase price portion plus
the additional $500,000 that may be drawn thereunder to cover
operating losses.
b. Four Hundred Fifty Thousand Dollars ($450,000) by CPMF's
execution and delivery to Seller of the Repair Note described in
Section 10(d) below; and
c. The balance of Four Million Three Hundred Sixty Thousand
Dollars ($4,360,000) in cash at Closing
Except as specifically provided in this Agreement, Purchaser does
not hereby or in connection herewith assume any liability of
Seller whatsoever in relation to Partnership Assets which relates
to the period prior to Closing.
Purchaser is aware that the Real Property is subject to a lien in
favor of GMAC Commercial Mortgage Corporation with a current
principal balance of approximately $15,600,000 (the "First Lien
Debt"). The First Lien Debt is evidenced by a Promissory Note
dated November 26,1998 in the original principal amount of
$15,600,000, and secured by, among other things, that certain Deed
of Trust dated November 26,1998 and recorded in the real property
records of Dallas County, Texas under Recorder's No. Volume 96237,
Page 06912. The First Lien Debt shall be personally guaranteed by
Xxxx. Seller shall obtain any consents required as a result of
this transaction from the holder of the First Lien Debt and shall
obtain a release of the guaranty of the First Lien Debt by
Emeritus Corporation.
3. CLOSING. The closing for the purchase and sale of the
Interest under this Agreement (the "Closing") shall occur on or
before July 31,1998 (provided all of the conditions to closing set
forth in Paragraphs 13 and 14 have been satisfied or waived) (the
"Closing Date").
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4. TRANSFER. The Interest shall be assigned to Purchaser by an
Assignment and Assumption of Partnership Interest in a form
acceptable to Seller and Purchaser (the "Assignment"). As of the
Closing Dated, fee simple insurable title to the Real Property and
marketable title to the Personal Property shall be free and clear
of all liens, charges, easements and encumbrances of any kind,
other than the following:
a. Liens for real estate taxes not yet due and payable;
b. The First Lien Debt; and
c. Such items of record as described in the Title Commitment (as
defined below) reviewed and approved by Purchaser as provided in
Paragraph 13.e. below, excluding, however, any monetary liens and
encumbrances referenced therein.
5. COSTS, PRORATIONS AND ADJUSTMENTS. The costs of the
transaction and the expenses related to the ownership and
operation of the Partnership Assets shall be allocated among
Seller and Purchaser as follows:
a. Seller and Purchaser shall share equally any State and County
transfer, documentary and /or excise taxes due on the transfer of
the Interest.
b. Seller and Purchaser shall share equally the premium for a
standard policy of owner's title insurance with an insured value
of not less than the total amount of the Purchase Price and
Purchaser shall pay the amount of any additional premium
associated with the issuance of extended coverage for said owner's
policy of title insurance.
c. All revenues (including but not limited to rent due from the
tenants of the Facility) and expenses (including but not limited
to payroll and employee benefits) related to the ownership or
operation of the Partnership Assets shall be prorated as of the
Closing Date, with Seller responsible for amounts attributable to
the period prior to the Closing Date and with Purchaser
responsible for amounts attributable to the period from and after
the Closing Date.
d. Real and Personal Properly taxes and assessments shall be
prorated as of the Closing Date, with Seller responsible for taxes
and assessments attributable to the period prior to the Closing
Date and with Purchaser responsible for taxes and assessments
attributable to the period from and after the Closing Date.
e. Seller shall arrange for a final statement with respect to
all utilities serving the Real Property and the Facility as of the
Closing Date and shall pay all fees identified thereon and
Purchaser shall arrange for all such utilities to be billed in its
name from and after the Closing Date and shall pay all fees due
therefor from and after the Closing Date.
f. Purchaser and Seller shall each pay their own attorney's
fees.
g. Purchaser shall pay all costs, expenses and fees which may be
assessed by any governmental authority in connection with
obtaining any governmental approval or consent which may be
required in order to consummate this transaction.
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6. POSSESSION. At Closing, Purchaser shall be entitled to
possession of the Partnership Assets, subject only to the rights
of the tenants of the Facility under the Facility Leases (as
defined below).
7. SELLER'S REPRESENTATIONS AND WARRANTIES. Seller hereby
warrants and represents to Purchaser that:
a. SELLER'S AUTHORITY. Seller has full power and authority to
execute and deliver this Agreement and all related documents, and
to carry out the transactions contemplated herein. This Agreement
is valid, binding and enforceable against Seller in accordance
with its terms, except as such enforceability may be limited by
creditors' rights, laws and applicable principles of equity. The
execution of this Agreement and the consummation of the
transaction contemplated herein do not result in a breach of the
terms and conditions of nor constitute a default under or
violation of the Partnership Agreement, or any law, regulation,
court order, mortgage, note, bond, indenture, agreement license or
other instrument or obligation to which Seller is now a party or
by which Seller or any of the assets of Seller may be bound or
affected.
b. TITLE. Seller has, good title to the Interest, free of all
liens and encumbrances. To Seller's knowledge, the Partnership has
good and insurable fee simple title to the Real Property and the
Facility, subject only to the easements, reservations and
encumbrances, if any, permitted under Paragraph 4, and good and
marketable title to the Personal Property free and clear of all
leases, liens and encumbrances. The Personal Property includes all
of the furniture, fixtures and equipment which is currently owned
by Seller and is used in connection with the operation of the
Facility.
c. THE FACILITY. The roof of the Facility and all major
mechanical systems at the Facility, including, but not limited to,
the air conditioning, electrical and heating and ventilating
systems shall be maintained through the Closing Date in good and
workable condition and repair consistent with condition existing
as of the expiration of the Feasibility Period.
d. NECESSARY ACTION. Seller will proceed with all due diligence
to take all action and obtain all consents prior to Closing
necessary for it to lawfully enter into and carry out the terms of
this Agreement.
e. TAXES AND TAX RETURNS. All tax returns, reports and filings
of any kind or nature required to be filed by Seller and the
Partnership prior to Closing with respect to its ownership and
operation of the Facility and its ownership of the Real Property
and the Personal Property have been properly completed and timely
fled in material compliance with all applicable requirements and
all taxes or other obligations which are due and payable by Seller
have been timely paid.
f. LITIGATION. Except as provided in Exhibit C, there is no
litigation, investigation, or other proceeding pending or, to the
best of Seller's knowledge, threatened against or relating to
Seller or the Partnership, its properties or business, which is
material to any of the Partnership Assets or to this Agreement, or
which would prevent Seller from performing its obligations
hereunder, and the transaction contemplated herein has not been
challenged by any governmental agency or any other person, nor
does Seller know or have reasonable grounds to know, of any basis
for any such litigation, investigation or other proceeding.
