Exhibit 10.64.1
PURCHASE AND SALE AGREEMENT
by and between
EMERITUS CORPORATION
("Seller")
and
MELCHOR AND ISABEL BALAZS, as Trustees for THE MELCHOR
AND ISABEL BALAZS FAMILY TRUST DATED OCTOBER 21, 1997
and
MELCHOR BALAZS, individually
and
JOSE AND AMALIA CHAVEZ, husband and wife
and
GLAURO TRONCOSO AND ANA INES LOPEZ, husband and wife
(collectively, "Purchaser")
PURCHASE AND SALE AGREEMENT
This Purchase and Sale Agreement ("Agreement") is made and entered into
this 18th day of December, 2000 (the "Execution Date") by and between EMERITUS
CORPORATION ("Seller") MELCHOR AND ISABEL BALAZS as Trustees for THE MELCHOR AND
ISABEL BALAZS FAIMILY TRUST DATED OCTOBER 21, 1997, MELCHOR BALAZS,
individually, JOSE AND AMILIA CHAVEZ, husband and wife, and GLAURO TRONCOSO AND
ANA INES LOPEZ, husband and wife (collectively, "Purchaser"), on the other hand.
1. Purchase and Sale
-----------------
On the terms and conditions set forth herein, Seller shall sell to
Purchaser and Purchaser shall purchase from Seller the following:
(a) Facility. The real property situated in the State of Arizona, which
is more particularly described in Exhibit "A" attached hereto and the
improvements thereon (the "Real Property") that constitute a facility with 99
assisted living beds and units and known as Villa Ocotillo, 3327 N. Civic Center
Plaza, Scottsdale, Arizona 85251 (the "Facility") together with all tenements,
hereditaments, rights, privileges, interests, easements and appurtenances now or
hereafter belonging or in any way pertaining to the Real Property and/or the
Facility.
(b) Personal Property. All equipment, furniture, fixtures, inventory,
appliances, tools, instruments, and other tangible personal property owned by
Seller as of the date of this Agreement or acquired by Seller prior to the
Closing Date, and located on the Real Property and/or used in connection with
the operation of the Facility (the "Personal Property"). The Personal Property
shall be described in Exhibit "B" , which shall be prepared by Seller no later
than ten days after the date hereof and submitted to Purchaser for Purchaser's
approval. Upon Purchaser's approval, such exhibit shall be attached hereto and
become a part of this Agreement.
(c) Inventory. All inventories of every kind and nature whatsoever
(specifically including, but not limited to, all pharmacy supplies, medical
supplies, office supplies, other supplies and foodstuffs) owned by Seller as of
the date of this Agreement or hereafter acquired, and relating to the Facility,
except inventory sold or consumed in the ordinary course of business from and
after the date of this Agreement (collectively, the "Inventory").
(d) Intangible Personal Property. All rights, if any, to the telephone
numbers of the Facility and its sequential numbers, medical records,
administrative records, manuals (excluding any proprietary materials included
therein), and other books and records relating directly to the operation of the
Facility and located therein, lien waivers, surety agreements, bonds,
warranties, guaranties, utility use agreements, covenants, commitments, permits,
certificates, approvals, and other intangible personal property of every kind
and nature whatsoever owned by Seller as of the date of this Agreement or
hereafter acquired, which can be legally transferred by Seller without
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the consent of any other party or governmental authority and which relate
directly to the Facility, including, but not limited to the name "Villa
Ocotillo" but specifically excluding cash (on hand or in banks) and accounts,
notes, interest, and other receivables arising from the operation of the
Facility prior to the Closing Date (as hereinafter defined) and the name
Emeritus Corporation or Emeritus Assisted Living or any right to use the same in
connection with the operation of the Facility (the "Intangible Personal
Property").
Hereinafter the Real Property, the Facility, the Personal Property, the
Inventory and the Intangible Personal Property shall sometimes be collectively
referred to as "Seller's Assets."
2. Purchase Price
--------------
The purchase price ("Purchase Price") payable by Purchaser to Seller for
Seller's Assets shall be Five Million and no/100 Dollars ($5,000,000) and shall
be payable as follows:
(a) Initial Deposit. Fifty Thousand and no/100 Dollars ($50,000) cash
which Purchaser acknowledges it has delivered or shall deliver concurrently with
the execution of this Agreement to Fidelity National Title Company, 2390 E.
Camelback Road, Suite 340, Phoenix, Arizona 85016, Attn: Pam Sanders ("Escrow
Agent"), and which has been or shall be deposited by Escrow Agent in an interest
bearing account under Escrow Number 20001514 (the "Initial Deposit").
(b) Cash at Closing. Cash at Closing in the amount of One Million One
Hundred Fifty Thousand and no/100 Dollars ($1,150,000) (plus or minus any costs
and prorations for which Seller and/or Purchaser are responsible under the terms
hereof) by wire transfer of immediately available funds at Closing (the "Cash
Payment").
