FIRST AMENDMENT TO STOCK PURCHASE AGREEMENT
This Agreement is made and entered into effective
as of 31st day of January, 1997, by and between
WAYNE VOEGELE, JEREOME LANG, RONALD CARLSON AND
THOMAS STANFORD (collectively "Seller"), and
EMERITUS CORPORATION, a Washington corporation
("Purchaser") and EMERITUS PROPERTIES V, INC., a
Washington corporation ("Properties").
RECITALS
A. Seller and Purchaser are parties to that
Stock Purchase Agreement dated September 30, 199G
(the "Purchase Agreement") with respect to the
acquisition by Purchaser of all of the issued and
outstanding stock of Stanford Centre, Inc. (the
"Corporation").
B. The Purchase Agreement provides for an
outside closing date of February 1, 1997, subject
to certain automatic extension provisions in the
event Purchaser has not secured a license to
operate the Facility (as defined in the Purchase
Agreement) as of February 1,1997.
C. The Purchase Agreement provides that it
is a condition to the Purchaser's obligation to
close that the stock acquisitions made pursuant to
the agreements described in Exhibit P thereto (the
"Other Purchase Agreements") shall have closed,
one of which relates to the assisted living
facility owned by Englewood Retirement Center,
Inc. and commonly referred to as Englewood
Retirement Center (the "Englewood Facility").
D. Seller and Purchaser have agreed that
the acquisition of the Englewood Facility cannot
occur by February 1,1997 due to outstanding
regulatory issues which must be addressed by
Englewood Retirement Center, Inc. (the "Englewood
Regulatory Issues").
E. Seller and Purchaser have agreed that
it is anticipated that it will take no longer than
sixty (60) days to resolve the Englewood
Regulatory Issues and have agreed to amend the
Purchase Agreement, as well as the Other Purchase
Agreements, to extend the Outside Closing Date
until May 1,1997.
F. In connection with the amendment of the
Purchase Agreement to address the extension of the
Closing Date, there are certain other matters
which Purchaser and Seller are interested in
addressing in an amendment to the Purchase
Agreement.
G. The Purchase Agreement provides that it
may be amended by written instrument signed by
Seller and Purchaser.
NOW, THEREFORE, in consideration of the
foregoing premises and the mutual covenants of the
parties set forth herein, IT IS HEREBY AGREED AS
FOLLOWS:
1. The Purchase Agreement is hereby amended
in its entirety to reflect that by the execution
of this Agreement, Purchaser does hereby assign
all of its right, title and interest iii and to
and obligations under the Purchase Agreement to
Properties and Properties does hereby, assume all
of Purchaser's right, title and interest in and to
and obligations under the Purchase Agreement and
that any and all references to the
Purchaser in the Purchase Agreement, the Other
Purchase Agreements and in any documents executed
pursuant thereto shall from and after the date
hereof be deemed to be references to Properties;
provided, however, that nothing herein shall be
construed as releasing Emeritus from liability
under the Purchase Agreement.
2. Paragraph 1 is hereby amended to reflect
that immediately after the acquisition of the
Stock, Properties and the Corporation shall merge
and Properties shall be the surviving entity.
Seller and Purchaser acknowledge, agree and
reaffirm that the transaction provided for in the
Purchase Agreement is a stock, and not an asset,
transaction and that Purchaser shall not make an
election under Section 338 of the Internal Revenue
Code without the prior written consent of Seller.
3. Paragraph 2 is hereby amended to reflect
that Purchaser shall receive a credit against the
cash due at Closing pursuant to Paragraph 2(b) in
the amount of $26,500 as compensation for certain
physical plant improvements identified during
Purchaser's due diligence review and not corrected
as of the Closing Date by the Corporation.
4. Paragraph 3 is hereby amended to provide
that the Closing shall take place on May 1,1997
provided all of the conditions to closing set
forth in Paragraphs 13 and 14 have been satisfied
or waived (the "Closing Date"). Purchaser shall
not have any rights to extend the Closing Date.
5. Paragraph 7(c) is hereby amended to read
in part as follows:
c. THE FACILITY. The facility is a
congregate care and assisted living and Alzheimer
care facility commonly known as The Stanford
Centre, located in Altamonte Springs, Florida and
duly licensed, with respect by the State of
Florida as an adult congregate care living
facility with a total of 180 licensed beds and 118
licensed units (the "Facility").
6. Paragraph 7(m) is hereby amended by
adding the following at the end: "The Corporation
is holding the security deposits described in
Exhibit O (the "Security Deposits") and certain
personal funds on behalf of any of the residents
of the Facility. A detailed listing of the
personal funds being held by the Corporation will
be provided to Purchaser at Closing and such funds
will be transferred to Purchaser at Closing."