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g. BOOKS AND RECORDS. To the best of Seller's knowledge, all of
the books and records maintained by Seller and the Partnership
with respect to its ownership and/or operation of the Partnership
Assets are true, accurate and correct in all material respects.
h. THE FACILITY LEASES. Attached hereto as Exhibit D is a true
and correct copy of the form of lease utilized by the Partnership
for the leasing of units at the Facility. Each of the leases in
the Facility ("the Facility Leases") is in full force and effect
and none of the Facility Leases have been modified or amended
except as set forth in any amendment provided to Purchaser. The
Partnership is not in default of any of its obligations under the
Facility Leases nor is Seller aware of any default or any action
which, with the passage of time or the giving of notice or both,
would constitute a default under the Facility Leases by any of the
tenants who are parties thereto.
i. RENT ROLL. Attached hereto as Exhibit E is a true and correct
rent roll as of June 1,1998, which identifies each of the tenants
of the Facility, the monthly rent currently being paid by each
such tenant and the date to which said rent has been paid and, in
the event of any rent delinquencies, an explanation of the reason
therefor and the efforts being undertaken by Seller to collect
said rent. Seller shall update the rent roll on a monthly basis
between the date hereof and the Closing Date.
j. LIENS. There are no mechanics', materialmen's or similar
claims or liens presently claimed or, to the best of Seller's
knowledge, which will be claimed against the Partnership Assets
for work performed or commenced prior to the date hereof at the
request of Seller or of which Seller has knowledge, Seller having
made or caused to be made arrangements for payment of all those
improvements now under construction or development.
k. ENVIRONMENTAL MATTERS. Except in accordance with and in full
compliance with, any and all applicable governmental laws,
regulations and requirements (collectively, the "Environmental
Laws") relating to environmental and occupational health and
safety matters and hazardous materials, substances or wastes (as
defined from time to time under any applicable federal, state or
local laws, regulations or ordinances), neither Seller nor the
Partnership has released into the environment or discharged,
placed or disposed of any such hazardous materials, substances or
wastes or caused the same to be so released into the environment
or discharged, placed or disposed of at, on or under the
Partnership Assets. Except as set forth in any environmental
report(s) which Seller shall have provided to Purchaser hereunder,
Seller is unaware that any hazardous materials, substances or
wastes have been located on the Real Property or the Facility or
have been released into the environment or discharged, placed or
disposed of in, on or under the Real Property or the Facility; to
Seller's knowledge, no underground storage tanks other that those
disclosed in the Phase I environmental report provided to
Purchaser by Seller are or have been located on the Real Property;
to Seller's knowledge, the Real Properly has never been used as a
dump for waste material; and, to Seller's knowledge, the Real
Properly and the Facility and their prior uses comply with and at
all times have complied with, all Environmental Laws.
1. EMPLOYEES; UNIONS. None of Seller's or the Partnership's
employees are member of a labor union or subject to collective
bargaining agreement with respect to their employment with Seller
or the Partnership. Neither Seller nor the Partnership is a party
to any labor dispute or grievance.
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m. Compliance with Law.(i) To Seller's knowledge, the
Partnership Assets are in compliance with all currently applicable
municipal, county, state and federal laws, regulations,
ordinances, standards and orders and with all municipal, health,
building and zoning by-laws and regulations (including, without
limitation, the building and zoning codes) where the failure to
comply therewith or to obtain a waiver therefrom could have a
material adverse effect on the business, property, condition
(financial or otherwise) or operation of the Partnership Assets;
(ii) There are no outstanding deficiencies or work orders of any
authority having jurisdiction over the Partnership Assets
requiring conformity to any applicable statute, regulation,
ordinance or by-law pertaining thereto; and
(iii) Seller is not aware of any claim, requirement or demand of
any agency supervising or having authority over the Facility to
rework or redesign it or to provide additional furniture, fixtures
or equipment so as to conform to or comply with any existing law,
code or standard which has not been fully satisfied prior to the
date hereof or which will not be satisfied prior to the Closing
Date.
n. OPERATING CONTRACTS. Prior to or concurrently with the
execution of this Agreement, Seller shall have made available to
Purchaser, for its review all operating contracts to which Seller
is a party in connection with its operation of the Facility (the
"Operating Contracts"). Each of the Operating Contracts is in full
force and effect and none of the Operating Contracts have been
modified or amended except as set forth in any amendment provided
to Purchaser. The Partnership is not in default of any of its
obligations under the Operating Contracts nor is Seller aware of
any default or any action which, with the passage of time or the
giving of notice or both would constitute a default, under the
Operating Contracts by any other party thereto.
o. THE FACILITY. The Facility contains one hundred fifty-two
(152) congregate units and one hundred forty-three (143) assisted
living units. The Facility is, or at Closing will be, duly and
properly licensed to operate as an assisted living facility as to
the above assisted living units. There is no action pending or, to
the best knowledge of Seller, recommended by any state or federal
agency having jurisdiction thereof, or any action of any other
type, which would have a material adverse effect on the Facility,
its operations or business.
p. INVENTORY. All inventories of non-perishable food, central
supplies, linen, housekeeping and other supplies located at the
Facility are, and shall be at the time of Closing, in sufficient
condition and quantity as is normal and customary for the
operation of the Facility.
q. DISCLOSURE. (i) No representation or warranty by Seller
contained in this Agreement, (ii) no statement contained in any
certificate, list, exhibit or other instrument prepared by Seller
and furnished or to be furnished to Purchaser pursuant hereto, or
in connection with the transaction contemplated hereby and (ii) to
Seller's knowledge, no statement contained in any certificate,
list, exhibit or other instrument prepared by any person or entity
other than Seller and furnished or to be furnished to Purchaser
pursuant hereto, or in connection with the transaction
contemplated hereby, contains or will contain any untrue statement
of a
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material fact, or omits oc will omit to state any material facts
which are necessary in order to make the statements contained
herein or therein not misleading.
r. PARTNERSHIP AGREEMENT. The Partnership was duly organized and
is in good standing under the laws of the State of Washington.
There are no defaults under the Partnership Agreement or matters
which with the passage of time or the giving of notice would
constitute a default thereunder. The Partnership is duly qualified
to transact business in the State of Texas. All Partnership
consents required for this transaction have been obtained.
8. PURCHASER'S REPRESENTATIONS AND WARRANTIES. Each of the
parties constituting Purchaser hereby warrants and represents to
Seller that:
a. STATUS OF CPMF. CPMF is a general partnership validly
existing under the laws of the State of Washington and is duly
qualified to do business in the State of Texas.
b. AUTHORITY. Purchaser has full power and authority to execute
and to deliver this Agreement and all related documents, and to
carry out the transactions contemplated herein. Xxxx, by signing
this Agreement, binds the assets of his full marital community and
has full authority to do so. This Agreement is valid, binding and
enforceable as against Purchaser in accordance with its terms,
except as such enforceability may be limited by creditors' rights
laws and applicable principles of equity. The execution of this
Agreement and the consummation of the transaction contemplated
herein do not result in a breach of the terms and conditions of
nor constitute a default under or violation of Purchaser's
Articles of Incorporation or By-laws or any law, regulations,
court order, mortgage, note, bond, indenture, agreement, license
or other instrument or obligation to which Purchaser is a party or
by which Purchaser or any of the assets or Purchaser may be bound
or affected.
c. LITIGATION. To the best of Purchaser's knowledge, there is no
litigation, investigation or other proceeding pending or
threatened against or relating to Purchaser, its properties or
business which is material to this Agreement, or which would
prevent Purchaser from performing its obligations hereunder, nor
does Purchaser know or have reasonable grounds to known of any
basis for any such action.
d. NECESSARY ACTION. CPMF will proceed with all due diligence to
take all action and obtain all consents prior to Closing necessary
for it to lawfully enter into and carry out the terms of this
Agreement, including, but not limited to, obtaining the consent of
its Board of Directors.
e. DISCLOSURE. No representation or warranty by Purchaser
contained in this Agreement and no statement contained in any
certificate, list, exhibit, or other instrument furnished or to be
furnished to Seller pursuant hereto, or in connection with the
transaction contemplated hereby, contains or will contain any
untrue statement of a material fact, or omits or will omit to
state any material facts which are necessary in order to make the
statements contained herein or therein not misleading.