(c) Loan Assumption. The partial assumption by Purchaser at Closing of
that Promissory Note dated December 31, 1996 executed by Seller in favor of Bank
United (the "Bank United Note") and all documents executed in furtherance
thereof or as security for the payment thereof (the "Bank United Loan
Documents") as the same shall have been amended prior to Closing to reflect that
the current loan which is secured by two properties, the Facility and Sellers'
Scottsdale Royale Facility, will be separated into two separate loans, such that
the only portion of the Bank United Note and Bank United Loan Documents assumed
by Purchaser will be the portion that relates to the Seller's Assets (the
"Revised Bank United Loan Documents"). Seller and Purchaser acknowledge and
agree that as of the date hereof and at Closing the Bank United Note, as so
amended, will have an outstanding principal balance of Three Million One Hundred
Sixty Five Thousand and no/100 Dollars ($3,165,000). In the event that Seller is
not released concurrently with the assumption of the Revised Bank United Loan
Documents by Purchaser, then Purchaser shall also deliver to Seller at Closing
an indemnity agreement with respect to any and all damages, liabilities, costs
and expenses which Seller may incur as a result of a default by Purchaser after
Closing in its obligations under the Revised Bank
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United Loan Documents (the "Indemnity Agreement").
(d) Promissory Note. The execution and delivery at Closing of Purchaser's
Promissory Note in the face amount of Six Hundred Thirty Five Thousand and
no/100 Dollars ($635,000) (the "Carryback Note"). The Carryback Note shall bear
interest at the rate of LIBOR plus 3.25%, shall provide for interest only
payments and shall provide that the entire outstanding principal balance and any
accrued and unpaid interest shall be due and payable in full twelve months after
the Closing Date (the "Maturity Date") unless extended in accordance with the
terms hereof and thereof and shall be signed personally by each of the persons
comprising Purchaser. The Carryback Note shall further provide that Purchaser
shall have the right to extend the Maturity Date for two six month periods in
the event it concurrently exercises its right to extent the maturity of the Bank
United Note. The form of the Carryback Note shall be agreed upon by the parties
prior to Closing.
Except as specifically provided in this Agreement, Purchaser does not
hereby or in connection herewith assume any liability of Seller or any other
party whatsoever in relation to Seller's Assets.
3. Closing
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(a) The Closing Date. The Closing of the purchase and sale under this
Agreement (the "Closing") shall take place on or before December 29, 2000
(provided all of the conditions to closing set forth herein have been satisfied
or waived) (the "Closing Date"). In the event that as of the Closing Date all of
the conditions to Closing other than the condition set forth in Section
13(a)(iv) (the "Licensure Condition") have been satisfied or waived, Purchaser
shall have the right to extend the Closing Date to January 31, 2001(the "Outside
Closing Date") in order to enable such condition to be satisfied; provided,
however, that in the event that as of the Closing Date Seller has secured an
opinion of Arizona counsel that Purchaser can lawfully purchase the Seller's
Assets and lease them back to Seller and that Seller can concurrently engage
Dover Management, Inc. ("Purchaser's Tenant") to manage the Facility on its
behalf on a "triple net" basis pending satisfaction of the Licensure Condition,
then Purchaser shall have no right to extend the Closing Date and instead (i)
Purchaser shall be required to consummate the transaction provided for herein,
(ii) Seller and Purchaser shall be required to enter into a Lease on terms and
conditions acceptable to Seller and Purchaser and (iii) Seller shall be required
to enter into a Management Agreement with Purchaser's Tenant and Purchaser shall
be required to cause Purchaser's Tenant to enter into a Management Agreement
with Seller on terms and conditions acceptable to Seller and Purchaser's Tenant.
(b) The Closing Process. Closing shall occur through escrow and
accordingly, at or prior to the Closing Date, Purchaser and Seller shall deposit
in escrow with the Escrow Agent all documents and monies necessary to close this
transaction as herein provided. At Closing, Seller shall deliver to Escrow Agent
the Deed, the Bill of Sale and the Assignment of Contracts (as
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those terms are defined below) and, if applicable, the Lease and Management
Agreement, along with written escrow instructions addressed to Escrow Agent.
Time is of the essence of this Agreement. Closing shall occur in accordance with
the procedures and instructions given by Seller and Purchaser to the Escrow
Agent prior to Closing.
4. [RESERVED]
5. Costs and Prorations
--------------------
(a) Costs and Expenses. Costs and expenses associated with the sale of
Seller's Assets to Purchaser shall be allocated between the parties as follows:
(i) Seller shall pay any state, county, or local transfer tax due and
payable by virtue of the transfer to Purchaser of the Real Property and
Facility;
(ii) Purchaser shall pay the cost of the Title Commitment and the
Owner's Title Policy (as those terms are defined below), including any
endorsements reasonably requested by Purchaser, and of the Survey and Purchaser
shall pay the cost of any title policy and title endorsements to the lender's
title policy required by Purchaser's lender.