Section 10(a) is hereby amended to include the
following as an additional pre
xxv. If and when requested by Purchaser,
to issue to each resident of the Facility a notice
advising them of an increase in the rates at the
Facility (the "Rate Increase"). In the event the
amount of the Rate Increase is more than 3% per
resident, the Rate Increase shall be subject to
the approval of Seller, which approval shall not
be unreasonably withheld. Seller and Purchaser
shall use their reasonable efforts to agree on a
Rate Increase schedule and to attach the same as
an exhibit hereto. The Rate Increase shall be
effective as of the date specified by Purchaser,
but in no event earlier than thirty (30) days
after the date of the Rate Increase notice and
shall commence on the first day of the month;
provided, however, in no event shall Seller be
required to issue the Rate Increase notice with an
effective date prior to the Closing Date, unless
Purchaser has confirmed in writing to Seller prior
to the issuance of the Rate Increase notice that
it has
2
determined that the conditions to closing set
forth in Sections 13(s), (t), (u) and (v) have
been satisfied or that it has waived the same if
and to the extent not satisfied.
Nothing herein shall be construed as prohibiting
Seller from issuing the Rate Increase prior to the
date requested by Purchaser.
8. Section 13 is hereby amended to include
the following additional conditions to Closing:
s. LITIGATION ESCROW AGREEMENT AND DEFENSE
CONFIRMATION. Purchaser and Seller shall have
entered into an acceptable escrow agreement with
respect to the $150,000 of collateral which Seller
has agreed to deposit in escrow either in the form
of cash or one or more certificates of deposit
pending the final settlement of The Estate of
Clarence Peter Palmateer and through Eleanor Ruth
Palmateer the Personal Representative an Eleanor
Ruth Palmateer individually vs. Stanford enter
Inc. a.k.a. Stanford Centre Inc., Case No. 95-
20470CA-16, filed in the Circuit Court of the
Eighteenth Judicial Circuit in and for Seminole
County, State of Florida and shall have provided
Purchaser with a letter from the insurer defending
such litigation confirming that it will continue
to be responsible for the defense of such
litigation and for the payment of any amounts due
with respect thereto subject to any applicable
policy limitations and exclusions. The Escrow
Agreement shall provide, among other things, that
Seller shall remain responsible for the defense
and settlement of such litigation, including the
payment of any amounts due upon the entry of a
judgement against the Corporation or upon the
execution of a settlement agreement, and
accordingly, that neither Purchaser nor the
Corporation shall have no right to settle any such
litigation without the prior written consent of
Wayne Voegele, as Seller's designated
representative.
t. RETURN OF RESIDENT DEPOSITS. With
respect to the Security Deposits, Seller shall
have provided Purchaser with a written
confirmation from each resident of the Facility
confirming that (i) he/she has received the return
of his/her security deposit, (ii) the amount
returned and received by him/her and (iii) that
the amount so returned and received represents the
full amount paid by him/her to the Facility as a
security deposit.
9. Paragraph 15(a) is hereby amended by
adding the following: and (v) and any and
obligations which relate to the Security Deposits.
10. Paragraph 17(a)(v) is hereby deleted in
its entirety and the following inserted instead:
v. If the Closing has not occurred by May
1, 1997, (the "Outside Closing Date") unless the
Closing has been extended by Seller pursuant to
the rights granted to Seller under Section 13(t)
of that Stock Purchase Agreement dated September
30, 1996 as amended by First Amendment dated as of
January 31, 1997 with respect to the Englewood
Retirement Center in Englewood, Florida (the
"Englewood Purchase Agreement"), in which case the
Outside Closing Date shall be June 1, 1997.
11. Except as specifically set forth herein,
the Purchase Agreement shall remain in full force
and effect as originally executed.
3
IN WITNESS WHEREOF, the parties hereby
execute this Agreement as of the day and year
first set forth above.
SELLER: /s/ Wayne Voegele
- --------------------------------------------------
- ---
WAYNE VOEGELE
/s/ Jerome Lang
- --------------------------------------------------
- ---
JEROME LANG
/s/ Ronald Carlson
- --------------------------------------------------
- ---
RONALD CARLSON
/s/ Thomas Stanford
- --------------------------------------------------
- ---
THOMAS STANFORD
PURCHASER: EMERITUS CORPORATION
By: /s/ Raymond R.
Brandstrom
- --------------------------------------------------
- --
Its: President
PURCHASER: EMERITUS PROPERTIES
V, INC.
By: /s/ Raymond R.
Brandstrom
- --------------------------------------------------
- --
Its: President
4