9. BROKER. Seller and Purchaser represent and warrant to each
other that they have employed no broker and/or finder in
connection with this transaction. In the event any claim, damage
or cause of action for brokerage and/or finder's fees is asserted
against a party to this Agreement who did not request such
services, the party through whom the broker and/or
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finder is making the claim shall indemnify, defend (with an
attorney of indemnitee's choice) and hold harmless the other party
from and against any and all such claims, demands and causes of
action.10. SELLER' S COVENANTS.a. PRE-CLOSING. Between the date
hereof and the Closing Date, except as contemplated by this
Agreement or with the consent of Purchaser:
(i) Other than as set forth in Paragraph 4, Seller will satisfy
and discharge all claims, liens, security interests, tenancies
(other than any Operating Contracts which Purchaser elects to
assume at Closing pursuant to the terms hereof and the Facility
Leases), and encumbrances on the Partnership Assets;
(ii) Seller will file all tax returns, reports and filings of any
kind or nature required to be filed by Seller and the Partnership
and will timely pay all taxes or other obligations which are due
and payable with respect to the Partnership Assets;
(iii) Seller will not take any action inconsistent with its
obligations under this Agreement or which could hinder or delay
the consummation of the transactions contemplated by this
Agreement, and Seller will continue until the Closing to fulfill
any obligations which it may have under the Facility Leases;
(iv) Seller will operate the Facility only in the ordinary course
and with due regard to the proper maintenance and repair of the
Facility and the Personal Properly;
(v) Seller will take all reasonable action to preserve the
goodwill of the tenants of the Facility;
(vi) Seller will make no material change in the operation of the
Facility nor sell or agree to sell any of the items which comprise
the Personal Property nor otherwise enter into an agreement
materially affecting any of the Partnership Assets;
(vii) Seller will use its reasonable efforts to retain the
services and goodwill of the employees of Seller and of the
Partnership located at or connected with the operation ofthe
Facility;
(viii) Seller will maintain in force the existing hazard and
liability insurance policies, or comparable coverage, for the
Partnership Assets as now in effect;
(ix) Seller will not increase the compensation or other benefits
or bonuses payable or to become payable to any of the Seller's
employees connected with the operation of the Facility, except for
increases substantially in accordance with existing employment
practices disclosed to and approved by Purchaser, if any;
(xiii) Seller will take all reasonable action to achieve
substantial compliance with any laws, regulations, ordinances,
standards and orders applicable to the Partnership Assets which
are enacted after execution of this Agreement and prior to
Closing;
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(xiv) Seller will proceed with all due diligence to secure any
consents which may be necessary for the assignment of the Facility
Leases;
(xv) Seller will make available to Purchaser, within five (5) days
following the mutual execution of this Agreement, for its review
all of the following documents relating the Real Property and the
Facility to the extent the same are in Seller's possession or
reasonably available (collectively, the "Property Documents"): all
environmental reports, structural reports and geological reports,
governmental licenses, permits, approvals, and certifications,
evidence of appropriate zoning for the Real Property, service and
maintenance contracts not previously delivered as pact of the
Operating Contracts, existing surveys of the Real Property
including any as-built surveys for the improvements, wetland
reports, soils reports, architect's drawings, plans and
specifications, engineering tests and reports, and all appraisals
prepared for the Real Property and the Facility. Upon the request
of Purchaser, Seller shall promptly deliver to Purchaser copies of
any Property Documents which Purchaser determines it shall require
in connection with its Feasibility Review; and
(xvi) During normal business hours, Seller will provide Purchaser
and its agents with access on 24 hours notice to the Real Property
and the Facility, provided Purchaser does not unreasonably
interfere with the operations of the Facility and at such times
Seller shall permit Purchaser to inspect the books and records
related to the Facility (which may be unaudited) covering a period
of not less than two (2) years prior to the date hereof and
conduct an audit, at Purchaser's sole cost and expense, of said
books and records (which may be conducted by Purchaser or
Purchaser's representative) and inspect the physical and
structural condition of the Facility, the Real Property and the
Personal Property. Said books and records shall include, but not
be limited to, leases, accounts payable records, rent rolls,
operating statements, inventory of personal property and all other
contracts and agreements which relate to the Partnership Assets.
b. CLOSING. On the Closing Date, Seller agrees that it will:
(i) Execute and deliver to Purchaser the Assignment;
(ii) Deliver to Purchaser a certificate dated as of the Closing
Date, certifying in such detail as Purchaser may reasonably
specify the fulfillment of the conditions set forth in
Paragraph(s) 13.a. and b.;
(iii) Pay its share of the Closing costs; and
(iv) Deliver to Purchaser the Benefits Schedule (as defined in
Paragraph 18) in accordance with the provisions of Paragraph I 8.
c. POST-CLOSING. After the Closing of this Agreement, Seller
agrees that, at Purchaser's sole cost and expense, it will take
such actions and properly execute and deliver to Purchaser such
further instruments of assignment, conveyance and transfer as, in
the reasonable opinion of counsel for Purchaser and Seller, may be
reasonably necessary to assure, complete and evidence the full and
effective transfer and conveyance of the Interest and cooperate
with Purchaser in any efforts which it may undertake to audit
Seller's financial statements with respect to the Facility for the
periods prior to the Closing if and to the extent such an audit is
required for
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Purchaser's compliance with applicable securities laws. The
obligations of Seller hereunder shall survive the Closing ofthe
transaction provided for herein.
d. REPAIRS. Seller shall complete, prior to the Closing Date,
the repairs specified on Exhibit F attached hereto. The cost of
such repairs shall be initially funded by Seller and treated as
draws by Seller under the Promissory Note to be made by CPMF to
Seller in the form of Exhibit G attached hereto (the "Repair
Note"). The terms of the Repair Note shall include:
(i) Interest accrual at nine percent (9%) per annum, with no
monthly payments required;
(ii) Due and payable in full after ten (10) years; and
(iii) Convertible at Seller's election to a five percent (5%)
limited partnership interest in the Partnership. Such conversion
shall be in exchange for all principal and interest then
outstanding under the Note.
11. PURCHASER' S COVENANTS.
a. PRE-CLOSING. Between the date hereof and the Closing Date,
except as contemplated by this Agreement or with the consent of
Seller, Purchaser agrees that:
(i) Purchaser will not take any action inconsistent with its
obligations under this Agreement or which could hinder or delay
the consummation of the transaction contemplated by this
Agreement;
(ii) Purchaser will proceed with all due diligence to obtain all
consents and approvals necessary to permit the consummation ofthe
transaction contemplated by this Agreement and/or necessary to
permit Purchaser to own and to operate the Facility.