(iii) Except as otherwise provided in Section 5(a)(vii), Purchaser
shall pay the cost of any recording fees;
(iv) Purchaser and Seller shall each pay their own attorney's fees;
(v) Purchaser and Seller shall share any escrow fees on a 50-50 basis;
(vi) Purchaser will bear all costs associated with its Due Diligence
Review, other than the cost of the Phase I environmental report, structural
inspection and termite and dry rot inspection (the "Inspections"), which shall
be shared by Seller and Purchaser on a 50-50 basis; provided, however, that
subject to the approval of Purchaser's lender, Purchaser shall only engage firms
identified by Seller as being acceptable to it to perform the Inspections;
(vii) In the event Seller elects to cure any objections Purchaser
makes to the items described in the Title Commitment, then Seller shall pay the
cost of obtaining and recording any releases necessary to deliver title to the
Seller's Assets in accordance with the terms of this Agreement;
(viii) Purchaser shall pay any sales or use tax due with respect to
the sale of Seller's Assets to Purchaser; and
(ix) Purchaser shall pay any and all costs and expenses, including
loan
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assumption fees and lender legal fees, imposed by Bank United in connection with
the assumption by Purchaser of the Bank United Loan Documents.
(b) Prorations and Adjustments.
(i) All revenues (including but not limited to rent due from the
residents of the Facility) and expenses related to the ownership or operation of
the Seller's Assets shall be prorated as of the Closing Date, with Seller
responsible therefor for the period prior to the Closing Date and with Purchaser
responsible therefor for the period from and after the Closing Date.
(ii) Real and Personal Property taxes shall be prorated as of the
Closing Date, with Seller responsible therefor for the period prior to the
Closing Date and with Purchaser responsible therefor for the period from and
after the Closing Date.
(iii) Seller shall arrange for a final statement with respect to all
utilities serving the Real Property and the Facility as of the Closing Date and
shall pay all fees identified thereon and Purchaser shall arrange for all such
utilities to be billed in its name from and after the Closing Date and shall pay
all fees due therefor as of the Closing Date.
(iv) In the event Purchaser receives a credit against its license
application fees for any amounts paid by Seller for the period covered by
Purchaser's license, Purchaser shall remit to Seller at Closing an amount equal
to such credit.
6. Possession
----------
On the Closing Date, Seller shall deliver to Purchaser possession of the
Facility, subject only to rights of patients of the Facility.
7. Representations and Warranties of Seller
----------------------------------------
Seller hereby warrants and represents to Purchaser that:
(a) 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 or general principals of equity. The execution
of this Agreement and the consummation of the transactions contemplated herein
do not result in a breach of the terms and conditions of nor constitute a
default under or violation of Seller's Articles of Incorporation or Bylaws or of
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.
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(b) Necessary Action. Seller will make all reasonable efforts, with all
due diligence, to take all action and obtain all consents prior to the Closing
Date necessary for it to lawfully enter into and carry out the terms of this
Agreement, including, but not limited to, providing any notice of the sale of
the Facility to the residents of the Facility or any governmental agency or
authority, to the extent the same may be required by law.
(c) Litigation. 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 actions, suits or
proceedings.
(d) Compliance with Law. To the best of Seller's knowledge:
(i) The Facility and its operation and use are now in compliance with
all applicable municipal, county, state and federal laws, regulations, statutes,
ordinances, standards and orders and all administrative rulings and with all
municipal, health, building, land use and zoning laws and regulations where the
failure to comply therewith could have a material adverse effect on the
business, property, condition (financial or otherwise) or operation of the
Facility as a licensed nursing facility;
(ii) There are no outstanding deficiencies or work orders of any
authority having jurisdiction over the Facility requiring conformity to any
applicable statute, regulation, ordinance or by-law pertaining to assisted
living facilities;
(iii) Seller is not aware of any claims, requirement or demand of any
licensing or certifying agency supervising or having authority over the Facility
or otherwise to rework or redesign it or to provide additional furniture,
fixtures, equipment or inventory so as to conform to or comply with any exiting
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;
(iv) Seller has not received any notice from any governmental body
claiming a violation of any building, zoning, environmental or other laws or
ordinances; and
(v) Seller holds a valid and currently effective Certificate of
Occupancy with respect to the Facility.
(e) Status of Seller. Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of Washington and is
duly qualified to do business in and in good standing under the laws of the
State of Arizona.
(f) The Facility. The Facility is a duly licensed assisted living
facility, with 150 licensed beds and with 99 operational licensed units and
beds.
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(g) Employees of the Facility; Unions. None of the employees of the
Facility are members of a labor union or subject to any collective bargaining
agreement nor, to the best of Seller's knowledge, are any such employees engaged
in any union organizing activities. Seller is not a party to any labor dispute
or grievance.
(h) Surveys and Reports. Complete copies of the most recent survey
reports, any waivers of deficiencies, plans of correction, and any other
investigative reports issued with respect to the Facility have been provided by
Seller to the Purchaser prior to or will be provided to Purchaser within ten
(10) days following execution of this Agreement.
(i) Hazardous Materials. During the time in which Seller has owned the
Property, Seller has not used, generated, transported, treated, constructed,
deposited, stored, disposed, placed or located at, on, under or from the Real
Property (i) any flammable explosives, radioactive materials, hazardous or toxic
substances, materials or wastes, pollutants or contaminants defined, listed or
regulated by any local, state or federal environmental laws.
(j) Condemnation. There is presently no pending or to the best of
Seller's knowledge, contemplated or threatened, condemnation of the Facility or
any part thereof.