(iii) Purchaser will proceed with all due diligence to conduct
such investigations with respect to the Partnership Assets as it
deems to be reasonably necessary in connection with its purchase
thereof, including, but not limited to, zoning investigations,
soil studies, environmental assessments, seismic assessments,
wetlands reports, review of all Property Documents made available
by Seller, investigations of Seller's and the Facility's operating
books and records and structural inspections; provided, however,
no studies or investigations conducted at the Real Property will
be physically intrusive on the Real Property or the Facility
unless Seller consents thereto, which consent shall not be
unreasonably withheld (the
"Feasibility Review"); provided, however, nothing herein shall be
construed as amending or modifying in any manner the
representations or warranties of Seller set forth in this
Agreement, which representations and wamanties shall be separate
from and unaffected by Purchaser's Feasibility Review; and
provided, further, that Purchaser shall maintain the
confidentiality of any documents or information obtained by it
during the course of its Feasibility Review and shall return the
same to Seller in the event the transaction provided for herein
fails close for any reason whatsoever;
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(iv) At least five (5) business days prior to the Closing Date,
Purchaser will advise Seller in writing which, if any, of the
Operating Contracts it elects to keep in effect as of the Closing
Date; and
(v) Promptly following the mutual execution of this Agreement,
Purchaser will arrange with Chicago Title Insurance Company,
Seattle Office (the "Title Company"), for the issuance and
delivery to Purchaser of a title commitment covering the Real
Property, together with copies of all exception documents
referenced therein (the "Title Commitment").
b. CLOSING. On the Closing Date, Purchaser agrees that it will:
Purchase Price;
(i) Deposit with the Escrow Agent the Convertible Note and the
(ii) Deposit with the Escrow Agent Purchaser's share of the
Closing costs as herein provided;
(iii) Execute and deliver to Seller or to Escrow Agent a counter-
part copy of the Assignment; and
(iv) Execute and deliver to Seller or to Escrow Agent such other
documents as may be necessary to consummate this transaction.
c. POST-CLOSING. After the Closing of this Agreement, Purchaser
agrees that it will:
(i) Upon prior reasonable notice, provide Seller with access
during normal business hours to any books or records which Seller
may need to file or to defend tax returns or other filings filed
prior or subsequent to the Closing Date which relate to periods
prior to the Closing Date; and
(ii) Take such actions and properly execute and deliver such
further instruments as Seller may reasonably request to assure,
complete and evidence the transaction provided for in this
Agreement.
12. MUTUAL. Following the execution of this Agreement, Purchaser
and Seller
agree:
a. If any event should occur, either within or without the
knowledge or control of Purchaser or Seller, which would prevent
fulfillment of the conditions to the obligations of any party
hereto to consummate the transaction contemplated by this
Agreement, to use its or their reasonable efforts to cure the same
as expeditiously as possible; and
b. To cooperate fully with each other in preparing, filing,
prosecuting, and taking any other actions which are or may be
reasonable and necessary to obtain the consent of any governmental
instrumentality or any third party or to accomplish the
transaction contemplated by this Agreement.
11
13. PURCHASER'S CONDITIONS. All obligations of Purchaser
under this Agreement are subject to fulfillment of each of the
following conditions, any one or all or which may be waived in
writing by Purchaser:
a. SELLER'S REPRESENTATIONS AND WARRANTIES TRUE AT CLOSING.
Seller's representations and warranties contained in this
Agreement or in any certificate or document delivered in
connection with this Agreement or the transactions contemplated
herein shall be true in all material respects at and as of the
date of Closing as though such representations and warranties were
then again made.
b. SELLER'S PERFORMANCE. Seller shall have performed all of its
obligations under this Agreement that are to be performed prior to
or at Closing to the extent the same have not been waived by
Purchaser in accordance with the terms hereof.
c. APPROVALS. On or before the Closing Date, Purchaser shall
have received all governmental consents, approvals and licenses as
may be necessary for it to own the Partnership and to operate the
Facility and any required approval from the holder of the First
Lien Debt. Purchaser covenants to use due diligence in applying
for and obtaining, all such necessary consents, approvals and
licenses.
d. NO DEFAULTS. Seller shall not be in default, where said
default cannot be cured by Closing, under any mortgage, contract,
lease or other agreement to which Seller is a party or by which
Seller is bound and which affects or relates to the Real Property,
the Personal Property or the Facility, including, but not limited
to, the Facility Leases.
e. TITLE REVIEW. Not later than seven (7) days prior to the
Closing Date (excluding any extension thereof, Purchaser shall
have reviewed and approved or disapproved those matters reflected
on the Title Commitment. In the event Purchaser objects to any
such matters, Purchaser shall advise Seller in writing of its
objections within said period; provided, however that such
objections shall not include those items specifically excluded in
Paragraph 4. Prior to the Closing, Seller shall advise Purchaser
in writing as to whether it intends to correct the defects to
which Purchaser has objected. If Seller fails to notify Purchaser
prior to the Closing or timely notifes Purchaser of its refusal to
correct some or all of such defects, Purchaser may nevertheless
elect to acquire the Partnership Assets, notwithstanding the
defects, or terminate this Agreement, which election shall be made
on or before the Closing Date. In the event of any such
termination, neither party shall have any further rights or
obligations hereunder.
f. UCC SEARCH. Purchaser may elect to obtain a UCC search
covering the name of Seller and/or the Facility, which search may
be done at the county and state level. On or before the end of the
Feasibility Period, Purchaser shall be satisfied with the results
of any such UCC search conducted by Purchaser.
g. TITLE POLICY. Upon the Closing, the Title Company shall
irrevocably agree to issue to Purchaser, effective as of the date
of Closing, an ALTA Owner's extended coverage policy of title
insurance for the Real Property and the Facility (the 'Title
Policy") with a value of not less than the total amount of the
Purchase Price insuring Purchaser' s interest in the Real Property
and the Facility, and subject to no exceptions other than those of
the usual printed exceptions (except that the survey, parties in
possession and mechanics lien exceptions and any
12
other general exception which is inconsistent with the issuance of
extended coverage, shall be unacceptable to Purchaser), and those
exceptions to title which are have been approved by Purchaser
pursuant to Paragraph 13.f. above.
h. SEWER AND ELEVATOR. Purchaser's obligations hereunder are
expressly conditioned upon Purchaser's satisfaction, in its sole
and absolute discretion, with the condition of the sewer system
and elevators serving the Facility.
In the event any of the foregoing conditions are not satisfied or
are not otherwise waived by Purchaser prior to the applicable
period for satisfaction or waiver, Purchaser shall have the right
to terminate this Agreement in accordance with the provisions of
Paragraph 17.
14. SELLER'S CONDITIONS. All obligations of Seller under this
Agreement are subject to the fulfillment, prior to or at Closing,
of each of the following conditions, any one or all of which may
be waived by Seller in writing:
a. PURCHASER'S REPRESENTATIONS AND WARRANTIES TRUE AT CLOSINGS.
Purchaser's representations and warranties contained in this
Agreement or in any certificate or document delivered in
connection with this Agreement or the transactions contemplated
herein shall be true in all material respects at and as of the
date of Closing as though such representations and warranties were
then again made.
b. PURCHASER'S PERFORMANCE. Purchaser shall have performed its
obligations under this Agreement that are to be performed prior to
or at Closing to the extent the same have not been waived by
Seller in accordance with the terms hereof.
c. MANAGEMENT AGREEMENT. Purchaser shall have entered into a
Management Agreement with Emeritus Corporation, an affiliate of
Seller, for the management of the Facility.
d. RELEASE OF GUARANTY. The holder of the First Lien Debt agrees
to release Emeritus Corporation from its guaranty of that debt as
of Closing.
15. SELLER'S INDEMNIFICATTON. Seller shall indemnify, defend and
hold Purchaser harmless from and against:
a. Except as otherwise provided in this Agreement, any and all
obligations relating to the Partnership's ownership of the
Partnership Assets and the operation of the Facility which exist
at the Closing Date, including, but not limited to any obligations
under the Facility Lease or the Operating Contracts which
Purchaser elects to keep in effect at Closing, and any obligations
with respect to the Resident Deposits;
b. Any and all damage, loss or liability arising from and after
the Closing Date under any of the Operating Contracts which
Purchaser does not elect to keep in effect at Closing;
c. Any and all damage, loss, or liability resulting from any
misrepresentation of a material fact, breach of warranty or
nonfulfillment of any agreement on
13
the part of Seller under this Agreement or from any
misrepresentation in any certificate furnished or to be furnished
to Purchaser hereunder;d. Any and all liability or loss arising
out of or relating to any failure in connection with the
transaction contemplated herein to comply with the requirements of
any laws or regulations relating to bulk sales or transfers; and
e. Any and all actions, suits, proceedings, demands,
assessments, judgments, reasonable costs, and other reasonable
expenses, including, but not limited to, reasonable attorney's
fees, incident to any of the foregoing.
For purposes of Paragraph 15.a., an obligation shall be deemed to
"exist" as of the Closing Date if it relates to events which
occurred prior to the Closing Date even if it is not asserted
until after the Closing Date. Excluded from Paragraph 15, are any
matters which occurred prior to the date the Partnership acquired
the Partnership Assets.
16. PURCHASER'S INDEMMTY. Purchaser shall indemnify, defend and
hold Seller harmless from and against:
a. Except as otherwise provided in this Agreement, any and all
obligations relating to the Partnership's ownership of the
Partnership Assets and the operation of the Facility from and
after the Closing Date, including, but not limited to, any
obligations under any of the Facility Leases or Operating
Contracts which Purchaser elects to keep in effect at Closing and
any obligations with respect to the Resident Deposits;
b. Any and all damage, loss or liability resulting from any
misrepresentation of a material fact, breach of warranty or
nonfulfillment of any agreement on the part of Purchaser under
this Agreement or from any misrepresentation in any certificate
furnished or to be furnished to Seller hereunder;
c. Any and all actions, suits, proceedings, demands,
assessments, judgments, reasonable costs and other reasonable
expenses, including, but not limited to, reasonable attorney's
fees, incident to any of the foregoing.
17. TERMINATION.
a. This Agreement may be terminated and the transaction
contemplated herein abandoned at any time prior to Closing:
(i) By mutual agreement of the parties;
(ii) By Seller, if any of the conditions set forth in Paragraph 14
shall have become incapable of fulfillment prior to the Closing
Date or such earlier date as may be specifically provided for the
performance thereof (as the same may be extended) through no fault
of Seller and the same shall not have been waived by Seller;
(iii) By Purchaser, if any of the conditions set forth in
Paragraph 13 shall have become incapable of fulfillment prior to
the Closing Date or such earlier date as may
14
be specifically provided for the performance thereof (as the same
may be extended) through no fault of Purchaser and the same shall
not have been waived by Purchaser;
(iv) By either Seller or Purchaser in the event of a material
breach by the other party of its obligations hereunder; or
(v) If the Closing has not occurred by the Closing Date, as
extended by mutual agreement of the parties.
b. In the event that prior to the Closing Date, a material
portion of the Real Property, the Facility or the Personal
Property shall have been damaged or destroyed by fire or other
casualty, or shall have been taken or condemned by any public or
quasi-public authority under the power of eminent domain,
Purchaser shall have the right to terminate this Agreement on
written notice to Seller. In the event Purchaser elects not to
terminate its rights hereunder, then Seller shall assign to
Purchaser all of its rights to any insurance proceeds or
condemnation award and all claims in the connection therewith. In
the event Purchaser exercises its termination rights hereunder,
the parties shall have no further rights or obligations hereunder.
c. Neither party to this Agreement may claim termination or
pursue any other remedy referred to in Paragraph I 7.a. on account
of a breach of a condition, covenant or warranty by the other,
without first giving such other party written notice of such
breach and not less than ten ( 10) days within which to cure such
breach. The Closing Date shall be postponed, if necessary, to
afford such opportunity to cure; provided, however, in no event
shall the Closing Date be postponed beyond January l,1999.
d. In the event of the termination of this Agreement by Seller
under Paragraphs 17.a.(ii) or (iv) or under Paragraph 17(a)(v) in
the event the Closing has failed to occur as a result of a
material breach by Purchaser of its obligations hereunder,
Seller's sole remedy shall be to terminate this Agreement and
recover as damages its actual out of pocket costs incurred in
connection with this transaction.
e. In the event of the termination of this Agreement by
Purchaser under Paragraphs 17.a.(iii), (iv) or (v) as a result of
the Closing failing to occur due to a material breach by Seller of
its obligations hereunder, Purchaser shall have the right to seek
specific performance of Seller's obligations hereunder or damages
for Seller's breach of its obligations hereunder. In lieu of the
foregoing, Purchaser may elect to require Seller to pay to
Purchaser a breakup fee of Four Hundred Thousand Dollars
($400,000) in cash to compensate Purchaser for its costs incurred
in this transaction.
18. INTENTIONALLY DELETED.
19. RESIDENT SECURITY DEPOSITS. At Closing, Seller shall provide
Purchaser with an accounting of all resident security deposits
being held by Seller as of the Closing Date (the "Resident
Deposits"). Such accounting shall set forth the names of the
residents or prospective residents for whom such funds are held,
the amounts held on behalf of each resident or prospective
resident and the Seller's warranty that the accounting is true,
correct and complete.
15
20. TRANSFER OF RESIDENT SECURITY DEPOSITS. On the Closing Date,
Seller shall transfer the Resident Deposits to the bank account
designated by the Purchaser. Purchaser shall in writing
acknowledge receipt of and expressly assume all Seller's financial
and custodial obligations with respect thereto, it being the
intent and purpose of this provision that, at Closing, Seller will
be relieved of all fiduciary and custodial obligations with
respect to said Resident Deposits, and that Purchaser will assume
all such obligations and be directly accountable to the residents
and prospective residents of the Facility, with respect thereto.