(k) Operating Contracts. Sellers shall provide to Purchaser within ten
(10) days after the Execution Date, true and correct copies of all to which
Seller or the Facility is a party in connection with the operation of the
Facility (the "Operating Contracts"). Each of the Operating Contracts is in full
force and effect and none of the Operating Contracts has been modified or
amended except as set forth in Exhibit C. Seller has no notice or knowledge that
it or the Facility, as applicable, is in default of any obligations under the
Operating Contracts nor is Seller aware of any default or any action which, with
the passage or time or the giving of notice or both would constitute a default,
under the Operating Contracts by any other party thereto. At Closing Seller
shall deliver, or cause to be delivered, to Purchaser duly executed assignments
of any of the Operating Contracts which Purchaser elects to assume pursuant to
Paragraph 11(a)(v).
8. Representations and Warranties of Purchaser
-------------------------------------------
Purchaser hereby jointly and severally warrants and represents to Seller
that:
(a) Status of Purchaser. Each of the persons comprising Purchaser is a
resident of the State of California. In addition, Melchor Balazs is a licensed
real estate broker.
(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. This Agreement is valid, binding and
enforceable as against Purchaser in accordance with its terms except as such
enforceability may be limited by applicable creditors rights laws and general
principles of equity. The execution of this Agreement and the consummation of
the transaction
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contemplated herein does not result in a breach of the terms and conditions of
nor constitute a default under or violation of 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 of Purchaser may be bound or affected.
(c) Litigation. 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, nor does Purchaser know or have
reasonable grounds to know of any basis for any such action.
(d) Necessary Action. Purchaser will make all reasonable efforts, with
all due diligence, to take all action and obtain all consents prior to Closing
necessary for each of the persons comprising Purchaser to carry out the terms of
this Agreement.
(e) Financial and Diligence Documents. Purchaser acknowledges and agrees
that Seller has provided to Purchaser copies of the income statement for the
Facility for the years ended December 31, 1998 and 1999 and for the year to date
for calendar year 2000 and a current rent roll and with copies of any maps
depicting the area in which the Facility is located, photos of the Facility,
site plans/floor plans of the Facility, brochures used in marketing the Facility
which are in Seller's possession (the "Financial and Diligence Documents") and
that Purchaser has found the same to be acceptable as of the date of the
execution of this Agreement.
9. Brokers
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Purchaser represents and warrants that National Investments which has acted
as the Purchaser's broker on this transaction but that no fee or commission is
due from either Seller or Purchaser to National Investments of Purchaser in
connection with this transaction. Seller represents and warrants that 2BeMa has
acted as the Seller's broker on this transaction and that any fee or commission
due to 2BeMa shall be paid by Seller at Closing, Seller and Purchaser 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 Purchaser 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. Purchaser 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 Purchaser's conduct with respect to this transaction.
10. Seller's Covenants
------------------
(a) Pre-Closing. Between the date hereof and the Closing Date, except as
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contemplated by this Agreement or with the consent of Purchaser, Seller does
hereby covenant as follows:
(i) Seller will operate the Facility in the ordinary course of
business and Seller will not enter into any contract, commitment or agreement
affecting the Seller's Assets except in the ordinary course of business and
Seller will advise Purchaser of any contracts or commitments which it enters,
whether in the ordinary course of business or otherwise;
(ii) Seller will provide Purchaser and Purchaser's lender with access
to the Facility and to the books and records of the Facility for the purpose of
the inspection thereof; provided, however, that such access and inspection shall
be with at least 24 hours prior notice and during normal business hours at such
time and in such manner as the parties shall reasonably agree upon;
(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;
(iv) Seller will maintain in force the existing hazard and liability
insurance policies, or comparable coverage, for the Real Property, the Facility
and the Personal Property;
(v) Seller will maintain the Real Property, the Facility and the
Personal Property in substantially the same condition as they are in as of the
date hereof, ordinary wear and tear excepted; and
(vi) Seller will promptly notify Purchaser of any changes affecting
the validity or accuracy of its representations and warranties of which it
becomes aware prior to the Closing.
(b) Closing. At the Closing, Seller agrees that it will:
(i) Execute and delivery such endorsements, assignments and other
instruments of transfer and conveyance as shall be reasonable or necessary to
transfer and assign Seller's Assets to Purchaser as herein provided;
(ii) Deliver to Purchaser a certificate dated as of the date of
Closing certifying in such detail as Purchaser may reasonably specify that
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 are true at and as of the date of Closing as
though such representations and warranties were then again made and that Seller
shall have performed its obligations under this Agreement that are to be
performed prior to or at Closing;
(iii) Pay for any of the costs and expenses identified in Paragraph 5
for which it
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is responsible.
(iv) Execute and deliver to the Escrow Agent a deed (with full
statutory warranties) (the "Deed"), a bill of sale (the "Bill of Sale"), and an
assignment and assumption agreement with respect to (the "Assignment of
Contracts"). The form of the Deed, the Bill of Sale and the Assignment of
Contracts shall be agreed upon by the parties prior to Closing.
(c) Post-Closing. After the Closing, Seller agrees that 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, may be necessary to assure, complete and evidence the full and
effective transfer and conveyance of Seller's Assets and the continued licensing
of the Facility.
11. Purchaser's Covenants
---------------------
(a) Pre-Closing. Between the date hereof and the Closing, 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; and
(ii) Purchaser will make all reasonable efforts, with all due
diligence, to obtain all consents, approvals and licenses necessary to permit
the consummation of the transaction contemplated by this Agreement and/or
necessary to permit Purchaser to own and operate the Facility as of the Closing
Date;
(iii) Purchaser will proceed with all due diligence to conduct such
investigations with respect to Seller's Assets as it deems to be reasonably
necessary in connection with its purchase thereof, including, but not limited
to, zoning investigations, soil studies, environmental assessments, seismic
assessments, wetlands reports, appraisals, investigations of Seller's and the
Facility's books and records and operations, dry rot and termite inspections and
structural inspections, provided no investigations will be physically intrusive
on the Real Property or the Facility unless Seller consents thereto, which
consent shall not be unreasonably withheld (the "Due Diligence Review");
provided, however, that Purchaser shall maintain the confidentiality of any
documents or information obtained by it during the course of its Due Diligence
Review and to the extent any such documents or information are obtained from
Seller, Purchaser shall return the same to Seller in the event the transaction
provided for herein fails close for any reason whatsoever. Furthermore,
Purchaser shall indemnify, defend and hold Seller and the Seller's Assets
harmless of and from any and all losses, liabilities, costs, expenses (including
without limitation, reasonable attorney's fees and costs of court at trial and
on appeal), damages, liens, claims (including, without limitation mechanics' or
materialmans' liens or claims
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of liens), actions and causes of action arising from or relating to Purchaser's
(or Purchaser's Agents, employees, or representatives) entering on the Real
Property and/or the Facility to test, study, investigate or inspect the same or
any part thereof, whether pursuant to this paragraph or otherwise or from a
breach by Purchaser of its confidentiality obligations hereunder. The foregoing
indemnity shall expressly survive the Closing or the earlier termination of this
Agreement;
(iv) Within ten (10) days after the later of the date of their
delivery to Purchaser, Purchaser will advise Seller in writing which, if any of
the Operating Contracts Purchaser elects to assume as of the Closing Date.
(b) Closing. At the Closing, Purchaser agrees that it will:
(i) Pay the Cash Payment due at Closing;
(ii) Deliver the executed Carryback Note;
(iii) Deliver to Seller a Certificate dated as of the date of Closing
certifying in such detail as Seller may reasonably specify the fulfillment of
the conditions set forth in Paragraph 13(b)(i);
(iv) Pay for any of the costs and expenses specified in Paragraph 5
for which Purchaser is responsible;
(v) If applicable, deliver the executed Indemnity Agreement; and
(vi) Execute any and all documents necessary to evidence the
assumption of the Revised Bank United Loan Documents.
(c) Post-Closing. After the Closing, Purchaser agrees that it will, or
its will use its reasonable efforts to cause Purchaser's Tenant to, take such
actions and properly execute and deliver such further instruments as Seller may
reasonably request to assure, complete and evidence the transactions provided
for in this Agreement.
12. Mutual Covenants
----------------
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.
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(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.
(c) To effect in a timely fashion all prorations contemplated in this
Agreement.
13. Conditions Precedent to Closing
-------------------------------
(a) Purchaser's Conditions. Purchaser's obligation to purchase Seller's
Assets hereunder is subject to the following conditions, any one or all of which
may be waived by Purchaser:
(i) Title and Survey Review. Within fifteen (15) days after the
execution of this Agreement, Purchaser shall obtain from the Escrow Agent a
title commitment with respect to the Real Property (the "Title Commitment") and,
if Purchaser elects to secure the same, an ALTA survey of the Real Property and
the Facility (the "Survey") and Purchaser shall advise Seller in writing prior
to the en end of such fifteen (15) day period of any objections which Purchaser
may have to the exceptions reflected on the Title Commitment or the Survey (the
"Title Review Period"). In no event shall Purchaser have any right to object to
any exceptions related to taxes which are not yet due and payable or any
covenants, conditions, restrictions, rights of way or easements which do not
materially affect the value or intended use of the Seller's Assets. The failure
of Purchaser to disapprove the Title Commitment or the Survey within the Title
Review Period shall be deemed approval by Purchaser of such items. If Purchaser
disapproves any such items or documents, Seller shall have five (5) business
days from the date of such disapproval in which to advise Purchaser whether or
not it is prepared to cure the same prior to Closing and in the event Seller
fails or refuses to do so within said five (5) business day period, then
Purchaser shall have the rights and remedies set forth in Paragraph 15.
(ii) Title Insurance. The Title Company shall issue with respect to
the Real Property and the Facility as of the Closing Date, an owner's policy of
title insurance to Purchaser in the full amount of the purchase price (the
"Owner's Title Policy") which shall reflect only those title exceptions approved
by Purchaser in accordance with Paragraph 13(a)(ii).
(iii) Due Diligence Review. Purchaser shall be satisfied with the
results of the Due Diligence Review; provided, however, in the event Purchaser
has not advised Seller on or before December 26, 2000 that it is not satisfied
with the results thereto, then this condition shall be deemed satisfied as of
such date.