21. INDEMNITY FOR RESIDENT SECURITY DEPOSITS. Notwithstanding the
foregoing, Seller will indemnify and hold Purchaser harmless from
all liabilities, claims and demands in the event the amount of the
Resident Deposits transferred to the Purchaser's bank account or
the credit for said Resident Deposits which has been applied
against the Purchase Price, as provided in Paragraph 20, did not
represent the full amount of such Resident Deposits then or
thereafter shown to have been delivered to Seller by the current
residents or prospective residents of the Facility.
22. NOTICES. Any notice, request or other communication to be
given by any party hereunder shall be in writing and shall be sent
by registered or certified mail, postage prepaid, by overnight
courier guaranteeing overnight delivery or by facsimile
transmission (if confirmed verbally or in writing by mail as
aforesaid), to the following address:
To Seller: c/o Emeritus Corporation
0000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx Xxxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
With a copy to: Xxxxxx Pepper & Shefelman PLLC
0000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
To Purchaser: c/o Columbia - Pacific, Inc.
0000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, XX 98121Attention: Xxxx Xxxxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
With a copy to: Whalen, Firestone, Xxxxxxxx,
Xxxxxxx & Xxxxx
Suite 2150 1191 Second Avenue
Seattle, Washington 98101Attn: Xxxxxx X.
Xxxxx, Esq.Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-00000
16
Notice shall be deemed given three (3) business days after deposit
in the mail, on the next day if sent by overnight courier and on
receipt if sent by facsimile (and confirmed verbally or by mail as
aforesaid).
23. SOLE AGREEMENT. This Agreement may not be amended or modified
in any respect whatsoever except by instrument in writing signed
by the parties hereto. This Agreement constitutes the entire
agreement between the parties hereto and supersedes all prior
negotiations, discussions, writings and agreements between them.
24. SUCCESSORS. The terms of this Agreement shall be binding upon
and inure to the benefit of and be enforceable by and against the
heirs and successors of the parties hereto, it being specifically
understood and agreed that Purchaser shall have the right to
assign in whole or in part its rights and obligations hereunder to
any affiliated entity or any entity which is sponsored by
Purchaser; provided no such assignment shall relieve Purchaser of
its obligations hereunder. Notwithstanding the foregoing,
Purchaser shall have the right, on written notice to Seller, to
assign its rights hereunder to a real estate investment trust (the
"REIT") in connection with its financing of the transaction
provided for herein, it being understood and agreed that in the
event of such an assignment, the only right which the REIT will
assume is Purchaser's right to take title to the Partnership
Assets and the only obligation which the REIT will assume is
Purchaser's obligation to pay the purchase price in accordance
with the terms hereof and that in any event Purchaser shall not be
relieved of any of its obligations hereunder in the event of such
an assignment.
25. CAPTIONS. The captions of this Agreement are for convenience
of reference only and shall not define or limit any of the terms
or provisions hereof.
26. SURVIVAL. All covenants, warranties and representations of
Purchaser and Seller herein shall survive for two years after
Closing other than Seller's representation and warranty in
Paragraph 7.k., which shall survive for the applicable statute of
limitations period.
27. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas.
28. SEVERABILITY. Should any one or more of the provisions of this
Agreement be determined to be invalid, unlawful or unenforceable
in any respect, the validity, legality and enforceability of the
remaining provisions hereofshall not in any way be affected or
impaired thereby.
29. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original; but such
counterparts shall together constitute but one and the same
instrument.
30. THIRD PARTY BENEFICIARY. The provisions of this Agreement are
not intended to confer any benefits upon any person or entity not
a party to this Agreement.
31. ACCOUNTS RECEIVABLE. Within ten days prior to the Closing
Date, Seller shall provide Purchaser with a detailed listing of
Seller's accounts receivable which are anticipated to be
outstanding on the Closing Date.
17
32. RESPONSIBILITY FOR COLLECTIONS. From and after the Closing
Date, Purchaser shall assume responsibility for the billing for
and collection of payments on account of services rendered or
goods sold by it on and after the Closing Date and Seller shall
retain all right, title and interest in and to and all
responsibility for the collection of its accounts receivable for
services rendered or goods sold prior to the Closing Date.
33. APPLICATION OF PAYMENTS. Any unspecified payments received by
Purchaser after the Closing Date from residents with balances due
for the period prior to and after the Closing Date, shall be
applied by Purchaser first to reduce any pre-Closing Date
balances, with the excess, if any, remitted to Seller to reduce
any post-Closing Date balances due.
34. ATTORNEY'S FEES. Should either party institute any action or
proceeding to enforce or interpret this Agreement or any provision
hereof, for damages by reason of any alleged breach of this
Agreement or of any provision hereof, or for a declaration of
rights hereunder, the prevailing party in any such action or
proceeding shall be entitled to receive from the other party all
costs and expenses, including reasonable attorneys' and other
fees, incurred by the prevailing party in connection with such
action or proceeding. The term "attorneys' and other fees" shall
mean and include attorneys' fees, accountants' fees, and any and
all other similar fees incurred in connection with the action or
proceeding and the preparations therefor. The term "action or
proceeding" shall mean and include actions, proceedings, suits,
arbitrations, appeals and other similar proceedings.
35. TIME IS OF THE ESSENCE. Time is of the essence of this
Agreement.
36. AS IS. Purchaser is a sophisticated commercial real estate
owner and shall rely solely upon its own evaluation and
investigation of the condition and all aspects of the Partnership
Assets. Purchaser acknowledges that Seller has granted to
Purchaser every opportunity which Purchaser may need to fully
evaluate the condition and all aspects of the Partnership Assets.
Purchaser has asked for, and has obtained in this Agreement,
representations from Seller, and Purchaser acknowledges that this
is to give Purchaser disclosure of information regarding the
Partnership Assets which is in Seller's knowledge, not for the
purposes of reducing any need by Purchaser to conduct its own
evaluation of the Partnership Assets. Accordingly, except as to
those representations and warranties of Seller expressly provided
for herein, Purchaser acknowledges that it is not relying upon any
representations of Seller as to the condition of the Partnership
Assets or their suitability for Purchaser's intended use. In the
event Purchaser approves the results of the feasibility
evaluation, Purchaser shall be deemed to accept the Partnership
Assets "as is" in all respects.
18
IN WITNESS WHEREOF, the parties hereby execute this Agreement as
of the day and year set forth opposite each party's signature
below with the last date constituting the date of mutual execution
of this Agreement.
Dated: PURCHASER:
Columbia Pacific Master Fund 98 General
Partnership, a Washington general partnership
By: Columbia Pacific Growth Fund 98
Limited Partnership, a Washington limited
partnership, its partner
By: B.F. Limited Partnership, a
Washington limited partnership, its
general partner
By: Columbia Pacific Group, Inc., a
Washington corporation, its general
partner
Dated: SELLER:
ESC XX XX, INC., a Washington corporation
By: /s/: Xxxxx X. Xxxxx
Its: Chief Financial Officer
EMERITUS PROPERTIES IV, INC.,
A Washington corporationBy: /s/: Xxxxx X.