(iv) Regulatory Approval; Licensing. The approval of the transaction
by the appropriate regulatory and licensing authorities and agencies of the
State of Arizona including receipt by Purchaser or Purchaser's Tenant, as
applicable, of all consents, approvals, licenses and
12
certificates as may be necessary for Purchaser lawfully to own and operate the
Facility.
(v) Damage and Condemnation. Prior to the Closing Date, the risk of
physical loss to the Seller's Assets shall be borne by Seller. Accordingly, it
shall be a condition to Purchaser's obligation hereunder that prior to the
Closing Date, no material portion of the Facility nor any material portion of
the Real Property, Inventory or 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, in any
such case to an extent which causes the Facility to lose use of any of its
licensed beds or to become impracticable to operate as of the Closing Date or
the postponement thereof, if applicable. If the Real or Personal Property or the
Facility shall have been so damaged or destroyed and Purchaser waives this
condition, Seller shall assign to Purchaser all its rights to any insurance
proceeds in the connection therewith and the purchase price shall be reduced by
any deductible which Purchaser shall be required to pay in connection with such
damage or destruction. If the Real or Personal Property or the Facility shall be
so taken or condemned prior to Closing, and if Purchaser waives this condition,
Seller shall pay or assign to Purchaser all Seller's right to the proceeds of
any condemnation award in connection thereof and the purchase price shall be
reduced by Purchaser's reasonable estimate of the amount by which the cost to
repair the portion of the Real or Personal Property or the Facility affected by
such taking exceeds such condemnation award. Purchaser may, however, in lieu of
closing, elect to exercise its rights under Paragraph 15(a)(iii) if any material
portion of the Real Property, Facility or Personal Property is damaged,
destroyed or taken prior to the Closing Date.
(vi) No Defaults. 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 Real Property, the Personal Property, the
Inventory, the Intangible Personal Property or the Facility.
(vii) 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.
(viii) Seller's Representations and Warranties. 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 at and as of the date of Closing as though
such representations and warranties were then again made.
(ix) Lease. Purchaser shall have entered into a Lease with an
operator of the Facility on terms and conditions acceptable to Purchaser and
Bank United; provided, however, in the event Purchaser has not advised Seller on
or before December 26, 2000 that this condition has not been satisfied, then
this condition shall be deemed satisfied as of such date.
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(x) Loan Assumption. Purchaser and Bank United shall have executed
any and all documents necessary for Purchaser to assume the Revised Bank United
Loan Documents.
(xi) Closing Documents. Seller and Purchaser shall have agreed on the
form of the Deed, Bill of Sale, Assignment of Contracts and Carryback Note and
any other closing documents referenced herein or contemplated by the terms
hereof.
(b) Seller's Conditions. Seller's obligation to sell Seller's Assets
hereunder is subject to the fulfillment of each of the following conditions, any
one or all of which may be waived by Seller in writing:
(i) Purchaser's Representations and Warranties. 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.
(ii) 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.
(iii) Board Approval. Seller shall have secured the approval of its
Board of Directors of the transaction provided for herein.
(iv) Loan Assumption. The Bank United Loan Documents shall have been
revised in the manner described in Paragraph 2(c) and Purchaser and Bank United
shall have executed any and all documents necessary for Purchaser to assume the
Revised Bank United Loan Documents.
(v) Closing Documents. Seller and Purchaser shall have agreed on the
form of the Deed, Bill of Sale, Assignment of Contracts and Carryback Note and
any other closing documents referenced herein or contemplated by the terms
hereof.
14. Indemnification
---------------
(a) By Seller. Seller shall indemnify, defend and hold harmless Purchaser
from and against any and all costs, losses, damages, liabilities and obligations
arising from or related to:
(i) The ownership and/or operation of the Real Property, the Facility,
the Inventory, the Intangible Personal Property or the Personal Property which
exist as the Closing Date or which relate to the period prior to the Closing
Date;
14
(ii) Any misrepresentation, breach of warranty or nonfulfillment of
any agreement or covenant on the part of Seller under this Agreement or from any
misrepresentation in or omission from any certificate furnished or to be
furnished by Seller to Purchaser hereunder;
(iii) Any litigation, investigations or other proceedings pending or
threatened against or relating to the Facility or the business being conducted
thereon or against or relating to Seller, its properties or business, including
but not limited to any such litigation, investigations or other proceedings
which may be disclosed to Purchaser in this Agreement, or any exhibit attached
to this Agreement, or otherwise; and
(iv) Any and all actions, suits, proceedings, demands, assessments,
judgments, costs and legal and other expenses, including, but not limited to,
reasonable attorney's fees, incident to any of the foregoing;
For purposes of this Paragraph 14, an obligation shall be deemed to "exist"
as of the Closing if it relates to events which occurred prior to the Closing
even if it is not asserted until after the Closing.
(b) By Purchaser. In addition to any indemnity obligations set forth in
the Indemnity Agreement, if applicable, Purchaser shall indemnify, defend and
hold Seller, Seller's partners, employees, and agents harmless from and against
any and all costs, losses, damages, liabilities and obligations arising from or
related to:
(i) Except as otherwise provided in this Agreement, the ownership and
operation of the Real Property, the Personal Property, the Inventory, the
Intangible Personal Property and the Facility accruing on or after the Closing
Date;
(ii) Any misrepresentation, breach of warranty or nonfulfillment of
any agreement on the part of Purchaser under this Agreement or from any
misrepresentation in or omission from any certificate furnished or to be
furnished by Purchaser to Seller hereunder; and
(iii) Any and all actions, suits, proceedings, demands, assessments,
judgments, costs and legal and other expenses, including, but not limited to,
reasonable attorney's fees, incident to any of the foregoing.
15. Termination
-----------
(a) Grounds for Termination. 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;
15
(ii) By Seller, if any of the conditions set forth in Paragraph 13(b)
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(a) shall have become incapable of fulfillment prior to the Closing Date or
such earlier date as may be specifically provided for the performance thereof
(as the same may be extended) through no fault of Purchaser and the same shall
not have been waived by Purchaser;
(iv) By either Seller or Purchaser in the event of a material breach
by the other party of its obligations hereunder;
(v) By either Seller or Purchaser if the Closing has not occurred by
the Closing Date or, if applicable, the Outside Closing Date specified in
Paragraph 3;
(vi) By Purchaser upon Purchaser's receipt of written notification of
any fact which would materially change any of the representations or warranties
of Seller herein; or
(vii) By Seller upon Seller's receipt of written notification of any
fact which would materially change any of the representations or warranties of
Purchaser herein.
Neither Seller nor Purchaser may claim termination of this Agreement or
pursue any other remedy referred to in this Agreement 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 shall be postponed to the first day of the next
calendar month if necessary to afford such opportunity to cure. In any event,
unless the parties hereto agree otherwise, postponement of closing to the first
day of the next calendar month shall be granted only once.
(b) Seller's Remedies Upon Termination. In the event of the termination
of this Agreement by Seller under Paragraphs 15(a)(ii) or (iv) or under
Paragraph 15(a)(v) in the event the Closing has failed to occur as a result of a
material breach by Purchaser of its obligations hereunder, Purchaser and Seller
acknowledge and agree as follows:
SELLER SHALL BE ENTITLED TO TERMINATE THIS AGREEMENT AND TO RETAIN $500,000
FROM THE DEPOSIT 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 $500,000 IS A
REASONABLE AND FAIR ESTIMATE THEREOF, AFTER WHICH THE PARTIES
16
SHALL HAVE NO FURTHER RIGHTS OR OBLIGATIONS HEREUNDER OTHER THAN
PURCHASER'S RIGHT TO SECURE THE RETURN OF THE REMAINDER OF THE DEPOSIT.
----------------------------- -----------------------------
Seller's Initials Purchaser's Initials
(c) Purchaser's Remedies Upon Termination. In the event of the
termination of this Agreement by Purchaser under Paragraphs 15(a)(iii) or (iv)
or under Paragraph 15(a)(v) in the event the Closing has failed to occur as of a
material breach by Seller of its obligations hereunder, Purchaser shall have the
right 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, secure the return of the Deposit and, in addition thereto,
demand from Seller the sum of $500,000 as liquidated damages in accordance with
the following provision:
PURCHASER SHALL BE ENTITLED TO TERMINATE THIS AGREEMENT AND TO DEMAND THE
PAYMENT OF $500,000 BY SELLER AS LIQUIDATED DAMAGES, THE PARTIES
ACKNOWLEDGING AND AGREEING THAT THE AMOUNT OF DAMAGES WHICH PURCHASER MAY
INCUR AS A RESULT OF SUCH TERMINATION MAY BE DIFFICULT TO ASCERTAIN AND
THAT $500,000 IS A REASONABLE AND FAIR ESTIMATE THEREOF, AFTER WHICH THE
PARTIES SHALL HAVE NO FURTHER RIGHTS OR OBLIGATIONS HEREUNDER OTHER THAN
PURCHASER'S RIGHT TO SECURE THE RETURN OF THE DEPOSIT.
----------------------------- -----------------------------
Seller's Initials Purchaser's Initials
(d) Expenses. In the event the transaction contemplated hereby is not
closed for any reason other than a breach by Purchaser, Seller shall pay all
escrow cancellation fees and title charges. Nothing contained in this Paragraph
15(d) shall limit or otherwise restrict Seller's liability and responsibility to
pay all costs and expenses incurred by Purchaser in connection with this
Agreement in the event of a breach by Seller of its obligations under this
Agreement.
(e) No Waiver. Nothing contained in this Paragraph 15 shall constitute a
waiver of or a restriction on any of Purchaser's rights or remedies in the event
of a breach by Seller of its obligations under this Agreement.
17
16. 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, to the following address:
To Seller: Emeritus Corporation
3131 Elliott Avenue
Suite 500
Seattle, WA 98121
Attn: President
Fax Number: 206-298-2909
with a copy to: The Nathanson Group PLLC
1411 Fourth Avenue Suite 905
Seattle, WA 98101
Attn: Randi S. Nathanson
Fax Number: 206-623-1738
To Purchaser: c/o Melchor Balazs
P.O. Box 7303
Berkley, CA 94707
Fax Number: 510-525-3191
with a copy to: Larry Parker
1848 Willow Path Road
Suite 204
Concord, CA 94520
Fax Number: 510-676-6038
Notice shall be deemed upon actual receipt or refusal of receipt thereof
regardless of the method of delivery used.