Xxxxx Its: Chief Financial Officer
EXHIBIT INDEXEXHIBIT A-Real Property Description
EXHIBIT B-Personal Property List
EXHIBIT C-Convertible NoteEXHIBIT D-Facility Lease Form
EXHIBIT E-Rent RollEXHIBIT F-Unit Repairs
EXHIBIT G-Repair Note
19
EXHIBIT C
CONVERTIBLE NOTE
PROMISSORY NOTE
$1,500,000 (U.S.)
Xxxxxxx, Xxxxxxxxxx, 0000
FOR VALUE RECEIVED, the undersigned ("Borrower"), jointly and
severally, promise to pay to the order of ESC XX XX, INC., a
Washington corporation, and EMERITUS PROPERTTES IV, INC., a
Washington corporation, at their office at Suite 500, 0000 Xxxxxxx
Xxxxxx, Xxxxxxx, Xxxxxxxxxx 00000, or at such other place as the
holder of this Note (hereinafter, "holder") may from time to time
designate in writing, the sum of ONE MILLION FIVE HUNDRED
THOUSAND DOLLARS ($1,500,000), or so much thereof as has been
advanced hereunder, in lawful money of the United States, with
interest thereon from the date of this Note until paid at the rate
set forth below, computed on monthly balances. Interest for any
partial calendar month at the beginning or end of the term of this
Note shall be calculated on the basis of a 365 or 366-day year and
the actual number of days in that month.
SECTION l. INTEREST RATE.
The per annum interest rate hereunder (the "Note Rate") shall be
nine percent (9%).
SECTION 2. MONTHLY PAYMENTS.
Borrower shall make periodic payments hereunder in accordance with
the terms of the Articles of Limited Partnership of ESC II LP, a
Washington limited partnership in which Borrower is a partner.
SECTION 3. MATURITY.
Unless sooner repaid by Borrower, the entire unpaid principal
balance of this Note, plus all accrued but unpaid interest, and
all other amounts owing hereunder shall be due and payable in full
on , 2008 (the "Maturity Date").
SECTION 4. FURTHER ADVANCES.
Borrower and holder acknowledge that the original principal
balance under this Note will be One Million Dollars ($ 1,000,000).
However, Borrower shall be entitled to, and holder shall make,
additional advances of principal hereunder, as necessary to fund
twenty percent (20%) of the operating cash shortfalls incurred by
Borrower in operating that certain assisted living facility owned
by Borrower, located in Dallas, Texas and commonly known as
Xxxxxxx Towers (the Facility). Borrower may request such
additional advances by providing holder, not more frequently than
monthly, with evidence of the operating shortfalls incurred from
operating the Facility along with such other supporting
information as holder may reasonably request. In no event shall
such additional advances exceed Five Hundred Thousand Dollars
($500,000).
SECTION 5. CONVERSION OPTION.
Holder may, at any time during the term of this Note, convert its
rights hereunder to a fifteen percent (15%) limited partnership
ownership interest in Borrower. Such conversion right may be
exercised at any time prior to Borrower's payment in full of all
amounts owing hereunder. Holder may exercise this right by
delivering written notice to Borrower of holder's election to so
convert, in which event the entire principal amount then owing
hereunder (but excluding interest and other amounts owing
hereunder), shall be applied as the entire consideration for the
partnership interest so purchased. The further terms of this
conversion right are set out in that certain Conversion Agreement
of even date herewith between Borrower and holder.
SECTION 6. APPLICATION OF PAYMENTS.
Payments shall be applied: (i) first, to the payment of accrued
interest; (ii) second, at the option of holder, to the payment of
any other amounts owing under this Note, other than accrued
interest and principal, including, but not limited to advances
holder may have made for attorneys' fees or for taxes,
assessments, insurance premiums, or other charges on any property
given as security for this Note and any late charges due
hereunder; and (iii) third, to the reduction of principal of this
Note.
SECTION 7. PREPAYMENT.
Borrower may not prepay this Note, in whole or in part.
SECTION 8. LATE CHARGE.
If any amount payable hereunder is paid more than ten (10) days
after the due date thereof, Borrower promises to pay a late charge
of five percent (5%) of the delinquent amount as liquidated
damages for the extra expense in handling past due payments.
SECTION 9. DEFAULT; REMEDIES.
If default is made in the payment of any amount payable hereunder
when due or in the keeping of any covenant hereunder, then, at the
option of holder, the entire indebtedness evidenced hereby shall
become immediately due and payable. Upon default, and without
notice or demand, all amounts owed under this Note, including all
accrued but unpaid interest, shall thereafter bear interest at a
variable rate, adjusted at the time at which the Note Rate would
otherwise have been adjusted pursuant to Section 2, five percent
(5%) per annum above the Note Rate that would have been applicable
from time to time had there been no default (the "Default Rate")
until such default is cured. Failure to exercise any option
granted to holder hereunder shall not waive the right to exercise
the same in the event of any subsequent default. Interest at the
Default Rate shall commence to accrue upon default under this
Note, including the failure to pay this Note at maturity.
SECTION 10. ATTORNEYS' FEES
In the event of any default under this Note, or in the event that
any dispute arises relating to the interpretation, enforcement or
performance of this Note, holder shall be entitled to collect from
Borrower on demand all fees and expenses incurred in connection
therewith, including but not limited to fees of attorneys,
accountants, appraisers, environmental inspectors, consultants,
expert
witnesses, arbitrators, mediators and court reporters. Without
limiting the generality of the foregoing, Borrower shall pay all
such costs and expenses incurred in connection with: (a)
arbitration or other alternative dispute resolution proceedings,
trial court actions and appeals; (b) bankruptcy or other
insolvency proceedings of Borrower, any guarantor or other party
liable for any of the obligations of this Note or any party having
any interest in any security for any of those obligations;
(c)judicial or non-judicial foreclosure on, or appointment of a
receiver for, any property securing this Note; (d) post judgment
collection proceedings; (e) all claims, counterclaims, crossclaims
and defenses asserted in any of the foregoing whether or not they
arise out of or are related to this Note or any security for this
Note; (all preparation for any of the foregoing; and (g) all
settlement negotiations with respect to any of the foregoing.
SECTION ll. MISCELLANEOUS.
(a) Every person or entity at any time liable for the payment of
the indebtedness evidenced hereby waives presentment for payment,
demand and notice of nonpayment of this Note. Every such person or
entity further hereby consents to any extension of the time of
payment hereof or other modification of the terms of payment of
this Note, the release of all or any part of the security herefor
or the release of any party liable for the payment of the
indebtedness evidenced hereby at any time and from time to time at
the request of anyone now or hereafter liable therefor. Any such
extension or release may be made without notice to any of such
persons or entities and without discharging their liability.
(b) Each person or entity who signs this Note is jointly and
severally liable for the full repayment of the entire indebtedness
evidenced hereby.
(c) The headings to the various sections have been inserted for
convenience of reference only and do not define, limit, modify, or
expand the express provisions of this Note.
(d) Time is of the essence under this Note and in the performance
of every term, covenant and obligation contained herein.
(e) This Note is made with reference to and is to be construed in
accordance with the laws of the state of Washington.