17. 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.
18
18. Successors
----------
The terms of this Agreement shall be binding upon and inure to the benefit
of and be enforceable by and against the heirs, successors and assigns of the
parties hereto. Purchaser shall have the right to assign this Agreement without
the prior written consent of Seller to an entity controlled by Purchaser. Any
other assignment shall require the consent of Seller. No such assignment,
whether with or without the consent of Seller, shall relieve Purchaser of its
obligations hereunder.
19. 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.
20. Survival
--------
All covenants, indemnities, warranties and representations of Purchaser and
Seller herein shall survive the Closing and shall continue in effect for a
period of one (1) year after the Closing Date, after which they shall terminate
and be of no further force or effect.
21. Governing Law
-------------
This Agreement shall be governed by and construed in accordance with the
laws of the State of Arizona.
22. 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 or
enforceability of the remaining provisions hereof shall not in any way be
affected or impaired thereby.
23. 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.
24. Confidentiality
---------------
In the event the transaction contemplated by this Agreement fails to close
for any reason, Purchaser and Seller agree to keep confidential any proprietary
information disclosed to them by the other party during the course of this
transaction.
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25. Employee Benefits
-----------------
At Closing, Seller shall terminate all of the employees of each of the
Facility and shall pay to them any wages and benefits which are due as of the
Closing Date under applicable State law. Purchaser agrees to cause Purchaser's
Tenant to extend an offer of employment to each of the employees of the Facility
on reasonable comparable terms and conditions to the current terms of their
employment as disclosed to Purchaser by Seller.
26. Resident Security Deposits
--------------------------
(a) At Closing, Seller shall provide Purchaser or Purchaser's Tenant 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.
(b) On the Closing Date, Seller shall transfer the Resident Deposits to
the bank accounts designated by the Purchaser or Purchaser's Tenant and
Purchaser shall in writing acknowledge or shall cause Purchaser's Tenant in
writing to acknowledge to Seller receipt of and expressly assume all Seller's
financial and custodial obligations with respect thereto, it being the intent
and purpose of this provision that, at Closing, Seller will be relieved of all
fiduciary and custodial obligations, and that Purchaser or Purchaser's Tenant
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
Purchaser harmless from all liabilities, claims and demands in the event the
amount of the Resident Deposits transferred to the Purchaser's bank accounts 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.
27. Accounts Receivable
-------------------
(a) Within ten days prior to the Closing Date, Seller shall provide
Purchaser or Purchaser's Tenant with a detailed listing of Seller's accounts
receivable which are anticipated to be outstanding on the Closing Date.
(b) From and after the Closing Date, Purchaser or Purchaser's Tenant 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.
20
(c) Any 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 or Purchaser's Tenant first to reduce any post-
Closing Date balances, with the excess, if any, remitted to Seller to reduce any
pre-Closing Date balances due.
(d) Seller shall have the right during normal business hours and on
reasonable notice to Purchaser and Purchaser's Tenant to inspect Purchaser's or
Purchaser's Tenant's books and records with respect to the accounts receivable
received by it after the Closing Date from residents with balances due as of the
Closing Date.
28. Internal Revenue Service Reporting
----------------------------------
Prior to the Closing, Seller shall furnish Purchaser and to the Escrow
Agent Sellers affidavit, under penalty of perjury, which shall include Seller's
United States taxpayer identification number, stating that Seller is not a
foreign person under Section 1445 of the Internal Revenue Code and the
Regulations thereunder.
29. Construction
------------
Each party acknowledges and agrees that it has participated in the drafting
and the negotiation of this Agreement and has been represented by counsel during
the course thereof. Accordingly, in the event of a dispute with respect to the
interpretation or enforcement of the terms hereof, no provision shall be
construed so as to favor or disfavor either party hereto.
30. 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.
31. 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.
21
32. Calculation of Time Periods
---------------------------
Unless otherwise specified, in computing any period of time described
herein, the day of the act or event on which the designated period of time
begins to run shall not be included and the last day of the period so computed
shall be included, unless such last day is a Saturday, Sunday or legal holiday,
in which event the period shall run until the next day which is not a Saturday,
Sunday or a legal holiday.
33. Expenses
--------
Except as otherwise specifically provided herein, each party shall bear its
own costs and expenses (including legal fees and expenses) incurred in
connection with this Agreement and the transactions contemplated hereby.
34. 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) any rights or remedies under or by reason of this Agreement, including
without limitation, any right to enforce this Agreement.
SIGNATURES ON FOLLOWING PAGE
22
IN WITNESS WHEREOF, the parties hereby execute this Agreement as of the day
and year first written above.
SELLER: EMERITUS CORPORATION
By: _______________________________
Its: _______________________________
/s/ Melchor Balazs
PURCHASER: _______________________
MELCHOR BALAZS
/s/ Jose Chavez
_______________________
JOSE CHAVEZ
/s/ Miguel Podolsky
_______________________
MIGUEL PODOLSKY
23
EXHIBIT A
LEGAL DESCRIPTION
24
EXHIBIT B
PERSONAL PROPERTY LIST
25