Each married person who executes this Note as a Borrower agrees
that recourse hereunder can be had to his or her separate property
as well as the assets of his or her marital community.
DATED as of the day and year first above written.
ORAL AGREEMENTS OR ORAL COMMITMENTS TO LEND MONEY EXTEND CREDIT OR
TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE
UNDER WASHINGTON LAW.
Columbia Pacific Master Fund 98 General Partnership, its general
partner
By:
Its:
EXHIBIT G
REPAIR NOTE
PROMISSORY NOTE
$450,000 (U.S.)
Xxxxxxx, Xxxxxxxxxx, 0000
FOR VALUE RECEIVED, the undersigned ("Borrower"), promises to pay
to the order of ESC XX XX, INC., a Washington corporation, and
EMERITUS PROPERTIES IV, INC., a Washington corporation, at their
oiFce at Suite 500, 0000 Xxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxx
00000, or at such other place as the holder of this Note
(hereinafter, "holder") may from time to time designate in
writing, the sum of FOUR HUNDRED FIFTY THOUSAND DOLLARS
($450,000), or so much thereof as has been advanced hereunder, in
lawful money of the United States, with interest thereon from the
date of this Note until paid at the rate set forth below, computed
on monthly balances. Interest for any partial calendar month at
the beginning or end of the term of this Note shall be calculated
on the basis of a 365 or 366-day year and the actual number of
days in that month.
SECTION 1. INTEREST RATE.
The per annum interest rate hereunder (the "Note Rate") shall be
NINE PERCENT (9.0%).
SECTION 2. MONTHLY PAYMENTS.
No monthly or other periodic payments shall be required hereunder.
SECTION 3. MATURITY.
Unless sooner repaid by Borrower, the entire unpaid principal
balance of this Note, plus all accrued but unpaid interest, and
all other amounts owing hereunder shall be due and payable in full
on , 2008 (the "Maturity Date").
SECTION 4. ADVANCES.
Holder has agreed to make certain repairs to the real property
located in Dallas, Texas commonly known as the Xxxxxxx Towers
pursuant to that certain Partnership Interest Purchase and Sale
Agreement between holder, Borrower and others. All amounts so
expended by holder shall be deemed draws by Borrower under this
Note, provided holder shall provide Borrower with written evidence
of all amounts so spent when those costs are incurred. In no event
will the outstanding principal amount hereunder for such costs
incurred exceed $450,000.
SECTION 5. CONVERSION OPTION.
Holder may, at any time during the term of this Note, convert its
rights hereunder to a five percent (5"%) limited partnership
ownership interest in Borrower. Such conversion right may be
exercised at any time prior to Borrower's payment in full of all
amounts owing hereunder. Holder
may exercise this right by delivering written notice to Borrower
of holder's election to so convert, in which event the entire
amount then owing hereunder, including principal, interest and
costs, shall be applied as the entire consideration for the
partnership interest so purchased. The further terms of this
conversion right are set out in that certain Conversion Agreement
of even date herewith between Borrower and holder.
SECTION 6. APPLICATION OF PAYMENTS.
Payments shall be applied: (i) first, to the payment of accrued
interest; (ii) second, at the option of holder, to the payment of
any other amounts owing under this Note, other than accrued
interest and principal, including, but not limited to advances
holder may have made for attorneys' fees or for taxes,
assessments, insurance premiums, or other charges on any property
given as security for this Note and any late charges due
hereunder; and (iii) third, to the reduction of principal of this
Note.
SECTION 7. PREPAYMENT.
Borrower may not prepay this Note, in whole or in part.
SECTION 8. LATE CHARGE.
If any amount payable hereunder is paid more than ten (10) days
after the due date thereof, Borrower promises to pay a late charge
of five percent (5"%) of the delinquent amount as liquidated
damages for the extra expense in handling past due payments.
SECTION 9. DEFAULT; REMEDIES.
If default is made in the payment of any amount payable hereunder
when due or in the keeping of any covenant hereunder, then, at the
option of holder, the entire indebtedness evidenced hereby shall
become immediately due and payable. Upon default, and without
notice or demand, all amounts owed under this Note, including all
accrued but unpaid interest, shall thereafter bear interest at a
variable rate, adjusted at the time at which the Note Rate would
otherwise have been adjusted pursuant to Section 2, five percent
(5"%) per annum above the Note Rate that would have been
applicable from time to time had there been no default (the
"Default Rate") until such default is cured. Failure to exercise
any option granted to holder hereunder shall not waive the right
to exercise the same in the event of any subsequent default.
Interest at the Default Rate shall commence to accrue upon default
under this Note, including the failure to pay this Note at
maturity.
SECTION 10. ATTORNEYS' FEES
In the event of any default under this Note, or in the event that
any dispute arises relating to the interpretation, enforcement or
performance of this Note, holder shall be entitled to collect from
Borrower on demand all fees and expenses incurred in connection
therewith, including but not limited to fees of attorneys,
accountants, appraisers, environmental inspectors, consultants,
expert witnesses, arbitrators, mediators and court reporters.
Without limiting the generality of the foregoing, Borrower shall
pay all such costs and expenses incurred in connection with: (a)
arbitration or other alternative dispute resolution proceedings,
trial court actions and appeals; (b) bankruptcy or other
insolvency proceedings of Borrower, any guarantor or other party
liable for any of the obligations of this Note or any party having
any interest in any security for any of those
obligations; (c)judicial or non-judicial foreclosure on, or
appointment of a receiver for, any property securing this Note;
(d) post judgment collection proceedings; (e) all claims,
counterclaims, cross- claims and defenses asserted in any of the
foregoing whether or not they arise out of or are related to this
Note or any security for this Note; (all preparation for any of
the foregoing; and (g) all settlement negotiations with respect to
any of the foregoing.
SECTION 11. MISCELLANEOUS.
(a) Every person or entity at any time liable for the payment of
the indebtedness evidenced hereby waives presentment for payment,
demand and notice of nonpayment of this Note. Every such person or
entity further hereby consents to any extension of the time of
payment hereof or other modification of the terms of payment of
this Note, the release of all or any part of the security herefor
or the release of any party liable for the payment of the
indebtedness evidenced hereby at any time and from time to time at
the request of anyone now or hereafter liable therefor. Any such
extension or release may be made without notice to any of such
persons or entities and without discharging their liability.
(b) Each person or entity who signs this Note is jointly and
severally liable for the full repayment of the entire indebtedness
evidenced hereby.
(c) The headings to the various sections have been inserted for
convenience of reference only and do not define, limit, modify, or
expand the express provisions of this Note.
(d) Time is of the essence under this Note and in the performance
of every term, covenant and obligation contained herein.
(e) This Note is made with reference to and is to be construed in
accordance with the laws of the state of Washington.
(f) Each married person who executes this Note as a Borrower
agrees that recourse hereunder can be had to his or her separate
property as well as the assets of his or her marital community.
DATED as of the day and year first above written.
ORAL AGREEMENTS OR ORAL COMMITMENTS TO LEND MONEY EXTEND CREDIT OR
TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE
UNDER WASHINGTON LAW.
Columbia Pacific Master Fund 98 General
Partnership, its general partner
By:
Its:
